IN THE SUPREME COURT OF THE UNITED STATES
ROSA COVINGTON PACKARD,
UNITED STATES OF AMERICA,
Petition for Writ of Certiorari
To the United States Court of Appeals for the Second Circuit
- PETER GOLDBERGER Counsel of Record
- JAMES H. FELDMAN, JR.
- 50 Rittenhouse Place Ardmore, PA 19003-2276 (610) 649-8200
- Attorneys for Petitioner
- February 2000
- Under the Religious Freedom Restoration Act, 42 USC § 2000bb et seq., is the government's asserted inability to further its compelling interest by any means less restrictive of the plaintiff's religious liberty an affirmative defense to be pleaded under Federal Rules of Civil Procedure 8(c), or may a court grant a Rule 12(b)(6) motion to dismiss the complaint on the unproven basis that the plaintiff's objection, by virtue of being religious in nature, cannot be accommodated?
- In light of the Free Exercise Clause, does a civil complaint for a refund of tax penalties state a claim on which relief can be granted by averring that the IRS categorically denies statutorily authorized penalty waivers to applicants whose religious convictions, if not accommodated, prevent them from voluntarily making timely payment of income tax, even though the IRS generally gives individualized consideration to taxpayers who allege that circumstances beyond their control impeded timely payment?
The caption of the case in this Court contains the names of all parties (petitioner Packard and the United States).
TABLE OF CONTENTS
- QUESTIONS PRESENTED
- LIST OF ALL PARTIES
- INDEX TO APPENDIX
- TABLE OF AUTHORITIES
- OPINIONS BELOW
- TEXT OF CONSTITUTIONAL PROVISION, FEDERAL STATUTES, RULES OF PROCEDURE, AND REGULATIONS INVOLVED
- STATEMENT OF THE CASE
- REASONS FOR GRANTING THE WRIT
- The decisions of the courts below depart from this Court's precedent in allowing a civil complaint to be dismissed under Rule 12(b)(6) despite well-pleaded allegations satisfying the elements of a statutory claim, on a basis that the Act requires the defendant-government, not the plaintiff-individual, to plead and prove. The result is effectively to exempt the Internal Revenue Service from compliance with the Religious Freedom Restoration Act in its decisions whether to waive discretionary penalties 10
- The lower courts allowed an application of the Internal Revenue Code's penalty provisions which violates this Court's binding precedent under the Free Exercise Clause, when they permitted the IRS to discriminate against religious reasons, as compared with all other equivalent impediments to individual compliance with a generally applicable law 21
- A. Summary Order of the Second Circuit (filed June 1, 1999)
- B. Opinion of the District Court, 7 F.Supp.2d 143 (D. Conn. 1998)
- C. Order of the Second Circuit denying rehearing (November 19, 1999)
- D. Internal Revenue Code, Treasury Regulations and Internal Revenue Manual provisions involved
(The pages noted are those in the original document. )
- Adams v. Commissoner,
- 170 F.3d 173 (3rd Circuit 1999),
- cert. denied, No. 99-798, pages 6, 11, 15, 21-23, 29
- Automatic Canteen Company v. FTC,
- 346 US 61 (1953), page 11
- Bowen v. Roy,
- 476 US 693 (1986), pages 23-26, 29
- Browne v. United States,
- 176 F.3d 25 (2nd Circuit 1999),
- cert. denied, No. 99-632, pages 6, 11, 17, 21-23
- Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah,
- 508 US 520 (1993), pages 13, 26
- City of Boerne v. Flores,
- 521 US 507 (1997), pages 10, 14
- Corning Glass Works v. Brennan,
- 417 US 188 (1974), page 11
- Crawford-El v. Britton,
- 523 US 574 (1998), page 16
- Davis v. Monroe County Board of Education,
- 526 US 629 (1999), pages 6, 16
- Ehlert v. United States,
- 402 US 99 (1971), page 27
- Employment Division v. Smith,
- 494 US 872 (1990), pages 15, 20, 23-25, 29
- Frazee v. Illinois Department of Employment Security,
- 489 US 829 (1989), pages 13, 24
- Goldman v. Weinberger,
- 475 US 503 (1986), page 19
- Gomez v. Toledo,
- 446 US 635 (1980), pages 10, 16
- Hamilton v. Board of Regents,
- 293 US 245 (1934), page 13
- Hernandez v. Commissoner of Internal Revenue,
- 490 US 680 (1989), pages 13, 19
- Hobbie v. Unemployment Appeals Comm'n,
- 480 US 136 (1987), page 24
- Hughes Aircraft Company v. Jacobson,
- 525 US 432 (1999), page 15
- O'Lone v. Shabazz, 482
- US 342 (1987), page 19
- Packard v. United States,
- 7 F.Supp.2d 143 (D. Conn. 1998), pages 5, 6, 13
- Sasnett v. Sullivan,
- 91 F.3d 1018 (7th Circuit 1996), page 13
- Scher v. United States,
- 305 US 251 (1938), page 11
- Sherbert v. Verner,
- 374 US 398 (1963), pages 14, 23-25
- Sutton v. United Air Lines, Inc.,
- 527 US 471 (1999), pages 6, 16
- Thomas v. Review Board,
- 450 US 707 (1981), pages 13, 24
- United States v. Bauer,
- 84 F.3d 1549 (9th Circuit 1996), pages 12, 14
- United States v. Boyle,
- 469 US 241 (1985), page 27
- United States v. Gaubert,
- 499 US 315 (1991), page 6
- United States v. Jenkins,
- 420 US 358 (1975), page 28
- United States v. Lee,
- 455 US 252 (1982), pages 13, 19, 20
- Vance v. Terrazas,
- 444 US 252 (1980), page 17
- Wisconsin v. Yoder,
- 406 US 205 (1972), page 14
CONSTITUTION, STATUTES AND RULES:
- US Constitution, amendment I
- (Free Exercise Clause), pages 14, 20-24, 26, 30
- 26 USC § 1402(g), page 20
- 26 USC § 3127, page 20
- 26 USC § 6096, page 18
- 26 USC § 6404(g), page 5
- 26 USC § 6651(a), pages 8, 9, 23, 24
- 26 USC § 6654, pages 9, 23, 25, 28, 29
- 26 USC § 7422, page 9
- 26 USC § 9006(a), page 18
- 28 USC § 1254(1), page 1
- 28 USC § 1291, page 9
- 28 USC § 1346(a), page 9
- 28 USC § 2101(c), page 1
- 42 USC § 2000bb-1, pages 2, 10
- 42 USC § 2000bb-2(1), page 19
- 42 USC § 2000bb-2(3), pages 10, 15
- 42 USC § 2000bb-2(4), page 13
- 42 USC § 2000bb-3(a), page 19
- Pub.L. 100-647, § 8007 (October 22, 1988), page 20
- Religious Freedom Restoration Act,
- 42 USC §§ 2000bb, et seq., pages 4,9-11, 13-15, 19, 30
- 26 C.F.R. § 1.6161-1(b), page 26
- 26 C.F.R. § 301.6651-1(c), page 25
- Federal Rules of Civil Procedure 7(a), page 16
- Federal Rules of Civil Procedure 8(c), pages 11, 15-17
- Federal Rules of Civil Procedure 8(d), pages 16
- Federal Rules of Civil Procedure 12(b)(1), page 5
- Federal Rules of Civil Procedure 12(b)(6), pages 5-7, 10, 11, 15-18, 21
- Federal Rules of Civil Procedure 12(c), page 17
- S.Ct. Rule 13.1, 13.3, page 1
- S.Ct. Rule 14.1(i), page 9
- Alexander M. Bickel,
- The Morality of Consent (1975), page 29
- The Holy Bible, page 8
- H. Rep. 103-88,
- 103rd Congress, 1st Session (1993), pages 15, 19
- Marjorie E. Kornhauser,
- For God and Country: Taxing Conscience,
- 1999 Wisconsin Law Revue 939, page 14
- John T. Noonan,
- The Lustre of Our Country: The American Experience of Religious Freedom
- (University of California Press 1998), page 12
- IRS, Internal Revenue Manual, pages 26-27
- Religious Freedom Tax Fund Bill
- H.R. 2660, 105th Congress, page 14
- S. Rep. 103-111, 103rd Congress, 1st Session (1993), pages 15, 19
- Charles A. Wright and Arthur R. Miller,
- Federal Practice and Procedure (1990), page 17
ROSA COVINGTON PACKARD respectfully petitions this Court for a writ of certiorari to review the order of the United States Court of Appeals for the Second Circuit filed on June 1, 1999, denying her appeal from an order under Federal Rules of Civil Procedure 12(b)(6) dismissing her complaint in a tax refund action.
The summary opinion of the court of appeals (Kearse, Miner and McLaughlin, JJ.) is not officially published. It is available at 83 A.F.T.R.2d 99-2874, 99-2 USTC ¶ 50,630, and 1999 WestLaw 500797; a copy is attached as Appendix A. The opinion of the United States District Court for the District of Connecticut (Goettel, J.) is published at 7 F.Supp.2d 143 (D. Conn. 1998); a copy is attached as Appendix B.
The judgment of the United States Court of Appeals for the Second Circuit affirming the judgment of the United States District Court was filed and entered on June 1, 1999. A timely petition for rehearing was denied by Order dated November 19, 1999. Appx. C. This petition is timely filed within 90 days thereafter. Rules 13.1, 13.3; 28 USC § 2101(c). The jurisdiction of this Court is invoked under 28 USC § 1254(1).
The First Amendment to the Constitution of the United States provides, in pertinent part, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof ....”
The Religious Freedom Restoration Act provides in pertinent part:
- In general. Government shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability, except as provided in subsection (b).
- Exception. Government may substantially burden a person's exercise of religion only if it demonstrates that application of the burden to the person --
- is in furtherance of a compelling governmental interest; and
- is the least restrictive means of furthering that compelling governmental interest.
- Judicial relief. A person whose religious exercise has been burdened in violation of this section may assert that violation as a claim or defense in a judicial proceeding and obtain appropriate relief against a government ...
42 USC § 2000bb-1.
§ 2000bb-2. Definitions
As used in this Act--
(1) the term “government” includes a branch, department, agency, instrumentality, and official (or other person acting under color of law) of the United States, a State, or a subdivision of a State;
* * *
(3) the term “demonstrates” means meets the burdens of going forward with the evidence and of persuasion; and
(4) the term “exercise of religion” means the exercise of religion under the First Amendment to the Constitution.
42 USC § 2000bb-2:
§ 2000bb-3. Applicability
(a) In general. This Act applies to all Federal and State law, and the implementation of that law, whether statutory or otherwise, and whether adopted before or after the enactment of this Act [enacted November 16, 1993].
* * * *
42 USC § 2000bb-2.
Rule 8 of the Federal Rules of Civil Procedure provides in pertinent part:
(a) Claims for Relief. A pleading which sets forth a claim for relief ... shall contain ... (2) a short and plain statement of the claim showing that the pleader is entitled to relief ....
(b) Defenses; Form of Denials. A party shall state in short and plain terms the party's defenses to each claim asserted, and shall admit or deny the averments upon which the adverse party relies.
* * *
(c) Affirmative Defenses. In pleading to a preceding pleading, a party shall set forth affirmatively ... any ... matter constituting an avoidance or affirmative defense. * * *
Rule 12 of the Federal Rules of Civil Procedure Provides in pertinent part:
(b) How Presented. Every defense, in law or fact, to a claim for relief in any pleading ... shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: ... (6) failure to state a claim upon which relief can be granted .... * * *
Because of their length, the pertinent provisions of the Internal Revenue Code and Treasury Regulations are reprinted in the Appendix, along with relevant implementing portions of the Internal Revenue Manual. Appx. D.
Petitioner Rosa Covington Packard is a Quaker pacifist, whose religious beliefs prevent her from voluntarily paying any tax, such as the federal income tax, which is used in substantial part to fund war preparation and warmaking activities. She filed a complaint for a refund of penalties and interest that had been added by the Internal Revenue Service to a federal income tax delinquency, claiming that both the Religious Freedom Restoration Act, 42 USC § 2000bb et seq., and the Internal Revenue Code itself exempted her from being required to pay additional sums on account of late payment of income tax obligations which resulted from obedience to the demands of her religious conscience, and that the refusal of the IRS to waive or abate the penalties violated the Free Exercise Clause, by discriminating against religiously-based showings of “reasonable cause.” The district court dismissed the complaint under Federal Rules of Civil Procedure 12(b)(6). Appx. B. The Second Circuit affirmed. Appx. A.
On January 26, 1998, the petitioner, Rosa Packard, filed a complaint in the United States District Court for the District of Connecticut, seeking a refund of certain penalties imposed on her by the Internal Revenue Service for late payment of federal income taxes and for failure to make quarterly estimated payments, for the tax years 1992 and 1993. The United States filed a motion under Federal Rules of Civil Procedure 12(b)(6) to dismiss the action for failure to state a claim on which relief could be granted.
The district court granted the motion in a written opinion. Packard v. United States, 7 F.Supp.2d 143 (D. Conn. 1998); Appx. B. On appeal, the Second Circuit affirmed by unpublished summary order. Appx. A. That Order does not rely on or adopt the district court's opinion at all. Instead, the court of appeals found this case “not meaningfully distinguishable” from two recent appellate cases, one in the Second Circuit and the other in the Third. Appx. A2, citing Browne v. United States, 176 F.3d 25 (2nd Circuit 1999), cert. denied, No. 99-632 (January 18, 2000), and Adams v. Commissoner, 170 F.3d 173 (3rd Circuit 1999), cert. denied, No. 99-798 (January 18, 2000). Rehearing was denied. Appx. C.
Because this case was decided on motion under Federal Rules of Civil Procedure 12(b)(6), this Statement recites the facts as alleged in the complaint, which must be taken as true for purpose of these proceedings, as they should have been in the courts below. Sutton v. United Air Lines, Inc., 527 US 471, 119 S.Ct. 2139, 2143 (1999) (citing United States v. Gaubert, 499 US 315, 327 (1991)); Davis v. Monroe County Board of Education, 526 US 629, 119 S.Ct. 1661, 1666 (1999).
The total amount of delinquent tax for the two years involved in this case was about $7950, while the penalties assessed and then seized totaled about $1465, approximately another 18%. The penalty amounts which petitioner sought to recover by this refund action had been collected from her by levy, along with the principal amount of taxes due. The IRS deemed them delinquent, because in obedience to her Quaker religious conscience, she had refused to pay them to the IRS voluntarily. Petitioner had filed a timely and accurate tax return for each year, accompanied by a letter fully explaining her position. Instead of making payment to the Internal Revenue Service, however, she had placed the full amounts due in an escrow account managed by her Quarterly Meeting of the Religious Society of Friends, in trust for the United States, as her letters disclosed. Disregarding this arrangement, the IRS later collected the taxes by levy, along with penalties and interest, from petitioner's own bank account. Before suing, she sought refunds through all available administrative channels on the grounds pursued here, but these were refused.
The complaint alleged that beginning in 1981, for tax year 1980, petitioner Packard has been unable to pay federal income taxes on a voluntary basis. She is prevented from doing so by her deeply-held religious conviction that Christ's advice to “love your enemies” and to “do good to those who hate you,” Luke 6:27, combined with the Ten Commandments admonition not to kill, Exodus 20:13, forbids her from paying any tax that will be expended in whole or in part for war or the preparation for war.
Petitioner did not seek a refund of the principal amount of tax collected, but only of the penalties, averring that her sincere religious principles:
afford a reasonable cause for her late payment of tax to the Internal Revenue Service, particularly because the plaintiff voluntarily deposited the full amount of taxes due, on or before the due date for payment, in an escrow fund which will turn the money over to the IRS should the government make an accommodation of the plaintiff's religious scruple.
CA2 App. 11a, 15a, referring to IRC § 6651(a). Further, she alleged that her religiously-grounded conduct in relation to taxes constitutes “an unusual circumstance which make[s] it against equity and good conscience for the IRS to impose a penalty for her failure to pay estimated tax,” quoting IRC § 6654(e)(3)(A).
On the basis of these averments, petitioner's complaint set forth two claims for relief, both statutory: that she was entitled to a refund of the penalties under the terms of the Internal Revenue Code itself, read in the light of well-established First Amendment Free Exercise principles, and that she was entitled to the same relief under the Religious Freedom Restoration Act, 42 USC § 2000bb et seq. In the latter connection, the complaint specifically alleged that the “imposition of penalties pursuant to 26 USC § 6651(a)(2) for late payment for taxes, and pursuant to 26 USC § 6654 for underpayment of estimated tax, are not the least restrictive means for the government to further its interest in the collection of taxes from” her.
The United States District Court for the District of Connecticut had subject matter jurisdiction of this case under 28 USC § 1346(a)(1) and 26 USC § 7422(h)(3), in that the complaint sought a refund of income tax penalties, as authorized by id. § 7422. Jurisdiction in the court below rested upon 28 USC § 1291.
1. The decisions of the courts below depart from this Court's precedent in allowing a civil complaint to be dismissed under Rule 12(b)(6) despite well-pleaded allegations satisfying the elements of a statutory claim, on a basis that the Act requires the defendant-government, not the plaintiff-individual, to plead and prove. The result is effectively to exempt the Internal Revenue Service from compliance with the Religious Freedom Restoration Act in its decisions whether to waive discretionary penalties.
The decision of the court below, affirming the district court's Rule 12(b)(6) dismissal of petitioner's tax refund complaint, conflicts with the burden of proof imposed on the government under the Religious Freedom Restoration Act (RFRA), 42 USC § 2000bb et seq., as construed by this Court in City of Boerne v. Flores, 521 US 507, 534 (1997). It also conflicts with this Court's decision in Gomez v. Toledo, 446 US 635 (1980), which holds that when a statute allocates the burden of proof on a fact-laden issue to the defendant, making the point an affirmative defense, a complaint may not be dismissed under Federal Rules of Civil Procedure 12(b)(6) on the basis of that defense.
RFRA imposes a general ban on governmental burdening of religious exercise (42 USC § 2000bb-1(a); Statutes Involved, at 2 ante) but defines an “exception” under which a federal agency may “demonstrate” (with “evidence,” id. § 2000bb-2(3)) that any infringement on religious exercise constitutes the “least restrictive means” of furthering a “compelling governmental interest.” Id. § 2000bb-1(b). This “exception” is plainly in the nature of an affirmative defense, consistent with the general rule for construction of federal statutes. Yet the government never satisfied its resulting burden of pleading under Federal Rules of Civil Procedure 8(c), much less its statutory burden of proof. This petition for certiorari should be granted in order to clarify that the IRS is not entitled to any special exemption either from the Rules of Civil Procedure or from generally-applicable laws of the United States.
In defiance of the Congressional mandate, the court below followed the opinion of another circuit (reviewing a decision after trial) which brushed off the statutory command that respondent “demonstrate” compliance with the governing legal standard as a merely “rhetorical question.” Appx. A2, following Adams v. Commissoner, 170 F.3d 173, 179 (3rd Circuit 1999). It likewise followed its own published precedent (reviewing a judgment on the pleadings) which denied a similar RFRA claim without any reference to the statutory language at all. See Browne v. United States, 176 F.3d 25, 26 (2nd Circuit 1999), followed at Appx. A2. Neither of those precedents could have determined the proper disposition of a Rule 12(b)(6) case, even if they had not both misapplied RFRA.
Judge Noonan has aptly summarized some of RFRA's salient points:
The statute goes beyond the constitutional language that forbids the ‘prohibiting’ of the free exercise of religion and uses the broader verb ‘burden’: a government may burden religion only on the terms set out .... [Moreover, t]here is an unusual statutory incorporation of two decisions of the Supreme Court, to which Congress refers as guides to the purposes of the statute. ... [In addition, i]f there is a substantial burdening of a person's exercise of religion, the government must meet two tests. [1st] The government must ‘demonstrate’ that the application of the burden to this particular person furthers ‘a compelling governmental interest.’ [2d] The government must ‘demonstrate’ that this application ‘is the least restrictive means of furthering that compelling governmental interest.’ [Finally, w]hat is meant by ‘demonstrate’ is explicitly defined in terms of the government's burdens ‘of going forward with the evidence and of persuasion.’
United States v. Bauer, 84 F.3d 1549, 1558 (9th Circuit 1996). The beliefs which have led petitioner not to pay federal income tax voluntarily are indisputably religious in nature. See 42 USC § 2000bb-2(4) (“exercise of religion” under RFRA is same as under Constitution); Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 US 520, 531 (1993) (discussing constitutional meaning of “religion”). At the core of petitioner Packard's religious belief is the fundamental tenet of Quaker theology that there is “that of God” in every person; she must therefore renounce all preparation for war. Petitioner's nonpayment of income tax is thus a mandated exercise of her religious beliefs, not a mere personal choice. Compare Appx. B2.
Petitioner has not disputed the established principle that the government has a compelling interest in collecting taxes. See United States v. Lee, 455 US 252, 260 (1982); Hernandez v. Commissoner of Internal Revenue, 490 US 680, 699-700 (1989); cf. Hamilton v. Board of Regents, 293 US 245, 266 (1934) (Cardozo, Brandeis and Stone, JJ., concurring). The issue here is the government's avoidance of its duty to “demonstrate,” that is, to prove by evidence, that it has employed the means of accomplishing that objective which are least restrictive of petitioner's religious liberty. While penalizing sincere religious objectors like petitioner may theoretically further the governmental interest in tax collection, the respondent -- by definition on its motion to dismiss -- did not prove that adding civil penalties to the amount of tax which is forcibly collected following petitioner's refusal of voluntary compliance is the least restrictive means of furthering its legitimate interest.
The Act calls upon federal courts and agencies to apply “the compelling interest test as set forth in Sherbert v. Verner, 374 US 398 (1963) and Wisconsin v. Yoder, 406 US 205 (1972) ....” 42 USC § 2000bb(b)(1). The Sherbert and Yoder decisions, which RFRA particularly endorses and “incorporat[es]” (Bauer, 84 F.3d at 1558), are among this Court's most sympathetic decisions toward Free Exercise claims. It cannot be accidental that Congress chose those decisions to mention in the RFRA statement of purpose. “Requiring a State to demonstrate a compelling interest and show that it has adopted the least restrictive means of achieving that interest is the most demanding test known to constitutional law.” City of Boerne v. Flores, 521 US 507, 534 (1997).
Under RFRA, a court cannot simply follow indiscriminately the holdings of any case decided before 1990 that rejected any sort of religious objection to any part of the federal tax system. The legislative history of the Act specifies that RFRA neither “approves nor disapproves of the result in any particular court decision involving the free exercise of religion.” H. Rep. 103-88, 103rd Congress, 1st Session 7 (1993); accord, S. Rep. 103-111, 103rd Congress, 1st Session 9 (1993). Yet the court below followed a ruling that constitutional case law, decided under a different legal standard prior to RFRA's enactment, “dictated” its ruling. Adams, 170 F.3d at 180, adopted at Appx. A2. What a statute means and requires is what the statute says; when the courts apply a statute, they must do so according to its terms. See, e.g., Hughes Aircraft Company v. Jacobson, 525 US 432, 142 L.Ed.2d 881, 119 S.Ct. 755, 760 (1999). That meaning is not set forth either in committee reports or in an amorphous body of “pre-Smith case law.” Appx. A2, adopting 170 F.3d at 179 (referring to Employment Division v. Smith, 494 US 872 (1990)).
The Adams panel's holding, summarily adopted by the court below, “that appellee was not required to produce evidence under the ‘least restrictive means’ prong of RFRA in order to prevail,” id. at 180, is directly contrary to the statutory language. 42 USC §§ 2000bb-1(b), 2000bb-2(3); Statutes Involved, ante at 3. In the context of the instant case, it thus violates Rule 8(c) and constitutes an abuse of the Rule 12(b)(6) procedure.
By defining the term “demonstrates” in RFRA to mean “meets the burden of going forward with the evidence and of persuasion,” 42 USC § 2000bb-2(3) (emphasis added), Congress legislated against courts' accepting mere argument in lieu of proof of government claims of inability to accommodate religious objections to compliance with generally applicable legal obligations. Yet in support of a motion to dismiss under Rule 12(b)(6), argument is all the respondent could offer. The lower courts were bound to accept as true all the well-pleaded averments of the complaint. Sutton v. United Air Lines, Inc., 527 US 471, 119 S.Ct. 2139, 2143 (1999); Davis v. Monroe County Board of Education, 526 US 629, 119 S.Ct. 1661, 1666 (1999). Petitioner's complaint pleaded that the imposition of civil tax penalties substantially burdened her exercise of religion. Under RFRA, this alone was enough to avoid dismissal under Rule 12(b)(6). Gomez v. Toledo, 446 US 635, 640 (1980).
For procedural reasons at least, RFRA's statutory structure dictated a result contrary to that reached below. In the procedural posture for disposition of the case that it sought, a Rule 12(b)(6) motion, respondent should not have been allowed to advance its affirmative defense of inability to achieve its compelling interest in tax collection through any less restrictive means. Only if the defendant pleads under Rule 8(c) that it has a compelling governmental interest and that it cannot fulfill that interest by any means less restrictive of the plaintiff's religious liberty than the one complained of is the “least restrictive means” issue placed before the court. Under the Rules, no response to an affirmative defense is required; that governmental claim is deemed automatically denied. Federal Rules of Civil Procedure 8(d). The case must proceed to trial, or at least to summary judgment.
That petitioner anticipated this defense, by pleading her willingness to accept any of a number of reasonable accommodations, did not remove respondent's obligation to plead its position under Rule 8(c). Vance v. Terrazas, 444 US 252, 269 n.11 (1980). Courts have a responsibility to apply RFRA's statutory “least restrictive means” test in a meaningful way, and the Rules of Civil Procedure must not be ignored so as to excuse the government from bringing forth evidence, at least, that the various less restrictive means suggested by petitioner Packard herself are not feasible. See Leatherman v. Tarrant County Narcotics Intell. and Coord. Unit, 507 US 163 (1993) (federal civil procedure pleading rules allow no exception for civil rights cases).
The courts below failed in their duty to enforce the plain language of the statute and rules when they upheld the respondent's mere assertion that so-called “voluntary compliance” -- an oxymoron in the case of a religious objector -- constitutes the “least restrictive means” of accomplishing its compelling objective of tax collection. Appx. A2, adopting Browne, 176 F.3d at 26. Indeed, “voluntary compliance” is not even an option for obtaining petitioner's taxes; in the exercise of her religious beliefs, she cannot pay voluntarily.
The issue the government tried impermissibly to raise under Rule 12(b)(6) in this case, which the courts below could not address under RFRA in the posture of a dismissal motion, is whether forcible collection with added penalties is the means of accomplishing the government's objective -- timely collection of the principal tax amount -- which is “least restrictive” of petitioner's religious liberty. Indeed, this cannot be so, since the IRS could set out to collect the overdue tax by levy (as it eventually always does) while exercising its statutory discretion to waive the civil penalties. Compulsory collection without added financial penalties is necessarily less restrictive of petitioner's free exercise than collection of a larger amount.
If the legislative history of RFRA proves anything, it is that no government agency is outside the obligation to comply with RFRA. The committee reports, House and Senate, expressly discuss the application of RFRA to the military, for example, as well as to prisons. H. Rep. 103-88, 103rd Congress, 1st Session 8 (1993); S. Rep. 103-111, 103rd Congress, 1st Session 9-12 (1993). Maintaining the national defense, according to the policies of Congress and the Administration, has always been considered a “governmental interest” of the most “compelling” kind; so has prison administration, to an only slightly lesser degree. These considerations had led this Court to require judicial deference and a lesser standard when religious rights were infringed in these contexts. See H. Rep. 103-88, at 7-8, discussing Goldman v. Weinberger, 475 US 503 (1986), and O'Lone v. Shabazz, 482 US 342 (1987).
Yet the legislative history confirms what the plain language states, that RFRA applies to all federal agencies, whether they be military branches or the IRS. 42 USC §§ 2000bb-2(1) (definition of “government”), 2000bb-3(a) (applicability to all agencies and departments). The Internal Revenue Code is thus not the only statute that the IRS must obey; RFRA is another and is equally binding. The Court's previous view that the devising of exceptions in tax matters is exclusively a legislative function (see Hernandez v. Commissoner, 490 US at 700), must give way to the directive of Congress itself in RFRA where the conflict is genuinely religious.
This Court's conclusion in United States v. Lee that “the tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates the religious belief,” 455 US at 260, is not controlling. RFRA places the burden on the government to “demonstrate” that it has no way to satisfy its compelling interest without “substantially burdening” the exercise of an individual's religious beliefs. The example in Lee itself is quite apt.
The Court held in Lee that the Free Exercise Clause did not give the Amish farmer and carpenter employees involved in that case, who were outside the protection of IRC § 1402(g), a right not to participate in the Social Security system. Justice Department lawyers argued, and this Court accepted in that 1982 case, that no further exemption for the Amish than then existed could be allowed without risking the fiscal soundness of Social Security. But this proved false in fact. In the 1988 Tax Bill, Congress enacted the precise additional exemption that the Lee Court had held unnecessary, or even impossible. Pub.L. 100-647, § 8007 (October 22, 1988), adding new 26 USC § 3127. This tale illustrates the difference between the standard under the Free Exercise Clause (even as sometimes construed before Smith) and that under RFRA. Congress legislated in RFRA against courts' accepting mere argument in lieu of proof of government claims of inability to accommodate.
In accepting the respondent's RFRA-defeating approach, the courts below rendered a decision in conflict with the statutory mandate. Petitioner's case well illustrates how the same religion-based claim can give rise to both a First Amendment Free Exercise argument, as described under Point 2 below, and a statutory RFRA argument. Contrary to the approach taken summarily by the court below, these two types of claims call for distinct lines of analysis and impose different burdens on the parties. Certiorari should be granted to enforce the Federal Rules of Civil Procedure in the context of RFRA's statutory language and to uphold the Congressional policy that federal government agencies meet a burden of proof under the “least restrictive means” test before unnecessarily burdening the exercise of sincere religious convictions.
2. The lower courts allowed an application of the Internal Revenue Code's penalty provisions which violates this Court's binding precedent under the Free Exercise Clause, when they permitted the IRS to discriminate against religious reasons, as compared with all other equivalent impediments to individual compliance with a generally applicable law.
Even if the Religious Freedom Restoration Act did not, for whatever reason, bar a Rule 12(b)(6) dismissal in this case, the court below also ignored this Court's cases construing the Free Exercise Clause of the First Amendment when it upheld the rejection of petitioner Packard's district court refund action. Seeking an even-handed application of the statutory penalty waiver provisions, petitioner relied on the Internal Revenue Code and regulations themselves, read in the light of constitutional doctrine. This Court should grant certiorari to clarify the application of the Free Exercise equal-treatment doctrine in the present context.
Rather than address the constitutional issue, the court of appeals relied on its prior decision in Browne, 176 F.3d at 26, and that of the Third Circuit in Adams, 170 F.3d at 180-82, and summarily affirmed the district court's dismissal. The circuit precedent which the court below followed both misstates the nature of petitioner's religious objection and conflicts with settled doctrine. In that prior case, the court held:
The [plaintiffs'] First Amendment claim fails because they are required to comply with the tax laws despite religious-based disagreement with the allocation of certain funds. ... Furthermore, they are not entitled to force the IRS to levy the taxes due at additional time and expense.
Browne v. United States, 176 F.3d at 26, adopted at Appx. A2. Petitioner's claim is not predicated on a “religious-based disagreement with the allocation of certain funds,” although she may well harbor such “disagreement.” Rather, it is based on the law's compulsion that she act in a manner which is precluded by her exercise of religion -- in other words, that she “voluntarily” pay for military activities and war preparation.
The decision of the court below also missed the mark in its Free Exercise rationale. In Adams, the Third Circuit relied on a “body of case law related to war tax protesters,” 170 F.3d at 181, referring to cases cited id. at 178, none of which involved equal-treatment challenges to the refusal to waive or abate penalties. Even if petitioner had no legal “excuse,” id., for refusing to pay without accommodation (as those cases all held, for various reasons), that says nothing about waiver of these waivable civil penalties.
The court below failed to follow this Court's cases interpreting the Free Exercise Clause of the First Amendment when it affirmed the district court's dismissal of the petitioner's complaint as having failed to state a claim on which relief could be granted, even though she alleged that the IRS failed to give equal consideration to her religious convictions as it gives to other individual circumstances that prevent compliance with federal income tax obligations.
Congress allows the penalty for late payment of tax to be waived, in the discretion of the Commissioner, where there is “reasonable cause.” 26 USC (IRC) § 6651(a)(1). Likewise, the penalty for failure to make quarterly estimated payments is waivable when the omission was due to an “unusual circumstance” which makes it “against equity and good conscience” to impose that penalty. Id. § 6654(e)(3)(A). The Third Circuit case relied on by the court below held that because the regulations in question were “uniform and facially neutral,” Adams, 170 F.3d at 181 n.10, they did not allow the sort of “individual exemption” discussed in Employment Division v. Smith, 494 US 872, 884 (1990) (quoting Bowen v. Roy, 476 US 693, 708 (1986) (plurality), explaining Sherbert v. Verner, 374 US 398 (1963)). Browne, the “controlling” Second Circuit case, Appx. A2, did not even address this issue, citing instead a different point from Smith, rejecting an argument that petitioner never advanced. This Court should grant a writ of certiorari to correct the lower courts' serious misunderstanding of precedent and deviation from an important aspect of First Amendment Free Exercise doctrine.
In Sherbert v. Verner, a Seventh Day Adventist had been denied unemployment insurance benefits, because she refused to work on Saturdays, her sabbath. The South Carolina law under which she was refused provided that:
to be eligible for benefits, a claimant must be “able to work and ... is available for work”; and, further, that a claimant is ineligible for benefits “[i]f ... he has failed, without good cause ... to accept available suitable work when offered him by the employment office or the employer ....”
374 US at 400-01. This Court reversed the denial of benefits on the basis that the state's rejection of her claim was not the “least restrictive means” of achieving a “compelling governmental interest.”
In Smith, the Court determined that it would no longer adhere to that formulation as a general statement of Free Exercise principle. 494 US at 878-79. The Court affirmed, however, a different rationale for the judgment in Sherbert and the cases which follow it:
[O]ur decisions in the unemployment cases stand for the proposition that where the State has in place a system of individual exemptions, it may not refuse to extend that system to cases of “religious hardship” without compelling reason.
Smith, 494 US at 884, quoting Bowen v. Roy, 476 US at 708 (1986) (plurality). Because Congress has mandated the same sort of “system of individual exemptions” from certain tax penalties, the equal-consideration rationale of Bowen v. Roy applies to this case. The Free Exercise Clause therefore forbids the Internal Revenue Service from “refus[ing] to extend” its individualized system of waivers of penalties for late payment and failure to estimate to cases involving “religious hardship,” such as this one. The court below utterly ignored that binding rule when it affirmed the district court's dismissal of the petitioner's complaint as having stated no claim upon which relief could be granted.
The civil penalty provisions involved in this case provide that no penalty shall be imposed for late payment if such lateness is “due to reasonable cause and not due to willful neglect,” IRC §§ 6651(a)(1), and that no estimated tax penalty shall be imposed if the Secretary determines that “by reason of ... unusual circumstances the imposition of such addition to tax would be against equity and good conscience.” IRC § 6654(e)(3)(A). As with the unemployment insurance standard discussed in Sherbert, even though these Tax Code provisions are “generally applicable, [and] religion-neutral,” Smith, 494 US at 886, they create a “system of individual exemptions.” Roy, 476 US at 708. Respondent may “not refuse to extend that system to cases of ‘religious hardship’ without compelling reason.” Id. By choosing to respond to this case by moving to dismiss, respondent necessarily failed to demonstrate any such reason.
Indeed, under the terms of the implementing regulation, waiver of this penalty was mandatory in petitioner's case, unless discrimination against religious reasons is authorized: “A taxpayer will be considered to have exercised ordinary business care and prudence if [s]he made reasonable efforts to conserve sufficient assets in marketable form to satisfy h[er] tax liability and nevertheless was unable to pay ... the tax when it became due.” Treas.Reg. (26 C.F.R.) § 301.6651-1(c)(1) (emphasis added); Appx. D6. Petitioner's consistent practice of depositing the full amount of tax shown on her return in the Quaker escrow account, which she fully disclosed to the IRS, thus demonstrates “ordinary business care and prudence” in just the way that the regulation views that concept.
Accepting the averments of her complaint as true, the petitioner also stated a claim for a “reasonable cause” waiver of the late payment penalty on the alternate basis of “undue hardship.” Treas. Reg. § 301.6651-1(c)(1) (“failure to pay will be considered to be due to reasonable cause to the extent that the taxpayer has made a satisfactory showing that he ... would suffer an undue hardship (as described in § 1.6161-1(b) of this chapter) if he paid on the due date.”); Appx. D5. As explained in Treas.Reg. § 1.6161-1(b), “‘undue hardship’ means more than an inconvenience”; rather, the hardship must be at least equivalent to a “substantial financial loss, for example ....” Appx. D3. Being forced by the government to abandon the exercise of one's religion easily meets any objective standard of “undue hardship.”
Only the respondent's improper refusal to consider religious reasons on an equal footing with other personal reasons could support the IRS refusal to waive these penalties in petitioner's case. See Treas. Reg. § 601.106(b) (“the appeal procedures do not extend to cases involving solely the failure or refusal to comply with the tax laws because of moral, religious, political, constitutional, conscientious, or similar grounds”); accord, Int.Rev.Man. 22.214.171.124.5; Appx. D7, D10.
Whatever the legitimacy of the IRS's predetermined refusal to consider “moral, ... political, constitutional, conscientious, or similar grounds” for noncompliance which are not “religious,” the Free Exercise Clause invalidates its categorical exclusion of that specially protected category from at least equal consideration. Bowen v. Roy, 476 US at 708. See also Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 US 520, 542-43 (1993).
The respondent's own Internal Revenue Manual (“IRM”), designed to guide IRS agents in making these determinations, emphasizes the general flexibility of the regulatory standard in all other cases. See IRM 1218, Policy Statement P-2-7; IRM 126.96.36.199.1(1),(3)1,(5); IRM 188.8.131.52.1.1(1); IRM 184.108.40.206.1.2(1); IRM 220.127.116.11.3(2)1. These portions of the IRM are reproduced in Appendix D8-D12. The Manual lists several situations in which penalties are not to be asserted or should be abated, even though a taxpayer has consciously decided not to pay tax.
For example, hardship imposed by the death of a family member is recognized as reason enough not to impose a penalty for late payment. Policy Smt. P-2-7, example (1); accord, IRM 18.104.22.168.1.2.4. This example is not based on any sort of physical impossibility. A taxpayer whose father dies and who does not pay on time so that she may attend the funeral, or because she is too distraught, has made a conscious decision, although under pressing circumstances, that attending to funeral-related concerns is more important than timely payment of tax.
In this case, the petitioner's complaint properly alleged that her “religious beliefs ... prevent her from voluntarily paying a tax, any part of which is expended for war or the preparation for war.” CA2 App. 11a, 15a. As construed by this Court, the “principle underlying the IRS regulations and practices” under the “reasonable cause” standard is “that a taxpayer should not be penalized for circumstances beyond his [or her] control ....” United States v. Boyle, 469 US 241, 248 n.6 (1985). Unless action compelled by religious convictions is categorically excluded from this waiver provision, the district court's dismissal of petitioner's complaint for failure to state a claim on which relief could be granted, affirmed by the court of appeals, was erroneous, because petitioner was without fault in her late payment.
The Internal Revenue Code also provides discretionary authority to waive the civil penalty for failure to pay estimated tax. That section provides that “No addition to tax shall be imposed ... to the extent the Secretary determines that by reason of ... unusual circumstances the imposition of such addition to tax would be against equity and good conscience.” 26 USC § 6654(e)(3). Petitioner's religious beliefs, coupled with the requirement of her Quaker religion that she act in accordance with that leading, are all too “unusual,” as they have always been since the founding of the Religious Society of Friends in 1650. The American tradition of tolerance and respect for religious conscience surely makes it “against equity and good conscience” to penalize her for adhering to those beliefs and acting accordingly in relation to her income tax obligations. By affirming the district court's dismissal of petitioner's complaint, the court of appeals improperly relieved the respondent from its constitutional duty under the rationale of the Roy plurality, as endorsed by the majority in Smith.
The court below missed a truly fundamental point in following the Third Circuit decision which refers to “civil disobedience” as constituting only a “slightly different context” from religious convictions that prevent compliance with a legal obligation of general applicability. See Appx. A2, approving Adams, 170 F.3d at 182. It is not a form of “civil disobedience” to request a fair application of the exemptions from penalty that Congress has enacted. Laws which interfere, in particular cases, with religious exercise cannot be casually brushed off by reference to “sincerely felt political and religious beliefs” which may require “facing the consequences.” Id. One of those “consequences,” under the Constitution and laws of the United States, cannot be the refusal of government agencies to apply discretionary penalty waivers that are triggered by a showing of “reasonable cause.”
Whether resolved by a holding under a straightforward construction of the Internal Revenue Code that religious inability to comply is itself a “reasonable cause” to refrain from adding penalties to a tax delinquency, or by holding that the addition of penalties is itself unnecessarily restrictive of religious liberty under RFRA, or by applying a First Amendment equal treatment principle, the district court's decision that the petitioner failed to state a claim on which relief could be granted should have been reversed. A writ of certiorari should be granted to correct the lower courts' departure from this Court's settled precedent under the Free Exercise Clause.
For the foregoing reasons, petitioner ROSA COVINGTON PACKARD prays that this Court grant her petition for a writ of certiorari and reverse the judgment below.
- Respectfully submitted,
- PETER GOLDBERGER Counsel of Record
- JAMES H. FELDMAN, JR.
- 50 Rittenhouse Place Ardmore, PA 19003-2276 (610) 649-8200
- Attorneys for Petitioner
- February 17, 2000.
-  Respondent also moved pursuant to Federal Rules of Civil Procedure 12(b)(1) to dismiss petitioner's claim for a refund of interest payments, asserting lack of subject matter jurisdiction under 26 USC § 6404(g). Petitioner abandoned that claim.
-  Where the district court failed to adhere to this rule in its decision, those errors are footnoted in this Statement or discussed in the Reasons which follow.
-  The district court's memorandum decision asserts, apparently intending a pejorative implication, that petitioner did not explain her position on her tax returns but rather “simply silently refused to pay her taxes.” Appx. B4 n.3; 7 F.Supp. at 145. This accusation is contrary to the facts alleged in the complaint, which the lower court was bound to accept for purposes of ruling on the motion under Rule 12(b)(6). As the complaint states, she always sends an explanatory letter along with her return. Of course, to a Quaker, it is not necessarily a criticism to be accused of exercising her religion “silently.”
-  Under the terms of the Peace Tax Escrow Fund of the Purchase Quarterly Meeting of the Religious Society of Friends:
Tax money placed in the Fund would be voluntarily surrendered to the United States government whenever, but only if, that money could be placed in an account that supported only non-military spending, or if it could be earmarked and directed to accounts assigned to the support of non-military expenditures.
Ms. Packard received no financial benefit from money she deposited in the Fund.
Interest income generated from money deposited in the Fund is used by the Meeting “for life-affirming activities which may remove the occasion for war.”
Any money Ms. Packard deposited in the fund could be returned to her only to replace money the government subsequently seized from her to cover taxes it claimed she owed. (CA2 App. 7a)
-  Some translations have “persecute” rather than “hate.”
-  There is no civil penalty literally applicable to a complete failure to pay income tax; the penalty is for late payment. Measured as 0.5% per month of “the amount shown as tax on any return” until certain notices are issued, and then at 1% per month, id. § 6651(d), the penalty reaches its maximum level of 25% after about 2 to 4 years. Id. § 6651(a)(2). Thus, in effect, the civil penalty for failure to pay federal tax at all is an addition of 25% of the tax amount. Forced collection from petitioner has never taken as long as two years.
-  See Corning Glass Works v. Brennan, 417 US 188, 196-97 (1974) (Fair Labor Standards Act); Scher v. United States, 305 US 251, 254 (1938) (exception in criminal prohibition “affords matter for affirmative defense”); cf. Automatic Canteen Company v. FTC, 346 US 61, 75 (1953) (Frankfurter, J.: “burden of showing a justification” is ordinarily “on the one who claims its benefit”).
-  Judge Noonan's comprehensive, scholarly study of the central role of religious freedom in the American constitutional system, The Lustre of Our Country: The American Experience of Religious Freedom, was published in 1998. The first words in Judge Noonan's book refer to the murderous persecution of Quakers for adhering to their beliefs in early New England, and he writes compellingly of those terrible days. Id. at 51-54.
-  While not all Quakers refuse to pay federal income taxes voluntarily, this fact does not lessen the protection available to the petitioner. See Frazee v. Illinois Department of Employment Security, 489 US 829 (1989) (individual's religious belief need not be church doctrine); Thomas v. Review Board, 450 US 707, 715-16 (1981) (fact that some Jehovah's Witnesses will work on military production does not diminish religious nature of petitioner's refusal); Sasnett v. Sullivan, 91 F.3d 1018, 1022 (7th Circuit 1996) (Posner, Ch.J.) (religious practice need not be mandated for all adherents of religion for individual's exercise to be “substantially burdened” under RFRA).
-  In fact, it is difficult to believe that the expense of forcible collection from those who cannot pay voluntarily on account of their religious pacifism really exceeds the sum ultimately collected. A recent study concludes that the enactment of a specific conscientious objector provision for such individuals would result in a slight revenue increase to the Treasury. Marjorie E. Kornhauser, For God and Country: Taxing Conscience, 1999 Wisc. Law Rev. 939, 943 n.18 (“revenues would increase because many war tax resisters would pay taxes that they currently do not pay”); see Religious Freedom Peace Tax Fund Bill, H.R. 2660, 105th Congress.
-  Since the validity of that defense is likely to be the issue on which the case turns, however, the court may wish to order a reply under Rule 7(a). See Crawford-El v. Britton, 523 US 574, 140 L.Ed.2d 759, 779, 118 S.Ct. 1584, 1596 (1998); 5 Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 1185 (1990). If an averment of inability to accommodate is denied, however, either automatically or factually in a reply, neither a motion under Rule 12(b)(6) nor a motion for judgment on the pleadings under Rule 12(c) could properly be granted in a RFRA case.
-  The requirement of collecting income tax from petitioner involuntarily itself results solely from respondent's total refusal, in arguable violation of RFRA, to accommodate petitioner's religious scruples against paying income tax into the General Fund. The petitioner does not raise that issue in this case, however.
-  The need to collect forcibly at all, and thus the added cost to the government, could also be avoided if respondent would offer petitioner any form of accommodation with respect to the application of her payments, even a method as simple as how it handles taxpayers who check off that they want $3 to go to the Presidential Election Campaign Fund. See 26 USC §§ 6096 (taxpayer choice), 9006(a) (transfers to Fund).
-  The issue of adding interest at the ordinary rate, while challenged in the district court, was not pursued on appeal, and is no longer presented by this case.
-  See Frazee v. Illinois Department of Employment Security, 489 US 829 (1989); Hobbie v. Unemployment Appeals Comm'n, 480 US 136 (1987); Thomas v. Review Board, 450 US 707 (1981).
-  In Ehlert v. United States, 402 US 99, 105 (1971), this Court expressly declined to “take sides in the somewhat theological debates about the nature of ‘control’ over one's own conscience” that had been addressed by certain lower court decisions under the draft law. The Court ruled that a post-induction opportunity to seek discharge from the Army as a conscientious objector, without having to bear arms within the military while pursuing that discharge, justified the Selective Service System in refusing to hear COs claims that “crystallized” after receipt of an induction notice, despite a procedure calling for cases to be reopened based on the emergence of circumstances that were “beyond [the draftee's] control.” See United States v. Jenkins, 420 US 358, 361-62 (1975). The issue of whether a person's religious beliefs are within her “control” need not be decided here either, because the Treasury Regulations and IRS Manual do not exclude difficult choices from the “reasonable cause” standard.
-  In our system, “civil disobedience” must be understood as action in violation of “formally binding general law,” on the basis of principle, and then only when undertaken “without challenging the validity of the law.” Alexander M. Bickel, The Morality of Consent 99 (1975).
-  For the same reasons, penalizing petitioner additionally for her failure to pay on the basis of religious principle, an obviously “unusual circumstance,” would a fortiori be “against equity and good conscience.” IRC § 6654(e)(3).