November 2, 2000 | Read Time: 2 minutes
By GRANT WILLIAMS
The U.S. Tax Court has ruled that the I.R.S. was right to refuse to grant charity status to a Mississippi organization, the Nationalist Foundation, that was formed to become, in the court’s words, the legal and educational arm of “rightist and pro-majority Americans.”
The Nationalist Foundation told the government that it will work to advance American freedom, democracy, and nationality in part by conducting seminars on the Internet and by trying to “save” neighborhoods from minority groups’ moving in by taking legal action.
The actions of the Nationalist Foundation “are designed to counteract the work of organizations such as the N.A.A.C.P. Legal Defense Fund and the American Civil Liberties Union,” according to the court, which said that the foundation characterized the other groups as “the leftist threat to our liberties.”
In its ruling, the Tax Court said that the Nationalist Foundation had provided the government with few details of its activities, which the court said “fall outside of the definitions of ‘charitable’ and ‘educational,’” and had attempted to “countermand and withdraw” some of the details it had originally offered.
What’s more, the court said that some of the group’s explanatory materials contain “distortions of fact,” which is a factor contained in a policy that the I.R.S. uses to decide if organizations are operated exclusively for educational purposes.
The policy, Revenue Procedure 86-43, is a “methodology test” that lists criteria for examining the way groups develop and present their views. For example, an organization also might not be educational if “the presentation of viewpoints unsupported by a relevant factual basis constitutes a significant portion of the organization’s communications.”
The Tax Court noted that it had declared the Internal Revenue Service policy to be constitutional in a similar 1994 case and that it saw no reason “to change the analysis” based on the challenge by the Mississippi group (Nationalist Foundation v. Commissioner of Internal Revenue, T.C. Memo. 2000-318).
