Justices Take Up Catholic Case; Calif. Workers Lose Pay Appeal : Issue Is Tax Status While Lobbying Against Abortion

The Supreme Court today agreed to decide whether a lawsuit seeking to strip the Roman Catholic Church of its tax-exempt status because of the church’s anti-abortion lobbying should go to trial.

Today’s action spares, for now, the U.S. Catholic Conference and the National Conference of Catholic Bishops from having to pay $100,000 a day in contempt-of-court fines for not surrendering information sought in the suit.

Lawyers for the church and its agencies contend that they should not be held in contempt for refusing to cooperate because the underlying lawsuit is flawed.

“Pro-choice” organizations and individuals who support the 1973 Supreme Court decision legalizing abortion sued the Internal Revenue Service and the secretary of the Treasury in 1980.

Church Not a Defendant

The church and its various entities were not named as defendants.

The suit seeks to force the government to revoke the church’s tax-exempt status, assess back taxes and order that money donated to the church may not be claimed as charitable tax deductions.

The suit says the government, by not forcing church compliance with the federal tax code’s limits on political lobbying by tax-exempt groups, is giving the church a subsidy unavailable to pro-choice groups also politically active but not tax-exempt.

An earlier attempt by the government to kill the suit was rejected without comment by the Supreme Court last year.

Church Held in Contempt

U.S. District Judge Robert L. Carter in New York City ruled that the church was in civil contempt after it refused to supply certain records to those who sued the government.

The 2nd U.S. Circuit Court of Appeals last June 4 rejected the church’s arguments that the suit should have been thrown out because those who filed it lack the proper legal standing.

By a 2-1 vote, the appeals court ruled that the church’s challenge to the contempt citation could succeed only if the trial judge “lacks even colorable jurisdiction over the underlying lawsuit.”

The appeals court then added that the suit “is more than a taxpayer effort to have the tax laws enforced and more than a taxpayer effort to complain of tax exemptions of others that might violate” the constitutionally required separation of church and state.

Plaintiffs at Disadvantage

“The plaintiffs have claimed direct, personal injury arising from the fact that the (government’s)failure to enforce the political action limitations of (the tax code)has placed the plaintiffs at a competitive disadvantage with the Catholic Church in the arena of public advocacy on important public issues,” the 2nd Circuit court said. “That is a substantial basis on which to predicate standing.”

The church’s appeal was supported by the Reagan Administration and numerous religious organizations.

Government lawyers argued that those who sued “are essentially seeking to exercise control over the executive branch’s allocation of its law enforcement responsibilities.”

“Permitting the present case to proceed to trial would encourage similar suits by third parties dissatisfied with the tax treatment of other groups with whose views they disagree,” they said.