Catholics Win Challenge to Church’s Tax Exemption

The U.S. Catholic Church won a long-sought victory in the courts this week when a federal appeals panel here dismissed a suit filed by abortion-rights advocates challenging the church’s tax exemption.

The case began in 1981 when Abortion Rights Mobilization and 20 other individuals and groups challenged the tax-exempt status of the National Conference of Catholic Bishops and the U.S. Catholic Conference because the church agencies allegedly campaigned against pro-choice legislators in the 1980 federal elections.

The Internal Revenue Service and the Treasury Department were named as defendants in the suit. Although the bishops’ agencies were not defendants, lawyers for the plaintiffs persuaded U.S. District Judge Robert L. Carter to issue subpoenas for church documents that the plaintiffs said were necessary to make their case. When the bishops refused to turn over the documents, Carter issued an order in 1986 fining the two church agencies $50,000 each for every day they continued to refuse.

Fines Stayed

The fines were stayed pending appeals, and in June, 1988, the U.S. Supreme Court ruled that the church agencies were within their legal rights to challenge the order. The high court then sent the dispute back to the appeals court, which has dismissed the lawsuit on the ground that the plaintiffs had no legal standing to bring the complaint.

In a 2-1 ruling, the appeals panel said the plaintiffs did not suffer a “particularized injury” by the alleged actions of the church agencies and therefore could not bring their complaint.

Marshall Beil, an attorney for the plaintiffs, said, “We’re obviously disappointed, but the case is far from over.” He said he will either ask the full appeals court to review the matter or ask the Supreme Court to settle the question of standing to sue.

Archbishop John L. May of St. Louis, president of the bishops’ conference, said the court’s action “clarifies the rights of churches and other tax-exempt organizations to participate in the public debate on controversial issues free of the threat of retaliatory litigation brought by those who have different views on significant moral issues.”

‘A Vast Relief’

The National Council of Churches was one of several religious groups that filed briefs supporting the bishops’ position on the matter. The Rev. Dean M. Kelley, the council’s director of civil and religious liberties, said, “It’s a vast relief to all religious groups that they cannot be pilloried by advocacy groups that disagree with them because they are attempting to carry out their moral convictions.”

But the Rev. Robert L. Maddox, executive director of Americans United for Separation of Church and State, expressed disappointment at the way the appeals panel handled the matter.

“We are always distressed when a legitimate lawsuit like this one gets thrown out on the question of standing,” Maddox said. “We struggle with that in our own particular lawsuits, and it leaves the whole question in limbo.”