Charity Not Required to Disclose Donor Information

Charity Not Required to Disclose Donor Information

News story posted in U.S. District Court on 19 August 1999| comments
audience: National Publication | last updated: 18 May 2011
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Summary

In, Stanbury Law Firm, P.A. v. IRS84 AFTR2d Par. 99 -5118; No. 98-2598 MJD/JGL (June 29, 1999), a United States District Court granted the IRS' Motion to Dismiss an action to compel the IRS to disclose the names of a public charity's contributors and the amounts of their respective contributions.

PGDC SUMMARY:

In September 1998, the Plaintiff requested from the Page Education Foundation ("Foundation"), a public charity, the names of its contributors for the fiscal year 1997. When the Plaintiff did not receive a response from the Foundation, it submitted a request for such information to the IRS pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. section 552. After not receiving a response to the FOIA request, the Plaintiff filed the instant action in the United States District Court for the District of Minnesota.

The Plaintiff requested, in part, that the Court direct the IRS to disclose the Foundation's contributors and the amounts of their respective contributions during the years ending June 30, 1997 and June 30, 1998. The IRS argued that the requested information is clearly exempt from any disclosure requirement pursuant to FOIA, 5 U.S.C. section 552(b)(3), together with sections 6103(a) and 6104(b) of the Code because of the Foundation's status as a public charity. In addition, the IRS argued that the Plaintiff lacked standing to challenge the IRS' determination of whether the Foundation is a public charity or a private foundation.

The Court granted the IRS' motion to dismiss stating that the IRS met its burden of proof establishing the propriety of its actions in withholding the requested information under FOIA pursuant to 5 U.S.C. section 552(a)(4)(B). In addition, the Court noted that the Plaintiff (i) provided no authority to support the assertion that the IRS abused its discretion in denying its FOIA request, and (ii) failed to provide any evidence to suggest that the Foundation is not a public charity.

POINTS TO PONDER:

The IRS' position in this case is now strengthened by Treasury's issuance of final regulations (T.D. 8818) relating to the public disclosure requirements of section 6104(d) of the Code, which explicitly states that a public charity is not required to disclose the names and addresses of contributors to the organization.

FULL TEXT:

STANBURY LAW FIRM, P.A.,
Plaintiff,
v.
UNITED STATES INTERNAL REVENUE SERVICE,
Defendant.
UNITED STATES DISTRICT COURT
DISTRICT Of MINNESOTA
ORDER
Alfred Stanbury, Stanbury Law Firm P.A., for Plaintiff.

Stuart D. Gibson, Tax Division, Department of Justice, for and on
behalf of Defendant.

The above-entitled matter came on before the Honorable Michael J. Davis on Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

Background

In September 1998, Plaintiff contacted the administrator for the Page Education Foundation and requested the names of the contributors for the fiscal year 1997. When Plaintiff did not receive a response from the Page Education Foundation, Plaintiff submitted a request for information to the Defendant Internal Revenue Service ("IRS") pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. section 552. After receiving no response to his FOIA request, Plaintiff filed the instant action.

In this action, Plaintiff seeks an order from this Court directing the IRS to disclose the Foundation's contributors and the amounts of their respective contributions during the years ending June 30, 1997 and June 30, 1998. Plaintiff also requests an order directing the IRS to investigate whether Justice Alan Page became ineligible to be an organizer and officer of a section 501(c)(3) foundation upon his election to the Minnesota Supreme Court. Finally, Plaintiff seeks an award of reasonable attorney's fees and costs.

The IRS argues that the information Plaintiff seeks is clearly exempt from any disclosure requirements pursuant to FOIA, 5 U.S.C. section 552(b)(3), together with 26 U.S.C. section 6103(a) and section 6104(b). 26 U.S.C. section 6103(a) of the IRS Code, entitled "Confidentiality and Disclosure of Returns and Return Information," states:

Returns and return information shall be confidential, and except as authorized by this title . . . no officer or employee of the United States shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section.

26 U.S.C. section 6104(b), entitled "Publicity of Information Required from Certain Exempt Organizations and Certain Trusts," states:

The information required to be furnished by sections 6033, 6034, and 6058, together with the names and addresses of such organizations and trusts, shall be made available to the public at such times and in such places as the Secretary may prescribe. Nothing in this subsection shall authorize the Secretary to disclose the name or address of any contributor to any organization or trust (other than a private foundation, as defined in section 509(a)) which is required to furnish such information.

The IRS asserts that as the Page Education Foundation is a public charity, it is proscribed from releasing the information the Plaintiff seeks. Attachment 2 to Defendant's Memorandum in Support of Motion to Dismiss. In response, Plaintiff asserts that the IRS abused its discretion in not releasing the information sought. Plaintiff further argues that the IRS has presented no information to substantiate the classification of the Page Education Foundation as a public charity.

The IRS argues that Plaintiffs lack standing to challenge the IRS' determination of whether the Page Education Foundation is a public charity or a private foundation. The IRS further argues that this Court does not have jurisdiction to order the IRS to investigate Justice Page's status as an organizer of the Page Foundation.

Analysis

Where an agency withholds records under the FOIA, the burden of proof rests with the agency to establish the propriety of its actions, 5 U.S.C. section 552(a)(4)(B). This Court must review the agency's actions under a de novo standard. Id. The Court has reviewed the relevant law and finds that the IRS has met its burden.

Under 26 U.S.C. section 6103(a) and 6104(b), the IRS is clearly proscribed from releasing the information Plaintiff seeks because the Page Education Foundation is a public charity. Plaintiff provides the Court with no authority to support the assertion that the IRS abused its discretion in denying its FOIA request and has failed to put forth any evidence to suggest that the Page Education Foundation is not a public charity. In addition, Plaintiff offers no authority to support jurisdiction by this Court over the other issues raised in Plaintiff's complaint.

Rule 12 Order to Strike Immaterial Matter

Under Rule 12(f) of the Federal Rules of Civil Procedure, this Court has the authority to "order stricken from any pleading . . . any redundant, immaterial, impertinent, or scandalous matter." In this case, Plaintiff's complaint and brief in opposition to the IRS' motion to dismiss contain information that is not relevant to the FOIA request and that could only have been included to impugn Justice Page. Justice Page is not a party to this suit, and his conduct is not at issue here. As a result, Plaintiff's pleadings will be stricken.

Based on the file, records, and proceedings and the arguments of counsel, IT IS HEREBY ORDERED that the motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) is GRANTED. Further, based on Rule 12(f) of the Federal Rules of Civil Procedure, IT IS HEREBY ORDERED that the Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss is stricken. The Clerk of Court is hereby directed to remove such pleading from the Court file and return same to Plaintiff.

LET JUDGMENT BE ENTERED ACCORDINGLY.

Date: 6/28/99

Michael J. Davis
United States District Court

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