Groups Seek Declaration of Constitutional Rights Violations

The Declaratory Judgment Act, 28 U.S.C. § 2201, provides that "[i]n a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such." Furthermore, the Administrative Procedure Act, 5 U.S.C. § 701, et seq. (APA), expressly permits "actions for declaratory judgments." 5 U.S.C. § 703.

This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, as it is a "civil action arising under the Constitution [and] laws . . . of the United States," specifically, the First and Fifth Amendments to the United States Constitution and the APA.

"Discrimination against speech because of its message is presumed to be unconstitutional." Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819, 828 (1995).

"What the First Amendment precludes the government from commanding directly, it also precludes the government from accomplishing indirectly." Rutan v. Republican Party, 497 U.S. 62, 77-78 (1990). Further, the Supreme Court has "repeatedly rejected the argument that if the government need not confer a benefit at all, it can withhold the benefit because someone refuses to give up constitutional rights." Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586, 2596 (2013). Even when the government has the authority to deny a benefit on some other ground, this "does not imply a lesser power to condition . . . approval on [the applicant's] forfeiture of his constitutional rights." Id. Stated bluntly, "the Government may not deny a benefit to a person on a basis that infringes his constitutionally protected . . . freedom of speech even if he has no entitlement to that benefit." Agency for Int'l Dev. v. Alliance for Open Soc'y Int'l, Inc., 133 S. Ct. 2321, 2328 (2013) (internal quotation marks omitted, ellipsis in original).

The tax code may not be used to "discriminate invidiously" based upon viewpoint. Regan v. Taxation with Representation of Wash., 461 U.S. 540, 548 (1983). "Denial of a tax exemption for engaging in certain speech" (including effective denial through inordinately long delay) constitutes an abridgment of speech because it "necessarily will have the effect of coercing the claimants to refrain from the proscribed speech," Speiser v. Randall, 357 U.S. 513, 519 (1958), and "to process [tax] exemption applications pursuant to different standards and at different rates depending upon the viewpoint of the applicants is a blatant violation of the First Amendment." True the Vote, 831 F.3d. at 561 (quoting Z St. v. Koskinen, 791 F.3d 24, 32 (D.C. Cir. 2015)) (internal quotation marks omitted). Yet, this is precisely what the IRS did to Plaintiffs here -- to some of them for nearly seven years.

B. Compelled Disclosure

The Supreme Court has "'repeatedly found that compelled disclosure, in itself, can seriously infringe on privacy of association and belief guaranteed by the First Amendment.' As a result, [the Court has] closely scrutinized disclosure requirements. . . ." Davis v. FEC, 554 U.S. 724, 744 (2008) (quoting Buckley v. Valeo, 424 U.S. 1, 64 (1976)). The Court in NAACP v. Alabama noted that "[i]t is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute [an] effective . . . restraint on freedom of association." 357 U.S. 449, 462 (1958). The Court also "recognized the vital relationship between freedom to associate and privacy in one's associations." Id. "Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs." Id. "Compelled disclosure of membership in an organization engaged in advocacy of particular beliefs," the Court held, is "of the same [unconstitutional] order" as requiring "adherents of particular religious faiths or political parties [to] wear identifying arm-bands." Id.

Disclosure requirements imposed by the government, whether requiring the disclosure of members in a group or of political contributions, are subjected to "exacting scrutiny." Buckley, 424 U.S. at 66. Exacting scrutiny "requires a substantial relation between the disclosure requirement and a sufficiently important governmental interest." Doe v. Reed, 561 U.S. 186, 196 (2010) (quoting Citizens United v. FEC, 558 U.S. 310, 366-67 (2010)). "To withstand this scrutiny, 'the strength of the governmental interest must reflect the seriousness of the actual burden on First Amendment rights.'" Reed, 561 U.S. at 187 (quoting Davis, 554 U.S. at 744). This test "is necessary because compelled disclosure has the potential for substantially infringing the exercise of First Amendment rights." Buckley, 424 U.S. at 66.

Crucially, challengers can prevail over an otherwise constitutional disclosure when there is "a reasonable probability that the group's members would face threats, harassment, or reprisals if their names were disclosed." Citizens United, 558 U.S. at 370; see also Reed, 561 U.S. at 200.

C. The IRS's Treatment of Plaintiffs Involved Both Unconstitutional Viewpoint-Based Discrimination and Compelled Disclosure of Constitutionally Protected Information.

In their Second Amended Complaint (Doc. 51) ("SAC"), Plaintiffs herein -- all Tea Party and/or conservative organizations -- alleged, inter alia, that the IRS discriminated against them and effectively denied them a government benefit -- i.e., tax-exempt status -- by segregating their applications for heightened scrutiny, delaying their applications for significant periods of time (several years for some Plaintiffs), and demanding unnecessary information from them, including the identity of Plaintiffs' donors, the issues of interest to them and their positions on those issues, and information about others with whom Plaintiffs were associated. See, e.g., SAC, ¶¶ 2, 280-83 (detailing the types of intrusive, unnecessary information the IRS demanded from Plaintiffs); see also, e.g., SAC, ¶¶ 127, 138, 144, 184, 193, 206, 210, 211, 224, 246, 247, 249-52, 255, 256, 259-61, 263, 266 (alleging that Plaintiffs responded to the IRS's intrusive, unnecessary information demands).

Plaintiffs alleged that such conduct by the IRS was based on Plaintiffs' names, as well as their perceived beliefs and viewpoints, particularly that they were at odds with the current administration. Id. at ¶¶ 74, 124, 142, 312. Plaintiffs further alleged that such treatment by the IRS had a dramatic impact on them, causing them to curtail lawful activities, expend considerable unnecessary funds, lose donor support, and forfeit free speech opportunities. See, e.g., id., ¶¶ 3, 311-15.

Following its investigation into these very matters, in its May 14, 2013 report entitled "Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review," (Doc. 51-1) ("TIGTA Report"), the Treasury Inspector General for Tax Administration (TIGTA) found that "[t]he IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention." Id. at "Highlights" page. TIGTA concluded that IRS management "1) allowed inappropriate criteria to be developed and stay in place for more than 18 months," which "2) resulted in substantial delays in processing certain applications, and 3) allowed unnecessary information requests to be issued." Id. More specifically, TIGTA found that the IRS's Determinations Unit singled out for special review as "potential political cases" tax-exempt applications "with the words Tea Party in their names" or other conservative-sounding political names, such as "We the People" or "Take Back the Country." Id. at 5, 30.

The Determinations Unit then "expanded the criteria to inappropriately include organizations with other specific names (Patriots or 9/12) or policy positions." Id. at 5. In fact, TIGTA found, "all cases with Tea Party, Patriots, or 9/12 in their names were forwarded to the team of specialists." Id. at 8. The policy positions targeted by the IRS included "government spending, government debt or taxes," "[e]ducation of the public by advocacy/lobbying to 'make America a better place to live,'" and "[s]tatement[s] in the case file criticize how the country is being run." Id. at 6. Later, the criteria included "political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform/movement." Id. at 38. TIGTA found that while the Determinations Unit targeted these applications for special review, which resulted in "substantial delays in processing," id. at 5, (e.g., in some cases the files had been delayed for more than two years at the time of the TIGTA Report, id. at 11), other applications, that actually included indications of significant political campaign intervention, were not forwarded for special review and were thus processed much more quickly. Id. TIGTA expressly concluded that such conduct "gives the appearance that the IRS is not impartial in conducting its mission," id. at 6, because "[u]sing the names or policy positions of organizations is not an appropriate basis for identifying applications for review. . . ." Id. at 7.

TIGTA found that "as of December 17, 2012, the IRS had been processing several potential political cases for more than 1,000 calendar days." Id. at 14. Cf. generally, SAC ¶¶ 81-219 (alleging significant delays experienced by Plaintiffs). TIGTA acknowledged a number of harms resulting from the IRS's delay in processing these applications, including that "potential donors and grantors could be reluctant to provide donations and grants." TIGTA Report, at 12. Crucially, TIGTA found, "potential political cases were open much longer than similar cases that were not identified for processing by the team of specialists." Id. at 15.

TIGTA also found that the IRS issued requests for irrelevant (unnecessary) information to many of these applicants, which created further delays in processing, again, potentially costing these organizations donations and grants. Id. at 18. TIGTA identified the following unnecessary requests for information issued by the IRS's Exempt Organizations department: the identities of donors, identification of issues important to the organization and the organization's position(s) on those issues, the type of conversations and discussions members and participants had during organizational activities, whether officers or directors planned to run for public office, political affiliations of officers and directors, and information about the activities of other organizations. Id. at 20. Cf. SAC, ¶ 280. Crucially, this conduct was not limited to one or two low-level IRS employees, as the individuals holding all of the various positions were aware of and/or directly involved in the foregoing conduct: the Acting Manager of the Exempt Organizations (EO) Technical Unit, the Determinations Unit Group Manager, the Director/Acting Director of the Rulings and Agreements Office, the Director of EO, the Deputy Commissioner for Services and Enforcement, the Senior Technical Advisor to the Acting Commissioner of Tax Exempt & Government Entities, the Senior Technical Advisor to the Director of EO, the IRS's Chief Counsel, Technical Unit managers, a Quality Assurance employee, and several IRS Tax Law Specialists. See generally, TIGTA Report, Appendix VII, pp. 31-42.

In short, TIGTA confirmed much of what Plaintiffs alleged in their SAC (and, in fact, Plaintiffs' allegations include the findings in the TIGTA Report, which was attached to the SAC), and, crucially, the Government has now admitted that the IRS did precisely what TIGTA said it did. See True the Vote, Inc. v. IRS, et al., Case No. 1:13-cv-0734-RBW / Linchpins of Liberty, et al. v. United States, et al., Case No. 1:13-cv-0777-RBW, Transcript of Status Conference Hearing, at 6:1-4; 8-18 (excerpt attached hereto as Ex. 1) (attorney for Government Defendants stating unequivocally that TIGTA "found that the IRS used inappropriate criteria to identify tax exempt applications for review" and that "the United States agrees with and has never disputed that conclusion" and further that TIGTA "made its recommendation," and "the United States does not dispute and agrees with all these findings . . .") (emphases added).

D. Declaratory Judgment

Based on the applicable law, and the Government's admissions, there can be no dispute that Plaintiffs are entitled to a declaration that the IRS violated their First Amendment rights by:

Jay Alan Sekulow, Counsel of Record