American Campaign Academy v. Commissioner

The National Republican Congressional Committee created the American Campaign Academy (academy) (plaintiff) to train individuals for careers as campaign managers and other political-campaign professionals. The academy maintained a regularly scheduled curriculum, faculty, and a full-time enrolled student body. The academy did not train candidates, but rather trained campaign professionals, and did not intervene in campaigns or engage in lobbying activities. The academy’s activities were funded by the National Republican Congressional Trust (NRCT), and most of the academy’s directors had significant ties to the Republican party. The academy did not closely track its students’ activities after graduation, but it appeared that most of the candidates for whom its graduates went on to work were Republican. The commissioner of internal revenue (commissioner) (defendant) denied the academy’s application for tax exemption under § 501(c)(3) of the Internal Revenue Code. The academy then sought a declaratory judgment that it was entitled to the exemption. The commissioner conceded that the academy was organized exclusively for exempt purposes, that no part of the academy’s net earnings inured to the benefit of a private individual, and that the academy was not engaged in proscribed political or lobbying activities. The commissioner argued, however, that the academy was operated for a substantial nonexempt purpose in that it more than incidentally benefited Republican party candidates and entities and served the private interests of Republican party entities rather than public interests.