National Right to Work Legal Defense and Education Foundation v. United States

The National Right to Work Legal Defense and Education Foundation (the foundation) (plaintiff) was organized primarily to defend and protect, free of charge, the rights of workers discriminated against under compulsory unionism arrangements. The foundation was originally incorporated in the District of Columbia and was awarded tax-exempt status under § 501(c)(3) of the Internal Revenue Code. In 1975, the foundation’s trustees decided to reincorporate in North Carolina under identical articles of incorporation. The personnel and operations of the foundation also remained unchanged. Because of the reincorporation, however, the foundation had to reapply for exemption under § 501(c)(3), and this time, the commissioner of internal revenue (commissioner) (defendant) denied the exemption. Pursuant to regulations promulgated by the commissioner, one of the exempt purposes for which an exempt entity may be organized is the promotion of social welfare by defending human and civil rights secured by law. The stated reason for the denial was that the phrase human and civil rights was limited to individual liberties and privileges specifically guaranteed by the United States Constitution or special statutory provisions coming directly within the scope of the Thirteenth or Fourteenth Amendments or that otherwise fell within the protection of the Constitution by reason of their long-established recognition at common law. The commissioner argued that the types of grievances the foundation litigated did not necessarily involve such constitutional issues. The foundation filed suit, seeking a refund of taxes paid and a determination that it was entitled to the exemption.