State Police Association of Massachusetts v. Commissioner
United States Court of Appeals for the First Circuit
125 F.3d 1 (1997) (cert. denied 1998)
- Written by Daniel Clark, JD
Facts
The State Police Association of Massachusetts (union) (plaintiff) was a tax-exempt labor organization under § 501(c)(5) of the Internal Revenue Code. The union’s primary responsibilities were engaging in collective bargaining and fostering comradery among its members. The union also published an annual yearbook. The union sold and published ads in the yearbook, generating almost $9 million in revenue over several years. Between its soliciting, sales, and publishing efforts, the union was engaged in activity concerning yearbook ads approximately 46 weeks out of the year. The union did not pay taxes on its advertising revenue. The Internal Revenue Service (IRS) (defendant) assessed a deficiency against the union, arguing that the advertising revenue was unrelated business taxable income (UBTI), notwithstanding the union’s tax-exempt status. The union challenged the deficiency in the United States Tax Court. The Tax Court ruled in favor of the IRS, and the union appealed.
Rule of Law
Issue
Holding and Reasoning (Selya, J.)
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