## Facts

- A District of Columbia nonprofit corporation was formed to conduct educational and charitable activities aimed at improving social welfare by encouraging greater corporate responsibility regarding issues such as employment discrimination, minority group concerns, pollution, and conservation of natural resources.
- The organization conducted research and disseminated information intended to affect corporate decision-making and inform the public on corporate responsibility and related social issues.
- Federal tax officials declined to recognize the organization as exempt under I.R.C. § 501(c)(3), which also prevented recognition as an eligible recipient of deductible charitable contributions under I.R.C. § 170(c)(2).
- The organization paid $13.16 in employment taxes for the first quarter of 1973 and filed suit seeking a refund and injunctive relief requiring recognition of its exempt status.
- The case was resolved on cross-motions for summary judgment in the U.S. District Court for the District of Columbia.

## Issues

1. Whether the organization’s purposes and operations qualified it as a “charitable and educational” organization exempt under I.R.C. § 501(c)(3) and eligible to receive deductible contributions under I.R.C. § 170(c)(2).
2. Whether the Anti-Injunction Act, I.R.C. § 7421(a), barred an injunction compelling recognition of exempt status, or whether the Williams Packing exception applied.

## Decision

- The court held the organization’s activities and purposes qualified for recognition under I.R.C. § 501(c)(3) and for deductible-contribution eligibility under I.R.C. § 170(c)(2).
- The court ordered a refund of the $13.16 in employment taxes paid for the first quarter of 1973.
- The court granted injunctive relief compelling tax officials to recognize the organization’s exempt status, finding the case satisfied the Williams Packing standard despite the Anti-Injunction Act.

## Legal Principles

- “Charitable” and “educational” under I.R.C. § 501(c)(3) can include efforts aimed at community betterment and social welfare, including education directed to corporate conduct on public issues.
- Issue-oriented advocacy does not by itself defeat § 501(c)(3) status; disqualification turns on whether the organization primarily engages in prohibited political campaign intervention or substantial lobbying.
- Eligibility under I.R.C. § 170(c)(2) generally tracks § 501(c)(3); qualification for exemption supports eligibility to receive deductible charitable contributions.
- Under the Anti-Injunction Act, I.R.C. § 7421(a), injunctive relief against tax assessment or collection is generally barred, but a court may enjoin tax officials under Williams Packing if (1) under no circumstances could the government ultimately prevail and (2) equity jurisdiction exists because legal remedies are inadequate and irreparable harm would result.

## Conclusion

The court concluded the organization’s corporate-responsibility program was charitable and educational within § 501(c)(3), not disqualifying political activity or substantial lobbying, and therefore ordered both a small employment-tax refund and an injunction requiring recognition of exempt status under the Williams Packing exception to the Anti-Injunction Act.


Ctr. on Corp. Resp., Inc. v. Shultz, 368 F. Supp. 863 (D.D.C. 1973)