## Facts

- Anthony Haswell organized and financed the National Association of Railroad Passengers (NARP), an Illinois not-for-profit corporation formed in 1967 to preserve and promote passenger rail service.
- NARP retained a Washington, D.C. lobbying firm and engaged in legislative advocacy, including testimony before congressional committees and submissions regarding pending or proposed rail legislation.
- NARP used events and receptions to contact and entertain legislators, congressional staff, and relevant executive officials in furtherance of its legislative objectives.
- Haswell paid NARP $41,864.23 in 1967 and $90,000 in 1968 and later sought tax refunds claiming the payments were deductible “charitable contributions” under I.R.C. § 170(c)(2).
- The IRS denied the refund claims, and Haswell brought a tax refund suit in the United States Court of Claims.
- A trial judge recommended denial of relief; the Court of Claims adopted that recommendation and dismissed the petition.

## Issues

1. Whether Haswell’s payments to NARP qualified as deductible “charitable contributions” under I.R.C. § 170(c)(2) despite NARP’s legislative advocacy.
2. Whether denial of a charitable-contribution deduction based on the donee organization’s lobbying activity violated the donor’s First Amendment rights of speech and petition.

## Decision

- The Court of Claims held that Haswell’s payments to NARP were not deductible under I.R.C. § 170(c)(2).
- The court found that a substantial part of NARP’s activities consisted of attempting to influence legislation, disqualifying NARP as a permissible recipient for § 170(c)(2) deduction purposes.
- The court rejected Haswell’s characterization of NARP’s efforts as merely nonpartisan analysis or research, concluding the organization’s communications were advocacy aimed at specific legislative outcomes.
- The court held that denying the deduction did not violate the First Amendment because Congress may limit tax-favored charitable deductions without prohibiting lobbying or speech.
- Judgment was entered for the United States; the petition was dismissed.

## Legal Principles

- Under I.R.C. § 170(c)(2), a contribution is deductible only if made to an organization organized and operated exclusively for qualifying purposes and for which no substantial part of its activities consists of propaganda or attempts to influence legislation.
- In applying the “no substantial part” limitation, courts evaluate the organization’s actual operations, not only its stated corporate purposes.
- Advocacy-oriented testimony, targeted legislative submissions, and organized contacts with legislators (including use of professional lobbyists) support a finding that the organization is attempting to influence legislation.
- Denial of a charitable deduction on the ground that the donee engages in substantial lobbying does not violate the First Amendment; the government need not provide tax subsidies for lobbying activity.

## Conclusion

The court denied a tax refund because NARP’s substantial lobbying activity prevented Haswell’s payments from qualifying as charitable contributions under I.R.C. § 170(c)(2), and it further held that conditioning the deduction on limits to lobbying did not infringe Haswell’s First Amendment rights.


Haswell v. United States, 500 F.2d 1133 (Ct. Cl. 1974), cert. denied, 419 U.S. 1107 (1975)