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In a court battle between the IRS and a group of Quakers, a federal judge has ruled that the Quakers must comply with a levy on the wages of a Quaker employee and “war tax protester” and that its refusal to honor the levy makes the Quakers directly liable for all of the employee’s unpaid taxes. But in a significant victory for the Quakers, U.S. District Judge Stewart Dalzell ruled that the Internal Revenue Service is not entitled to a 50 percent penalty because the church had “raised novel and important questions” about its rights under the Religious Freedom Restoration Act. In his opinion in United States v. Philadelphia Yearly Meeting of the Religious Society of Friends, Dalzell said he agreed with the Quakers’ argument that complying with the levy “substantially burdens its exercise of religion.” Dalzell found that although the Quakers themselves have no general religious objection to the federal income tax and acknowledge their duty as employers to participate in the withholding system, they were nonetheless burdened by the IRS levy because “Quaker beliefs require it to support the tax protesters’ endeavors.” Thomas Jeavons, the Quakers’ general secretary, testified that the organization “considers it a sacred duty to support the conscientious actions of its individual members, especially in such historic witnesses as the peace testimony.” To withdraw that support, for any reason, Jeavons said in his affidavit, “would directly violate one of [the] most fundamental religious principles: the sanctity of obedience to the guidance of the Inner Light, or Divine Spirit, as revealed in the individual conscience and confirmed by the discernment of the faith community.” Under RFRA, Dalzell said, the burden then shifted to the government to “show that enforcement of the levy furthers a compelling interest by the least restrictive means.” Dalzell sided with the IRS on that point, saying, “The government needs a speedy, cheap, and certain means of collecting delinquent taxes.” The Quakers’ lawyer, Peter Goldberger, argued that the IRS had a duty under RFRA to consider alternative means of collecting taxes from Quaker employee Priscilla Lippincott Adams — such as investigating her bank accounts and other property — once it was aware that a wage levy would burden the Quaker’s exercise of religion. Dalzell disagreed, saying, “The imposition of the duty to engage in a time-consuming, and possibly fruitless, scavenger hunt for other assets would be inconsistent with the government’s compelling interest in the speedy exercise of its levying power.” As a result, Dalzell concluded that “the levy on Ms. Adams’s wages was the least restrictive means of achieving the government’s compelling interest in satisfying her tax deficiency.” Since the Quaker “refused to cooperate” with the IRS, and since RFRA offered “no defense for its conduct,” Dalzell concluded that the Quaker “is directly liable for her back taxes.” But Goldberger nonetheless won a significant victory for the Quaker by persuading Dalzell to reject the IRS’ argument that the Quakers were also liable for a 50 percent penalty. In her own RFPA challenge to the tax code, Adams v. CIR, the Quaker challenged whether uniform and mandatory participation in the federal income tax system is the least restrictive means of advancing the government’s compelling interest in collecting taxes. She argued that the government had failed to show that it could not achieve its purpose by some means that accommodates conscientious objectors’ beliefs, perhaps by setting aside their tax monies for non-military purposes. But the 3rd U.S. Circuit Court of Appeals rejected that argument in 1999, holding that a uniform and mandatory tax code was the “least restrictive” means of achieving the government’s goals “based on the practical need of the government for uniform administration of taxation, given particularly difficult problems with administration should exceptions on religious grounds be carved out by the courts.” Citing that decision, government lawyers argued that the Quaker had no valid basis for refusing to comply with the levies on Adams’ wages. Dalzell disagreed, saying the Quaker had raised new issues that were never addressed by the 3rd Circuit in Adams’ appeal. “This case both factually and doctrinally begins where Adams left off, and … we do not think that the answers to the issues it raises are so self-evident or fully settled that a penalty is warranted here,” Dalzell wrote.

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