Universal Life Church, Inc. v. United States

A religious organization seeks to have an Internal Revenue Service (“IRS”) revocation of its tax-exempt status declared void as violative of bankruptcy’s automatic stay. We hold that the IRS’s administrative actions were permissible under the police and regulatory power exception to the automatic stay and affirm.

I.

Universal Life Church, Inc. (“Church”), is a California nonprofit corporation. The IRS denied the Church’s application for tax exempt status in 1969 and again in 1970 on the ground that the Church had engaged in activities outside the religious activities contemplated by I.R.C. § 501(c)(3). After paying the taxes and interest due for fiscal year ending April 30, 1969, the Church brought a suit for refund and prevailed. Universal Life Church, Inc. v. United States, 372 F.Supp. 770 (E.D.Cal.1974). The district court found that the contested activities (ordination of ministers, granting of church charters, and issuance of honorary doctorates) were not a substantial enough part of the Church’s activities to justify denying the exemption. Id. at 775-76 .

In 1984, the IRS revoked the Church’s tax exempt status for the fiscal years ending April 30, 1978 through April 30,…