A three-judge U.S. Court of Appeals panel ruled yesterday that a Virginia group that advocates violence against racial and religious minorities is not an educational organization and does not qualify for exemption from federal taxes.
The ruling came in a challenge to the Internal Revenue Service's denial of an exemption to National Alliance, a Crystal City-based organization, which published a monthly newsletter called "Attack!"
The opinion said National Alliance "repetitively appeals for action, including violence . . . to injure persons who are members of named racial, religious, or ethnic groups."
In the opinion, the panel said that "in order to be deemed 'educational' and enjoy tax exemption, some degree of intellectually appealing development of or foundation for the views advocated would be required.
"We do not attempt a definition of the term 'educational' ," the opinion said, "but we are convinced that the National Alliance material is far outside the range Congress could have intended to subsidize in the public interest by granting a tax exemption."
The American Civil Liberties Union, which represents National Alliance, called the opinion "appalling" and said it intends to ask the full court to hear the case.
ACLU legal director Arthur Spitzer said the decision "ignored the warnings of the Supreme Court," which recently said the government has to avoid discrimination based on the content of a group's publications and views.
The NAACP, the American Jewish Congress and the B'nai B'rith Anti-Defamation League jointly filed a friend of the court brief in the case, arguing against the tax exemption for National Alliance. Walter J. Rockler, an attorney with Arnold & Porter who represented those three groups, called yesterday's ruling a "splendid decision."
Rockler said the panel upheld National Alliance's right under the First Amendment to publish its magazine, but "it's another thing for the government to subsidize" literature "for an organization that proclaims violence and the pursuit of racist principles."
Senior Circuit Judge Thomas E. Fairchild, a judge of the Seventh Circuit Court of Appeals in Chicago, sitting here under a statute that allows judges from other circuits to sit here on designation of the Chief Justice, wrote the opinion for the panel.
National Alliance brought its case in 1979 after the IRS refused to grant it a tax exemption. In May 1981, a U.S. District Court judge here reversed the IRS ruling and sent the case back to the agency. The D.C. Court of Appeals, in a similar case over IRS exemption policy, ruled that the guidelines the IRS used were unconstitutionally vague.
But the panel opinion yesterday did not address the challenge to the IRS guidelines, saying that it was not necessary to reach that question, because National Alliance was not, under any conceivable definition, an educational organization.
"In the present case we see no possibility that the National Alliance publication can be found educational within any reasonable interpretation of the term," Fairchild wrote, concluding that the IRS denial of an exemption "was not arbitrary or discriminatory."
Spitzer likened the opinion's view of the term "educational" to the view of obscenity former Justice Potter Stewart expressed in a 1964 Supreme Court decision: "I know it when I see it."
"They the panel are saying 'We know it an educational organization when we see it and this is not it,' " Spitzer said, adding that the "most appalling aspect of the opinion is the use of 'intellectually appealing' as a criteria" for judging tax exemption.
William Pierce, a founder of National Alliance, said in an interview that the organization now publishes a successor to Attack! called National Vanguard, which has a circulation of about 12,000. He estimated 80 percent of the circulation is in this country and the rest overseas. He said the organization does not publish membership figures. Pierce said the organization, founded in 1974, never paid taxes because it has never made a profit, but he said a tax exemption would be helpful because it might encourage more contributions.
Pierce said National Alliance is an educational and informational organization. "We present facts that we believe may not have been available to readers (in other publications) . . . . We try to analyze trends and forecast developments," Pierce said, and "try to let people understand the chronic problems in American society." One of those problems, he said, is "the survival of the race."