Louisiana religious groups and churches won an
important court victory recently – but the battle is
not complete.
A three-judge panel of the United States Fifth
Circuit Court of Appeals recently reversed a lower
court decision that would have forced the state to
begin collecting certain sales and use taxes from
churches and religious groups.
Louisiana religious groups and churches won an
important court victory recently – but the battle is
not complete.
A three-judge panel of the United States Fifth
Circuit Court of Appeals recently reversed a lower
court decision that would have forced the state to
begin collecting certain sales and use taxes from
churches and religious groups.
For now, qualified churches and groups remain exempt
from paying state sales tax on the purchase of
Bibles and religious materials. They also do not
have to pay sales taxes on use of religious camps.
However, the matter has not been fully settled. Two
avenues of federal appeal remain open – and if those
fail, the issue then could be taken to state court.
At issue is whether the state acted properly in
granting sales tax exemptions to religious groups
and churches in the 1990s.
The American Civil Liberties Union say the
exemptions represent a violation of the separation
of church and state and are, therefore,
unconstitutional.
In light of that, they filed suit in 2000, asking
that the exemptions be revoked.
In March 2002, the U.S. District Court for the
Eastern District of Louisiana sided with the ACLU
and declared the exemptions unconstitutional.
The news caught most religious leaders by surprise,
since the suit had gained practically no attention.
Their concern grew when news reports indicated the
state was not going to appeal the issue.
Indeed, the Louisiana Department of Revenue already
had sent a bulletin to buyers and vendors,
instructing them to begin paying and collecting the
taxes.
Suddenly, churches and religious groups were faced
with having to pay more for Bibles, hymnals and
instructional materials, such as Sunday School
quarterlies. They also were faced with having to pay
sales tax on room and board at their camps.
For some, the increased costs could have been
significant.
In reporting on the case, the Louisiana Baptist
Message sought to learn from state leaders why the
issue was not being pursued. Some officials said the
state simply did not have a good case.
However, the state attorney general also said he had
reserved the right to appeal – and within a matter
of days, he announced the state would do so.
Oral arguments were set for March 12.
At that hearing, much of the focus fell on whether
the federal court had proper jurisdiction on the
issue. A state attorney argued that it did not and
that the issue should be decided in state court, if
anywhere.
State Assistant District Attorney Charles Braud
argued that longstanding federal law requires state
tax matters to be decided at that level. Louisiana
Baptist Convention Attorney Greg Erwin also argued
the point, noting that the federal law requires
available state remedies to be pursued.
Some three months later, the federal three-judge
panel agreed, issuing an 11-page ruling that
dismisses the case.
“Because we find that the Tax Injunction Act of 1937
prevents the federal court from hearing this
challenge to the state’s tax scheme, we reverse the
district court’s denial of the state’s motion to
dismiss and remand the case with instructions for
the court to dismiss (it) for lack of jurisdiction,”
the resulting opinion noted.
The panel acknowledged the Tax Injunction Act has
been interpreted in various ways. But it argued the
sales tax issue in question is covered by the act.
“The Tax Injunction Act prohibits the (federal)
district court from hearing this case, …” the
three-judge ruling concluded.
“We are convinced … it is the duty of federal
courts to withhold relief when a state legislature
has provided an adequate scheme whereby a taxpayer
may … challenge a state tax.”
However, the action does not close the door on the
matter, the judges added. “This does not mean the
ACLU is left with no other recourse,” they
concluded.
Essentially, three avenues of action remain open for
the ACLU. The organization already is pursuing one,
asking for a review of the three-judge decision
before the entire appeals court panel.
That request may be granted or denied.
The only other federal avenue available for either
side at that point would be appeal to the U.S.
Supreme Court.
If federal avenues are exhausted and the sales tax
exemptions remain in place, the ACLU then may
challenge them in state court. In that arena, the
issue of jurisdiction would not be on the table.
Instead, the matter would have to be decided on
other grounds, such as constitutionality and whether
the ACLU has standing to challenge the exemptions.
As the three-judge panel recently noted, since they
lacked jurisdiction in the issue, they declined to
address those questions.
Whether they eventually are raised – and answered –
remains to be seen.
But for now, the prevailing answ