Russo Truth Federal Income Tax – Why you should not pay

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§ 601.602 26 CFR Ch. I (4–1–03 Edition)
understanding of the procedure. Revenue
Procedures may also be based on
internal management documents which
should be a matter of public knowledge
even though not necessarily affecting
the rights or duties of the public. When
publication of the substance of a Revenue
Procedure in the FEDERAL REGISTER
is required pursuant to 5 U.S.C.
552, it will usually be accomplished by
an amendment of the Statement of procedural
Rules (26 CFR Part 601).
(vii) (a) The Assistant Commissioner
(Technical) is responsible for administering
the system for the publication
of Revenue Rulings and Revenue Procedures
in the Bulletin, including the
standards for style and format.
(b) In accordance with the standards
set forth in subdivision (iv) of this subparagraph,
each Assistant Commissioner
is responsible for the preparation
and appropriate referral for publication
of Revenue Rulings reflecting
interpretations of substantive tax law
made by his office and communicated
in writing to taxpayers or field offices.
In this connection, the Chief Counsel is
responsible for the referral to the appropriate
Assistant Commissioner, for
consideration for publication as Revenue
Rulings, of interpretations of substantive
tax law made by his Office.
(c) In accordance with the standards
set forth in subdivision (iv) of this subparagraph,
each Assistant Commissioner
and the Chief Counsel is responsible
for determining whether procedures
established by any office under
his jurisdiction should be published as
Revenue Procedures and for the initiation,
content, and appropriate referral
for publication of such Revenue Procedures.
(e) Foreign tax law. (1) The Service
will accept the interpretation placed
by a foreign tax convention country on
its revenue laws which do not affect
the tax convention. However, when
such interpretation conflicts with a
provision in the tax convention, reconsideration
of that interpretation may
be requested.
(2) Conferences in the National Office
of the Service will be granted to representatives
of American firms doing
business abroad and of American citizens
residing abroad, in order to discuss
with them foreign tax matters
with respect to those countries with
which we have tax treaties in effect.
[32 FR 15990, Nov. 22, 1967, as amended at 33
FR 6826, May 4, 1968; 35 FR 16593, Oct. 24, 1970;
38 FR 4971, Feb. 23, 1973; 39 FR 15755, May 6,
1974; 41 FR 13611, Mar. 31, 1976; 41 FR 20883,
May 21, 1976; 43 FR 17821, Apr. 26, 1978; 47 FR
56333, Dec. 16, 1982; 48 FR 15624, Apr. 12, 1983;
52 FR 26673, July 16, 1987]
§ 601.602 Tax forms and instructions.
(a) Tax return forms and instructions.
The Internal Revenue Service develops
forms and instructions that explain the
requirements of the Internal Revenue
Code and regulations. The Service distributes
the forms and instructions to
help taxpayers comply with the law.
The tax system is based on voluntary
compliance, and the taxpayers complete
and return the forms with payment
of any tax owed.
(b) Other forms and instructions. In addition
to tax return forms, the Internal
Revenue Service furnishes the public
copies of other forms and instructions
developed for use in complying with
the laws and regulations. These forms
and instructions lead the taxpayer
step-by-step through data needed to accurately
report information required
by law.
(c) Where to get forms and instructions.
The Internal Revenue Service mails
tax return forms to taxpayers who
have previously filed returns. However,
taxpayers can call or write to district
directors or directors of service centers
for copies of any forms they need.
These forms are described in Publication
676, Catalog of Federal Tax Forms,
Form Letters, and Notices, which the
public can buy from the Superintendent
of Documents, U.S. Government
Printing Office, Washington, DC
20402.
[46 FR 26055, May 11, 1981]
Subpart G—Records (Note)
NOTE: The regulations in Subpart G of 26
CFR Part 601 are superseded in part by 27
CFR Part 71 to the extent that it applied to
alcohol, tobacco, firearms, and explosives
records, formerly administered by the Internal
Revenue Service and transferred to the
Bureau of Alcohol, Tobacco and Firearms.
(See 37 FR 13691, July 13, 1972.)
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115
Internal Revenue Service, Treasury § 601.702
§ 601.702 Publication, public inspection,
and specific requests for
records.
(a) Publication in the FEDERAL
REGISTER—(1) Requirement. (i) Subject
to the application of the exemptions
and exclusions described in the Freedom
of Information Act, 5 U.S.C. 552(b)
and (c), and subject to the limitations
provided in paragraph (a)(2) of this section,
the IRS is required under 5 U.S.C.
552(a)(1), to state separately and publish
currently in the FEDERAL REGISTER
for the guidance of the public the
following information—
(A) Descriptions of its central and
field organization and the established
places at which, the persons from
whom, and the methods whereby, the
public may obtain information, make
submittals or requests, or obtain decisions,
from the IRS;
(B) Statement of the general course
and method by which its functions are
channeled and determined, including
the nature and requirements of all formal
and informal procedures which are
available;
(C) Rules of procedure, descriptions
of forms available or the places at
which forms may be obtained, and instructions
as to the scope and contents
of all papers, reports, or examinations;
(D) Substantive rules of general applicability
adopted as authorized by
law, and statements of general policy
or interpretations of general applicability
formulated and adopted by the
IRS; and
(E) Each amendment, revision, or repeal
of matters referred to in paragraphs
(a)(1)(i)(A) through (D) of this
section.
(ii) Pursuant to the foregoing requirements,
the Commissioner publishes
in the FEDERAL REGISTER from
time to time a statement, which is not
codified in this chapter, on the organization
and functions of the IRS, and
such amendments as are needed to
keep the statement on a current basis.
In addition, there are published in the
FEDERAL REGISTER the rules set forth
in this part 601 (Statement of Procedural
Rules), such as those in paragraph
E of this section, relating to conference
and practice requirements of
the IRS; the regulations in part 301 of
this chapter (Procedure and Administration
Regulations); and the various
substantive regulations under the Internal
Revenue Code of 1986, such as
the regulations in part 1 of this chapter
(Income Tax Regulations), in part 20 of
this chapter (Estate Tax Regulations),
and in part 31 of this chapter (Employment
Tax Regulations).
(2) Limitations—(i) Incorporation by
reference in the FEDERAL REGISTER.
Matter which is reasonably available
to the class of persons affected thereby,
whether in a private or public publication,
shall be deemed published in the
FEDERAL REGISTER for purposes of
paragraph (a)(1) of this section when it
is incorporated by reference therein
with the approval of the Director of the
Office of the Federal Register. The
matter which is incorporated by reference
must be set forth in the private
or public publication substantially in
its entirety and not merely summarized
or printed as a synopsis. Matter,
the location and scope of which are familiar
to only a few persons having a
special working knowledge of the activities
of the IRS, may not be incorporated
in the FEDERAL REGISTER by
reference. Matter may be incorporated
by reference in the FEDERAL REGISTER
only pursuant to the provisions of 5
U.S.C. 552(a)(1) and 1 CFR part 20.
(ii) Effect of failure to publish. Except
to the extent that a person has actual
and timely notice of the terms of any
matter referred to in paragraph (a)(1)
of this section which is required to be
published in the FEDERAL REGISTER,
such person is not required in any manner
to resort to, or be adversely affected
by, such matter if it is not so
published or is not incorporated by reference
therein pursuant to paragraph
(a)(2)(i) of this section. Thus, for example,
any such matter which imposes an
obligation and which is not so published
or incorporated by reference
shall not adversely change or affect a
person’s rights.
(b) Public inspection and copying—(1)
In general. (i) Subject to the application
of the exemptions described in 5
U.S.C. 552(b) and the exclusions described
in 5 U.S.C. 552(c), the IRS is required
under 5 U.S.C. 552(a)(2) to make
available for public inspection and
copying or, in the alternative, to
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116
§ 601.702 26 CFR Ch. I (4–1–03 Edition)
promptly publish and offer for sale the
following information:
(A) Final opinions, including concurring
and dissenting opinions, and orders,
if such opinions and orders are
made in the adjudication of cases;
(B) Those statements of policy and
interpretations which have been adopted
by the IRS but are not published in
the FEDERAL REGISTER;
(C) Its administrative staff manuals
and instructions to staff that affect a
member of the public; and
(D) Copies of all records, regardless of
form or format, which have been released
to any person under 5 U.S.C.
552(a)(3) and which, because of the nature
of their subject matter, the IRS
determines have become or are likely
to become the subject of subsequent requests
for substantially the same
records. The determination that
records have become or may become
the subject of subsequent requests
shall be based on the following criteria:
(1) The subject matter is clearly of
interest to the public at large or to
special interest groups from which
more than one request is expected to be
received; or
(2) When more than four requests for
substantially the same records have already
been received.
(ii) The IRS is also required by 5
U.S.C. 552(a)(2) to maintain and make
available for public inspection and
copying current indexes identifying
any matter described in paragraphs
(b)(1)(i)(A) through (C) of this section
which is issued, adopted, or promulgated
after July 4, 1967, and which is
required to be made available for public
inspection or published. In addition,
the IRS shall also promptly publish,
quarterly or more frequently, and distribute
(by sale or otherwise) copies of
each index or supplements thereto unless
it determines by order published in
the FEDERAL REGISTER that the publication
would be unnecessary and impracticable,
in which case the IRS shall
nonetheless provide copies of such indexes
on request at a cost not to exceed
the direct cost of duplication. No matter
described in paragraphs (b)(1)(i)(A)
through (C) of this section which is required
by this section to be made available
for public inspection or published
may be relied upon, used, or cited as
precedent by the IRS against a party
other than an agency unless such party
has actual and timely notice of the
terms of such matter or unless the
matter has been indexed and either
made available for inspection or published,
as provided by this paragraph
(b). This paragraph (b) applies only to
matters which have precedential significance.
It does not apply, for example,
to any ruling or advisory interpretation
issued to a taxpayer or to a particular
transaction or set of facts
which applies only to that transaction
or set of facts. Rulings, determination
letters, technical advice memorandums,
and Chief Counsel advice are
open to public inspection and copying
pursuant to 26 U.S.C. 6110. This paragraph
(b) does not apply to matters
which have been made available pursuant
to paragraph (a) of this section.
(iii) For records required to be made
available for public inspection and
copying pursuant to 5 U.S.C. 552(a)(2)
and paragraphs (b)(1)(i)(A) through (D)
of this section, which are created on or
after November 1, 1996, the IRS shall
make such records available on the
Internet within one year after such
records are created.
(iv) The IRS shall make the index referred
to in paragraph (b)(1)(ii) of this
section available on the Internet.
(2) Deletion of identifying details. To
prevent a clearly unwarranted invasion
of personal privacy, the IRS shall, in
accordance with 5 U.S.C. 552(a)(2), delete
identifying details contained in
any matter described in paragraphs
(b)(1)(i)(A) through (D) of this section
before making such matter available
for inspection or publication. Such
matters shall also be subject to any applicable
exemption set forth in 5 U.S.C.
552(b). In every case where identifying
details or other matters are so deleted,
the justification for the deletion shall
be explained in writing. The extent of
such deletion shall be indicated on the
portion of the record which is made
available or published, unless including
that indication would harm an interest
protected by the exemption in 5 U.S.C.
552(b) under which the deletion is
made. If technically feasible, the extent
of the deletion shall be indicated
at the place in the record where the deletion
was made.
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117
Internal Revenue Service, Treasury § 601.702
(3) Freedom of Information Reading
Room—(i) In general. The Headquarters
Disclosure Office of the IRS shall provide
a reading room where the matters
described in paragraphs (b)(1)(i)(A)
through (D) of this section which are
required to be made available for public
inspection, and the current indexes
to such matters, shall be made available
to the public for inspection and
copying. The Freedom of Information
Reading Room shall contain other matters
determined to be helpful for the
guidance of the public, including a
complete set of rules and regulations
(except those pertaining to alcohol, tobacco,
firearms, and explosives) contained
in this title, any Internal Revenue
matters which may be incorporated
by reference in the FEDERAL
REGISTER (but not a copy of the FEDERAL
REGISTER so doing) pursuant to
paragraph (a)(2)(i) of this section, a set
of Cumulative Bulletins, and copies of
various IRS publications. The public
shall not be allowed to remove any
record from the Freedom of Information
Reading Room.
(ii) Location of Freedom of Information
Reading Room. The location of the
Headquarters Disclosure Office Freedom
of Information Reading Room is:
IRS, 1111 Constitution Avenue, NW.,
Room 1621, Washington, DC.
(iii) Copying facilities. The Headquarters
Disclosure Office shall provide
facilities whereby a person may obtain
copies of material located on the
shelves of the Freedom of Information
Reading Room.
(c) Specific requests for other records—
(1) In general. (i) Subject to the application
of the exemptions described in 5
U.S.C. 552(b) and the exclusions described
in 5 U.S.C. 552(c), the IRS shall,
in conformance with 5 U.S.C. 552(a)(3),
make reasonably described records
available to a person making a request
for such records which conforms in
every respect with the rules and procedures
set forth in this section. Any request
or any appeal from the initial denial
of a request that does not comply
with the requirements set forth in this
section shall not be considered subject
to the time constraints of paragraphs
(c)(9), (10), and (11) of this section, unless
and until the request or appeal is
amended to comply. The IRS shall
promptly advise the requester in what
respect the request or appeal is deficient
so that it may be resubmitted or
amended for consideration in accordance
with this section. If a requester
does not resubmit a perfected request
or appeal within 35 days from the date
of a communication from the IRS, the
request or appeal file shall be closed.
When the resubmitted request or appeal
conforms with the requirements of
this section, the time constraints of
paragraphs (c)(9), (10), and (11) of this
section shall begin.
(ii) Requests for the continuing production
of records created or for
records created after the date of receipt
of the request shall not be honored.
(iii) Specific requests under paragraph
(a)(3) for material described in
paragraph (a)(2)(A)through(C) and
which is in the Freedom of Information
Reading Room shall not be honored.
(2) Electronic format records. (i) The
IRS shall provide the responsive record
or records in the form or format requested
if the record or records are
readily reproducible by the IRS in that
form or format. The IRS shall make
reasonable efforts to maintain its
records in forms or formats that are reproducible
for the purpose of disclosure.
For purposes of this paragraph,
the term readily reproducible means,
with respect to electronic format, a
record or records that can be
downloaded or transferred intact to a
floppy disk, computer disk (CD), tape,
or other electronic medium using
equipment currently in use by the office
or offices processing the request.
Even though some records may initially
be readily reproducible, the need
to segregate exempt from nonexempt
records may cause the releasable material
to be not readily reproducible.
(ii) In responding to a request for
records, the IRS shall make reasonable
efforts to search for the records in electronic
form or format, except where
such efforts would significantly interfere
with the operation of the agency’s
automated information system(s). For
purposes of this paragraph (c), the term
search means to locate, manually or by
automated means, agency records for
the purpose of identifying those
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118
§ 601.702 26 CFR Ch. I (4–1–03 Edition)
records which are responsive to a request.
(iii) Searches for records maintained
in electronic form or format may require
the application of codes, queries,
or other minor forms of programming
to retrieve the requested records.
(3) Requests for records not in control of
the IRS. (i) Where the request is for a
record which is determined to be in the
possession or under the control of a
constituent unit of the Department of
the Treasury other than the IRS, the
request for such record shall immediately
be transferred to the appropriate
constituent unit and the requester
notified to that effect. Such referral
shall not be deemed a denial of
access within the meaning of these regulations.
The constituent unit of the
Department to which such referral is
made shall treat such request as a new
request addressed to it and the time
limits for response set forth in paragraphs
(c)(9) and (c)(10) of this section
shall commence when the referral is received
by the designated office or officer
of the constituent unit. Where the
request is for a record which is of a
type that is not maintained by any
constituent unit of the Department of
the Treasury, the requester shall be so
advised.
(ii) Where the record requested was
created by another agency or constituent
unit of the Department of the
Treasury and a copy thereof is in the
possession of the IRS, the IRS official
to whom the request is delivered shall
refer the request to the agency or constituent
unit which originated the
record for direct reply to the requester.
The requester shall be informed of such
referral. This referral shall not be considered
a denial of access within the
meaning of these regulations. Where
the record is determined to be exempt
from disclosure under 5 U.S.C. 552, the
referral need not be made, but the IRS
shall inform the originating agency or
constituent unit of its determination.
Where notifying the requester of its referral
may cause a harm to the originating
agency or constituent unit
which would enable the originating
agency or constituent unit to withhold
the record under 5 U.S.C. 552, then such
referral need not be made. In both of
these circumstances, the IRS official
to whom the request is delivered shall
process the request in accordance with
the procedures set forth in this section.
(iii) When a request is received for a
record created by the IRS (i.e., in its
possession and control) that includes
information originated by another
agency or constituent unit of the Department
of the Treasury, the record
shall be referred to the originating
agency or constituent unit for review,
coordination, and concurrence prior to
being released to a requester. The IRS
official to whom the request is delivered
may withhold the record without
prior consultation with the originating
agency or constituent unit.
(4) Form of request. (i) Requesters are
advised that only requests for records
which fully comply with the requirements
of this section can be processed
in accordance with this section. Requesters
shall be notified promptly in
writing of any requirements which
have not been met or any additional requirements
to be met. Every effort
shall be made to comply with the requests
as written. The initial request
for records must—
(A) Be made in writing and signed by
the individual making the request;
(B) State that it is made pursuant to
the Freedom of Information Act, 5
U.S.C. 552, or regulations thereunder;
(C) Be addressed to and mailed to the
office of the IRS official who is responsible
for the control of the records requested
(see paragraph (h) of this section
for the responsible officials and
their addresses), regardless of where
such records are maintained. Generally,
requests for records pertaining
to the requester, or other matters of
local interest, should be directed to the
office servicing the requester’s geographic
area of residence. Requests for
records maintained in the Headquarters
of the IRS and its National
Office of Chief Counsel, concerning
matters of nationwide applicability,
such as published guidance (regulations
and revenue rulings), program management,
operations, or policies, should be
directed to the Headquarters Disclosure
Office. If the person making the
request does not know the official responsible
for the control of the records
being requested, the person making the
request may contact, by telephone or
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119
Internal Revenue Service, Treasury § 601.702
in writing, the disclosure office servicing
the requester’s geographic area of
residence to ascertain the identity of
the official having control of the
records being requested so that the request
can be addressed, and delivered,
to the appropriate responsible official.
Misdirected requests that otherwise
satisfy the requirements of this section
shall be immediately transferred to the
appropriate responsible IRS official
and the requester notified to that effect.
Such transfer shall not be deemed
a denial of access within the meaning
of these regulations. The IRS official
to whom the request is redirected shall
treat such request as a new request addressed
to it and the time limits for response
set forth in paragraphs (c)(9)
and (c)(11) of this section shall commence
when the transfer is received by
the designated office;
(D) Reasonably describe the records
in accordance with paragraph (c)(5)(i)
of this section;
(E) In the case of a request for
records the disclosure of which is limited
by statute or regulations (as, for
example, the Privacy Act of 1974 (5
U.S.C. 552a) or section 6103 and the regulations
thereunder), establish the
identity and the right of the person
making the request to the disclosure of
the records in accordance with paragraph
(c)(5)(iii) of this section;
(F) Set forth the address where the
person making the request desires to
be notified of the determination as to
whether the request shall be granted;
(G) State whether the requester wishes
to inspect the records or desires to
have a copy made and furnished without
first inspecting them;
(H) State the firm agreement of the
requester to pay the fees for search, duplication,
and review ultimately determined
in accordance with paragraph (f)
of this section, or, in accordance with
paragraph (c)(4)(ii) of this section,
place an upper limit for such fees that
the requester is willing to pay, or request
that such fees be reduced or
waived and state the justification for
such request; and
(I) Identify the category of the requester
and, with the exception of
‘‘other requesters,’’ state how the
records shall be used, as required by
paragraph (f)(3) of this section.
(ii) As provided in paragraph
(c)(4)(i)(H) of this section, rather than
stating a firm agreement to pay the fee
ultimately determined in accordance
with paragraph (f) of this section or requesting
that such fees be reduced or
waived, the requester may place an
upper limit on the amount the requester
agrees to pay. If the requester
chooses to place an upper limit and the
estimated fee is deemed to be greater
than the upper limit, or where the requester
asks for an estimate of the fee
to be charged, the requester shall be
promptly advised of the estimate of the
fee and asked to agree to pay such
amount. Where the initial request includes
a request for reduction or waiver
of the fee, the IRS officials responsible
for the control of the requested
records (or their delegates) shall determine
whether to grant the request for
reduction or waiver in accordance with
paragraph (f) of this section and notify
the requester of their decisions and, if
their decisions result in the requester
being liable for all or part of the fee
normally due, ask the requester to
agree to pay the amount so determined.
The requirements of this paragraph
shall not be deemed met until
the requester has explicitly agreed to
pay the fee applicable to the request
for records, if any, or has made payment
in advance of the fee estimated to
be due. If the requester has any outstanding
balance of search, review, or
duplication fees, the requirements of
this paragraph shall not be deemed met
until the requester has remitted the
outstanding balance due.
(5) Reasonable description of records;
identity and right of the requester. (i) The
request for records must describe the
records in reasonably sufficient detail
to enable the IRS employees who are
familiar with the subject matter of the
request to locate the records without
placing an unreasonable burden upon
the IRS. While no specific formula for
a reasonable description of a record can
be established, the requirement shall
generally be satisfied if the requester
gives the name, taxpayer identification
number (e.g., social security number or
employer identification number), subject
matter, location, and years at
issue, of the requested records. If the
request seeks records pertaining to
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
pending litigation, the request shall indicate
the title of the case, the court in
which the case was filed, and the nature
of the case. It is suggested that
the person making the request furnish
any additional information which shall
more clearly identify the requested
records. Where the requester does not
reasonably describe the records being
sought, the requester shall be afforded
an opportunity to refine the request.
Such opportunity may involve a conference
with knowledgeable IRS personnel
at the discretion of the disclosure
officer. The reasonable description
requirement shall not be used by officers
or employees of the Internal Revenue
as a device for improperly withholding
records from the public.
(ii) The IRS shall make a reasonable
effort to comply fully with all requests
for access to records subject only to
any applicable exemption set forth in 5
U.S.C. 552(b) or any exclusion described
in 5 U.S.C. 552(c). In any situation in
which it is determined that a request
for voluminous records would unduly
burden and interfere with the operations
of the IRS, the person making
the request shall be asked to be more
specific and to narrow the request, or
to agree on an orderly procedure for
the production of the requested
records, in order to satisfy the request
without disproportionate adverse effect
on IRS operations.
(iii) Statutory or regulatory restrictions.(
A) In the case of records containing
information with respect to
particular persons the disclosure of
which is limited by statute or regulations,
persons making requests shall
establish their identity and right to access
to such records. Persons requesting
access to such records which pertain
to themselves may establish their
identity by—
(1) The presentation of a single document
bearing a photograph (such as a
passport or identification badge), or
the presentation of two items of identification
which do not bear a photograph
but do bear both a name and signature
(such as a credit card or organization
membership card), in the case of
a request made in person,
(2) The submission of the requester’s
signature, address, and one other identifier
(such as a photocopy of a driver’s
license) bearing the requester’s signature,
in the case of a request by mail,
or
(3) The presentation in person or the
submission by mail of a notarized
statement, or a statement made under
penalty of perjury in accordance with
28 U.S.C. 1746, swearing to or affirming
such person’s identity.
(B) Additional proof of a person’s
identity shall be required before the requests
shall be deemed to have met the
requirement of paragraph (c)(4)(i)(E) of
this section if it is determined that additional
proof is necessary to protect
against unauthorized disclosure of information
in a particular case. Persons
who have identified themselves to the
satisfaction of IRS officials pursuant
to this paragraph (c) shall be deemed to
have established their right to access
records pertaining to themselves. Persons
requesting records on behalf of or
pertaining to another person must provide
adequate proof of the legal relationship
under which they assert the
right to access the requested records
before the requirement of paragraph
(c)(4)(i)(E) of this section shall be
deemed met.
(C) In the case of an attorney-in-fact,
or other person requesting records on
behalf of or pertaining to other persons,
the requester shall furnish a
properly executed power of attorney,
Privacy Act consent, or tax information
authorization, as appropriate. In
the case of a corporation, if the requester
has the authority to legally
bind the corporation under applicable
state law, such as its corporate president
or chief executive officer, then a
written statement or tax information
authorization certifying as to that person’s
authority to make a request on
behalf of the corporation shall be sufficient.
If the requester is any other officer
or employee of the corporation,
then such requester shall furnish a
written statement certifying as to that
person’s authority to make a request
on behalf of the corporation by any
principal officer and attested to by the
secretary or other officer (other than
the requester) that the person making
the request on behalf of the corporation
is properly authorized to make
such a request. If the requester is other
than one of the above, then such person
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Internal Revenue Service, Treasury § 601.702
may furnish a resolution by the corporation’s
board of directors or other
governing body which provides that the
person making the request on behalf of
the corporation is properly authorized
to make such a request, or shall otherwise
satisfy the requirements set forth
in section 6103(e). A person requesting
access to records of a partnership or a
subchapter S Corporation shall provide
a notarized statement, or a statement
made under penalty of perjury in accordance
with 28 U.S.C. 1746, that the
requester was a member of the partnership
or subchapter S corporation for a
part of each of the years included in
the request.
(6) Requests for expedited processing. (i)
When a requester demonstrates compelling
need, a request shall be taken
out of order and given expedited treatment.
A compelling need involves—
(A) Circumstances in which the lack
of expedited treatment could reasonably
be expected to pose an imminent
threat to the life or physical safety of
an individual;
(B) An urgency to inform the public
concerning actual or alleged Federal
government activity, if made by a person
primarily engaged in disseminating
information. A person primarily engaged
in disseminating information, if
not a full-time representative of the
news media, as defined in paragraph
(f)(3)(ii)(B) of this section, must establish
that he or she is a person whose
main professional activity or occupation
is information dissemination,
though it need not be his or her sole
occupation. A person primarily engaged
in disseminating information
does not include individuals who are
engaged only incidentally in the dissemination
of information. The standard
of urgency to inform requires that
the records requested pertain to a matter
of current exigency to the American
public, beyond the public’s right
to know about government activity
generally, and that delaying a response
to a request for records would compromise
a significant recognized interest
to and throughout the American
general public;
(C) The loss of substantial due process
rights.
(ii) A requester who seeks expedited
processing must submit a statement,
certified to be true and correct to the
best of his or her knowledge and belief,
explaining in detail why there is a
compelling need for expedited processing.
(iii) A request for expedited processing
may be made at the time of the
initial request for records or at any
later time. For a prompt determination,
requests for expedited processing
must be submitted to the responsible
official of the IRS who maintains the
records requested except that a request
for expedited processing under paragraph
(c)(6)(i)(B) of this section shall
be submitted directly to the Director,
Communications Division, whose address
is Office of Media Relations,
CL:C:M, Internal Revenue Service,
Room 7032, 1111 Constitution Avenue,
NW., Washington, DC 20224.
(iv) Upon receipt by the responsible
official in the IRS, a request for expedited
processing shall be considered
and a determination as to whether to
grant or deny the request shall be
made, and the requester notified, within
ten days of the date of the request,
provided that in no event shall the IRS
have less than five days (excluding Saturdays,
Sundays, and legal public holidays)
from the date of the responsible
official’s receipt of the request for such
processing. The determination to grant
or deny a request for expedited processing
shall be made solely on the information
initially provided by the requester.
(v) An appeal of an initial determination
to deny expedited processing must
be made within ten days of the date of
the initial determination to deny expedited
processing, and must otherwise
comply with the requirements of paragraph
(c)(10) of this section. Both the
envelope and the appeal itself shall be
clearly marked, ‘‘Appeal for Expedited
Processing.’’
(vi) IRS action to deny or affirm denial
of a request for expedited processing
pursuant to this paragraph, and
IRS failure to respond in a timely manner
to such a request shall be subject
to judicial review, except that judicial
review shall be based on the record before
the IRS at the time of the determination.
A district court of the
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
United States shall not have jurisdiction
to review the IRS’s denial of expedited
processing of a request for
records after the IRS has provided a
complete response to the request.
(7) Date of receipt of request. (i) Requests
for records and any separate
agreement to pay, final notification of
waiver of fees, or letter transmitting
payment, shall be promptly stamped
with the date of delivery to or dispatch
by the office of the IRS official responsible
for the control of the records requested.
A request for records shall be
considered to have been received on the
date on which a complete request containing
the information required by
paragraphs (c)(4)(i)(A) through (I) has
been received by the IRS official responsible
for the control of the records
requested. A determination that a request
is deficient in any respect is not
a denial of access, and such determinations
are not subject to administrative
appeal.
(ii) The latest of such stamped dates
shall be deemed for purposes of this
section to be the date of receipt of the
request, provided that the requirements
of paragraphs (c)(4)(i)(A)
through (I) of this section have been
satisfied, and, where applicable—
(A) The requester has agreed in writing,
by executing a separate contract
or otherwise, to pay the fees for search,
duplication, and review determined due
in accordance with paragraph (f) of this
section, or
(B) The fees have been waived in accordance
with paragraph (f) of this section,
or
(C) Payment in advance has been received
from the requester.
(8) Search for records requested. (i)
Upon the receipt of a request, search
services shall be performed by IRS personnel
to identify and locate the requested
records. Search time includes
any and all time spent looking for material
responsive to the request, including
page-by-page or line-by-line identification
of material within records.
Where duplication of an entire record
would be less costly than a line-by-line
identification, duplication should be
substituted for this kind of search.
With respect to records maintained in
computerized form, a search shall include
services functionally analogous
to a search for records which are maintained
on paper.
(ii) In determining which records are
responsive to a request, the IRS official
responsible for the control of the
records requested shall include only
those records within the official’s possession
and control as of the date of
the receipt of the request by the appropriate
disclosure officer.
(9) Initial determination—(i) Responsible
official.(A) The Associate Director,
Personnel Security or delegate shall
have the sole authority to make initial
determinations with respect to requests
for records under that office’s
control.
(B) The Director of the Office of Governmental
Liaison and Disclosure or
delegate shall have the sole authority
to make initial determinations with
respect to all other requests for records
of the IRS maintained in the Headquarters
and its National Office of the
Chief Counsel. For all other records
within the control of the IRS, the initial
determination with respect to requests
for records may be made either
by the Director, Office of Governmental
Liaison and Disclosure, or by
the IRS officials responsible for the
control of the records requested, or
their delegates (see paragraph (h) of
this section).
(ii) Processing of request. The appropriate
responsible official or delegate
shall respond in the approximate order
of receipt of the requests, to the extent
consistent with sound administrative
practice. In any event, the initial determination
shall be made and notification
thereof mailed within 20 days
(excepting Saturdays, Sundays, and
legal public holidays) after the date of
receipt of the request, as determined in
accordance with paragraph (c)(7) of this
section, unless the responsible official
invokes an extension pursuant to paragraph
(c)(11) of this section, the requester
otherwise agrees to an extension
of the 20 day time limitation, or
the request is an expedited request.
(iii) Granting of request. If the request
is granted in full or in part, and if the
requester wants a copy of the records,
a statement of the applicable fees, if
there are any, shall be mailed to the
requester either at the time of the determination
or shortly thereafter. In
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Internal Revenue Service, Treasury § 601.702
the case of a request for inspection, the
records shall be made available
promptly for inspection, at the time
and place stated, normally at the appropriate
office where the records requested
are controlled. If the person
making the request has expressed a desire
to inspect the records at another
office of the IRS, a reasonable effort
shall be made to comply with the request.
Records shall be made available
for inspection at such reasonable and
proper times so as not to interfere with
their use by the IRS or to exclude
other persons from making inspections.
In addition, reasonable limitations
may be placed on the number of
records which may be inspected by a
person on any given date. The person
making the request shall not be allowed
to remove the records from the
office where inspection is made. If,
after making inspection, the person
making the request desires copies of all
or a portion of the requested records,
copies shall be furnished upon payment
of the established fees prescribed by
paragraph (f) of this section.
(iv) Denial of request. If it is determined
that some records shall be denied,
the person making the request
shall be so notified by mail. The letter
of notification shall specify the city or
other location where the requested
records are situated, contain a brief
statement of the grounds for not granting
the request in full including the exemption(
s) relied upon, the name and
any title or position of the official responsible
for the denial, and advise the
person making the request of the right
to appeal to the Commissioner in accordance
with paragraph (c)(10) of this
section.
(A) In denying a request for records,
in whole or in part, the IRS shall include
the date that the request was received
in the appropriate disclosure office,
and shall provide an estimate of
the volume of the denied matter to the
person making the request, unless providing
such estimate would harm an interest
protected by an exemption in 5
U.S.C. 552(b) or (c) pursuant to which
the denial is made; and
(B) The amount of information deleted
shall be indicated on the released
portion of the record, unless including
that indication would harm an interest
protected by an exemption in 5 U.S.C.
552(b) under which the deletion is
made. If technically feasible, the
amount of the information deleted and
the asserted exemption shall be indicated
at the place in the record where
such deletion is made.
(v) Inability to locate and evaluate
within time limits. Where the records requested
cannot be located and evaluated
within the initial twenty day period
or any extension thereof in accordance
with paragraph (c)(11) of this section,
the search for the records or evaluation
shall continue, but the requester
shall be notified, and advised
that the requester may consider such
notification a denial of the request for
records. The requester shall be provided
with a statement of judicial
rights along with the notification letter.
The requester may also be invited,
in the alternative, to agree to a voluntary
extension of time in which to
locate and evaluate the records. Such
voluntary extension of time shall not
constitute a waiver of the requester’s
right to appeal or seek judicial review
of any denial of access ultimately
made or the requester’s right to seek
judicial review in the event of failure
to comply with the time extension
granted.
(10) Administrative appeal. (i) The requester
may submit an administrative
appeal to the Commissioner of Internal
Revenue by letter that is postmarked
within 35 days after the later of the
date of any letter of notification described
in paragraph (c)(9)(iv) of this
section, the date of any letter of notification
of an adverse determination of
the requester’s category described in
paragraph (f)(3) of this section, the
date of any letter of notification of an
adverse determination of the requester’s
fee waiver or reduction request described
in paragraph (f)(2) of this section,
the date of any letter determining
that no responsive records exist, or the
date of the last transmission of the last
records released. An administrative appeal
for denial of a request for expedited
processing must be made to the
Commissioner of Internal Revenue by
letter that is postmarked within 10
days after the date of any letter of notification
discussed in paragraph
(c)(6)(iv) of this section.
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
(ii) The letter of appeal shall—
(A) Be made in writing and signed by
the requester;
(B) Be addressed to the Commissioner
and mailed to IRS Appeals, 6377A Riverside
Avenue, Suite 110, Riverside,
California 92506–FOIA Appeal;
(C) Reasonably describe the records
requested to which the appeal pertains
in accordance with paragraph (c)(5)(i)
of this section;
(D) Set forth the address where the
appellant desires to be notified of the
determination on appeal;
(E) Specify the date of the request,
the office to which the request was submitted,
and where possible, enclose a
copy of the initial request and the initial
determination being appealed; and
(F) Ask the Commissioner to grant
the request for records, fee waiver, expedited
processing, or favorable fee
category, as applicable, or verify that
an appropriate search was conducted
and the responsive records were either
produced or an appropriate exemption
asserted. The person submitting the
appeal may submit any argument in
support of the appeal in the letter of
appeal.
(iii) Appeals shall be stamped
promptly with the date of their receipt
in the Office of Appeals, and the later
of this stamped date or the stamped
date of a document submitted subsequently
which supplements the original
appeal so that the appeal satisfies
the requirements set forth in paragraphs
(c)(10)(ii)(A) through (F) of this
section shall be deemed by the IRS to
be the date of receipt of the appeal for
all purposes of this section. The Commissioner
or a delegate shall acknowledge
receipt of the appeal and advise
the requester of the date of receipt and
the date a response is due in accordance
with this paragraph. If an appeal
fails to satisfy any of the requirements
of paragraph (c)(10)(ii)(A) through (F)
of this section, the person making the
request shall be advised promptly in
writing of the additional requirements
to be met. Except for appeals of denials
of expedited processing, the determination
to affirm the initial denial (in
whole or in part) or to grant the request
for records shall be made and notification
of the determination shall be
mailed within twenty days (exclusive
of Saturdays, Sundays, and legal public
holidays) after the date of receipt of
the appeal unless extended pursuant to
paragraph (c)(11)(i) of this section. Appeals
of initial determinations to deny
expedited processing must be made
within 10 calendar days of the determination
to deny the expedited processing.
If it is determined that the appeal
from the initial denial is to be denied
(in whole or in part), the requester
shall be notified in writing of the denial,
the reasons therefor, the name
and title or position of the official responsible
for the denial on appeal, and
the provisions of 5 U.S.C. 552(a)(4) for
judicial review of that determination.
(11) Time extensions—(i) Unusual circumstances.
(A) In unusual circumstances,
the time limitations specified
in paragraphs (c)(9) and (10) of this
section may be extended by written notice
from the official charged with the
duty of making the determinations to
the person making the request or appeal
setting forth the reasons for this
extension and the date on which the
determination is expected to be sent.
As used in this paragraph, the term unusual
circumstances means, but only to
the extent reasonably necessary to the
proper processing of the particular request:
(1) The need to search for and collect
the requested records from field facilities
or other establishments that are
separate from the office processing the
request;
(2) The need to search for, collect,
and appropriately examine a voluminous
amount of separate and distinct
records which are demanded in a single
request;
(3) The need for consultation, which
shall be conducted with all practicable
speed, with another agency having a
substantial interest in the determination
of the request or among two or
more constituent units of the Department
of the Treasury having substantial
subject matter interest therein;
and
(4) The need for consultation with
business submitters to determine the
nature and extent of proprietary information
in accordance with this section.
(B) Any extension or extensions of
time for unusual circumstances shall
not cumulatively total more than ten
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Internal Revenue Service, Treasury § 601.702
days (exclusive of Saturday, Sunday
and legal public holidays). If additional
time is needed to process the request,
the IRS shall notify the requester and
provide the requester an opportunity
to limit the scope of the request or arrange
for an alternative time frame for
processing the request or a modified request.
The requester shall retain the
right to define the desired scope of the
request, as long as it meets the requirements
contained in this section.
(ii) Aggregation of requests. If more
than one request is received from the
same requester, or from a group of requesters
acting in concert, and the IRS
believes that such requests constitute
a single request which would otherwise
satisfy the unusual circumstances
specified in subparagraph (c)(11)(i) of
this section, and the requests involve
clearly related matters, the IRS may
aggregate these requests for processing
purposes. Multiple requests involving
unrelated matters shall not be aggregated.
(12) Failure to comply. If the IRS fails
to comply with the time limitations
specified in paragraphs (c)(9), (10), or
paragraph (c)(11)(i) of this section, any
person making a request for records
satisfying the requirements of paragraphs
(c)(4)(i)(A) through (I) of this
section, shall be deemed to have exhausted
administrative remedies with
respect to such request. Accordingly,
this person may initiate suit in accordance
with paragraph (c)(13) of this section.
(13) Judicial review. If an administrative
appeal pursuant to paragraph
(c)(10) of this section for records or fee
waiver or reduction is denied, or if a request
for expedited processing is denied
and there has been no determination as
to the release of records, or if a request
for a favorable fee category under paragraph
(f)(3) of this section is denied, or
a determination is made that there are
no responsive records, or if no determination
is made within the twenty
day periods specified in paragraphs
(c)(9) and (10) of this section, or the period
of any extension pursuant to paragraph
(c)(11)(i) of this section, or by
grant of the requester, respectively,
the person making the request may
commence an action in a United States
district court in the district in which
the requester resides, in which the requester’s
principal place of business is
located, in which the records are situated,
or in the District of Columbia,
pursuant to 5 U.S.C. 552(a)(4)(B). The
statute authorizes an action only
against the agency. With respect to
records of the IRS, the agency is the
IRS, not an officer or an employee
thereof. Service of process in such an
action shall be in accordance with the
Federal Rules of Civil Procedure (28
U.S.C. App.) applicable to actions
against an agency of the United States.
Delivery of process upon the IRS shall
be directed to the Commissioner of Internal
Revenue, Attention: CC:PA, 1111
Constitution Avenue, NW., Washington,
DC 20224. The IRS shall serve
an answer or otherwise plead to any
complaint made under this paragraph
within 30 days after service upon it, unless
the court otherwise directs for
good cause shown. The district court
shall determine the matter de novo,
and may examine the contents of the
IRS records in question in camera to determine
whether such records or any
part thereof shall be withheld under
any of the exemptions described in 5
U.S.C. 552(b) and the exclusions described
in 5 U.S.C. 552(c). The burden
shall be upon the IRS to sustain its action
in not making the requested
records available. The court may assess
against the United States reasonable
attorney fees and other litigation costs
reasonably incurred by the person
making the request in any case in
which the complainant has substantially
prevailed.
(14) Preservation of records. All correspondence
relating to the requests
received by the IRS under this chapter,
and all records processed pursuant to
such requests, shall be preserved, until
such time as the destruction of such
correspondence and records is authorized
pursuant to title 44 of the United
States Code. Under no circumstances
shall records be destroyed while they
are the subject of a pending request,
appeal, or lawsuit under 5 U.S.C. 552.
(d) Rules for disclosure of certain specified
matters. Requests for certain specified
categories of records shall be processed
by the IRS in accordance with
other established procedures.
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
(1) Inspection of tax returns and attachments
or transcripts. The inspection of
returns and attachments is governed
by the provisions of the internal revenue
laws and regulations thereunder
promulgated by the Secretary of the
Treasury. See section 6103 and the regulations
thereunder. Written requests
for a copy of a tax return and attachments
or a transcript of a tax return
shall be made using IRS form 4506,
‘‘Request for Copy or Transcript of Tax
Form.’’ A reasonable fee, as the Commissioner
may from time to time establish,
may be charged for such copies.
(2) Record of seizure and sale of real estate.
Subject to the rules on disclosure
set forth in section 6103, record 21, part
2, ‘‘Record of seizure and sale of real
estate’’, is available for public inspection
in the local IRS office where the
real estate is located. Copies of Record
21, part 2 shall be furnished upon written
request. Members of the public may
call the toll-free IRS Customer Service
number, 1–800–829–1040, to obtain the
address of the appropriate local office.
Record 21 does not list real estate
seized for use in violation of the internal
revenue laws (see section 7302).
(3) Public inspection of certain information
returns, notices, and reports furnished
by certain tax-exempt organizations
and certain trusts. Subject to the
rules on disclosure set forth in section
6104: Information furnished on any
form 990 series or form 1041–A returns,
pursuant to sections 6033 and 6034, shall
be made available for public inspection
and copying, upon written request; information
furnished by organizations
exempt from tax under section 527 on
forms 8871, Political Organization Notice
of Section 527 Status, and forms
8872, Political Organization Report of
Contributions and Expenditures, are
available for public inspection and
copying from the IRS Web site at
http://www.eforms.irs.gov. In addition, forms
8871 and 8872 shall be made available
for public inspection and copying, upon
written request; and information furnished
by organizations exempt from
tax under section 527 on form 1120–POL
pursuant to section 6012(a)(6) shall be
made available for public inspection
and copying upon written request.
Written requests to inspect or obtain
copies of any of the information described
in this paragraph (d)(3) shall be
made using form 4506–A, ‘‘Request for
Public Inspection or Copy of Exempt or
Political Organization IRS Form,’’ and
be directed to the appropriate address
listed on form 4506–A.
(4) Public inspection of applications and
determinations of certain organizations
for tax exemption. Subject to the rules
on disclosure set forth in section 6104,
applications, including forms 1023 and
1024, and certain papers submitted in
support of such applications, filed by
organizations described in section
501(c) or (d) and determined to be exempt
from taxation under section
501(a), and any letter or other document
issued by the IRS with respect to
such applications, shall be made available
for public inspection and copying,
upon written request. Written requests
to inspect or obtain copies of this information
shall be made using form
4506–A, ‘‘Request for Public Inspection
or Copy of Exempt or Political Organization
IRS Form’’ and be directed to
the appropriate address listed on form
4506–A.
(5) Public inspection of applications and
annual returns with respect to certain deferred
compensation plans and accounts
and employee plans. Subject to the rules
on disclosure set forth in section 6104;
forms, applications, and papers submitted
in support of such applications,
with respect to the qualification of a
pension, profit sharing, or stock bonus
plan under sections 401(a), 403(a), or
405(a), an individual retirement account
described in section 408(a), an individual
retirement annuity described
in section 408(b), or with respect to the
exemption from tax of an organization
forming part of such a plan or account,
and any document issued by the IRS
dealing with such qualification or exemption,
shall be open to public inspection
and copying upon written request.
This paragraph shall not apply with respect
to plans with no more than 25
plan participants. Written requests to
inspect or obtain copies of such material
shall be directed to IRS Customer
Service—Tax Exempt & Government
Entities Division (TEGE), PO Box 2508,
Room 2023, Cincinnati, Ohio 45201; and
information furnished on the Form 5500
series of returns, pursuant to section
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Internal Revenue Service, Treasury § 601.702
6058, shall be made available for public
inspection and copying upon written
request. Except for requests for form
5500–EZ, written requests to inspect or
to obtain a copy of this information
shall be directed to the Department of
Labor, Public Disclosure, Room N–5638,
200 Constitution Avenue, NW., Washington,
DC 20210. Written requests to
inspect or to obtain a copy of form
5500–EZ shall be directed to the Internal
Revenue Service Center, PO Box
9941, Stop 6716, Ogden, Utah 84409.
(6) Publication of statistics of income.
Statistics with respect to the operation
of the income tax laws are published
annually in accordance with section
6108 and § 301.6108–1.
(7) Comments received in response to a
notice of proposed rulemaking, a solicitation
for public comments, or prepublication
comments. Written comments received
in response to a notice of proposed
rulemaking, a solicitation for
public comments, or prepublication
comments, may be inspected, upon
written request, by any person upon
compliance with the provisions of this
paragraph. Comments may be inspected
in the Freedom of Information
Reading Room, IRS, 1111 Constitution
Avenue, NW., Room 1621, Washington,
DC. The request to inspect comments
must be in writing and signed by the
person making the request and shall be
addressed to the Commissioner of Internal
Revenue, Attn: CC:ITA:RU, PO
Box 7604, Ben Franklin Station, Washington,
DC 20044. The person submitting
the written request may inspect
the comments that are the subject of
the request during regular business
hours. If the requester wishes to inspect
the documents, the requester
shall be contacted by IRS Freedom of
Information Reading Room personnel
when the documents are available for
inspection. Copies of comments may be
made in the Freedom of Information
Reading Room by the person making
the request or may be requested, in
writing, to the Commissioner of Internal
Revenue, Attn: CC:ITA:RU, PO Box
7604, Ben Franklin Station, Washington,
DC 20044. The IRS shall comply
with requests for records under the
paragraph within a reasonable time.
The provisions of paragraph (f)(5)(iii) of
this section, relating to fees for duplication,
shall apply with respect to requests
made in accordance with this
paragraph.
(8) Accepted offers in compromise. For
one year after the date of execution, a
copy of the form 7249, ‘‘Offer Acceptance
Report,’’ for each accepted offer
in compromise with respect to any liability
for a tax imposed by title 26
shall be made available for inspection
and copying in the location designated
by the Compliance Area Director or
Compliance Services Field Director
within the Small Business and Self-
Employed Division (SBSE) of the taxpayer’s
geographic area of residence.
(9) Public inspection of written determinations.
Certain rulings, determination
letters, technical advice memorandums,
and Chief Counsel advice are
open to public inspection pursuant to
section 6110.
(e) Other disclosure procedures. For
procedures to be followed by officers
and employees of the IRS upon receipt
of a request or demand for certain internal
revenue records or information
the disclosure procedure for which is
not covered by this section, see
§ 301.9000–1.
(f) Fees for services—(1) In general. Except
as otherwise provided, the fees to
be charged for search, duplication, and
review services performed by the IRS,
with respect to the processing of Freedom
of Information Act requests, shall
be determined and collected in accordance
with the provisions of this subsection.
A fee shall not be charged for
monitoring a requester’s inspection of
records which contains exempt matter.
The IRS may recover the applicable
fees even if there is ultimately no disclosure
of records. Should services
other than the services described in
this paragraph be requested and rendered,
which are not required by the
Freedom of Information Act, fees shall
be charged to recover the actual direct
cost to the IRS.
(2) Waiver or reduction of fees. (i) The
fees authorized by this paragraph may
be waived or reduced on a case-by-case
basis in accordance with this subsection
by any IRS official who is authorized
to make the initial determination
pursuant to paragraph (c)(9) of
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128
§ 601.702 26 CFR Ch. I (4–1–03 Edition)
this section. Fees shall be waived or reduced
by such official when it is determined
that disclosure of the requested
information is in the public interest
because it is likely to contribute significantly
to public understanding of
the operations or activities of the IRS
and is not primarily in the commercial
interest of the requester. Such officials
shall consider several factors, including,
but not limited to, paragraphs
(f)(2)(i) through (vi), in determining requests
for waiver or reduction of fees-
(A) Whether the subject of the releasable
records concerns the agency’s operations
or activities;
(B) Whether the releasable records
are likely to contribute to an understanding
of the agency’s operations or
activities;
(C) Whether the releasable records
are likely to contribute to the general
public’s understanding of the agency’s
operations or activities (e.g., how will
the requester convey the information
to the general public);
(D) The significance of the contribution
to the general public’s understanding
of the agency’s operations or
activities (e.g., is the information contained
in the releasable records already
available to the general public);
(E) The existence and magnitude of
the requester’s commercial interest, as
that term is used in paragraph
(f)(3)(i)(A) of this section, being
furthered by the releasable records;
and
(F) Whether the magnitude of the requester’s
commercial interest is sufficiently
large in comparison to the general
public’s interest.
(ii) Requesters asking for reduction
or waiver of fees must state the reasons
why they believe disclosure meets
the standards set forth in paragraph
(f)(2)(ii) of this section in a written request
signed by the requester.
(iii) The indigence of the requester
shall not be considered as a factor to
determine if the requester is entitled
to a reduction or waiver of fees.
(iv) Normally, no charge shall be
made for providing records to federal,
state, local, or foreign governments, or
agencies or offices thereof, or international
governmental organizations.
(v) The initial request for waiver or
reduction of fees shall be addressed to
the official of the IRS to whose office
the request for disclosure is delivered
pursuant to paragraph (c)(4)(i)(C) of
this section. Appeals from denials of
requests for waiver or reduction of fees
shall be decided by the Commissioner’s
delegate in accordance with the criteria
set forth in paragraph (f)(2)(ii) of
this section. Appeals shall be received
by the Commissioner’s delegate within
35 days of the date of the letter of notification
denying the initial request for
waiver or reduction and shall be decided
promptly. See paragraph
(c)(10)(ii)(B) of this section for the appropriate
address. Upon receipt of the
determination on appeal to deny a request
for waiver of fees, the requester
may initiate an action in a United
States district court to review the request
for waiver of fees. In such action,
the court shall consider the matter de
novo, except that the court’s review of
the matter shall be limited to the
record before the IRS official to whose
office the request for waiver is delivered.
In such action, the court shall
consider the matter under the arbitrary
and capricious standard.
(3) Categories of requesters—(i) Attestation.
A request for records under this
section shall include an attestation as
to the status of the requester for use by
the IRS official to whose office the request
is delivered in determining the
appropriate fees to be assessed. No attestation
is required for a requester
who falls within paragraph
(f)(3)(ii)(E)(an ‘‘other requester’’).
(ii) Categories—(A) Commercial use requester.
Any person who seeks information
for a use or purpose that furthers
the commercial, trade, or profit interests
of the requester or the person on
whose behalf the request is made.
(B) News media requester. Any person
actively gathering news for an entity
that is organized and operated to publish
or broadcast news (i.e., information
about current events or of current
interest to the public) to the public.
News media entities include, but are
not limited to, television or radio stations
broadcasting to the public at
large, publishers of periodicals, to the
extent they disseminate news, who
make their periodicals available for
purchase or subscription by the general
public, computerized news services and
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Internal Revenue Service, Treasury § 601.702
telecommunications. Free lance journalists
shall be included as media requesters
if they can demonstrate a
solid basis for expecting publication
through a qualifying news entity (e.g.,
publication contract, past publication
record). Specialized periodicals, although
catering to a narrower audience,
may be considered media requesters
so long as they are available to the
public generally, via newsstand or subscription.
(C) Educational institution requester.
Any person who, on behalf of a preschool,
public or private elementary or
secondary school, institution of undergraduate
or graduate higher education,
institution of professional or vocational
education, which operates a program
or programs of scholarly research,
seeks records in furtherance of
the institution’s scholarly research and
is not for a commercial use. This category
does not include requesters
wanting records for use in meeting individual
academic research or study requirements.
(D) Noncommercial scientific institution
requester. Any person on behalf of an
institution that is not operated on a
commercial basis, that is operated
solely for the purpose of conducting
scientific research whose results are
not intended to promote any particular
product or industry.
(E) Other requester. Any requester
who does not fall within the categories
described in paragraphs (f)(3)(ii)(A)
through (D).
(iii) Determination of proper category.
Where the IRS has reasonable cause to
doubt the use to which a requester
shall put the records sought, or where
that use is not clear from the record
itself, the IRS shall seek additional
clarification from the requester before
assigning the request to a specific category.
In any event, a determination of
the proper category of requester shall
be based upon a review of the requester’s
submission and may also be based
upon the IRS’ own records.
(iv) Allowable charges—(A) Commercial
use requesters. Records shall be provided
to commercial use requesters for the
cost of search, duplication, and review
(including doing all that is necessary
to excise and otherwise prepare records
for release) of records. Commercial use
requesters are not entitled to two
hours of free search time or 100 pages
of free duplication.
(B) News media, educational institution,
and noncommercial scientific institution
requesters. Records shall be provided
to news media, educational institution,
and noncommercial scientific
institution requesters for the cost of
duplication alone, excluding fees for
the first 100 pages.
(C) Other requesters. Requesters who
do not fit into any of the above categories
shall be charged fees that shall
cover the full actual direct cost of
searching for and duplicating records,
except that the first two hours of
search time and first 100 pages of duplication
shall be furnished without
charge. Requests from individuals for
records about themselves maintained
in the IRS’s systems of records shall
continue to be treated under the fee
provisions of the Privacy Act of 1974,
which permits fees only for duplication
after the first 100 pages are furnished
free of charge.
(4) Avoidance of unexpected fees. (i) In
order to protect requesters from unexpected
fees, all requests for records
shall state the agreement of the requesters
to pay the fees determined in
accordance with paragraph (f)(5) of this
section or state the upper limit they
are willing to pay to cover the costs of
processing their requests.
(ii) When the fees for processing requests
are estimated by the IRS to exceed
the upper limit agreed to by a requester,
or when a requester has failed
to state a limit and the costs are estimated
to exceed $250, and the IRS has
not then determined to waive or reduce
the fees, a notice shall be sent to the
requester. This notice shall—
(A) Inform the requester of the estimated
costs;
(B) Extend an offer to the requester
to confer with agency personnel in an
attempt to reformulate the request in
a manner which shall reduce the fees
and still meet the needs of the requester;
(C) If the requester is not amenable
to reformulation, which would reduce
fees to under $250, then advance payment
of the estimated fees shall be required;
and
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
(D) Inform the requester that the
time period, within which the IRS is
obliged to make a determination on
the request, shall not begin to run,
pending a reformulation of the request
or the receipt of advance payment from
the requester, as appropriate.
(5) Fees for services. The fees for services
performed by the IRS shall be imposed
and collected as set forth in this
paragraph. No fees shall be charged if
the costs of routine collecting and
processing the fees allowable under 5
U.S.C. 552(a)(4)(A) are likely to equal or
exceed the amount of the fee.
(i) Search services. Fees charged for
search services are as follows:
(A) Searches for records other than
computerized records. The IRS shall
charge for search services at the salary
rate(s) (i.e., basic pay plus 16 percent)
of the employee(s) making the search.
An average rate for the range of grades
typically involved may be established.
Fees may be charged for search time as
prescribed in this section even if the
time spent searching does not yield
any records, or if records are denied.
(B) Searches for computerized records.
Actual direct cost of the search, including
computer search time, runs,
and the operator’s salary. The fee for
computer output shall be actual direct
costs. For requesters in the ‘‘other requester’’
category, the charge for the
computer search shall begin when the
cost of the search (including the operator
time and the cost of operating the
computer) equals the equivalent dollar
amount of two hours of the salary of
the person performing the search.
(C) Searches requiring travel or transportation.
Shipping charges to transport
records from one location to another,
or for the transportation of an
employee to the site of requested
records when it is necessary to locate
rather than examine the records, shall
be at the rate of the actual cost of such
shipping or transportation.
(ii) Review Services—(A) Review defined.
Review is the process of examining
records in response to a commercial
use requester, as that term is defined
in paragraph (f)(3)(i)(A), upon initial
consideration of the applicability
of an exemption described in 5 U.S.C.
552(b) or an exclusion described in 5
U.S.C. 552(c) to the requested records,
be it at the initial request or administrative
appeal level, to determine
whether any portion of any record responsive
to the request is permitted to
be withheld. Review includes doing all
that is necessary to excise and otherwise
prepare the records for release.
Review does not include the time spent
on resolving general legal or policy
issues regarding the applicability of exemptions
to the requested records.
(B) Fees charged for review services.
The IRS shall charge commercial use
requesters for review of records at the
initial determination stage at the salary
rate(s) (i.e., basic pay plus 16 percent)
of the employee(s) making the review.
An average rate for the range of
grades typically involved may be established
by the Commissioner.
(iii) Duplication other than for tax returns
and attachments. (A) Duplication
fees charged for copies of paper records
shall be a reasonable fee, as the Commissioner
may from time to time establish.
(B) The actual direct cost of duplication
for photographs, films, videotapes,
audiotapes, compact disks, and other
materials shall be charged.
(C) Records may be provided to a private
contractor for copying and the requester
shall be charged for the actual
cost of duplication charged by the private
contractor.
(D) When other duplication processes
not specifically identified above are requested
and provided pursuant to the
Freedom of Information Act, their actual
direct cost to the IRS shall be
charged.
(E) Where the condition of the record
does not enable the IRS to make legible
copies, the IRS shall not attempt
to reconstruct it. The official having
jurisdiction over the record shall furnish
the best copy that is available and
advise the requester of this fact.
(iv) Charges for copies of tax returns
and attachments, and transcripts of tax
returns. A charge shall be made for
each copy of a tax return and its attachments,
and transcripts of tax returns,
supplied in response to a form
4506, ‘‘Request for Copy of Tax Form.’’
The amount of the charge shall be a
reasonable fee as computed by the
Commissioner from time to time, and
as set forth on form 4506.
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Internal Revenue Service, Treasury § 601.702
(v) Other services. Other services and
materials requested (e.g., certification,
express mailing) which are not specifically
covered by this part and/or not
required by the Freedom of Information
Act are provided at the discretion
of the IRS and are chargeable at the
actual direct cost to the IRS.
(6) Printed material. Certain relevant
government publications which shall
be placed on the shelves of the Freedom
of Information Reading Room
shall not be sold at that location. Copies
of pages of these publications may
be duplicated on the premises and a fee
for such service may be charged in accordance
with paragraph (f)(5)(iii) of
this section. A person desiring to purchase
the complete publication, for example,
an Internal Revenue Bulletin,
should contact the Superintendent of
Documents, U.S. Government Printing
Office, Washington, DC 20402.
(7) Search, duplication, and deletion
services with respect to records open to
public inspection pursuant to section 6110.
Fees charged for searching for, making
deletions in, and copies of records subject
to public inspection pursuant to
section 6110 only upon written request
shall be at the actual cost, as the Commissioner
may from time to time establish.
(8) Form of payment. Payment shall be
made by check or money order, payable
to the order of the Treasury of the
United States.
(9) Advance payments. (i) If previous
fees have not been paid in a timely
fashion, as defined in paragraph (f)(10)
of this section, or where the estimated
fees exceed $250, the IRS shall require
payment in full of any outstanding fees
and all estimated fees prior to processing
a request. Additionally, the IRS
reserves the right to require payment
of fees after a request is processed and
before any records are released to a requester.
For purposes of this paragraph,
a requester is the individual in
whose name a request is made; however,
where a request is made on behalf
of another individual, and previous fees
have not been paid within the designated
time period by either the requester
or the individual on whose behalf
the request is made, then the IRS
shall require payment in full of all outstanding
fees and all estimated fees before
processing the request.
(ii) When the IRS acts pursuant to
paragraph (f)(9)(i) of this section, the
administrative time limits prescribed
in paragraphs (c)(9) and (10) of this section,
plus permissible extensions of
these time limits as prescribed in paragraph
(c)(11)(i) of this section, shall
begin only after the IRS official to
whom the request is delivered has received
the fees described above in paragraph
(f)(9)(i) of this section.
(10) Interest. Interest shall be charged
to requesters who fail to pay the fees in
a timely fashion; that is, within 30
days following the day on which the
statement of fees as set forth in paragraph
(c)(9)(i) of this section was sent
by the IRS official to whom the request
was delivered. Whenever interest is
charged, the IRS shall begin assessing
interest on the 31st day following the
date the statement of fees was mailed
to the requester. Interest shall be at
the rate prescribed in 31 U.S.C. 3717. In
addition, the IRS shall take all steps
authorized by the Debt Collection Act
of 1982, including administrative offset,
disclosure to consumer reporting agencies,
and use of collection agencies, as
otherwise authorized by law to effect
payment.
(11) Aggregating requests. When the
IRS official to whom a request is delivered
reasonably believes that a requester
or group of requesters is attempting
to break down a request into
a series of requests for the purpose of
evading the assessment of fees, the IRS
shall aggregate such requests and
charge accordingly, upon notification
to the requester and/or requesters.
(g) Business information and contractor
proposal procedures— (1) In general.
Business information provided to the
IRS by a business submitter shall not
be disclosed pursuant to a Freedom of
Information Act request except in accordance
with this section.
(2) Definition. Business information is
any trade secret or other confidential
financial or commercial (including research)
information.
(3) Notice to business submitters. Except
where it is determined that the information
is covered by paragraph
(g)(9), the official having control over
the requested records, which includes
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
business information, shall provide a
business submitter with prompt written
notice of a request encompassing
its business information whenever required
in accordance with paragraph
(g)(4) of this section. Such written notice
shall either describe the exact nature
of the business information requested
or provide copies of the records
or portions thereof containing the business
information.
(4) When notice is required. (i) For
business information submitted to the
IRS prior to October 13, 1987, the official
having control over the requested
records shall provide a business submitter
with notice of a request whenever—
(A) The business information was
submitted to the IRS upon a commitment
of confidentiality; or
(B) The business information was voluntarily
submitted and it is of a kind
that would customarily not be released
to the public by the person from whom
it was obtained; or
(C) The official has reason to believe
that disclosure of the information may
result in commercial or financial injury
to the business submitter.
(ii) For business information submitted
to the IRS on or after October
13, 1987, the IRS shall provide a business
submitter with notice of a request
whenever—
(A) The business submitter has designated
the information as commercially
or financially sensitive information;
or
(B) The official has reason to believe
that disclosure of the information may
result in commercial or financial injury
to the business submitter.
(iii) The business submitter’s designation
that the information is commercially
or financially sensitive information
should be supported by a statement
or certification by an officer or
authorized representative of the business
providing specific justification
that the information in question is, in
fact, confidential commercial or financial
information and has not been disclosed
to the public.
(iv) Notice of a request for business
information falling within paragraph
(g)(4)(ii)(A) of this section shall be required
for a period of not more than
ten years after the date of submission
unless the business submitter requests,
and provides acceptable justification
for, a specific notice period of greater
duration.
(5) Opportunity to object to disclosure.
Through the notice described in paragraph
(g)(3) of this section, the official
having control over the requested
records shall afford a business submitter
ten days (excepting Saturdays,
Sundays and legal public holidays)
within which to provide the official
with a detailed statement of any objection
to disclosure. Such statement
shall specify all grounds for withholding
any of the information, with
particular attention to why the information
is claimed to be trade secret or
commercial or financial information
that is privileged and confidential. Information
provided by a business submitter
pursuant to this paragraph may
itself be subject to disclosure under 5
U.S.C. 552.
(6) Notice of intent to disclose. The IRS
shall consider a business submitter’s
objections and specific grounds for nondisclosure
prior to determining whether
to disclose business information.
Whenever the official having control
over the requested records decides to
disclose business information over the
objection of a business submitter, the
official shall forward to the business
submitter a written notice which shall
include—
(i) A statement of the reasons for
which the business submitter’s disclosure
objections were not sustained;
(ii) A description of the business information
to be disclosed; and
(iii) A specified disclosure date,
which is ten days (excepting Saturdays,
Sundays and legal public holidays)
after the notice of the final decision
to release the requested records
has been mailed to the submitter. Except
as otherwise prohibited by law, a
copy of the disclosure notice shall be
forwarded to the requester at the same
time.
(7) Judicial review—(i) In general. The
IRS’ disposition of the request and the
submitter’s objections shall be subject
to judicial review under paragraph
(c)(14) of this section. A requester is
not required to exhaust administrative
remedies if a complaint has been filed
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Internal Revenue Service, Treasury § 601.702
under this paragraph by a business submitter
of the information contained in
the requested records. Likewise, a business
submitter is not required to exhaust
administrative remedies if a
complaint has been filed by the requester
of these records.
(ii) Notice of FOIA lawsuit. Whenever
a requester brings suit seeking to compel
disclosure of business information
covered by paragraph (g)(4) of this section,
the official having control over
the requested records shall promptly
provide the business submitter with
written notice thereof.
(iii) Exception to notice requirement.
The notice requirements of this paragraph
shall not apply if—
(A) The official having control over
the records determines that the business
information shall not be disclosed;
(B) The information lawfully has
been published or otherwise made
available to the public; or
(C) Disclosure of the information is
required by law (other than 5 U.S.C.
552).
(8) Appeals. Procedures for administrative
appeals from denials of requests
for business information are to be processed
in accordance with paragraph
(c)(10) of this section.
(9) Contractor Proposals. (i) Pursuant
to 41 U.S.C. 253b(m), the IRS shall not
release under the Freedom of Information
Act any proposal submitted by a
contractor in response to the requirements
of a solicitation for a competitive
proposal, unless that proposal is
set forth or incorporated by reference
in a contract entered into between the
IRS and the contractor that submitted
the proposal. For purposes of this paragraph,
the term proposal means any
proposal, including a technical, management,
or cost proposal, submitted
by a contractor in response to the requirements
of a solicitation for a competitive
proposal.
(ii) A copy of the FOIA request for information
protected from disclosure
under this paragraph shall be furnished
to the contractor who submitted the
proposal.
(h) Responsible officials and their addresses.
For purposes of this section,
the IRS officials in the disclosure offices
listed below are responsible for
the control of records within their geographic
area. In the case of records of
the Headquarters Office (including
records of the National Office of the Office
of Chief Counsel), except as provided
in paragraph (c)(9)(i)(A), the Director,
Office of Governmental Liaison
and Disclosure, or delegate, is the responsible
official. Requests for these
records should be sent to: IRS FOIA
Request, Headquarters Disclosure Office,
CL:GLD:D, 1111 Constitution Avenue,
NW., Washington, DC 20224.
(1) For Personnel Background Investigation
Records, the address of the responsible
official is: Internal Revenue
Service, Attn: Associate Director, Personnel
Security, Room 4244, A:PS:PSO,
1111 Constitution Avenue, NW. Washington,
DC 20224.
(2) For records of the Office of Chief
Counsel other than those located in the
Headquarters or Division Counsel immediate
offices, records shall be
deemed to be under the jurisdiction of
the local area Disclosure Office. Requesters
seeking records under this
section should send their requests to
the local area Disclosure Office address
listed for the state where the requester
resides or any activity associated with
the records occurred (for states with
multiple offices, the request should be
sent to the nearest office):
ALABAMA
IRS FOIA Request
New Orleans Disclosure Office
Mail Stop 40
600 S. Maestri Place
New Orleans, LA 70130
ALASKA
IRS FOIA Request
Oakland Disclosure Office
1301 Clay Street, Suite 840–S
Oakland, CA 94612–5210
ARKANSAS
IRS FOIA Request
Nashville Disclosure Office
MDP 44
801 Broadway, Room 480
Nashville, TN 37203
ARIZONA
IRS FOIA Request
Phoenix Disclosure Office
Mail Stop 7000 PHX
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§ 601.702 26 CFR Ch. I (4–1–03 Edition)
210 E. Earll Drive
Phoenix, AZ 85012
CALIFORNIA
IRS FOIA Request
Laguna Niguel Disclosure Office
24000 Avila Road, M/S 2201
Laguna Niguel, CA 92677–0207
IRS FOIA Request
Los Angeles Disclosure Office
Mail Stop 1020
300 N. Los Angeles Street
Los Angeles, CA 90012–3363
IRS FOIA Request
Oakland Disclosure Office
1301 Clay Street, Suite 840–S
Oakland, CA 94612
IRS FOIA Request
San Jose Disclosure Office
Mail Stop HQ–4603
55 South Market Street
San Jose, CA 95113
COLORADO
IRS FOIA Request
Denver Disclosure Office
Mail Stop 7000 DEN
600 17th Street
Denver, CO 80202–2490
CONNECTICUT
IRS FOIA Request
Hartford Disclosure Office
William R. Cotter F.O.B.
Mail Stop 140
135 High Street
Hartford, CT 06103
DELAWARE
IRS FOIA Request
Baltimore Disclosure Office
George Fallon Fed. Bldg.
31 Hopkins Plaza, Room 1210
Baltimore, MD 21201
DISTRICT OF COLUMBIA
IRS FOIA Request
Baltimore Disclosure Office
George Fallon Fed. Bldg.
31 Hopkins Plaza, Room 1210
Baltimore, MD 21201
FLORIDA
IRS FOIA Request
Fort Lauderdale Disclosure Off.
Mail Stop 4030
7850 SW 6th Court, Rm. 260
Plantation, FL 33324–3202
IRS FOIA Request
Jacksonville Disclosure Office
MS 4030
400 West Bay Street
Jacksonville, FL 32202–4437
GEORGIA
IRS FOIA Request
Atlanta Disclosure Office
Mail Stop 602D, Room 1905
401 W. Peachtree Street, NW
Atlanta, GA 30308
HAWAII
IRS FOIA Request
Laguna Niguel Disclosure Office
24000 Avila Road, M/S 2201
Laguna Niguel, CA 92677–0207
IDAHO
IRS FOIA Request
Seattle Disclosure Office
Mail Stop W625
915 2nd Avenue
Seattle, WA 98174
ILLINOIS
IRS FOIA Request
Chicago Disclosure Office
Mail Stop 7000 CHI, Room 2820
230 S. Dearborn Street
Chicago, IL 60604
INDIANA
IRS FOIA Request
Indianapolis Disclosure Office
Mail Stop CL 658
575 N. Penn. Street
Indianapolis, IN 46204
IOWA
IRS FOIA Request
St. Paul Disclosure Office
Stop 7000
316 N. Robert Street
St. Paul, MN 55101
KANSAS
IRS FOIA Request
St. Louis Disclosure Office
Mail Stop 7000 STL
PO Box 66781
St. Louis, MO 63166
KENTUCKY
IRS FOIA Request
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Internal Revenue Service, Treasury § 601.702
Cincinnati Disclosure Office
Post Office Box 1818, Rm. 7019
Cincinnati, OH 45201
LOUISIANA
IRS FOIA Request
New Orleans Disclosure Office
Mail Stop 40
600 S. Maestri Place
New Orleans, LA 70130
MAINE
IRS FOIA Request
Boston Disclosure Office
Mail Stop 41150
Post Office Box 9112
JFK Building
Boston, MA 02203
MARYLAND
IRS FOIA Request
Baltimore Disclosure Office
George Fallon Fed. Bldg.
31 Hopkins Plaza, Room 1210
Baltimore, MD 21201
MASSACHUSETTS
IRS FOIA Request
Boston Disclosure Office
Mail Stop 41150
JFK Building
Post Office Box 9112
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[67 FR 69675, Nov. 19, 2002]
Subpart H—Tax Counseling for the
Elderly
AUTHORITY: Sec. 163(b)(5) of the Revenue
Act of 1978, Pub. L. 95–600, Nov. 6, 1978 (92
Stat. 2811) and Pub. L. 89–554, Sept. 6, 1966 (80
Stat. 379, 5 U.S.C. 301).
SOURCE: 44 FR 72113, Dec. 13, 1979, unless
otherwise noted.
§ 601.801 Purpose and statutory authority.
(a) This Subpart H contains the rules
for implementation of the Tax Counseling
for the Elderly assistance program
under section 163 of the Revenue
Act of 1978, Pub. L. 95–600, November 6,
1978 (92 Stat. 2810). Section 163 authorizes
the Secretary of the Treasury,
through the Internal Revenue Service,
to enter into agreements with private
or public non-profit agencies or organizations
for the purpose of providing
training and technical assistance to
prepare volunteers to provide tax counseling
assistance for elderly individuals,
age 60 and over, in the preparation
of their Federal income tax returns.
(b) Section 163 provides that the Secretary
may provide:
(1) Preferential access to Internal
Revenue Service taxpayer service representatives
for the purpose of making
available technical information needed
during the course of the volunteers’
work;
(2) Publicity for making elderly persons
aware of the availability of volunteer
taxpayer return preparation assistance
programs under this section;
and
(3) Technical materials and publications
to be used by such volunteers.
(c) In carrying out responsibilities
under section 163, the Secretary,
through the Internal Revenue Service
is also authorized:
(1) To provide assistance to organizations
which demonstrate, to the satisfaction
of the Secretary, that their volunteers
are adequately trained and
competent to render effective tax counseling
to the elderly in the preparation
of Federal income tax returns;
(2) To provide for the training of such
volunteers, and to assist in such training,
to ensure that such volunteers are
qualified to provide tax counseling assistance
to elderly individuals in the
preparation of Federal income tax returns;
(3) To provide reimbursement to volunteers
through such organizations for
transportation, meals, and other expenses
incurred by them in training or
providing tax counseling assistance in
the preparation of Federal income tax
returns under this section, and such
other support and assistance determined
to be appropriate in carrying
out the provisions of the section;
VerDate Jan2003 09:50 Apr 12, 2003 Jkt 200100 PO 00000 Frm 00137 Fmt 8010 Sfmt 8010 Y:\SGML\200100T.XXX 200100T http://edocket.access.gpo.gov/cfr_2003/aprqtr/pdf/26cfr601.702.pdf

236 U.S. 1 (1915)
COPPAGE
v.
STATE OF KANSAS.
No. 48.

Supreme Court of United States.
Submitted October 30, 1914.
Decided January 25, 1915.
ERROR TO THE SUPREME COURT OF THE STATE OF KANSAS.

4*4 Mr. R.R. Vermilion and Mr. W.F. Evans for plaintiff in error.

Mr. John S. Dawson, Attorney General of the State of Kansas, and Mr. J.I. Sheppard for defendant in error.

6*6 MR. JUSTICE PITNEY delivered the opinion of the court.

In a local court in one of the counties of Kansas, plaintiff in error was found guilty and adjudged to pay a fine, with imprisonment as the alternative, upon an information charging him with a violation of an act of the legislature of that State, approved March 13, 1903, being Chap. 222 of the session laws of that year, found also as §§ 4674 and 4675, Gen. Stat. Kansas 1909. The act reads as follows:

“AN ACT to provide a penalty for coercing or influencing or making demands upon or requirements of employes, servants, laborers, and persons seeking employment.

“Be it Enacted, etc.:

“SECTION 1. That it shall be unlawful for any individual or member of any firm, or any agent, officer or employe of any company or corporation, to coerce, require, demand or influence any person or persons to enter into any agreement, either written or verbal, not to join or become or remain a member of any labor organization or association, as a condition of such person or persons securing employment, or continuing in the employment of such individual, firm, or corporation.

“SEC. 2. Any individual or member of any firm or any 7*7 agent, officer or employe of any company or corporation violating the provisions of this act shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined in a sum not less than fifty dollars or imprisoned in the county jail not less than thirty days.”

The judgment was affirmed by the Supreme Court of the State, two justices dissenting (87 Kansas, 752), and the case is brought here upon the ground that the statute, as construed and applied in this case, is in conflict with that provision of the Fourteenth Amendment of the Constitution of the United States which declares that no State shall deprive any person of liberty or property without due process of law.

The facts, as recited in the opinion of the Supreme Court, are as follows: About July 1, 1911, one Hedges was employed as a switchman by the St. Louis & San Francisco Railway Company, and was a member of a labor organization called the Switchmen’s Union of North America. Plaintiff in error was employed by the railway company as superintendent, and as such he requested Hedges to sign an agreement, which he presented to him in writing, at the same time informing him that if he did not sign it he could not remain in the employ of the company. The following is a copy of the paper thus presented:
Fort Scott, Kansas, ____ ____, 1911.

Mr. T.B. Coppage, Superintendent Frisco Lines, Fort Scott:

We, the undersigned, have agreed to abide by your request, that is, to withdraw from the Switchmen’s Union, while in the service of the Frisco Company.
(Signed) _______________________

Hedges refused to sign this, and refused to withdraw from the labor organization. Thereupon plaintiff in error, as such superintendent, discharged him from the service of the company.

8*8 At the outset, a few words should be said respecting the construction of the act. It uses the term “coerce,” and some stress is laid upon this in the opinion of the Kansas Supreme Court. But, on this record, we have nothing to do with any question of actual or implied coercion or duress, such as might overcome the will of the employe by means unlawful without the act. In the case before us, the state court treated the term “coerce” as applying to the mere insistence by the employer, or its agent, upon its right to prescribe terms upon which alone it would consent to a continuance of the relationship of employer and employe. In this sense we must understand the statute to have been construed by the court, for in this sense it was enforced in the present case; there being no finding, nor any evidence to support a finding, that plaintiff in error was guilty in any other sense. The entire evidence is included in the bill of exceptions returned with the writ of error, and we have examined it to the extent necessary in order to determine the Federal right that is asserted (Southern Pacific Co. v. Schuyler, 227 U.S. 601, 611, and cases cited). There is neither finding nor evidence that the contract of employment was other than a general or indefinite hiring, such as is presumed to be terminable at the will of either party. The evidence shows that it would have been to the advantage of Hedges, from a pecuniary point of view and otherwise, to have been permitted to retain his membership in the union, and at the same time to remain in the employ of the railway company. In particular, it shows (although no reference is made to this in the opinion of the court) that as a member of the union he was entitled to benefits in the nature of insurance to the amount of fifteen hundred dollars, which he would have been obliged to forego if he had ceased to be a member. But, aside from this matter of pecuniary interest, there is nothing to show that Hedges was subjected to the least pressure or influence, or that he was not 9*9 a free agent, in all respects competent, and at liberty to choose what was best from the standpoint of his own interests. Of course, if plaintiff in error, acting as the representative of the railway company, was otherwise within his legal rights in insisting that Hedges should elect whether to remain in the employ of the company or to retain his membership in the union, that insistence is not rendered unlawful by the fact that the choice involved a pecuniary sacrifice to Hedges. Silliman v. United States, 101 U.S. 465, 470, 471; Hackley v. Headley, 45 Michigan, 569, 576; Emery v. Lowell, 127 Massachusetts, 138, 141; Custin v. City of Viroqua, 67 Wisconsin, 314, 320. And if the right that plaintiff in error exercised is founded upon a constitutional basis it cannot be impaired by merely applying to its exercise the term “coercion.” We have to deal, therefore, with a statute that, as construed and applied, makes it a criminal offense punishable with fine or imprisonment for an employer or his agent to merely prescribe, as a condition upon which one may secure certain employment or remain in such employment (the employment being terminable at will), that the employe shall enter into an agreement not to become or remain a member of any labor organization while so employed; the employe being subject to no incapacity or disability, but on the contrary free to exercise a voluntary choice.

In Adair v. United States, 208 U.S. 161, this court had to deal with a question not distinguishable in principle from the one now presented. Congress, in § 10 of an act of June 1, 1898, entitled “An Act concerning carriers engaged in interstate commerce and their employes” (c. 370, 30 Stat. 424, 428), had enacted “That any employer subject to the provisions of this Act and any officer, agent, or receiver of such employer who shall require any employe, or any person seeking employment, as a condition of such employment, to enter into an agreement, either written or verbal, not to become or remain a member 10*10 of any labor corporation, association, or organization; or shall threaten any employe with loss of employment, or shall unjustly discriminate against any employe because of his membership in such a labor corporation, association, or organization . . . is hereby declared to be guilty of a misdemeanor, and, upon conviction thereof . . . shall be punished for each offense by a fine of not less than one hundred dollars and not more than one thousand dollars.” Adair was convicted upon an indictment charging that he, as agent of a common carrier subject to the provisions of the Act, unjustly discriminated against a certain employe by discharging him from the employ of the carrier because of his membership in a labor organization. The court held that portion of the Act upon which the conviction rested to be an invasion of the personal liberty as well as of the right of property guaranteed by the Fifth Amendment, which declares that no person shall be deprived of liberty or property without due process of law. Speaking by Mr. Justice Harlan, the court said (208 U.S., p. 174): “While, as already suggested, the right of liberty and property guaranteed by the Constitution against deprivation without due process of law, is subject to such reasonable restraints as the common good or the general welfare may require, it is not within the functions of government — at least in the absence of contract between the parties — to compel any person in the course of his business and against his will to accept or retain the personal services of another, or to compel any person, against his will, to perform personal services for another. The right of a person to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the purchaser of labor to prescribe the conditions upon which he will accept such labor from the person offering to sell it. So the right of the employe to quit the service of the employer, for whatever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of such 11*11 employe. It was the legal right of the defendant Adair — however unwise such a course might have been — to discharge Coppage [the employe in that case] because of his being a member of a labor organization, as it was the legal right of Coppage, if he saw fit to do so — however unwise such a course on his part might have been — to quit the service in which he was engaged, because the defendant employed some persons who were not members of a labor organization. In all such particulars the employer and the employe have equality of right, and any legislation that disturbs that equality is an arbitrary interference with the liberty of contract which no government can legally justify in a free land.”

Unless it is to be overruled, this decision is controlling upon the present controversy; for if Congress is prevented from arbitrary interference with the liberty of contract because of the “due process” provision of the Fifth Amendment, it is too clear for argument that the States are prevented from the like interference by virtue of the corresponding clause of the Fourteenth Amendment; and hence if it be unconstitutional for Congress to deprive an employer of liberty or property for threatening an employe with loss of employment or discriminating against him because of his membership in a labor organization, it is unconstitutional for a State to similarly punish an employer for requiring his employe, as a condition of securing or retaining employment, to agree not to become or remain a member of such an organization while so employed.

It is true that, while the statute that was dealt with in the Adair Case contained a clause substantially identical with the Kansas act now under consideration — a clause making it a misdemeanor for an employer to require an employe or applicant for employment, as a condition of such employment, to agree not to become or remain a member of a labor organization, — the conviction was 12*12 based upon another clause, which related to discharging an employe because of his membership in such an organization; and the decision, naturally, was confined to the case actually presented for decision. In the present case, the Kansas Supreme Court sought to distinguish the Adair decision upon this ground. The distinction, if any there be, has not previously been recognized as substantial, so far as we have been able to find. The opinion in the Adair Case, while carefully restricting the decision to the precise matter involved, cited (208 U.S. on page 175), as the first in order of a number of decisions supporting the conclusion of the court, a case (People v. Marcus, 185 N.Y. 257), in which the statute denounced as unconstitutional was in substance the counterpart of the one with which we are now dealing.

But, irrespective of whether it has received judicial recognition, is there any real distinction? The constitutional right of the employer to discharge an employe because of his membership in a labor union being granted, can the employer be compelled to resort to this extreme measure? May he not offer to the employe an option, such as was offered in the instant case, to remain in the employment if he will retire from the union; to sever the former relationship only if he prefers the latter? Granted the equal freedom of both parties to the contract of employment, has not each party the right to stipulate upon what terms only he will consent to the inception, or to the continuance, of that relationship? And may he not insist upon an express agreement, instead of leaving the terms of the employment to be implied? Can the legislature in effect require either party at the beginning to act covertly; concealing essential terms of the employment — terms to which, perhaps, the other would not willingly consent — and revealing them only when it is proposed to insist upon them as a ground for terminating the relationship? Supposing an employer is unwilling to have in his 13*13 employ one holding membership in a labor union, and has reason to suppose that the man may prefer membership in the union to the given employment without it — we ask, can the legislature oblige the employer in such case to refrain from dealing frankly at the outset? And is not the employer entitled to insist upon equal frankness in return? Approaching the matter from a somewhat different standpoint, is the employe’s right to be free to join a labor union any more sacred, or more securely founded upon the Constitution, than his right to work for whom he will, or to be idle if he will? And does not the ordinary contract of employment include an insistence by the employer that the employe shall agree, as a condition of the employment, that he will not be idle and will not work for whom he pleases but will serve his present employer, and him only, so long as the relation between them shall continue? Can the right of making contracts be enjoyed at all, except by parties coming together in an agreement that requires each party to forego, during the time and for the purpose covered by the agreement, any inconsistent exercise of his constitutional rights?

These queries answer themselves. The answers, as we think, lead to a single conclusion: Under constitutional freedom of contract, whatever either party has the right to treat as sufficient ground for terminating the employment, where there is no stipulation on the subject, he has the right to provide against by insisting that a stipulation respecting it shall be a sine qua non of the inception of the employment, or of its continuance if it be terminable at will. It follows that this case cannot be distinguished from Adair v. United States.

The decision in that case was reached as the result of elaborate argument and full consideration. The opinion states (208 U.S. 171): “This question is admittedly one of importance, and has been examined with care and deliberation. And the court has reached a conclusion 14*14 which, in its judgment, is consistent with both the words and spirit of the Constitution and is sustained as well by sound reason.” We are now asked, in effect, to overrule it; and in view of the importance of the issue we have re-examined the question from the standpoint of both reason and authority. As a result, we are constrained to re-affirm the doctrine there applied. Neither the doctrine nor this application of it is novel; we will endeavor to re-state some of the grounds upon which it rests. The principle is fundamental and vital. Included in the right of personal liberty and the right of private property — partaking of the nature of each — is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property. If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long-established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich; for the vast majority of persons have no other honest way to begin to acquire property, save by working for money.

An interference with this liberty so serious as that now under consideration, and so disturbing of equality of right, must be deemed to be arbitrary, unless it be supportable as a reasonable exercise of the police power of the State. But, notwithstanding the strong general presumption in favor of the validity of state laws, we do not think the statute in question, as construed and applied in this case, can be sustained as a legitimate exercise of that power. To avoid possible misunderstanding, we should here emphasize, what has been said before, that so far as its title or enacting clause expresses a purpose to deal with coercion, compulsion, duress, or other undue influence, we have no present concern with it, because nothing of that sort is involved in this case. As has 15*15 been many times stated, this court deals not with moot cases or abstract questions, but with the concrete case before it. (California v. San Pablo &c. Railroad, 149 U.S. 308, 314; Richardson v. McChesney, 218 U.S. 487, 492; Missouri, Kan. & Texas Ry. v. Cade, 233 U.S. 642, 648.) We do not mean to say, therefore, that a State may not properly exert its police power to prevent coercion on the part of employers towards employes, or vice versa. But, in this case, the Kansas court of last resort has held that Coppage, the plaintiff in error, is a criminal punishable with fine or imprisonment under this statute simply and merely because, while acting as the representative of the Railroad Company and dealing with Hedges, an employe at will and a man of full age and understanding, subject to no restraint or disability, Coppage insisted that Hedges should freely choose whether he would leave the employ of the Company or would agree to refrain from association with the union while so employed. This construction is, for all purposes of our jurisdiction, conclusive evidence that the State of Kansas intends by this legislation to punish conduct such as that of Coppage, although entirely devoid of any element of coercion, compulsion, duress, or undue influence, just as certainly as it intends to punish coercion and the like. But, when a party appeals to this court for the protection of rights secured to him by the Federal Constitution, the decision is not to depend upon the form of the state law, nor even upon its declared purpose, but rather upon its operation and effect as applied and enforced by the State; and upon these matters this court cannot, in the proper performance of its duty, yield its judgment to that of the state court. St. Louis S.W. Ry. v. Arkansas, 235 U.S. 350, 362, and cases cited. Now, it seems to us clear that a statutory provision which is not a legitimate police regulation cannot be made such by being placed in the same act with a police regulation, or by being enacted under a title that declares a 16*16 purpose which would be a proper object for the exercise of that power. “Its true character cannot be changed by its collocation,” as Mr. Justice Grier said in the Passenger Cases, 7 How. 283, 458. It is equally clear, we think, that to punish an employer or his agent for simply proposing certain terms of employment, under circumstances devoid of coercion, duress, or undue influence, has no reasonable relation to a declared purpose of repressing coercion, duress, and undue influence. Nor can a State, by designating as “coercion” conduct which is not such in truth, render criminal any normal and essentially innocent exercise of personal liberty or of property rights; for to permit this would deprive the Fourteenth Amendment of its effective force in this regard. We of course do not intend to attribute to the legislature or the courts of Kansas any improper purpose or any want of candor; but only to emphasize the distinction between the form of the statute and its effect as applied to the present case.

Laying aside, therefore, as immaterial for present purposes, so much of the statute as indicates a purpose to repress coercive practices, what possible relation has the residue of the Act to the public health, safety, morals or general welfare? None is suggested, and we are unable to conceive of any. The Act, as the construction given to it by the state court shows, is intended to deprive employers of a part of their liberty of contract, to the corresponding advantage of the employed and the upbuilding of the labor organizations. But no attempt is made, or could reasonably be made, to sustain the purpose to strengthen these voluntary organizations, any more than other voluntary associations of persons, as a legitimate object for the exercise of the police power. They are not public institutions, charged by law with public or governmental duties, such as would render the maintenance of their membership a matter of direct concern to the general 17*17 welfare. If they were, a different question would be presented.

As to the interest of the employed, it is said by the Kansas Supreme Court (87 Kansas, p. 759) to be a matter of common knowledge that “employes, as a rule, are not financially able to be as independent in making contracts for the sale of their labor as are employers in making contracts of purchase thereof.” No doubt, wherever the right of private property exists, there must and will be inequalities of fortune; and thus it naturally happens that parties negotiating about a contract are not equally unhampered by circumstances. This applies to all contracts, and not merely to that between employer and employe. Indeed a little reflection will show that wherever the right of private property and the right of free contract co-exist, each party when contracting is inevitably more or less influenced by the question whether he has much property, or little, or none; for the contract is made to the very end that each may gain something that he needs or desires more urgently than that which he proposes to give in exchange. And, since it is self-evident that, unless all things are held in common, some persons must have more property than others, it is from the nature of things impossible to uphold freedom of contract and the right of private property without at the same time recognizing as legitimate those inequalities of fortune that are the necessary result of the exercise of those rights. But the Fourteenth Amendment, in declaring that a State shall not “deprive any person of life, liberty or property without due process of law,” gives to each of these an equal sanction; it recognizes “liberty” and “property” as co-existent human rights, and debars the States from any unwarranted interference with either.

And since a State may not strike them down directly it is clear that it may not do so indirectly, as by declaring in effect that the public good requires the removal of those 18*18 inequalities that are but the normal and inevitable result of their exercise, and then invoking the police power in order to remove the inequalities, without other object in view. The police power is broad, and not easily defined, but it cannot be given the wide scope that is here asserted for it, without in effect nullifying the constitutional guaranty.

We need not refer to the numerous and familiar cases in which this court has held that the power may properly be exercised for preserving the public health, safety, morals, or general welfare, and that such police regulations may reasonably limit the enjoyment of personal liberty, including the right of making contracts. They are reviewed in Holden v. Hardy, 169 U.S. 366, 391; Chicago, B. & Quincy R.R. v. McGuire, 219 U.S. 549, 566; Erie R.R. v. Williams, 233 U.S. 685; and other recent decisions. An evident and controlling distinction is this: that in those cases it has been held permissible for the States to adopt regulations fairly deemed necessary to secure some object directly affecting the public welfare, even though the enjoyment of private rights of liberty and property be thereby incidentally hampered; while in that portion of the Kansas statute which is now under consideration — that is to say, aside from coercion, etc. — there is no object or purpose, expressed or implied, that is claimed to have reference to health, safety, morals, or public welfare, beyond the supposed desirability of leveling inequalities of fortune by depriving one who has property of some part of what is characterized as his “financial independence.” In short, an interference with the normal exercise of personal liberty and property rights is the primary object of the statute, and not an incident to the advancement of the general welfare. But, in our opinion, the Fourteenth Amendment debars the States from striking down personal liberty or property rights, or materially restricting their normal exercise, excepting 19*19 so far as may be incidentally necessary for the accomplishment of some other and paramount object, and one that concerns the public welfare. The mere restriction of liberty or of property rights cannot of itself be denominated “public welfare,” and treated as a legitimate object of the police power; for such restriction is the very thing that is inhibited by the Amendment.

It is said in the opinion of the state court that membership in a labor organization does not necessarily affect a man’s duty to his employer; that the employer has no right, by virtue of the relation, “to dominate the life nor to interfere with the liberty of the employe in matters that do not lessen or deteriorate the service”; and that “the statute implies that labor unions are lawful and not inimical to the rights of employers.” The same view is presented in the brief of counsel for the State, where it is said that membership in a labor organization is the “personal and private affair” of the employe. To this line of argument it is sufficient to say that it cannot be judicially declared that membership in such an organization has no relation to a member’s duty to his employer; and therefore, if freedom of contract is to be preserved, the employer must be left at liberty to decide for himself whether such membership by his employe is consistent with the satisfactory performance of the duties of the employment.

Of course we do not intend to say, nor to intimate, anything inconsistent with the right of individuals to join labor unions, nor do we question the legitimacy of such organizations so long as they conform to the laws of the land as others are required to do. Conceding the full right of the individual to join the union, he has no inherent right to do this and still remain in the employ of one who is unwilling to employ a union man, any more than the same individual has a right to join the union without the consent of that organization. Can it be doubted that a 20*20 labor organization — a voluntary association of working men — has the inherent and constitutional right to deny membership to any man who will not agree that during such membership he will not accept or retain employment in company with non-union men? Or that a union man has the constitutional right to decline proffered employment unless the employer will agree not to employ any non-union man? (In all cases we refer, of course, to agreements made voluntarily, and without coercion or duress as between the parties. And we have no reference to questions of monopoly, or interference with the rights of third parties or the general public. These involve other considerations, respecting which we intend to intimate no opinion. See Curran v. Galen, 152 N.Y. 33; 46 N.E. Rep. 297; Jacobs v. Cohen, 183 N.Y. 207, 213, 214; 76 N.E. Rep. 5; Plant v. Woods, 176 Massachusetts, 492; 57 N.E. Rep. 1011; Berry v. Donovan, 188 Massachusetts, 353; 74 N.E. Rep. 603; 3 A. & E. Ann. Cas. 738; Brennan v. United Hatters, 73 N.J. Law, 729, 738; 65 Atl. Rep. 165, 169; 9 A. & E. Ann. Cas. 698, 702.) And can there be one rule of liberty for the labor organization and its members, and a different and more restrictive rule for employers? We think not; and since the relation of employer and employe is a voluntary relation, as clearly as is that between the members of a labor organization, the employer has the same inherent right to prescribe the terms upon which he will consent to the relationship, and to have them fairly understood and expressed in advance.

When a man is called upon to agree not to become or remain a member of the union while working for a particular employer, he is in effect only asked to deal openly and frankly with his employer, so as not to retain the employment upon terms to which the latter is not willing to agree. And the liberty of making contracts does not include a liberty to procure employment from an unwilling employer, or without a fair understanding. Nor may the 21*21 employer be foreclosed by legislation from exercising the same freedom of choice that is the right of the employe.

To ask a man to agree, in advance, to refrain from affiliation with the union while retaining a certain position of employment, is not to ask him to give up any part of his constitutional freedom. He is free to decline the employment on those terms, just as the employer may decline to offer employment on any other; for “It takes two to make a bargain.” Having accepted employment on those terms, the man is still free to join the union when the period of employment expires; or, if employed at will, then at any time upon simply quitting the employment. And, if bound by his own agreement to refrain from joining during a stated period of employment, he is in no different situation from that which is necessarily incident to term contracts in general. For constitutional freedom of contract does not mean that a party is to be as free after making a contract as before; he is not free to break it without accountability. Freedom of contract, from the very nature of the thing, can be enjoyed only by being exercised; and each particular exercise of it involves making an engagement which, if fulfilled, prevents for the time any inconsistent course of conduct.

So much for the reason of the matter; let us turn again to the adjudicated cases.

The decision in the Adair Case is in accord with the almost unbroken current of authorities in the state courts. In many States enactments not distinguishable in principle from the one now in question have been passed, but, except in two instances (one, the decision of an inferior court in Ohio, since repudiated; the other, the decision now under review), we are unable to find that they have been judicially enforced. It is not too much to say that such laws have by common consent been treated as unconstitutional, for while many state courts of last resort have adjudged them void, we have found no decision by such a court 22*22 sustaining legislation of this character, excepting that which is now under review. The single previous instance in which any court has upheld such a statute is Davis v. State of Ohio (1893), 30 Cinc. Law Bull. 342; 11 Ohio Dec. Reprint, 894; where the Court of Common Pleas of Hamilton County sustained an act of April 14, 1892 (89 Ohio Laws, 269), which declared that any person who coerced or attempted to coerce employes by discharging or threatening to discharge them because of their connection with any lawful labor organization should be guilty of a misdemeanor and upon conviction fined or imprisoned. We are unable to find that this decision was ever directly reviewed; but in State of Ohio v. Bateman (1900), 10 Ohio Dec. 68; 7 Ohio N.P. 487, its authority was repudiated upon the ground that it had been in effect overruled by subsequent decisions of the state Supreme Court, and the same statute was held unconstitutional.

The right that plaintiff in error is now seeking to maintain was held by the Supreme Court of Kansas, in an earlier case, to be within the protection of the Fourteenth Amendment and therefore beyond legislative interference. In Coffeyville Brick Co. v. Perry, 69 Kansas, 297; 76 Pac. Rep. 848; 66 L.R.A. 185; 1 A. & E. Ann. Cas. 936; the court had under consideration Ch. 120 of the Laws of 1897 (Gen. Stat. 1901, §§ 2425, 2426), which declared it unlawful for any person, company, or corporation, or agent, officer, etc., to prevent employes from joining and belonging to any labor organization, and enacted that any such person, company, or corporation, etc., that coerced or attempted to coerce employes by discharging or threatening to discharge them because of their connection with such labor organization should be deemed guilty of a misdemeanor, and upon conviction subjected to a fine, and should also be liable to the person injured in punitive damages. It was attacked as violative of the Fourteenth Amendment, and also of the Bill of Rights of the state 23*23 constitution.[1] The court held it unconstitutional, saying (p. 299): “The right to follow any lawful vocation and to make contracts is as completely within the protection of the constitution as the right to hold property free from unwarranted seizure, or the liberty to go when and where one will. One of the ways of obtaining property is by contract. The right, therefore, to contract cannot be infringed by the legislature without violating the letter and spirit of the constitution. Every citizen is protected in his right to work where and for whom he will. He may select not only his employer but also his associates. He is at liberty to refuse to continue to serve one who has in his employ a person, or an association of persons, objectionable to him. In this respect the rights of the employer and employe are equal. Any act of the legislature that would undertake to impose on an employer the obligation of keeping in his service one whom, for any reason, he should not desire would be a denial of his constitutional right to make and terminate contracts and to acquire and hold property. Equally so would be an act the provisions of which should be intended to require one to remain in the service of one whom he should not desire to serve. . . . The business conducted by the defendant was its property, and in the exercise of this ownership it is protected by the constitution. It could abandon or discontinue its operation at pleasure. It had the right, beyond the possibility of legislative interference, to make any contract with reference thereto not in violation of law.

24*24 In the operation of its property it may employ such persons as are desirable, and discharge, without reason, those who are undesirable. It is at liberty to contract for the services of persons in any manner that is satisfactory to both. No legislative restrictions can be imposed upon the lawful exercise of these rights.”

In Railway Co. v. Brown, 80 Kansas, 312; 102 Pac. Rep. 459, the same court passed upon Chapter 144 of the Laws of 1897 (Gen. Stat. 1901, §§ 2421-2424), which required the employer upon the request of a discharged employe to furnish in writing the true cause or reason for such discharge. The railway company did not meet this requirement, its “service letter,” as it was called, stating only that Brown was discharged “for cause,” which the court naturally held was not a statement of the cause. The law was held unconstitutional, upon the ground (80 Kansas, 315) that an employer may discharge his employe for any reason, or for no reason, just as an employe may quit the employment for any reason, or for no reason; that such action on the part of employer or employe, where no obligation is violated, is an essential element of liberty in action; and that one cannot be compelled to give a reason or cause for an action for which he may have no specific reason or cause, except, perhaps, a mere whim or prejudice.

In the present case the court did not repudiate or overrule these previous decisions, but on the contrary cited them as establishing the right of the employer to discharge his employe at any time, for any reason, or for no reason, being responsible in damages for violating a contract as to the time of employment, and as establishing, conversely, the right of the employe to quit the employment at any time, for any reason, or without any reason, being likewise responsible in damages for a violation of his contract with the employer. The court held the act of 1903 that is now in question to be distinguishable from the 25*25 act of 1897, upon grounds sufficiently indicated and answered by what we have already said.

In five other States the courts of last resort have had similar acts under consideration, and in each instance have held them unconstitutional. In State v. Julow (1895), 129 Missouri, 163; 31 S.W. Rep. 781; 29 L.R.A. 257; 50 Am. St. Rep. 443; the Supreme Court of Missouri dealt with an act (Missouri Laws 1893, p. 187), that forbade employers, on pain of fine or imprisonment, to enter into any agreement with an employe requiring him to withdraw from a labor union or other lawful organization, or to refrain from joining such an organization, or to “by any means attempt to compel or coerce any employe into withdrawal from any lawful organization or society.” In Gillespie v. The People (1900), 188 Illinois, 176; 58 N.E. Rep. 1007; 52 L.R.A. 283; 80 Am. St. Rep. 176; the Supreme Court of Illinois held unconstitutional an act (Hurd’s Stat. 1899, p. 844) declaring it criminal for any individual or member of any firm, etc., to prevent or attempt to prevent employes from forming, joining, and belonging to any lawful labor organization, and that any such person “that coerces or attempts to coerce employes by discharging or threatening to discharge them because of their connection with such lawful labor organization” should be guilty of a misdemeanor. In State, ex rel. Zillmer v. Kreutzberg (1902), 114 Wisconsin, 530; 90 N.W. Rep. 1098; 58 L.R.A. 748; 91 Am. St. Rep. 934; the court had under consideration a statute (Wisconsin Laws 1899, ch. 332), which, like the Kansas act now in question, prohibited the employer or his agent from coercing the employe to enter into an agreement not to become a member of a labor organization, as a condition of securing employment or continuing in the employment, and also rendered it unlawful to discharge an employe because of his being a member of any labor organization. The decision related to the latter prohibition, but this was denounced 26*26 upon able and learned reasoning that has a much wider reach. In People v. Marcus (1906), 185 N.Y. 257; 77 N.E. Rep. 1073; 7 L.R.A., N.S. 282; 113 Am. St. Rep. 902; 7 A. & E. Ann. Cas. 118; the statute dealt with (N.Y. Laws, 1887, ch. 688), as we have already said, was in substance identical with the Kansas act. These decisions antedated Adair v. United States. They proceed upon broad and fundamental reasoning, the same in substance that was adopted by this court in the Adair Case, and they are cited with approval in the opinion (208 U.S. 175). A like result was reached in State, ex rel. Smith v. Daniels (1912), 118 Minnesota, 155; 136 N.W. Rep. 584; with respect to an act that, like the Kansas statute, forbade an employer to require an employe or person seeking employment, as a condition of such employment, to make an agreement that the employe would not become or remain a member of a labor organization. This was held invalid upon the authority of the Adair Case. And see Goldfield Mines Co. v. Goldfield Miners’ Union, 159 Fed. Rep. 500, 513.

Upon both principle and authority, therefore, we are constrained to hold that the Kansas act of March 13, 1903, as construed and applied so as to punish with fine or imprisonment an employer or his agent for merely prescribing, as a condition upon which one may secure employment under or remain in the service of such employer, that the employe shall enter into an agreement not to become or remain a member of any labor organization while so employed, is repugnant to the “due process” clause of the Fourteenth Amendment, and therefore void.

Judgment reversed, and the cause remanded for further proceedings not inconsistent with this opinion.

MR. JUSTICE HOLMES, dissenting.

I think the judgment should be affirmed. In present conditions a workman not unnaturally may believe that 27*27 only by belonging to a union can he secure a contract that shall be fair to him. Holden v. Hardy, 169 U.S. 366, 397. Chicago, Burlington & Quincy R.R. v. McGuire, 219 U.S. 549, 570. If that belief, whether right or wrong, may be held by a reasonable man, it seems to me that it may be enforced by law in order to establish the equality of position between the parties in which liberty of contract begins. Whether in the long run it is wise for the workingmen to enact legislation of this sort is not my concern, but I am strongly of opinion that there is nothing in the Constitution of the United States to prevent it, and that Adair v. United States, 208 U.S. 161, and Lochner v. New York, 198 U.S. 45, should be overruled. I have stated my grounds in those cases and think it unnecessary to add others that I think exist. See further Vegelahn v. Guntner, 167 Massachusetts, 92, 104, 108. Plant v. Woods, 176 Massachusetts, 492, 505. I still entertain the opinions expressed by me in Massachusetts.

MR. JUSTICE DAY with whom MR. JUSTICE HUGHES concurs, dissenting:

The character of the question here involved sufficiently justifies, in my opinion, a statement of the grounds which impel me to dissent from the opinion and judgment in this case. The importance of the decision is further emphasized by the fact that it results not only in invalidating the legislation of Kansas, now before the court, but necessarily decrees the same fate to like legislation of other States of the Union.[1] This far-reaching result is attained because the statute is declared to be an infraction 28*28 of the constitutional protection afforded under the Fourteenth Amendment to the Federal Constitution, which declares that no person shall be deprived of life, liberty or property without due process of law. The right of contract, it is said, is part of the liberty of the citizen, and to abridge it, as is done in this case, is declared to be beyond the legislative authority of the State.

That the right of contract is a part of individual freedom within the protection of this amendment, and may not be arbitrarily interfered with, is conceded. While this is true, nothing is better settled by the repeated decisions of this court than that the right of contract is not absolute and unyielding, but is subject to limitation and restraint in the interest of the public health, safety and welfare, and such limitations may be declared in legislation of the State. It would unduly extend what I purpose to say in this case to refer to all the cases in which this doctrine has been declared. One of them is: Frisbie v. United States, 157 U.S. 160, 165. In that case, it was declared, and in varying form has been repeated many times since:

“While it may be conceded that, generally speaking, among the inalienable rights of the citizen is that of the liberty of contract, yet such liberty is not absolute and universal. It is within the undoubted power of government to restrain some individuals from all contracts, as well as all individuals from some contracts. It may deny to all the right to contract for the purchase or sale of lottery tickets; to the minor the right to assume any obligations, except for the necessaries of existence; to the common carrier the power to make any contract releasing himself from negligence, and, indeed, may restrain all engaged in any employment from any contract in the course of that employment which is against public policy. The possession of this power by government in no manner conflicts with the proposition that, generally 29*29 speaking, every citizen has a right freely to contract for the price of his labor, services, or property.”

See also Holden v. Hardy, 169 U.S. 366, 391; Atkin v. Kansas, 191 U.S. 207; Muller v. Oregon, 208 U.S. 412, 421; McLean v. Arkansas, 211 U.S. 539; Chicago, Burlington & Quincy R.R. v. McGuire, 219 U.S. 549; Atlantic Coast Line v. Riverside Mills, 219 U.S. 186, 202; Erie Railroad v. Williams, 233 U.S. 685, 699. The Erie Railroad Case is a very recent deliverance of this court upon the subject, wherein it was declared:

“But liberty of making contracts is subject to conditions in the interest of the public welfare, and which shall prevail — principle or condition — cannot be defined by any precise and universal formula. Each instance of asserted conflict must be determined by itself, and it has been said many times that each act of legislation has the support of the presumption that it is an exercise in the interest of the public. The burden is on him who attacks the legislation, and it is not sustained by declaring a liberty of contract. It can only be sustained by demonstrating that it conflicts with some constitutional restraint or that the public welfare is not subserved by the legislation. The legislature is, in the first instance, the judge of what is necessary for the public welfare, and a judicial review of its judgment is limited. The earnest conflict of serious opinion does not suffice to bring it within the range of judicial cognizance. C., B. & Q.R.R. Co. v. McGuire, 219 U.S. 549, 565; German Alliance Insurance Co. v. Kansas, 233 U.S. 389.”

It is therefore the thoroughly established doctrine of this court that liberty of contract may be circumscribed in the interest of the State and the welfare of its people. Whether a given exercise of such authority transcends the limits of legislative authority must be determined in each case as it arises. The preservation of the police power of the States, under the authority of which that 30*30 great mass of legislation has been enacted which has for its purpose the promotion of the health, safety and welfare of the public, is of the utmost importance. This power was not surrendered by the States when the Federal Constitution was adopted, nor taken from them when the Fourteenth Amendment was ratified and became a part of the fundamental law of the Union. Barbier v. Connolly, 113 U.S. 27.

Of the necessity of such legislation, the local legislature is itself the judge, and its enactments are only to be set aside when they involve such palpable abuse of power and lack of reasonableness to accomplish a lawful end that they may be said to be merely arbitrary and capricious, and hence out of place in a government of laws and not of men, and irreconcilable with the conception of due process of law. McGehee on “Due Process of Law,” page 306, and cases from this court therein cited.

By this it is not meant that the legislative power is beyond judicial review. Such enactments as are arbitrary or unreasonable and thus exceed the exercise of legislative authority in good faith, may be declared invalid when brought in review by proper judicial proceedings. This is necessary to the assertion and maintenance of the supremacy of the Constitution.

Conceding then that the right of contract is a subject of judicial protection, within the authority given by the Constitution of the United States, the question here is, was the power of the State so arbitrarily exercised as to render its action unconstitutional and therefore void? It is said that this question is authoritatively determined in this court, in the case of Adair v. United States, 208 U.S. 161. In that case, a statute passed by the Congress of the United States, under supposed sanction of the power to regulate interstate commerce, was before this court, and it was there decided that the right of contract protected by the Fifth Amendment to the Constitution, 31*31 providing that no person shall be deprived of life, liberty or property without due process of law, avoided a statute which undertook to make it a crime to discharge an employe simply because of his membership in a labor organization. The feature of the statute which is here involved, making it an offense to require any employe, or any person seeking employment, as a condition of such employment, to enter into an agreement, either written or verbal, not to become a member of any labor corporation, association or organization, — a provision exactly similar to that of the Kansas statute now under consideration, — was not before the court upon the charge made or the facts shown, and this provision was neither considered nor decided upon in reaching the conclusion that an employer could not be made a criminal because he discharged an employe simply because of his membership in a labor organization. In the course of the opinion this fact was more than once stated, and the question before the court declared to be (208 U.S., p. 171):

“May Congress make it a criminal offense against the United States — as by the tenth section of the act of 1898 it does — for an agent or officer of an interstate carrier, having full authority in the premises from the carrier, to discharge an employe from service simply because of his membership in a labor organization?”

Such was the question before the court, and that there might be no mistake about it, at the close of the opinion, the part of the act upon which the defendant in that case was convicted was declared to be separable from the other parts of the act, and that feature of the statute the only subject of decision. Mr. Justice Harlan, concluding the opinion of the court said (p. 180):

“We add that since the part of the act of 1898 upon which the first count of the indictment is based, and upon which alone the defendant was convicted, is severable from its other parts, and as what has been said is sufficient to 32*32 dispose of the present case, we are not called upon to consider other and independent provisions of the act, such, for instance, as the provisions relating to arbitration. This decision is therefore restricted to the question of the validity of the particular provision in the act of Congress making it a crime against the United States for an agent or officer of an interstate carrier to discharge an employe from its service because of his being a member of a labor organization.” (Italics mine.)

In view of the feature of the statute involved, the charge made, and this express reservation in the opinion of the court as to other features of the statute, I am unable to agree that that case involved or decided the one now at bar.

There is nothing in the statute now under consideration which prevents an employer from discharging one in his service at his will. The question now presented is, May an employer, as a condition of present or future employment, require an employe to agree that he will not exercise the privilege of becoming a member of a labor union, should he see fit to do so? In my opinion, the cases are entirely different, and the decision of the questions controlled by different principles. The right to join labor unions is undisputed, and has been the subject of frequent affirmation in judicial opinions. Acting within their legal rights, such associations are as legitimate as any organization of citizens formed to promote their common interest. They are organized under the laws of many States, by virtue of express statutes passed for that purpose, and, being legal, and acting within their constitutional rights, the right to join them, as against coercive action to the contrary may be the legitimate subject of protection in the exercise of the police authority of the States. This statute, passed in the exercise of that particular authority called the police power, the limitations of which no court has yet undertaken precisely to define, has for its avowed 33*33 purpose the protection of the exercise of a legal right, by preventing an employer from depriving the employe of it as a condition of obtaining employment. I see no reason why a State may not, if it chooses, protect this right, as well as other legal rights.

But it is said that the contrary must necessarily result, if not from the precise matter decided in the Adair Case, then from the principles therein laid down, and that it is the logical result of that decision that the employer may, as a condition of employment, require an obligation to forego the exercise of any privileges because of the exercise of which an employe might be discharged from service. I do not concede that this result follows from anything decided in the Adair Case. That case dealt solely with the right of an employer to terminate relations of employment with an employe, and involved the constitutional protection of his right so to do, but did not deal with the conditions which he might exact or impose upon another as a condition of employment.

The act under consideration is said to have the effect to deprive employers of a part of their liberty of contract, for the benefit of labor organizations. It is urged that the statute has no object or purpose, express or implied, that has reference to health, safety, morals, or public welfare, beyond the supposed desirability of leveling inequalities of fortune by depriving him who has property of some part of his “financial independence.”

But this argument admits that financial independence is not independence of law or of the authority of the legislature to declare the policy of the State as to matters which have a reasonable relation to the welfare, peace and security of the community.

This court has many times decided that the motives of legislators in the enactment of laws are not the subject of judicial inquiry. Legislators, state and Federal, are entitled to the presumption that their action has been in 34*34 good faith and because of conditions which they deem proper and sufficient to warrant the action taken. Speaking for this court in Ex parte McCardle, 7 Wall. 506, 514, Chief Justice Chase summed up the doctrine in a sentence when he said: “We are not at liberty to inquire into the motives of the legislature. We can only examine into its power under the Constitution.” In Cooley’s Constitutional Limitations, 7th Ed., 257, that eminent author says: “They [the courts] must assume that legislative discretion has been properly exercised. If evidence was required, it must be supposed that it was before the legislature when the act was passed; and if any special finding was required to warrant the passage of the particular act, it would seem that the passage of the act itself might be held equivalent to such finding.” “The rule is general with reference to the enactments of all legislative bodies that the courts cannot inquire into the motives of the legislators in passing them, except as they may be disclosed on the face of the acts, or inferable from their operation, considered with reference to the condition of the country and existing legislation. The motives of the legislators, considered as the purposes they had in view, will always be presumed to be to accomplish that which follows as the natural and reasonable effect of their enactments. Their motives, considered as the moral inducements for their votes, will vary with the different members of the legislative body. The diverse character of such motives, and the impossibility of penetrating into the hearts of men and ascertaining the truth, precludes all such inquiries as impracticable and futile.” Soon Hing v. Crowley, 113 U.S. 703, 710. “We must assume that the legislature acts according to its judgment for the best interests of the State. A wrong intent cannot be imputed to it.” Florida Central &c. R.R. v. Reynolds, 183 U.S. 471, 480.

The act must be taken as an attempt of the legislature to enact a statute which it deemed necessary to the good 35*35 order and security of society. It imposes a penalty for “coercing or influencing or making demands upon or requirements of employes, servants, laborers, and persons seeking employment.” It was in the light of this avowed purpose that the act was interpreted by the Supreme Court of Kansas, the ultimate authority upon the meaning of the terms of the law. Of course, if the act is necessarily arbitrary and therefore unconstitutional, mere declarations of good intent cannot save it, but it must be presumed to have been passed by the legislative branch of the state government in good faith, and for the purpose of reaching the desired end. The legislature may have believed, acting upon conditions known to it, that the public welfare would be promoted by the enactment of a statute which should prevent the compulsory exaction of written agreements to forego the acknowledged legal right here involved, as a condition of employment in one’s trade or occupation.

It would be impossible to maintain that because one is free to accept or refuse a given employment, or because one may at will employ or refuse to employ another, it follows that the parties have a constitutional right to insert in an agreement of employment any stipulation they choose. They cannot put in terms that are against public policy either as it is deemed by the courts to exist at common law or as it may be declared by the legislature as the arbiter within the limits of reason of the public policy of the State. It is no answer to say that the greater includes the less and that because the employer is free to employ, or the employe to refuse employment, they may agree as they please. This matter is easily tested by assuming a contract of employment for a year and the insertion of a condition upon which the right of employment should continue. The choice of such conditions is not to be regarded as wholly unrestricted because the parties may agree or not as they choose. And if the State may prohibit 36*36 a particular stipulation in an agreement because it is deemed to be opposed in its operation to the security and well being of the community, it may prohibit it in any agreement whether the employment is for a term or at will. It may prohibit the attempt in any way to bind one to the objectionable undertaking.

Would anyone contend that the State might not prohibit the imposition of conditions which should require an agreement to forego the right on the part of the employe to resort to the courts of the country for redress in the case of disagreement with his employer? While the employe might be discharged in case he brought suit against an employer if the latter so willed, it by no means follows that he could be required, as a condition of employment, to forego a right so obviously fundamental as the one supposed. It is therefore misleading to say that the right of discharge necessarily embraces the right to impose conditions of employment which shall include the surrender of rights which it is the policy of the State to maintain.

Take another illustration: The right to exclude a foreign corporation from carrying on a purely domestic business in the State has been distinctly recognized by decisions of this court; yet it has been held, and is now settled law, that it is beyond the authority of the State to require a corporation doing business of this character to file in the office of the Secretary of State a written agreement that it will not remove a suit, otherwise removable, to a Federal court of the United States. Insurance Co. v. Morse, 20 Wall. 445. In that case, the right to exclude was held not to include the right to impose any condition under which the corporation might do business in the State. In that connection this court said:

“A man may not barter away his life or his freedom, or his substantial rights. In a criminal case, he cannot, as was held in Cancemi’s Case, be tried in any other manner than by a jury of twelve men, although he consent in open 37*37 court to be tried by a jury of eleven men. In a civil case he may submit his particular suit by his own consent to an arbitration, or to the decision of a single judge. So he may omit to exercise his right to remove his suit to a Federal tribunal, as often as he thinks fit, in each recurring case. In these aspects any citizen may no doubt waive the rights to which he may be entitled. He cannot, however, bind himself in advance by an agreement, which may be specifically enforced, thus to forfeit his rights at all times and on all occasions, whenever the case may be presented.” Insurance Co. v. Morse, 20 Wall. 445, 451.

It may be that an employer may be of the opinion that membership of his employes in the National Guard, by enlistment in the militia of the State, may be detrimental to his business. Can it be successfully contended that the State may not, in the public interest, prohibit an agreement to forego such enlistment as against public policy? Would it be beyond a legitimate exercise of the police power to provide that an employe should not be required to agree, as a condition of employment, to forego affiliation with a particular political party, or the support of a particular candidate for office? It seems to me that these questions answer themselves. There is a real and not a fanciful distinction between the exercise of the right to discharge at will and the imposition of a requirement that the employe, as a condition of employment, shall make a particular agreement to forego a legal right. The agreement may be, or may be declared to be, against public policy, although the right of discharge remains. When a man is discharged, the employer exercises his right to declare such action necessary because of the exigencies of his business, or as the result of his judgment for other reasons sufficient to himself. When he makes a stipulation of the character here involved essential to future employment, he is not exercising a right to discharge, and may not wish to discharge the employe when, at a 38*38 subsequent time, the prohibited act is done. What is in fact accomplished, is that the one engaging to work, who may wish to preserve an independent right of action, as a condition of employment, is coerced to the signing of such an agreement against his will, perhaps impelled by the necessities of his situation. The State, within constitutional limitations, is the judge of its own policy and may execute it in the exercise of the legislative authority. This statute reaches not only the employed but as well one seeking employment. The latter may never wish to join a labor union. By signing such agreements as are here involved he is deprived of the right of free choice as to his future conduct, and must choose between employment and the right to act in the future as the exigencies of his situation may demand. It is such contracts, having such effect, that this statute and similar ones seek to prohibit and punish as against the policy of the State.

It is constantly emphasized that the case presented is not one of coercion. But in view of the relative positions of employer and employed, who is to deny that the stipulation here insisted upon and forbidden by the law is essentially coercive? No form of words can strip it of its true character. Whatever our individual opinions may be as to the wisdom of such legislation, we cannot put our judgment in place of that of the legislature and refuse to acknowledge the existence of the conditions with which it was dealing. Opinions may differ as to the remedy, but we cannot understand upon what ground it can be said that a subject so intimately related to the welfare of society is removed from the legislative power. Wherein is the right of the employer to insert this stipulation in the agreement any more sacred than his right to agree with another employer in the same trade to keep up prices? He may think it quite as essential to his “financial independence” and so in truth it may be if he alone is to be considered. But it is too late to deny that the legislative 39*39 power reaches such a case. It would be difficult to select any subject more intimately related to good order and the security of the community than that under consideration — whether one takes the view that labor organizations are advantageous or the reverse. It is certainly as much a matter for legislative consideration and action as contracts in restraint of trade.

It is urged that a labor organization — a voluntary association of working-men — has the constitutional right to deny membership to any man who will not agree that during such membership he will not accept or retain employment in company with non-union men. And it is asserted that there cannot be one rule of liberty for the labor organization and its members and a different and more restrictive rule for employers.

It of course is true, for example, that a Church may deny membership to those who unite with other denominations, but it by no means follows that the State may not constitutionally prohibit a railroad company from compelling a working-man to agree that he will, or will not, join a particular church. An analogous case, — viewed from the employer’s standpoint, would be: Can the State, in the exercise of its legislative power, reach concerted effort of employes intended to coerce the employer as a condition of hiring labor that he shall engage in writing to give up his privilege of association with other employers in legal organizations, corporate or otherwise, having for their object a united effort to promote by legal means that which employers believe to be for the best interest of their business?

I entirely agree that there should be the same rule for employers and employed, and the same liberty of action for each. In my judgment, the law may prohibit coercive attempts, such as are here involved, to deprive either of the free right of exercising privileges which are theirs within the law. So far as I know, no law has undertaken 40*40 to abridge the right of employers of labor in the exercise of free choice as to what organizations they will form for the promotion of their common interests, or denying to them free right of action in such matters.

But it is said that in this case all that was done in effect was to discharge an employe for a cause deemed sufficient to the employer — a right inherent in the personal liberty of the employer protected by the Constitution. This argument loses sight of the real purpose and effect of this and kindred statutes. The penalty imposed is not for the discharge but for the attempt to coerce an unwilling employe to agree to forego the exercise of the legal right involved as a condition of employment. It is the requirement of such agreements which the State declares to be against public policy.

I think that the act now under consideration, and kindred ones, are intended to promote the same liberty of action for the employe as the employer confessedly enjoys. The law should be as zealous to protect the constitutional liberty of the employe as it is to guard that of the employer. A principal object of this statute is to protect the liberty of the citizen to make such lawful affiliations as he may desire with organizations of his choice. It should not be necessary to the protection of the liberty of one citizen that the same right in another citizen be abridged or destroyed.

If one prohibitive condition of the sort here involved may be attached, so may others, until employment can only be had as the result of written stipulations, which shall deprive the employe of the exercise of legal rights which are within the authority of the State to protect. While this court should, within the limitations of the constitutional guaranty, protect the free right of contract, it is not less important that the State be given the right to exert its legislative authority, if it deems best to do so, for the protection of rights which inhere in the privileges of the citizen of every free country.

41*41 The Supreme Court of Kansas in sustaining this statute, said that “employes as a rule are not financially able to be as independent in making contracts for the sale of their labor as are employers in making a contract of purchase thereof,” and in reply to this it is suggested that the law cannot remedy inequalities of fortune, and that so long as the right of property exists, it may happen that parties negotiating may not be equally unhampered by circumstances.

This view of the Kansas court, as to the legitimacy of such considerations, is in entire harmony, as I understand it, with the former decisions of this court in considering the right of state legislatures to enact laws which shall prevent the undue or oppressive exercise of authority in making contracts with employes. In Holden v. Hardy, 169 U.S. 366, this court considering legislation limiting the number of hours during which laborers might be employed in a particular employment, said:

“The legislature has also recognized the fact, which the experience of legislators in many States has corroborated, that the proprietors of these establishments and their operatives do not stand upon an equality, and that their interests are, to a certain extent, conflicting. The former naturally desire to obtain as much labor as possible from their employes, while the latter are often induced by the fear of discharge to conform to regulations which their judgment, fairly exercised, would pronounce to be detrimental to their health or strength. In other words, the proprietors lay down the rules and the laborers are practically constrained to obey them. In such cases self-interest is often an unsafe guide, and the legislature may properly interpose its authority. . . . But the fact that both parties are of full age and competent to contract does not necessarily deprive the State of the power to interfere where the parties do not stand upon an equality, or where the public health demands that one party to 42*42 the contract shall be protected against himself. `The State still retains an interest in his welfare, however reckless he may be. The whole is no greater than the sum of all the parts, and when the individual health, safety and welfare are sacrificed or neglected, the State must suffer.'” (Page 397.)

This language was quoted with approval in Chicago, Burlington & Quincy R.R. Co. v. McGuire, 219 U.S. 549, 570, in which a statute of Iowa was sustained, prohibiting contracts limiting liability for injuries made in advance of the injuries received, and providing that the subsequent acceptance of benefits under such contracts should not constitute satisfaction for injuries received after the contract. Certainly it can be no substantial objection to the exercise of the police power that the legislature has taken into consideration the necessities, the comparative ability, and the relative situation of the contracting parties. While all stand equal before the law, and are alike entitled to its protection, it ought not to be a reasonable objection that one motive which impelled an enactment was to protect those who might otherwise be unable to protect themselves.

I therefore think that the statute of Kansas, sustained by the Supreme Court of the State, did not go beyond a legitimate exercise of the police power, when it sought, not to require one man to employ another against his will, but to put limitations upon the sacrifice of rights which one man may exact from another as a condition of employment. Entertaining these views, I am constrained to dissent from the judgment in this case.

I am permitted to say that MR. JUSTICE HUGHES concurs in this dissent.

[1] Constitution of the State of Kansas. . . . Bill of Rights.

Section 1. All men are possessed of equal and inalienable natural rights, among which are life, liberty, and the pursuit of happiness.

* * * * * * * *

Section 18. All persons, for injuries suffered in person, reputation or property, shall have remedy by due course of law, and justice administered without delay.

[1] Statutes like the Kansas statute have been passed in California, Colorado, Connecticut, Indiana, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Oklahoma, Oregon, Pennsylvania, Porto Rico, and Wisconsin. Bulletin of the Bureau of Labor Statistics No. 148, Volumes 1 and 2; Labor Laws of the United States.
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