Klaassen v. Commissioner
76 T.C.M. (RIA) 98241 aff'd
182 F.3d 932 (10th Cir. 1999)

  • Klaassen and his wife had a lot of kids (13!) When they filed their tax return they properly took deductions for all of their kids as dependents (under 26 U.S.C. 151(c)). All the deductions dropped their tax liability below the Alternative Minimum Tax (AMT) (26 U.S.C. 55).
    • Klaassen was a member of a religion that believed having large numbers of children was a good thing.
  • Klaassen did not report any tax liability under the AMT. The IRS assessed a deficiency.
    • Klaassen argued that penalizing families with lots of children because that's not what Congress intended the AMT to be used for.
    • In addition, Klaassen argued that he was being discriminated against for his religious beliefs, and that was a violation of the 1st Amendment.
  • The Tax Court found for The IRS. Klaassen appealed.
    • The Tax Court found that Congress did intend the AMT to cover people in Klaassen's situation.
      • The wording of 55 was very broad.
    • The Court found that the AMT was not a violation of Klaassen's 1st Amendment right to freedom of religion.
      • See Employment Division, Department of Human Resources of Oregon v. Smith (497 U.S. 872 (1990)), which said that the government cannot do something because of religion (like banning golden calves because the bible says no worshiping of graven images), but that the government can do something for totally non-religious reasons (like setting an alternative minimum tax), even if the ban affects a religious practice, as long as they have a rational basis for doing so.
  • The Appellate Court affirmed.