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
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
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
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.