Jill Manny, executive director of the National Center on Philanthropy and the Law, says the methodology test “is no less vague than the full and fair exposition test that it’s meant to clarify. I don’t think anyone knows what an organization that advocates a specific viewpoint means.” But why have any test at all? “If they don’t have a test, then … they [would] have to grant tax-exempt status to all organizations,” she explained. For example, without the test, the IRS could not have denied tax-exempt status to The National Alliance and the Nationalist Movement, two organizations promoting white supremacy, racism and anti-Semitism. As it stands now, the IRS approves the vast majority of the organizations that apply for tax exemption. In 2004, only 1.2 percent of the nearly 87,000 applications were denied.

Rubright and Cunningham believed the IRS was attempting to deny 3rdfloor nonprofit status not because it failed to meet the agency’s regulations but because it disapproved of the magazine’s content. Rubright knew that by questioning the art in 3rdfloor, the IRS was on shaky ground. So she was not surprised when, with the help of the National Coalition Against Censorship and Volunteer Lawyers for the Arts, she and Cunningham received two possibilities for pro-bono legal representation. According to Rubright, the New York Civil Liberties Union expressed an interest in representing 3rdfloor as a “test case about broader systemic censorship” (the NYCLU declined to verify this comment because they never “committed to representing 3rdfloor”). The other possibility was an offer from two corporate finance lawyers at a prominent New York law firm. Unlike the NYCLU, these lawyers believed that the letter represented the opinion of a wayward IRS official. Hoping to avoid the lengthy legal battle that might accompany an NYCLU test case aimed at changing IRS policy, Rubright and Cunningham decided to go with the private law firm.

The two women met their lawyers for the first time late last summer. The firm’s offices were on the 70th floor of a skyscraper near the World Trade Center site. Rubright describes herself and Cunningham as “two little shabby dykes” among a sea of suits in an enormous conference room. “We literally had to push paper across the table because the table was so big,” Rubright recalls with a chuckle. “The lawyers were nothing but affirmative,” she says. They told her they would establish that there was no precedent for denying status on “the basis of content alone” (because the case is ongoing, 3rdfloor’s lawyers refused to comment).

The attorneys drafted a lengthy memo and sent it to the IRS within the 90-day response period. In it they argued that “the fact that some viewers/readers may consider some of the material in 3rdfloor’s magazine as unpleasant or even ‘inappropriate’ is no grounds for denying tax-exempt status.” They cited the Big Mama Rag decision four times. “When we read this thing, we were freaking out,” Rubright says. The 20-page document contained nearly 50 footnotes referencing relevant case law and IRS regulations and procedures.

The IRS responded with its longest letter yet. It included the entire text of the methodology test and asked Rubright to explain the factual basis for 3rdfloor’s content. The letter also included several attachments. One was a 2005 Baltimore City Paper article about the magazine and another was a page from 3rdfloor’s website. The IRS requested explanations for several statements in the City Paper article, one of which was made by the article’s author, not by Rubright or Cunningham. It read: “And if things keep going their way, they might just topple capitalism, patriarchy, false privilege and banality one slim art journal at a time.” The letter said, “Explain your organization’s statement to topple capitalism and patriarchy.”

In addition, the IRS took issue with a “fucking recycle” button that 3rdfloor’s website promised to send to new subscribers. It asked Rubright to explain how this language was “appropriate and befitting of a charitable organization.” The letter also referred to a posting on the magazine’s website that announced the IRS’s accusations and listed an email address for anyone interested in learning more. The posting read, “In an amazing show of sophistication, the ever-accommodating IRS has charged 3rdfloor with ‘printing inappropriate, lewd, immoral, licentious, and sacrilegious pictures and text.’ ”

When she heard this quote, Shawntel McGuire, an IRS employee specializing in applications for tax-exempt status, said: “To me that sounds like an opinion. … If you even take out ‘IRS’ and put in another organization, we would have the same concern.” According to McGuire, the fact that 3rdfloor contained opinionated postings and artwork warranted the application of the methodology test, which McGuire describes as “a rule of God” for employees of the IRS’s tax-exempt division. But when asked how the IRS differentiates between the viewpoint of a publication and the viewpoints of the artists it publishes, she could offer no explanation. She was also unable to explain how the methodology test, which assesses the factual basis of a viewpoint, could be applied to something as subjective as art.

Manny, however, understands the dilemma. “It might be difficult … to conclude that an organization that publishes an art magazine is advocating a specific position,” she said. But, she added, “There could be pictures that were so offensive that the organization shouldn’t be tax-exempt.”

If this debate sounds familiar, that’s because it is. In 1999, Mayor Rudolph Giuliani tried to cut city funding to the nonprofit Brooklyn Museum of Art because it presented an exhibition he called “sick” and “disgusting.” The show included the now-infamous painting of the Virgin Mary covered with elephant dung and cutouts from pornographic magazines. The museum sued the city, and a federal judge ordered Giuliani to continue municipal funding. “There is no federal constitutional issue more grave than the effort by government officials to censor works of expression,” said United States District Court Judge Nina Gershon.

Joan Bertin, executive director of the National Coalition Against Censorship, remembers 3rdfloor’s case vividly, even though more than six months have passed since she spoke with Rubright and Cunningham. She characterizes the IRS’s attack on the magazine’s content as “a classic violation of First Amendment principles.” “I can’t imagine what they think they’re doing,” she said in a phone interview. Tom Silk, a San Francisco lawyer specializing in nonprofit law, agrees. “That [IRS] office is just wrong,” he says. “[The IRS] can’t get around their constitutional obligations with regulations,” said Bertin, referring to the service’s internal documents. But as Manny points out, the constitutional right to free speech is not the same as a right to government-subsidized free speech. While she thinks the methodology test is flawed, she’s not sure there’s a better alternative.

On March 8, 3rdfloor’s lawyers sent a 25-page response to the IRS’s most recent letter. In their memo, the lawyers explicitly addressed the irrelevance of applying the methodology test to 3rdfloor. “3rdfloor is not an advocacy organization … By publishing a certain work of art, 3rdfloor does not adopt or advocate the ideas expressed by the artist,” wrote the lawyers. With a rare burst of emotive language, they continued: “It would be perverse for the IRS to grant tax-exempt status to museums which provide ‘traditional’ venues while denying tax-exempt status to an organization such as 3rdfloor that engages in similar activities in a nontraditional mode.”

If the IRS denies nonprofit status to 3rdfloor, Rubright will have several chances to appeal the decision. First, she must file a written protest with the IRS office that reviewed her application. If the IRS refuses to rescind the denial, Rubright and her counsel can take the case to a federal court. If the IRS’s decision is overturned at any point in the appeals process, including internally, the methodology test could be replaced by a new set of criteria for determining whether an organization would qualify as an educational nonprofit. But this, of course, could prove to be a difficult task. In a 1983 decision, the District of Columbia Circuit Court of Appeals declined to rule on the constitutionality of the methodology test: “We recognize the inherently general nature of the term ‘educational’ and the wide range of meanings Congress may have intended to convey,” wrote the judges. “In attempting a definition suitable for all comers, IRS, or any legislature, court, or other administrator is beset with difficulties which are obvious. We do not attempt a definition. …”

Although she is a proponent of free speech, Rubright is less interested in changing the law than she is in getting 3rdfloor off the ground. Already $15,000 in debt to her father for printing costs, she has had to put the next issue on hold. She needs grant funding, but she can’t apply for any until 3rdfloor is awarded nonprofit status. “We need [the status] so bad—as soon as we possibly can,” she said. “I can’t keep asking my parents for cash.”

In March, Rubright reached a new depth of financial desperation when she was forced to apply for food stamps. Her part-time job at a day care center for dogs in Brooklyn barely pays enough to cover her $750 rent. “If I worked full-time, I wouldn’t be able to do it,” she said, referring to the magazine.

But if Silk’s prediction is correct, Rubright needn’t worry. “This should never go to court,” he declared in a phone interview. “This will make the IRS look like a fool.”

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