MR. JUSTICE MURPHY delivered the opinion of the Court.
Here our consideration is directed to the question of whether the petitioner, the Better Business Bureau of Washington, D.C., Inc., is exempt from social security taxes as a corporation organized and operated exclusively for scientific or educational purposes within the meaning of Section 811 (b) (8) of the Social Security Act.
From the stipulated statement of facts it appears that petitioner was organized in 1920 as a non-profit corporation
The charter of petitioner states that "the object for which it is formed is for the mutual welfare, protection and improvement of business methods among merchants and other persons engaged in any and all business or professions and occupations of every description whatsoever that deal directly or indirectly with the public at large, and for the educational and scientific advancements of business methods among persons, corporations or associations engaged in business in the District of Columbia so that the public can obtain a proper, clean, honest and fair treatment in its dealings or transactions with such merchants, tradesmen, corporations, associations or persons following a profession and at the same time protecting the interest of the latter classes of businesses to enable such as are engaged in the same to successfully and profitably conduct their business and for the further purposes of endeavoring to obtain the proper, just, fair and effective enforcement of the Act of Congress approved May 29th, 1916, otherwise known as `An Act to prevent fraudulent advertising in the District of Columbia.'"
In carrying out its charter provisions, petitioner divides its work roughly into five subdivisions:
(1) Prevention of fraud by informing and warning members and the general public of the plans and schemes of various types of swindlers.
(2) Fighting fraud by bringing general and abstract fraudulent practices to the attention of the public.
(4) Education of consumers to be intelligent buyers.
(5) Cooperation with various governmental agencies interested in law enforcement.
Information which the petitioner compiles is available to anyone without charge and is communicated to the members and the public by means of the radio, newspapers, bulletins, meetings and interviews. This information is also exchanged with the approximately eighty-five other Better Business Bureaus in the United States.
After paying the social security taxes for the calendar years 1937 to 1941, inclusive, petitioner filed claims for refunds, which were disallowed. This suit to recover the taxes paid was then filed by petitioner in the District Court, which granted a motion for summary judgment for the United States. The court below affirmed the judgment, 79 U.S. App. D.C. 380, 148 F.2d 14, and we granted certiorari, the Tenth Circuit Court of Appeals having reached a contrary result in Jones v. Better Business Bureau of Oklahoma City, 123 F.2d 767.
Petitioner claims that it qualifies as a corporation "organized and operated exclusively for . . . scientific . . . or educational purposes . . . no part of the net earnings of which inures to the benefit of any private shareholder or individual" within the meaning of § 811 (b) (8) of the Social Security Act and hence is exempt from payment of social security taxes. No serious assertion is made, however, that petitioner is devoted exclusively to scientific purposes. The basic contention is that all of its purposes and activities are directed toward the education of business men and the general public. Merchants are taught to conduct their businesses honestly,
It has been urged that a liberal construction should be applied to this exemption from taxation under the Social Security Act in favor of religious, charitable and educational institutions. Cf. Trinidad v. Sagrada Orden, 263 U.S. 578; Helvering v. Bliss, 293 U.S. 144. But it is unnecessary to decide that issue here. Cf. Hassett v. Associated Hospital Service Corp., 125 F.2d 611 (C.C.A. 1). Even the most liberal of constructions does not mean that statutory words and phrases are to be given unusual or tortured meanings unjustified by legislative intent or that express limitations on such an exemption are to be ignored. Petitioner's contention, however, demands precisely that type of statutory treatment. Hence it cannot prevail.
In this instance, in order to fall within the claimed exemption, an organization must be devoted to educational purposes exclusively. This plainly means that the presence of a single noneducational purpose, if substantial in nature, will destroy the exemption regardless of the number or importance of truly educational purposes. It thus becomes unnecessary to determine the correctness of the educational characterization of petitioner's operations, it being apparent beyond dispute that an important, if not the primary, pursuit of petitioner's organization is to promote not only an ethical but also a profitable business community. The exemption is therefore unavailable to petitioner.
The commercial hue permeating petitioner's organization is reflected in its corporate title and in the charter provisions dedicating petitioner to the promotion of the "mutual welfare, protection and improvement of business methods among merchants" and others and to the securing
The legislative history of § 811 (b) (8) of the Social Security Act confirms the conclusion that petitioner is not exempt under that section. This provision was drawn almost verbatim from § 101 (6) of the Internal Revenue Code, dealing with exemptions from income taxation. And Congress has made it clear, from its committee reports, that it meant to include within § 811 (b) (8) only those organizations exempt from the income tax under § 101 (6).
Moreover, in amending the Social Security Act in 1939, Congress created certain new exemptions by providing, inter alia, that an organization exempt from income taxes under any of the subdivisions of § 101 of the Internal Revenue Code was also exempt from social security taxes as to those employees receiving no more than $45 in a calendar quarter.
Finally, a Treasury regulation
For the foregoing reasons the judgment of the court below is
MR. JUSTICE JACKSON took no part in the consideration or decision of this case.
"(8) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual."
An amendment to this definition, not here relevant, was added in 1939. The entire definition has been incorporated into § 1426 (b) (8) of the Internal Revenue Code.