The atheists had argued that the IRS violates the First Amendment's Establishment Clause and the right to due process, guaranteed by the Fifth Amendment. Generally, tax-exempt organizations must file a 990 financial form with the IRS, but religious and religious-related groups are exempted.
The court found that the atheists had no standing to bring the suit, in part because American Atheists could have applied to the IRS for designation as a religious organization, but never had. It's just speculation that the IRS would reject the application, the court wrote; in fact, the IRS has granted nontheistic groups status as religious nonprofits in the past.
"A review of case law establishes that the words 'church,' 'religious organization,' and 'minister,' do not necessarily require a theistic or deity-centered meaning," the court wrote.
The atheists held that to apply to the IRS for status as a religious organization would go against their principles.
The court wrote that the plaintiffs had failed to established that any concrete harm had come to them at the hand of the IRS. But the atheists had argued that they could raise far more money if they could tell their potential donors as religious organizations may that their names do not have to be disclosed on documents available to the public.
The plaintiffs argued that the American government unfairly subsidizes religious organizations that do not have to prove they do anything to benefit Americans. That special treatment costs $71 billion in annual tax revenue, the groups said.