Petitioner
Bob Jones University
Respondent
Internal Revenue Service (IRS)
Petitioner's Claim
That as a non-profit educational institution, it was entitled to tax-exempt status under Section 501(c)(3) of the Internal Revenue Code of 1954 (IRC), andthat the revocation of that status by the IRS--because of the school's policy of racial discrimination in admissions--constituted an abridgement of rights under the freedom of religion clauses of the First Amendment.
Chief Lawyer for Petitioner
William G. McNairy
Chief Lawyer for Respondent
Reynolds, U.S. Assistant Attorney General
Justices for the Court
Harry A. Blackmun, William J. Brennan, Jr., Warren E. Burger (writing for theCourt), Thurgood Marshall, Sandra Day O'Connor, John Paul Stevens, Byron R.White
Justices Dissenting
Lewis F. Powell, Jr., William H. Rehnquist
Place
Washington, D.C.
Date of Decision
24 May 1983
Decision
That the petitioner did not qualify as a tax exempt organization under Section 501(c)(3), because its policy of racial discrimination was a goal clearly in opposition to common law standards of charity, and the government's interest in eradicating racial discrimination outweighed whatever burden denial of tax exemption would place on the petitioner.
Significance
Bob Jones University v. United States, along with the companion case of Goldsboro Christian Schools v. United States, established the higherimportance of the federal interest in ending racial discrimination over thatof preserving the tax-exempt status of religious institutions.
Bob Jones University, located in Greenville, South Carolina, was a nondenominational and fundamentalist Christian educational institution. In line with its founders' segregationist beliefs, allegedly based on an interpretation of the Bible, the school practiced racial discrimination in admissions and prohibited African Americans from enrolling. At the same time, the school enjoyed tax-exempt status as a charitable institution under 501(c)(3) of the InternalRevenue Code (IRC) of 1954.
Then in 1970, in the case of Green v. Connally, a special three-judgedistrict court ordered the Internal Revenue Service (IRS) to withhold tax exemption from private schools in Mississippi that continued to practice racialdiscrimination in their admissions policy. The Supreme Court upheld the decision on appeal, in Coit v. Green (1971). Therefore the IRS issued Revenue Bulletin 71-447, which revoked tax exemption for any private school that discriminated against applicants on the basis of race. Not only did the new rule require such schools to pay federal taxes, it also removed the tax deduction for individuals who made donations to the school. In 1970, Bob Jones University was informed that it would lose its tax-exempt status, but the school continued to maintain that it was entitled to such status.
In 1975, the Court of Appeals of the Fourth Circuit outlawed racial discrimination by all private schools, a decision upheld by the Supreme Court in Runyon v. McCrary (1976). Therefore Bob Jones University was required to open its doors to non-white applicants, and it did allow unmarried black applicants to enroll--but the school maintained a policy of punishing interracial dating with expulsion. In 1976, the university filed tax returns for the period from 1 December 1970 to 31 December 1975, and paid a tax of $21 on one employee for the calendar year of 1975. The IRS responded by informing the schoolthat it owed $489,675.59 in taxes, plus interest.
The U.S. District Court for the District of South Carolina held that by revoking the school's tax exemption, the IRS had overstepped its delegated powersand ordered the IRS to pay back Bob Jones' $21. The Fourth Circuit Court of Appeals, however, reversed the decision in a divided opinion. Citing Greenv. Connally, it held that Bob Jones did not meet the commonly understoodrequirements for a charity, since it practiced racial discrimination.
Defining a Charity
Chief Justice Burger gave the opinion for the Court. He addressed the petitioner's close reading of 501(c)(3): in their interpretation, the rule guaranteed charitable status to corporations organized and operated exclusively for religious or educational purposes, and since their purposes were both, they fell well within the exemption. The chief justice, however, said that it was theduty of the Court to "go beyond the literal language of a statute if reliance on that language would defeat the plain purpose of the statute." Citing a host of earlier Court decisions, as well as speeches in Congress and other official pronouncements of the U.S. government, Burger established a definitionof charity. In Perin v. Carey (1861), for instance, it was stated thatcourts should "protect . . . a gift . . . to public charitable uses, provided the same is consistent with local laws and public policies." In a 1917 speech to Congress during a debate on charitable exemptions, a senator had opinedthat "For every dollar that a man contributes to these public charities, educational, scientific, or otherwise, the public gets 100 percent."
Taxes and Religious Freedom
Under such a definition of charity--as benefiting the common good--it was clear that Bob Jones University did not meet the requirements due to its policyof racial discrimination. The Court had long held that discrimination in public education was contrary to federal policy, and thus the university was notpursuing an aim that would benefit the public. As for the petitioners' claimthat only Congress was able to alter the tax laws, not the IRS, Burger citedthe legislative body's tendency to accord the IRS broad powers in making andcarrying out tax policy.
The petitioner also addressed the argument that to censure an institution forits sincerely held religious beliefs was a violation of religious freedom under the First Amendment. Burger again cited a host of cases showing that, where the exercise of religious belief is contrary to "an overriding governmental interest," the government had authority to justify limits on religious freedom. An example was the case of Prince v. Massachusetts (1944), in which the Jehovah's Witnesses' policy of putting children to work distributing literature came into conflict with child labor laws. As Burger quoted, "The Court found no constitutional infirmity in `excluding [Jehovah's Witness children] from doing . . . what no other children may do'." And in any case, as thechief justice pointed out, the case revolved not around the abridgement of freedom, but rather the abridgement of tax exemption. (This is rather akin tothe arguments in the late 1980s over public funding of controversial artwork.The pro-funding side portrayed it as a question of censorship when in fact the debate revolved around giving or withholding funds.)
Given these considerations, therefore, the Court found that the IRS had actedcorrectly in its interpretation of 501(c)(3), and it affirmed the judgmentsof the court of appeals. In his opinion, Chief Justice Burger was joined by the entire Court except for Justices Powell and Rehnquist. Justice Powell concurred with all parts of the decision except certain aspects of the government's right to abridge religious freedom in view of an overriding interest. As for Justice Rehnquist, he agreed with the Court's observation that "there is astrong national policy in this country opposed to racial discrimination." His problem with the decision was that, in his view, it was the job of Congress--and not the IRS or the courts--to decide that organizations which practiceracial discrimination are not eligible for 501(c)(3) exemption.
Related Cases
Private Institutions and Segregation
Private institutions have played an important role in American education. Private schools and universities were dominate in the United States until growthof state-sponsored school systems in the late nineteenth century. As publicschool desegregation policies came to the forefront in the mid-1950s, local efforts grew to preserve segregation or a least to delay racial integration, particularly in the South. Various states used different tactics, including partially funding the quickly growing number of private segregated schools. OneVirginia county completely closed its public school system. The prevailing argument was racial discrimination in private institutions did not violate theFourteenth Amendment. Segregation proponents claimed they were promoting public health and morals, and preserving the peace.
Federal policy soon became established that private schools with racially-biased policies could not receive public subsidies. Additionally, sectarian private schools could not even discriminate in their admissions based on the Civil Rights Act of 1866. However, "white flight" to private institutions substantially undermined desegregation in public schools as the American education system essentially became racially separate and unequal. Proposals for tuitiontax credits, or vouchers, to support private schools in the 1990s propelleddebate over the impact of private institutions on community-based racial desegregation goals.
Sources
Devins, Neal E. Public Values, Private Schools. New York: The Falmer Press, 1989.
Bob Jones University
Respondent
Internal Revenue Service (IRS)
Petitioner's Claim
That as a non-profit educational institution, it was entitled to tax-exempt status under Section 501(c)(3) of the Internal Revenue Code of 1954 (IRC), andthat the revocation of that status by the IRS--because of the school's policy of racial discrimination in admissions--constituted an abridgement of rights under the freedom of religion clauses of the First Amendment.
Chief Lawyer for Petitioner
William G. McNairy
Chief Lawyer for Respondent
Reynolds, U.S. Assistant Attorney General
Justices for the Court
Harry A. Blackmun, William J. Brennan, Jr., Warren E. Burger (writing for theCourt), Thurgood Marshall, Sandra Day O'Connor, John Paul Stevens, Byron R.White
Justices Dissenting
Lewis F. Powell, Jr., William H. Rehnquist
Place
Washington, D.C.
Date of Decision
24 May 1983
Decision
That the petitioner did not qualify as a tax exempt organization under Section 501(c)(3), because its policy of racial discrimination was a goal clearly in opposition to common law standards of charity, and the government's interest in eradicating racial discrimination outweighed whatever burden denial of tax exemption would place on the petitioner.
Significance
Bob Jones University v. United States, along with the companion case of Goldsboro Christian Schools v. United States, established the higherimportance of the federal interest in ending racial discrimination over thatof preserving the tax-exempt status of religious institutions.
Bob Jones University, located in Greenville, South Carolina, was a nondenominational and fundamentalist Christian educational institution. In line with its founders' segregationist beliefs, allegedly based on an interpretation of the Bible, the school practiced racial discrimination in admissions and prohibited African Americans from enrolling. At the same time, the school enjoyed tax-exempt status as a charitable institution under 501(c)(3) of the InternalRevenue Code (IRC) of 1954.
Then in 1970, in the case of Green v. Connally, a special three-judgedistrict court ordered the Internal Revenue Service (IRS) to withhold tax exemption from private schools in Mississippi that continued to practice racialdiscrimination in their admissions policy. The Supreme Court upheld the decision on appeal, in Coit v. Green (1971). Therefore the IRS issued Revenue Bulletin 71-447, which revoked tax exemption for any private school that discriminated against applicants on the basis of race. Not only did the new rule require such schools to pay federal taxes, it also removed the tax deduction for individuals who made donations to the school. In 1970, Bob Jones University was informed that it would lose its tax-exempt status, but the school continued to maintain that it was entitled to such status.
In 1975, the Court of Appeals of the Fourth Circuit outlawed racial discrimination by all private schools, a decision upheld by the Supreme Court in Runyon v. McCrary (1976). Therefore Bob Jones University was required to open its doors to non-white applicants, and it did allow unmarried black applicants to enroll--but the school maintained a policy of punishing interracial dating with expulsion. In 1976, the university filed tax returns for the period from 1 December 1970 to 31 December 1975, and paid a tax of $21 on one employee for the calendar year of 1975. The IRS responded by informing the schoolthat it owed $489,675.59 in taxes, plus interest.
The U.S. District Court for the District of South Carolina held that by revoking the school's tax exemption, the IRS had overstepped its delegated powersand ordered the IRS to pay back Bob Jones' $21. The Fourth Circuit Court of Appeals, however, reversed the decision in a divided opinion. Citing Greenv. Connally, it held that Bob Jones did not meet the commonly understoodrequirements for a charity, since it practiced racial discrimination.
Defining a Charity
Chief Justice Burger gave the opinion for the Court. He addressed the petitioner's close reading of 501(c)(3): in their interpretation, the rule guaranteed charitable status to corporations organized and operated exclusively for religious or educational purposes, and since their purposes were both, they fell well within the exemption. The chief justice, however, said that it was theduty of the Court to "go beyond the literal language of a statute if reliance on that language would defeat the plain purpose of the statute." Citing a host of earlier Court decisions, as well as speeches in Congress and other official pronouncements of the U.S. government, Burger established a definitionof charity. In Perin v. Carey (1861), for instance, it was stated thatcourts should "protect . . . a gift . . . to public charitable uses, provided the same is consistent with local laws and public policies." In a 1917 speech to Congress during a debate on charitable exemptions, a senator had opinedthat "For every dollar that a man contributes to these public charities, educational, scientific, or otherwise, the public gets 100 percent."
Taxes and Religious Freedom
Under such a definition of charity--as benefiting the common good--it was clear that Bob Jones University did not meet the requirements due to its policyof racial discrimination. The Court had long held that discrimination in public education was contrary to federal policy, and thus the university was notpursuing an aim that would benefit the public. As for the petitioners' claimthat only Congress was able to alter the tax laws, not the IRS, Burger citedthe legislative body's tendency to accord the IRS broad powers in making andcarrying out tax policy.
The petitioner also addressed the argument that to censure an institution forits sincerely held religious beliefs was a violation of religious freedom under the First Amendment. Burger again cited a host of cases showing that, where the exercise of religious belief is contrary to "an overriding governmental interest," the government had authority to justify limits on religious freedom. An example was the case of Prince v. Massachusetts (1944), in which the Jehovah's Witnesses' policy of putting children to work distributing literature came into conflict with child labor laws. As Burger quoted, "The Court found no constitutional infirmity in `excluding [Jehovah's Witness children] from doing . . . what no other children may do'." And in any case, as thechief justice pointed out, the case revolved not around the abridgement of freedom, but rather the abridgement of tax exemption. (This is rather akin tothe arguments in the late 1980s over public funding of controversial artwork.The pro-funding side portrayed it as a question of censorship when in fact the debate revolved around giving or withholding funds.)
Given these considerations, therefore, the Court found that the IRS had actedcorrectly in its interpretation of 501(c)(3), and it affirmed the judgmentsof the court of appeals. In his opinion, Chief Justice Burger was joined by the entire Court except for Justices Powell and Rehnquist. Justice Powell concurred with all parts of the decision except certain aspects of the government's right to abridge religious freedom in view of an overriding interest. As for Justice Rehnquist, he agreed with the Court's observation that "there is astrong national policy in this country opposed to racial discrimination." His problem with the decision was that, in his view, it was the job of Congress--and not the IRS or the courts--to decide that organizations which practiceracial discrimination are not eligible for 501(c)(3) exemption.
Related Cases
- Perin v. Carey, 65 U.S. 465 (1861).
- Prince v. Massachusetts, 321 U.S. 296 (1944).
- Green v. Connally, 330 F. Supp. 1150 (1970).
- Coit v. Green, 404 U.S. 997 (1971).
- Runyon v. McCrary, 427 U.S. 160 (1976).
- Goldsboro Christian Schools v. United States, 461 U.S. 574 (1983).
Private Institutions and Segregation
Private institutions have played an important role in American education. Private schools and universities were dominate in the United States until growthof state-sponsored school systems in the late nineteenth century. As publicschool desegregation policies came to the forefront in the mid-1950s, local efforts grew to preserve segregation or a least to delay racial integration, particularly in the South. Various states used different tactics, including partially funding the quickly growing number of private segregated schools. OneVirginia county completely closed its public school system. The prevailing argument was racial discrimination in private institutions did not violate theFourteenth Amendment. Segregation proponents claimed they were promoting public health and morals, and preserving the peace.
Federal policy soon became established that private schools with racially-biased policies could not receive public subsidies. Additionally, sectarian private schools could not even discriminate in their admissions based on the Civil Rights Act of 1866. However, "white flight" to private institutions substantially undermined desegregation in public schools as the American education system essentially became racially separate and unequal. Proposals for tuitiontax credits, or vouchers, to support private schools in the 1990s propelleddebate over the impact of private institutions on community-based racial desegregation goals.
Sources
Devins, Neal E. Public Values, Private Schools. New York: The Falmer Press, 1989.
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