Allen v. Wright and Donald T. Regan v. Inez Wright

In rendering a decision, the Court wanted to address the issue of standing as an essential matter in suits alleging injury from governmental actions. In rendering its decision, the Court clarified previous rulings by explaining that "injury in fact" was "fairly traceable" only if a plaintiff had suffered personal harm that was both visible and perceptible. Specifically, with regard to cases involving alleged injury sustained through governmental action (or inaction), the injury had to clearly, directly affect a litigant to establish standing and thus support a claim.

The Court did not seek to question the legality of IRS policy with regard to granting tax-exempt status to racially discriminatory schools. (In likely response to this suit, however, the IRS revised and adopted more stringently defined criteria for determining ineligibility for tax-exempt status of schools engaging in racial discrimination of any sort.) Justices chose to focus, instead, on whether respondents had standing to bring suit. The Court conformed to a prior decision, Simon v. Eastern Kentucky Welfare Rights Organization (1976) which held "that litigation concerning tax liability is a matter between taxpayer and IRS, with the door barely ajar for third party challenges." By that decision, the Court also reiterated previous guidance in cases that involved third-party challenges in tax liability suits. Moreover, the highest court in the U.S. tacitly warned that, in the period that followed this decision, they would only entertain lawsuits related to racial discrimination if a litigant personally alleged "fairly traceable" and recognizable injury.