461 U.S. 574 (1983), 81-3, 81-1., Bob Jones University v. U.s.

Docket Nº:Nos. 81-3, 81-1.
Citation:461 U.S. 574, 103 S.Ct. 2017, 76 L.Ed.2d 157
Case Date:May 24, 1983
Court:United States Supreme Court

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461 U.S. 574 (1983)

103 S.Ct. 2017, 76 L.Ed.2d 157







Nos. 81-3, 81-1.

United States Supreme Court.

May 24, 1983

Argued Oct. 12, 1982.

University, denied tax-exempt status because of its racially discriminatory admissions policy, sought refund of federal unemployment tax payments, and Government counterclaimed for unpaid taxes. The United States District Court for the District of South Carolina entered judgment in favor of university, and the IRS appealed. The Court of Appeals, 639 F.2d 147, reversed, and certiorari was granted. In a second case, another school sought refund of social security and unemployment taxes paid, and the IRS counterclaimed for unpaid taxes. The United States District Court for the Eastern District of North Carolina entered summary judgment for the Government, the Court of Appeals, 644 F.2d 879, affirmed, and certiorari was granted. The Supreme Court, Chief Justice Burger, held that nonprofit private schools that prescribe and enforce racially discriminatory admission standards on the basis of religious doctrine do not qualify as tax-exempt organizations under the Internal Revenue Code, nor are contributions to such schools deductible as charitable contributions.


Justice Powell filed an opinion concurring in part and concurring in the judgment.

Justice Rehnquist filed a dissenting opinion.

[103 S.Ct. 2019] Syllabus[*]


Section 501(c)(3) of the Internal Revenue Code of 1954 (IRC) provides that "[c]orporations ... organized and operated exclusively for religious, charitable ... or educational purposes" are entitled to tax exemption. Until 1970, the Internal Revenue Service (IRS) granted tax-exempt status under § 501(c)(3) to private schools, [103 S.Ct. 2020] independent of racial admissions policies, and granted charitable deductions for contributions to such schools under § 170 of the IRC. But in 1970, the IRS concluded that it could no longer justify allowing tax-exempt status under § 501(c)(3) to private schools that practiced racial discrimination, and in 1971 issued Revenue Ruling 71-447 providing that a private school not having a racially nondiscriminatory policy as to students is not "charitable" within the common-law concepts reflected in §§ 170 and 501(c)(3). In No. 81-3, petitioner Bob Jones University, while permitting unmarried Negroes to enroll as students, denies admission to applicants engaged in an interracial marriage or known to advocate interracial marriage or dating. Because of this admissions policy, the IRS revoked the University's tax-exempt status. After paying a portion of the federal unemployment taxes for a certain taxable year, the University filed a refund action in Federal District Court, and the Government counterclaimed for unpaid taxes for that and other taxable years. Holding that the IRS exceeded its powers in revoking the University's tax-exempt status and violated the University's rights under the Religion Clauses of the First Amendment, the District Court ordered the IRS to refund the taxes paid and rejected the counterclaim. The Court of Appeals reversed. In No. 81-1, petitioner Goldsboro Christian Schools maintains a racially discriminatory admissions policy based upon its interpretation of the Bible, accepting for the most part only Caucasian students. The IRS determined that Goldsboro was not an organization described in § 501(c)(3) and hence was required to pay federal social security and unemployment taxes. After paying a portion of such taxes for certain years, Goldsboro filed a refund suit in Federal District Court, and the IRS counterclaimed for unpaid taxes. The District Court entered summary judgment for

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the Government, rejecting Goldsboro's claim to tax-exempt status under § 501(c)(3) and also its claim that the denial of such status violated the Religion Clauses of the First Amendment. The Court of Appeals affirmed.

Held: Neither petitioner qualifies as a tax-exempt organization under § 501(c)(3). Pp. 2025-2035.

(a) An examination of the IRC's framework and the background of congressional purposes reveals unmistakable evidence that underlying all relevant parts of the IRC is the intent that entitlement to tax exemption depends on meeting certain common-law standards of charity--namely, that an institution seeking tax-exempt status must serve a public purpose and not be contrary to established public policy. Thus, to warrant exemption under § 501(c)(3), an institution must fall within a category specified in that section and must demonstrably serve and be in harmony with the public interest, and the institution's purpose must not be so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred. Pp. 2025-2028.

(b) The IRS's 1970 interpretation of § 501(c)(3) was correct. It would be wholly incompatible with the concepts underlying tax exemption to grant tax-exempt status to racially discriminatory private educational entities. Whatever may be the rationale for such private schools' policies, racial discrimination in education is contrary to public policy. Racially discriminatory educational institutions cannot be viewed as conferring a public benefit within the above "charitable" concept or within the congressional intent underlying § 501(c)(3). Pp. 2028-2030.

(c) The IRS did not exceed its authority when it announced its interpretation of § 501(c)(3) in 1970 and 1971. Such interpretation is wholly consistent with what Congress, the Executive, and the courts had previously declared. And the actions of Congress since 1970 leave no doubt that the IRS reached the correct conclusion in exercising its authority. Pp. 2030-2033.

(d) The Government's fundamental, overriding interest in eradicating racial discrimination in education substantially outweighs whatever burden denial of tax benefits [103 S.Ct. 2021] places on petitioners' exercise of their religious beliefs. Petitioners' asserted interests cannot be accommodated with that compelling governmental interest, and no less restrictive means are available to achieve the governmental interest. Pp. 2033-2034.

(e) The IRS properly applied its policy to both petitioners. Goldsboro admits that it maintains racially discriminatory policies, and, contrary to Bob Jones University's contention that it is not racially discriminatory, discrimination on the basis of racial affiliation and association is a form of racial discrimination. Pp. 2034-2035.

No. 81-1, 644 F.2d 879 (4th Cir., 1981), and No. 81-3, 639 F.2d 147 (4th Cir., 1980), affirmed.


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William G. McNairy argued the cause for petitioner in No. 81-1. With him on the briefs were Claude C. Pierce, Edward C. Winslow, and John H. Small. William Bentley Ball argued the cause for petitioner in No. 81-3. With him on the briefs were Philip J. Murren and Richard E. Connell.

Assistant Attorney General Reynolds argued the cause for the United States in both cases. With him on the briefs were Acting Solicitor General Wallace andDeputy Assistant Attorney General Cooper.

William T. Coleman, Jr., pro se, by invitation of the Court, 456 U.S. 922, argued the cause as amicus curiae urging affirmance. With him on the brief were Richard C. Warmer, Donald T. Bliss, John W. Stamper, Ira M. Feinberg, andEric Schnapper.d

d Briefs of amici curiae urging reversal in No. 81-3 were filed by Earl W. Trent, Jr., and John W. Baker for the American Baptist Churches in the U.S.A. et al.; by William H. Ellis for the Center for Law and Religious Freedom of the Christian Legal Society; by Forest D. Montgomery for the National Association of Evangelicals; and by Congressman Trent Lott, pro se.

Briefs of amici curiae urging affirmance in both cases were filed by Nadine Strossen, E. Richard Larson, and Samuel Rabinove for the American Civil Liberties Union et al.; by Harold P. Weinberger, Lawrence S. Robbins, Justin J. Finger, Jeffrey P. Sinensky, and David M. Raim for the Anti-Defamation League of B'nai B'rith; by John H. Pickering, William T. Lake, and Adam Yarmolinsky for Independent Sector; by Amy Young-Anawaty, David Carliner, Burt Neuborne, and Harry A. Inman for the International Human Rights Law Group; byRobert H. Kapp, Walter A. Smith, Jr., Joseph M. Hassett, David S. Tatel, Richard C. Dinkelspiel, William L. Robinson, Norman J. Chachkin, and Frank R. Parker for the Lawyers' Committee for Civil Rights Under Law; by Thomas I. Atkins, J. Harold Flannery, and Robert D. Goldstein for the National Association for the Advancement of Colored People et al.; by Leon Silverman, Linda R. Blumkin, Ann F. Thomas, Marla G. Simpson, and Jack Greenberg for the NAACP Legal Defense and Educational Fund, Inc.; by Harry K. Mansfield for the National Association of Independent Schools; by Charles E. Daye for the North Carolina Association of Black Lawyers; by Earle K. Moore for the United Church of Christ; and by Lawrence E. Lewy, pro se.

Briefs of amici curiae in both cases were filed by Martin B. Cowan and Dennis Rapps for the National Jewish Commission on Law and Public Affairs; and byLaurence H. Tribe, pro se, and Bernard Wolfman, pro se.

William B. Ball, Harrisburg, Pa., for petitioner Bob Jones University.

William G. McNairy, Greensboro, N.C., for petitioner Goldsboro Christian Schools, Inc.

William Bradford Reynolds, Asst. Atty. Gen., Dept. of Justice, Washington, D.C., for the U.S.

William T. Coleman, Jr., Washington, D.C., as amicus curiae in support of the judgment below.


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Chief Justice BURGER delivered the opinion of the Court.

We granted certiorari to decide whether petitioners, nonprofit private schools that prescribe and enforce racially discriminatory admissions standards on the basis of religious doctrine, qualify as tax-exempt organizations...

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