Bob Jones University
v. U.S. 461 US 574
Jason Yu Chen
TX 8020
Summer, 2007
Cites



Cites: 52 AFTR 2d 83-5001, 461 US 574,
103 S Ct 2017, 76 L Ed 2d 157, 83-1 USTC
P 9366
Date Decided: 05/24/1983
Judge: Chief Justice BURGER
Facts





Bob Jones University is a S.C. nonprofit religious
institution that believes the Bible forbids interracial
dating and marriage.
Prior to 1971 African Americans were excluded from the
school.
From 1971 to 1975 the school accepted African
Americans married within their race.
In 1976 the 4th Circuit ruled in McCravy v. Runyon that
racial exclusion should be prohibited from private
schools.
Bob Jones started enrolling unmarried African American
students, but still banned interracial dating & marriage.
Facts (continued)





Until 1970 IRS extended the tax-exempt status
to Bob Jones.
In 1970 IRS started challenging the tax-exempt
status of private schools practicing racial
discrimination.
On Jan. 19, 1976 IRS revoked the school’s taxexempt status.
From 1970 to 1975 the school filed tax returns
and paid $21.00 under the Federal
Unemployment Tax Act.
IRS claimed unpaid tax of $489,675.59 plus
interest for the taxable years of 1971 to 1975
History

The U.S. District Court in S.C.


The 4th Circuit Court of Appeals


IRS exceeded its delegated power
Sec. 501(c)(3) must be read against the
background of charitable trust law and thus
should not contradict public policy.
The U.S. Supreme Court

Granted certiorari
Issue
Should Sec. 501(c)(1) be interpreted solely
by the plain language of the Code or should
it be analyzed within the framework of the
Code and against the background of the
congressional purposes?
Argument


Bob Jones: the school is not racially
discriminating. It now allows all races to
enroll and the ban on interracial dating
and marriage applies to all races.
IRS: the school is practicing racial
discrimination.
Supreme Court Ruling




Decision: favored IRS
Petitioner does not qualify as a tax-exempt
organization under §501(c)(3).
The IRS's 1970 interpretation of
§501(c)(3) was correct.
The IRS did not exceed its delegated
power by the revocation.
Reasoning


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.
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).
Reasoning (Continued)


Such interpretation is wholly consistent with
what Congress, the Executive, and the courts
had previously declared.
The Government's fundamental, overriding
interest in eradicating racial discrimination in
education substantially outweighs whatever
burden denial of tax benefits places on
petitioners' exercise of their religious beliefs.
Petitioners' asserted interests cannot be
accommodated with that compelling
governmental interest.
Conclusion
Regardless of religious sincerity of policies,
compelling government interest in
eradicating racial discrimination substantially
outweighed any burden that denial of tax
benefits would have on schools' exercise of
religious beliefs.