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461 U.S.574 (more)103 S. Ct. 2017; 76 L. Ed. 2d 157; 1983 U.S. LEXIS 36; 51 U.S.L.W. 4593; 83-1 U.S. Tax Cas. (CCH) P9366; 52 A.F.T.R.2d (RIA) 5001
Case history
Prior
Certiorari to the United States Court of Appeals for the Fourth Circuit
Holding
"Neither petitioner qualifies as a tax-exempt organization...t 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)."
Bob Jones University, because of its interpretation of Biblical principles, denied "admission to applicants engaged in an interracial marriage or known to advocate interracial marriage or dating." The University had received a ruling letter in 1942, confirming its tax exempt status.
The University was notified November 30, 1970 that the IRS was planning on revoking its tax exempt status as a "religious, charitable . . . or educational" institution. In response, the University filed suit in 1971 in Bob Jones University v. Schultz.
The Supreme Court affirmed the Court of Appeals decision in Bob Jones University v. Simon (416 US 725). The case was decided May 15, 1974, in an 8-0 decision (Douglas not participating). They stated that there was a lack of proof of "irreparable injury." Justice Powell wrote the decision.
The IRS again notified the University on April 16, 1975 of the proposed revocation. Officially, the IRS revoked the University's tax exempt status on January 19, 1976. The University paid $21 in unemployment taxes for one employee for tax year 1975 and then filed for a refund in the United States District Court for the District of South Carolina. The Government counterclaimed for unpaid federal unemployment taxes for the taxable years 1971 through 1975, in the amount of $489,675.59, plus interest.
The District Court ruled December 26, 1978 that the IRS had violated the University's First Amendment rights, and ordered the IRS to refund the University the $21 of taxes that it had paid.
The United States Court of Appeals of the Fourth Circuit ruled that the case be sent back to the District Court
The Supreme Court decision
Bob Jones University v. United States was decided May 24, 1983 in an 8-1 decision with majority opinion written by Warren E. Burger, and joined by William J. Brennan, Byron R. White, Thurgood Marshall, Harry A. Blackmun, John Paul Stevens, and Sandra Day O'Connor. The Court, speaking through Burger, read a "common law" public interest requirement into the statute governing tax-exempt charitable status, and cited Congress' refusal to intervene as proof that they approved of the IRS's construction of the statute. Lewis F. Powell wrote a separate concurring opinion, emphasizing the importance of Congressional approval for administrative policy changes. William H. Rehnquist was the sole dissenter, arguing that the literal terms of the governing statute could not be read to exclude Bob Jones from charitable status.
Aftermath
The case has been cited in many decisions that followed as well as by commentators, due to the significance of the precedent established in this case.
The ban on interracial dating was lifted in 2000 after Dr. Bob Jones III, following a media uproar prompted by the visit of presidential candidate George W. Bush, announced its nullification on Larry King Live.
Supreme Court of the United States