Not that the actual loss of tax-exempt status would be an issue.Sarah Posner is the author of God’s Profits: Faith, Fraud, and the Republican Crusade for Values Voters.
Keenly observed and meticulously reported, "God's Profits" examines the unholy alliance between a new breed of corrupt televangelists and the Republican Party, which is eagerly courting "values voters" in the nation's largest megachurches.What’s more, she said, federal law bans race discrimination, demonstrating a broad consensus to protect as fundamental public policy.Given that discrimination based on sexual orientation has not been banned by any federal law, we are far from such a consensus on sexual orientation discrimination.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. (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. (b) The IRS's 1970 interpretation of § 501(c)(3) was correct. That court approved the IRS's amended construction of the Tax Code. All charitable trusts, educational or otherwise, are subject to the requirement that the purpose of the trust may not be illegal or contrary to public policy. It is both a religious and educational institution. These are but a few of numerous Executive Orders over the past three decades demonstrating the commitment of the Executive Branch to the fundamental policy of eliminating racial discrimination. In an area as complex as the tax system, the agency Congress vests with administrative responsibility must be able to exercise its authority to meet changing conditions and new problems. Since Congress cannot be expected to anticipate every conceivable problem that can arise or to carry out day-to-day oversight, it relies on the administrators and on the courts to implement the legislative will. This in turn may necessitate later determinations of whether given activities so violate public policy that the entities involved cannot be deemed to provide a public benefit worthy of "charitable" status. Bull., at 231, is wholly consistent with what Congress, the Executive, and the courts had repeatedly declared before 1970. That governmental interest substantially outweighs whatever burden denial of tax benefits places on petitioners' exercise of their religious beliefs. JUSTICE POWELL concedes that, if any national policy is sufficiently fundamental to constitute such an overriding limitation on the availability of tax-exempt status under § 501(c)(3), it is the policy against racial discrimination in education. Since that policy is sufficiently clear to warrant JUSTICE POWELL's concession and for him to support our finding of longstanding congressional acquiescence, it should be apparent that his concerns about the Court's opinion are unfounded. In light of our resolution of this litigation, we do not reach that issue. The District Court entered summary judgment for [p575] the IRS, 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. Neither petitioner qualifies as a tax-exempt organization under § 501(c)(3). 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. It would be wholly incompatible with the concepts underlying tax exemption to grant tax-exempt status to racially discriminatory private educational entities. At the same time, the IRS announced that it could not "treat gifts to such schools as charitable deductions for income tax purposes [under § 170]." By letter dated November 30, 1970, the IRS formally notified private schools, including those involved in this litigation, of this change in policy, "applicable to all private schools in the United States at all levels of education." 404 U. The court also held that racially discriminatory private schools were not entitled to exemption under § 501(c)(3) and that donors were not entitled to deductions for contributions to such schools under § 170. Based on the "national policy to discourage racial discrimination in education," the IRS ruled that a [private] school not having a racially nondiscriminatory policy as to students is not 'charitable' within the common law concepts reflected in sections 170 and 501(c)(3) of the Code. Its teachers are required to be devout Christians, and all courses at the University are taught according to the Bible. § 7421(a), prohibited the University from obtaining judicial review by way of injunctive action before the assessment or collection of any tax. Indeed, as early as 1918, Congress expressly authorized the Commissioner "to make all needful rules and regulations for the enforcement" of the tax laws. Administrators, like judges, are under oath to do so. Some years before the issuance of the rulings challenged in these cases, the IRS also ruled that contributions to community recreational facilities would not be deductible, and that the facilities themselves would not be entitled to tax-exempt status, unless those facilities were open to all on a racially nondiscriminatory basis. We emphasize, however, that these sensitive determinations should be made only where there is no doubt that the organization's activities violate fundamental public policy. Indeed, it would be anomalous for the Executive, Legislative, and Judicial Branches to reach conclusions that add up to a firm public policy on racial discrimination, and at the same time have the IRS blissfully ignore what all three branches of the Federal Government had declared. The interests asserted by petitioners cannot be accommodated with that compelling governmental interest, [p605] IV The remaining issue is whether the IRS properly applied its policy to these petitioners. The common law requirement of public benefit is universally recognized by commentators on the law of trusts.