Green v. Miller Brief for Plaintiffs-Appellees

    IN THE
UNITED STATES COURT OF APPEALS 

FOR THE DISTRICT OF COLUMBIA CIRCUIT
t.,

4"
i

No. 80-1913

WILLIAM H. GREEN, ET AL.,
Plaintiffs-Appellees,

‘S

l
V •
v*

v.
G. WILLIAM MILLER, ET AL.,

Defendants-Appellees,
ASSOCIATION OF CHRISTIAN SCHOOLS 

INTERNATIONAL, ET AL.,
Appellants.

Appeal from the 
United States District Court 
for the District of Columbia

BRIEF FOR PLAINTIFFS-APPELLEES

Frank R. ParkerLawyers’ Committee for 
Civil Rights Under Law 

720 Milner Building 
210 South Lamar Street 
Jackson, Mississippi

39201
(601) 948-5400

William L. Robinson 
Norman J. Chachkin 
Beatrice Rosenberg 
Lester Goldner

Lawyers' Committee for 
Civil Ricrhts Under Law 

733 15th Street, N.W. 
Washington, D. C. 20005 
(202) 628-6700

Attorneys for Plaintiffs-Appellees



IN THE
UNITED STATES COURT OF APPEALS 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 80-1913

WILLIAM H. GREEN, ET AL.,
Plaintiffs-Appellees,

v.
G. WILLIAM MILLER, ET AL.,

Defendants-Appellees,
ASSOCIATION OF CHRISTIAN SCHOOLS 

INTERNATIONAL ET AL.,
Appellants.

CERTIFICATE OF COUNSEL
required by Rule 8(c) of the General Rules 
of the United States Court of Appeals for 

the District of Columbia Circuit

The undersigned, counsel of record for plaintiffs-appellees 
certifies that the following parties appeared below:

Plaintiffs:
William H. Green, on his own behalf and on behalf of his minor 
children, Connie Green, Belinda Green, Ronnie Green, and Bessie 
Green,
Vernon Tom Griffin, on his own behalf and on behalf of his minor 
son, Vernon Tom Griffin, Jr.,



John D. Wesley, on his own behalf and on behalf of his minor 
children, Shirley Ann Wesley, Florence Wesley, and Jessie Lee 
Wesley,
Warren G. Booker, on his own behalf and on behalf of his minor 
adopted son, Adam Wayne Gilley, and
Essie Bernice Austin.

Defendants:
G. William Miller, as Secretary of the Treasury of the United 
States, and
Jerome Kurtz, as Commissioner of Internal Revenue.

Intervenor Defendants:
Dan Coit, on his own behalf and on behalf of his minor children, 
Lauren Faye Coit and Linda Ann Coit.

Proposed Intervenors:
First Presbyterian Church, Jackson, Mississippi,
Association of Christian Schools International.
Joe K. Treloar, Reverend William K. Wymond, Mary Elizabeth Blanton, 
Theresa 0. Younce, Judy C. Hand, James L. Moore and Elizabeth r>. 
Moore, his wife; David T. Hagenr.an and Lynn T. Hagerman, his wife, 
S. Kent Dear and Janie C. Dear, his wife.

These representations are made in order that Judges of this 
Court, inter alia, may evaluate possible disqualification or
recusal.

Plaintiffs-Appellees.



TABLE OF CONTENTS
Page

1Counter-Statement of Issue Presented 
Prior and Related Proceedings 2
Statutes and Rules Involved 2
Reference to Parties and Rulings 2
STATEMENT 3

A. The Original Action 4
B. The Supplementary Proceedings 6
C. The Motion to Intervene 12

ARGUMENT —
THE DISTRICT COURT'S DENIAL OF

ARGUMENT —
THE DISTRICT COURT'S DENIAL OF
THE MOTION TO INTERVENE WAS PROPER 15

A. The motion to intervene 
was not timely. 16

B. The proposed intervenors1 interests 
can be fully adjudicated in a sepa­
rate action under 26 U.S.C. § 7428, 
which would develop the particular 
facts of appellants' particular sit­
uation without the necessity of dis­
turbing the final judgment in this 
case. 27

Conclusion 31

Appendices
A —  Rule 24, F.R. CIV. P., and 26 U.S.C. § 7428
B —  IRS News Releases of July 10, 1970 and July 19, 1970
C —  IRS Commissioner Thrower's December 10, 1970 affidavit
D —  Plaintiffs' 1976 motion for further relief
E —  Excerpts from December 5, 1978 hearing on IRS proposed 

Revenue Procedure



Cases: Page

*Alaniz v. Tillie Lewis Foods, 572 F.2d 657 (9th Cir.) , 
cert, denied sub nom. Beaver v. Alaniz, 439 U.S.
837 (1978)............................................. 26

Bob Jones University v. Simon, 416 U.S. 725 (1974)........  20n
Brumfield v. Dodd, 425 F. Supp. 528 (E.D. La. 1976) . . . .  9n, 16n,

22n, 27, 31
Brumfield v. Dodd, 405 F. Supp. 338 (E.D. La. 1975) . . . .  9n, 22n
Gilmore v. City of Montgomery, 417 U.S. 556 (1974)........  21
Gilmore v. City of Montgomery, 337 F. Supp. 22 

(M.D. Ala. 1972), rev'd in part, 473 F.2d 832 
(5th Cir. 1973), rev'd in part and remanded,
417 U.S. 556 (1974).....................................  22n

Goldsboro Christian Schools v. United States,
436 F. Supp. 1314 (E.D. N.C. 1977)......................  29n

*Green v. Connally, 330 F. Supp. 1150 (D.D.C.),
aff'd sub nom. Coit v. Green, 404 U.S. 997 (1971). . . .  2, 4, 5,

7n, 21, 29
Green v. Kennedy, 309 F. Supp. 1127 (D.D.C. 1970) ........  2,4
Hodgson v. United Mine Workers, 153 U.S. App. D.C. 407,

473 F . 2d 118 (1972)..................................... 16 , 31
Moten v. Bricklayers, Masons, and Plasterers 

International Union, 177 U.S. App. D.C. 17,
543 F . 2d 224 (1976) ................................... 16

*NAACP v. New York, 413 U.S. 345 (1973)....................  16 , 17 ,
19n, 31

Nevilles v. EEOC, 511 F.2d 303 (8th Cir. 1975)............  26
Newman v. Piggie Park Enterprises, Inc., 256 F. Supp.

941 (D.S.C. 1966), rev'd in part, 377 F.2d 433
(4th Cir. 1967), modified and aff'd, 390 U.S. 400
(1968).................................................  19n

-11-

Table of Authorities

* Cases or authorities chiefly relied upon are marked by asterisks.



— x x x—

Cases (continued): Page

Norwood v. Harrison, 413 U.S. 455 (1973).................  6 , 21
*Norwood v. Harrison, 382 F. Supp. 921 (N.D.

Miss.1974)...........................................  6,7,8,
21, 22n

Prince Edward School Foundation v. Commissioner,
478 F. Supp. 107 (D.D.C. 1979), aff'd
____ U.S. App. D.C. ____, ____  F. 2d ____
(June 30, 1980), petition for cert, filed,
U.S. No. 80-484 (September 25, 1980).................  2

Stallworth v. Monsanto Co., 558 F.2d 257
(5th Cir. 1977)....................................... 17

United States v. Freedom Church, 613 F.2d 316
(1st Cir. 1979)....................................... 27

United States v. Marion County School Dist.,
590 F. 2d 146 (5th Cir. 1979)........................  31

Wright v. Miller, 480 F. Supp. 790 (D.D.C. 1979),
appeal pending, No. 30-1124 (D.C. Cir.)..............  2

Statutes, Regulations and Rules:

26 U.S.C. § 7428 ....................................... 2, 16 ,
27, 29

26 C.F.R. § 1.6033-2 (g) (1979)..........................  9n
*F.R. CIV. P. 2 4 .........................................  2, 16
F.R. CIV. P. 25 (d) ( 1 ) ................................... 3n

Table of Authorities (continued)

* Cases or authorities chiefly relied upon are marked by asterisks.



-iv-

Other Authorities Page

Proposed Internal Revenue Procedure, 44 Fed. Reg.
9451-55 (February 9 , 1979)........................  10

Proposed Internal Revenue Procedure, 43 Fed. Reg.
37296-98 (August 22 , 1978)........................  10

Internal Revenue Service Regulation, 42 Fed. Reg.
767-68 (January 4, 1977)..........................  9n

Internal Revenue Procedure 75-50, 1975-2 Cum. Bull. 587 . 9n
Internal Revenue Ruling 75-231, 1975-1 Cum. Bull. 158 . . 9
Internal Revenue Service News Release IR-1930 .......... 23n
Internal Revenue Service Technical Information

Release No. 1449................................... 9n
Internal Revenue Service, Hearing: Proposed Revenue

Procedure on Tax Exempt Private Schools 
(December 5, 1978). . . I  ̂  ̂ ! ! ! T

Table of Authorities (continued)

2 5n



IN THE
UNITED STATES COURT OF APPEALS 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 80-1913

WILLIAM H. GREEN, ET AL.,
Plaintiffs-Appellees,

v.
G. WILLIAM MILLER, ET AL.,

Defendants-Appellees,
ASSOCIATION OF CHRISTIAN SCHOOLS 

INTERNATIONAL, ET AL.,
Appellants.

Appeal from the 
United States District Court 
for the District of Columbia

BRIEF FOR PLAINTIFFS-APPELLEES

COUNTER-STATEMENT OF 
ISSUE PRESENTED

Whether the district court properly declined in 1980 to 
permit appellants to intervene in a suit instituted in 1969 in 
which a final judgment had been entered, where appellants should 
have known, from the time the suit was instituted and at various 
stages thereafter, that their school would fall within the orbit



-2-

of the action, and where the intervenors can fully protect their 
interest by a separate action under 26 U.S.C. §7428.

PRIOR AND RELATED PROCEEDINGS

The instant matter was commenced in 1969. A preliminary in­
junction was issued in 1970 sub nom. Green v. Kennedy, 309 F. Supp. 
1127. A permanent injunction was issued by a three-judge court in 
1971 sub nom. Green v. Connally, 330 F. Supp. 1150; this judgment 
was affirmed by the Supreme Court sub nom. Coit v. Green, 404 U.S. 
997 (1971).

In 1976 a nationwide class action was filed seeking relief 
similar to that sought by plaintiffs in the instant case. The 
District Court's ruling dismissing that action, Wright v. Miller, 
480 F. Supp. 790 (D.D.C. 1979), is presently pending before this 
Court on appeal, D.C. Cir. No. 80-1124. A case involving issues 
similar to claims which appellants v/ould seek to litigate here if 
granted intervention is Prince Edward School Foundation v. Commis-
sioner, 478 F. Supp. 107 (D.D.C. 1979) , aff'd ___ U.S. App. D.C.
___, ___ F.2d ___ (June 30, 1980), petition for cert, filed, U.S.
No. 80-484 (September 25, 1980).

STATUTES AND RULES INVOLVED

Rule 24 of the Federal Rules of Civil Procedure and 
26 U.S.C. 7428 are set forth in Appendix A to this brief.

REFERENCE TO PARTIES AND RULINGS

This is an appeal from an order of Judge George L. Hart,
Jr., of the United States District Court of the District of 
Columbia, entered July 9, 1980, denying a motion to intervene.



-3-

The ruling is not reported but appears at pp. 124-25 of the Ap­

pendix.
The appellants, proposed intervenors, are the Association 

of Christian Schools International, the First Presbyterian Church 
of Jackson, Mississippi, and various members of that church.

The plaintiffs in the action are black federal taxpayers 
and their minor children attending public schools in Mississippi. 
The adult plaintiffs are William H. Green, Vernon Tom Griffin, 
John D. Wesley, Warren G. Booker, and Essie Bernice Austin.

Defendants in the action are G. William Miller as Secretary 
of the Treasury of the United States and Jerome Kurtz as Commis—

JVsioner of Internal Revenue.
Persons previously allowed to intervene are Dan Coit and 

his minor children, Lauren and Linda Coit.

STATEMENT

Appellants (Association of Christian Schools International, 
the First Presbyterian Church, Jackson, Mississippi, and some of 
its members) appeal from an order entered July 9, 1980 denying 
their motion to intervene in this case, which had been commenced 
in 1969. The District Court held that the motion was untimely, 
that the movants lacked a protectable interest, and that allow­
ance of intervention would delay and prejudice the rights of the 
original plaintiffs. (A. 124.)

1/ The current defendants have been substituted for their pred­
ecessors pursuant to F.R. CIV. P. 25(d)(1).



-4-

A. The Original Action

The action in which appellants sought to intervene is a 
class action, commenced in 1969, by which black taxpayers and 
their minor children attending public schools in Mississippi 
sought to enjoin the Secretary of the Treasury and the Commis­
sioner of Internal Revenue from according tax-exempt status to 
private schools in Mississippi which exclude students on the 
basis of race. See Green v. Connally, 330 F. Supp. 1150 (D.D.C.), 
aff'd VTithout opinion sub nom. Coit v. Green, 404 U.S. 997 (1971) . 
Permitted to intervene in that action on January 21, 1970, were 
representatives of the class of parents and children who support
or attend private nonprofit, hitherto tax-exempt schools in Mis-

_2/sissippi having an all-white enrollment,established as a means 
of enabling white students to avoid desegregated public schools.
See 330 F. Supp. at 1155.

In January, 1970, the District Court enjoined the IRS from 
approving any pending or future application for tax-exempt status 
unless it "first affirmatively determine[s] pursuant to appropriate 
directives and procedures satisfactory to this Court that the 
applicant school is not part of a system of private schools oper­
ated on a racially segregated basis as an alternative to white 
students seeking to avoid desegregated public schools." Green v. 
Kennedy, 309 F. Supp. 1127, 1140 (D.D.C. 1970).

2/ Applications to intervene by persons and schools outside the 
"state of Mississippi were denied.



-5-

On June 30, 1971, the District Court issued an injunction 
restraining the Secretary of the Treasury and the Commissioner 
of Internal Revenue from approving tax-exempt status under Sec­
tion 501(c)(3) of the Internal Revenue Code for any private 
school located in the State of Mississippi unless such school 
made a showing that it had adopted and publicized, in a manner 
reasonably effective to bring the matter to the attention of 
minority students and parents, a racially non-discriminatory 
admissions policy; and unless the school supplied to the IRS in­
formation concerning the organization of the school and the ra­
cial composition of its student body (see 330 F. Supp. at 1179- 
80) .

As the District Court noted in its 1971 opinion, while the 
case was pending before it the Internal Revenue Service, on 
July 10, 1970, had itself announced in a press release that it 
would grant tax exemption only to schools having "racially non- 
discriminatory admission policies." See 330 F. Supp. at 1172.
In a press release of July 19, 1970 explaining its earlier state­
ment, the IRS added that its "statement of position on racially
nondiscriminatory admissions policies would be applicable to all

_3/private schools, whether church related or not."
In an affidavit filed in this case on December 10, 1970,

3/ Both press releases are attached to the August 21, 1970 affi­
davit of IRS Commissioner Randolph Thrower, filed in this case 
along with the government's Motion to Dismiss of that date, and 
contained in that portion of the record which has not been trans­
mitted to this Court. For the convenience of the Court, we have 
reproduced the news releases in Appendix B infra.



-6-

_£/
before issuance of the permanent injunction, the Commissioner 
of Internal Revenue stated that the Service had mailed letters 
to approximately 5,000 private schools in the United States which 
had previously received favorable rulings on tax exemption. He 

also said:
It is estimated that there are, in addi­
tion, more than 10,000 private schools 
which are covered by group rulings, as 
through a ruling given to a church cover­
ing all of the church-owned private schools. 
Similar information is being obtained as to 
the admission policies of such schools.

B . The Supplementary Proceedings

In 1976, the plaintiffs, contending that the IRS had failed 
to comply with the 1971 orders of the District Court, moved for

_5/additional relief. The motion arose in part out of develop­
ments in the case of Norwood v. Harrison, 413 U.S. 455 (1973), 
in which the Supreme Court had held that Mississippi schools 
which discriminated on the basis of race were ineligible to re­
ceive state-loaned textbooks.

On remand of that case (see 382 F. Supp. 921 [N.D. Miss.
1974]), the District Court for the Northern District of Missis­
sippi ordered the establishment of a certification procedure

4/ The affidavit was attached to the government's Memorandum 
of Points and Authorities in Opposition to Plaintiffs' Motion 
for Summary Judgment and Intervenors1 Motion for Summary Judg­
ment. It is reprinted in Appendix C infra.
5/ That motion, which was also not included in the portions of 

the record transmitted to this Court, is reproduced in Appendix 
D infra.



-7-

whereby schools applying for textbooks were required to give in­
formation as to their organization and student body, including 
answers to questions about whether and how they had publicized a 
policy of nondiscrimination. (The form is attached as an appen­
dix to the District Court's opinion, 382 F. Supp. at 936-39.) 
Thereafter, in reviewing evidence as to schools whose eligibility 
was disputed, Chief Judge Ready held that a prima facie case of 
racial discrimination was shown by evidence that a "school's 
existence began close upon the heels of" public school desegrega­
tion in the area, and that the school had never enrolled a black

_6/
student nor employed a black teacher or administrator.
(382 F. Supp. at 924-925.) He then listed illustrative factors 
which could overcome the presumption, including publicity of a 
nondiscriminatory policy, communication with black community

6/ In 1971, the three-judge court had held (330 F. Supp. at 
1173-74) (emphasis supplied):

The history of state-established seg­
regation in Mississippi, coupled with the 
founding of new private schools there at 
times reasonably proximate to public school 
desegregation litigation, leaves private 
schools in Mississippi carrying a badge of 
doubt. The finding in the Coffey case, 
supra, which has not been controverted and 
which we accept, that the new schools were 
established as segregated schools leads us 
to declare that it is the duty of the 
Internal Revenue Service to seek out sup­
plementary information, whether or not 
required for schools elsewhere, before 
granting final rulings of tax-exempt~status 
and deductibility of contributions to those 
private Mississippi schools applying for 
such benefits. The same condition of rea­
sonable proximity to desegregation litiga­
tion applies not only to schools organized 
in contemplation of litigation about to 
start, but also to schools subsequently 
organized in the wake of a decree.



-8-

leaders, etc. (See 382 F. Supp. at 926.)
Judge Ready's opinion dealt specifically with a number of 

religious schools, i.e., the South Haven Mennonite School, which
---  J Jhe held ineligible for textbook loans (382 F. Supp. at 927-28); 

the Christ Episcopal Day School, which he found nondiscriminatory 
even though the step of adopting a nondiscriminatory policy was 
"taken as a direct result of Green v. Connally" (i.e. , this case) , 
(382 F. Supp. at 931-32); and the Presbyterian Day School of 
Cleveland, which was approved only conditionally because, al­
though the church itself did not discriminate, the school had 
failed to publicize its willingness to accept black students 
(382 F. Supp. at 932-35).

Plaintiffs discovered that a number of schools, including 
several specifically attacked in the earlier phase of this, the 
Green litigation, were still enjoying federal tax-exempt status 
although they had been found ineligible to receive textbook loans 
from the State of Mississippi because of their racially discrim­
inatory policies. The IRS had failed to act against schools

7/ Judge Ready's conclusion about this school was as follows: 
T382 F. Supp. at 928):

Admittedly the factors for a prima facie 
case are here present. The only question is 
whether this school, sponsored by a close-knit 
Christian membership, has successfully rebut­
ted the inference of a racially discriminatory 
admissions policy. The school's reluctance, 
if not disdain, in presenting evidence to this 
court has not facilitated our task. Neverthe­
less, this court has undertaken to give this 
school utmost, careful consideration in view 
of its status as a church-sponsored school 
emphasizing religion. Despite contrary claims, 
however, we are driven to the conclusion that 
the South Haven school exists as a haven for 
perpetuating white, segregated education.



-9-

adiudicated discriminatory under the Norwood standards in both
_8/Mississippi and Louisiana, apparently because there were no

_9/
IRS announcements setting forth such standards. However, the
IRS had, on May 22, 1975, issued Revenue Ruling 75-231, 1975-1 
Cum. Bull. 158, which proclaimed explicitly that organizations 
"including churches, that conduct schools with a policy of re­
fusing to accept children from certain racial and ethnic groups

10/
will not be recognized as tax-exempt."

In response to the plaintiffs' motion, the government orig­
inally moved to dismiss the action (this request was denied by 
Judge Waddy on May 25, 1977); subsequently, the IRS advised the 
District Court, inter alia, that

Plaintiffs' 1976 motion reopening this lawsuit 
prompted the Service to review its procedures 
for determining whether private schools seeking

8/ See Brumfield v. Dodd, 405 F. Supp. 338 (E.D. La. 1975);
Td., 425 FT Supp. 528 (E.D. La. 1976).
9/ Thus, for example, Rev. Proc. 75-50, adopted November 6,

T9 75 , contained no reference to the relationship between a pri­
vate school's establishment or expansion and public school deseg­
regation .
10/ Rev. Rul. 75-231 was appended to the February 6, 1976 letter 
from IRS Chief Counsel Meade Whitaker to Green plaintiffs' counsel 
Frank Parker which is Exhibit 8 to the 1976 motion for further 
relief (see note 5 supra). It appears in Appendix D to this 
brief, pp. 40d- 41d infra. Subsequently, on November 6, 1975,
the IRS issued Rev. Proc. 75-50, 1975-2 Cum. Bull. 587, setting 
forth the showing that had to be made to establish a school's 
nondiscriminatory policy. (But see note 9 supra.) On March 19, 
1976, the IRS issued Technical Information Release No. 1449, an­
nouncing that the annual certification of nondiscrimination re­
quired by Rev. Proc. 75—50 should be filed along with a school's 
Form 990 information return; and that for schools which did not 
file Form 990 [such as church schools, see 26 C.F.R. §1.6033-2(g) 
(1979); 42 Fed. Reg. 767-68 (.Jan. 4 , 1977)], "a separate certifi­
cation form is being developed . . . ."



-10-

or maintaining Section 501(c)(3) tax exemp­
tion have racially nondiscriminatory admis­
sions policies as to students. After review­
ing the Service's existing guidelines and 
the judicial authority in racial discrimina­
tion cases, the Service concluded that its 
existing procedures do not provide adequate 
guidance with respect to certain schools 
formed or substantially expanded at the time 
of public school desegregation in the commu­
nity. Defendants believe that the Service's 
existing procedures are ineffective in iden­
tifying such schools whose formation or ex­
pansion raise substantial doubts concerning 
their practices, even though the schools may 
profess an open enrollment policy and comply 
with the yearly publication requirement of 
Rev. Proc. 75-50. 11/

It therefore published, for comment, a proposed Revenue Procedure 
providing additional guidelines to be used in reviewing private 
schools' eligibility for tax-exempt status. 43 Fed. Reg. 37296- 
98 (August 22, 1978). These clearly applied to church-operated 
schools. In hearings on the proposed Revenue Procedure held in 
Washington on December 5-8, 1978, testimony was given by a num­
ber of representatives of religious organizations, including 
counsel for the Association of Christian Schools International, 
asserting conflict with religious freedom. After receiving and 
reviewing numerous comments, the Service made substantial revi­
sions and reissued the guidelines for comment on February 9,
1979, 44 Fed. Reg. 9451-55. The proposed Procedure has never

12/
been implemented.

11/ Memorandum of Defendants in Response to Plaintiffs' Submis- 
sTon on the Merits, filed November 27, 1979, at 20-21.
12/ In 1979 and 1980, the Congress approved riders to Treasury 
Department appropriations measures prohibiting the use of funds 
to carry out the guidelines.



- 11-

On cross-motions for summary judgment, the District Court 
held that the IRS had not violated the order of June 30, 1971, 
but that the order required supplementation and modification.
(A. 9.) Paragraph (1) of the 1980 ruling expanded the injunction 
to prohibit the grant of tax-exempt status to Mississippi private 
schools

which have been determined in adversary or 
administrative proceedings to be racially 
discriminatory; or [which] were established 
or expanded at or about the time the public 
school districts in which they are located 
or which they serve were desegregating, and 
which cannot demonstrate that they do not 
racially discriminate in admissions, employ­
ment, scholarships, loan programs, athletics, 
and extra-curricular programs.

Paragraph (2) explained that the existence of the conditions set 
forth in paragraph (1) raises an inference of discrimination 
which can be overcome "by evidence which clearly and convincingly 
reveals objective acts and declarations establishing that such is 
not proximately caused by such school's policies and practices," 
and set forth non-exclusively the type of evidence which would 
tend to establish nondiscrimination. (A. 10.)

The Court also modified the prior decree to require greater 
regularity in the schools' publicizing of nondiscriminatory poli­
cies and to require the IRS to collect additional information 
with respect to the organization and status of the school.
(A. 11-12.) The IRS was directed to take all reasonable steps to 
determine which, if any, church-related schools in Mississippi 
would come under the definition of Paragraph (1), and with re­
spect to such schools to collect the information required by the



-12-

permanent injunction. (A. 13.) Finally, the Service was ordered 
to deny tax exemption unless the showing and information required 
by the permanent injunction, as amended, was made within specific 
times. (A. 12.) The order was amended on June 2, 1980, to make 
clear that it was intended to apply only to schools which have 
in the past been determined to be racially discriminatory, or 
which were established or expanded at or about the time the pub­
lic school districts in which they are located or serve were 
desegregated. (A. 14-16.)

C. The Motion to Intervene

In June, 1980, after entry of the final decree in this 
case, the Association of Christian Schools International, the 
First Presbyterian Church of Jackson, Mississippi, and some of 
its members moved to intervene in this action (A. 17-29). The 
Association alleaed that it represented the interests of more 
than 1400 Bible-oriented Christian elementary and secondary 
schools in the United States (A. 17); the First Presbyterian 
Church that it ran a school for children whose parents desire 
instruction in the Biblical faith and who abide by the religious 
and moral principles of the church (A. 18). The Church averred 
that it enrolls children who reside in public school districts 
in Mississippi which have been desegregated, and that none of 
the students or teachers at the school are black (A. 21). The 
proposed intervenors alleged that the order of May 5, 1980, as 
amended, unduly burdened the right of a wholly religious enter­
prise to conduct its religious ministry in education free from 
government direction, supervision, investigation, and evaluation,



-13-

in violation of the First Amendment (A. 21). The application to 
intervene also alleged that the motion was timely because no 
church schools were implicated in the original complaint or in 
the motion of the plaintiffs filed in July, 1976, to enforce the 
original (June 10, 1971) decree (A. 28).

Annexed to the motion to intervene was a proposed answer to 
the complaint in which the proposed intervenors challenged the 
status of the plaintiffs to maintain this action and asserted 
that the Internal Revenue Code of 1954 does not require that 
religious schools adopt or publicize a policy of racial nondis­
crimination as a condition of being accorded recognition of tax 
exemption (A. 57). They also annexed a proposed response to the
July 1976 motion to modify the original decree in which they al­
leged that, if the decree were extended to include churches and 
other religious entities, it would violate the First Amendment 
(A. 59). In a subsequent response to the contention of the plain­
tiffs that the motion to intervene was untimely, proposed inter­
venors offered the affidavit of their attorney that he was first 
contacted by the First Presbyterian Church about this case on 
May 21, 1980, after the district court order of May 5, 1980; that 
he was unaware of the order prior to that time; and that he was 
retained to seek intervention only on June 2, 1980. (A. 122—23.)

The District Court denied the motion to intervene on July 9, 
1980. It ruled that the motion was untimely; that the movants 
lacked any protectable interest; that to allow intervention would 
delay and prejudice the rights of the original parties. It also 
noted that the Association of Christian Schools International



-14-

sought to represent the interest of religious schools located 
outside the State of Mississippi (A. 124-25).

This appeal followed.



-15-

ARGUMENT

THE DISTRICT COURT'S DENIAL OF THE 
MOTION TO INTERVENE WAS PROPER

Although the Association of Christian Schools International 
is a nominal appellant on this appeal, the Brief for Appellants, 
by concentrating on the position of the First Presbyterian Church 
Day School [hereinafter referred to as the "Day School"], virtu­
ally concedes that the Association has no independent interest 
that would give it standing to intervene in this case, which is 
limited to schools in Mississippi. Aside from the fact that the 
Day School is a member of the Association, the only other basis 
for an independent interest which the Association suggests is 
that it stands ready to represent other Mississippi schools 
(App. Br. at 24). Since it does not even suggest that any other 
school desires representation, this obviously does not give the 
Association standing to intervene in this case.

As to the Day School and its patrons or employees, they 
allege an interest affected by the decrees issued in this case, 
since the school has an all-white enrollment and was started 
after a desegregation order in its district. Our primary con­
tention in this Court is that the denial of their motion to 
intervene was nevertheless proper because the motion was untimely 
(the school having slept on its rights after it knew or should 
have been aware that it might be affected by the orders in this 
case). The judgment below should also be sustained since the 
interest which the school asserts may be fully litigated, if



-16-

exemption is denied (either because the school declines to fur­
nish the IRS with the information it is required by the Green 
decree to collect or because the IRS concludes, based upon ap­
plication of the Green decree to the Day School, that it has 
failed to establish nondiscrimination), in an action under 
26 U.S.C. §7428. Such an action would concentrate on the partic­
ular facts relating to this school's claims without the neces­
sity of opening the final judgment in this long-standing action.

A. The motion to intervene was not timely.

It is well-established that, in accord with the language of 
Rule 24 of the Federal Rules of Civil Procedure, before granting 
a motion to intervene, the court "must first be satisfied as to 
timeliness." NAACP v. New York, 413 U.S. 345, 365 (1973). See 
also Moten v. Bricklayers, Masons and Plasterers International 
Union, 177 U.S. App. D.C. 77, 81, 543 F.2d 224, 228 (1976). Timeli­
ness is a flexible concept, to be determined from all the circum­
stances of the case. Hodcrson v. United Mine Workers, 153 U.S.

---- ------------TV
App. D.C. 407, 473 F.2d 118 (1972). As a result, the question
of timeliness is largely committed to the discretion of the dis­
trict court, whose determination will not be overturned on appeal 
unless an abuse of discretion has been shown. NAACP v. New York, 
supra, 413 U.S. at 366. While the point to which the suit has 
progressed is not solely dispositive, it is an appropriate factor

13/ Accord, Brumfield v. Dodd, supra, 425 F. Supp. at 531 (post- 
judgment motion of Grawood Christian School to intervene in Lou­
isiana textbook-aid case denied as untimely).



-17-

to be considered. NAACP v. New York, supra, 413 U.S. at 366 .
Even more significant is the length of time during which the 
would-be intervenor actually knew or reasonably should have known 
of his interest in the case before he petitioned for leave to 
intervene. Stallworth v. Monsanto Co., 558 F.2d 257, 264 (5th 

Cir. 1977).
Appellants are disingenuous in their assertion that their 

motion was timely because they moved to intervene immediately 
after they realized they would be affected by the May 5, 1980 
order of the District Court. Of course, appellants did not know 
the exact terms of the order until it was entered. But if they 
did not know -- long before that time -- that all-white, church- 
related schools in Mississippi, established after desegregation 
orders in their localities, could be affected by the Green liti­
gation (at least to the extent of being asked to provide the IRS 
with information), that could be only because they deliberately 
chose to ignore what they had to know.

1. It is inconceivable that any white, private school in 
Mississippi was unaware of the Green litigation. When t_he first 
order for a temporary injunction in January, 1970 barred the 
IRS from approving an application for tax exemption unless it 
determined that the school was not part of a system of private 
schools "operated on a racially segregated basis as an alterna­
tive to white students seeking to avoid desegregated public 
schools," the Day School had to be put on notice that, as a 
racially segregated school established after a desegregation 
order, it was potentially subject to being affected by an order

in the Green case.



-18-

Any possible doubt on that score would have had to be dis­
sipated by the IRS press releases of July, 1970 making clear that 
its "statement of position on racially nondiscriminatory admis­
sions policies would be app?icable to all private schools, whether 
church related or not." (See Statement, supra, at 5.) It 
does not appear whether the Presbyterian Day School received the 
kind of letter which the Commissioner said, in December 10, 1970, 
he would send to church-owned private schools (see Statement, 
supra, at 6), but, in view of the wide dissemination indicated by 
the Commissioner, it is difficult to believe that any private 
school interested in its tax-exempt status would not be aware of 
the IRS rulings. When, therefore, the district court in this 
case issued its first permanent injunction in June, 1971, prohib­
iting the Internal Revenue Service from approving tax-exempt 
status for any private school in Mississippi unless the school 
had a racially nondiscriminatory policy and supplied information 
concerning its organization and racial composition, the proposed 
intervenors had to be aware that all-white religious schools in 
Mississippi would fall within the orbit of that order.

Appellants stress that the initial opinion on the permanent
injunction reserved (as not before the Court then) the question
whether a school could be granted exemption if discrimination was
dictated by the religion itself (see 330 F. Supp. at 1169). The
point is a curious one, for it suggests that appellants not only

11/were aware of the Green litigation as early as 1971 but also

14/ Nowhere in their pleadings before the District Court nor in 
their brief in this Court do appellants ever state that they had

[footnote continued on next page]



-19-

were aware that tax exemptions for religious schools could become
15/an issue in the case. Yet they chose to remain outside the

litigation, after it was reopened in 1976, until a final judgment 
16/was entered. Even though appellants' reading of

17/the 1971 opinion is fundamentally in error, therefore, their

[continuation of footnote no. 14]
no knowledge of this litigation before May 5, 1980. They focus 
only on the provisions of the May 5, 1980 judgment itself —  but 
if prescience as to the contents of a yet unwritten ruling were 
the only basis for a finding of untimeliness, there would be lit­
tle finality of judgments in American law. Cf. NAACP v. New York 
supra.
15/ Appellants admit that the language of the 1971 District 
Court opinion concerning the issue which the Court was pretermit- 
ting can be interpreted in two different ways (App. Br. at 14-15) 
See also A. 115 ("plainly susceptible of two possible meanings 
. . . equally plausible . . . .")
16/ Had appellants not slept on their rights, by deliberately 
seeking to ignore this litigation so long as no order had been 
entered which they viewed as objectionable, they would have noted 
the discussion of religious schools in the plaintiffs' 1976 mo­
tion for further relief, in the cases cited by plaintiffs in that 
motion, in the correspondence appended to the motion as exhibits, 
and in the IRS Revenue Procedures attached to that document.
(See Appendix D infra.) These indications would have motivated 
a responsible party to intervene on a timely basis.
17/ Appellants propose a tortured interpretation of the words, 
""acts of racial restriction," from the 1971 opinion —  which they 
claim indicate that the District Court did not mean to include 
within the ambit of its decree private sectarian schools, formed 
in the wake of public school desegregation, which limited their 
enrollment on a religious basis and had all-white enrollments. 
(App. Br. at 14-15.) This construction of the opinion is plainly 
inconsistent with the District Court's statement, in the same 
part of its 1971 opinion, that the issue it pretermittea "may 
never arise . . . ," a statement which obviously refers to the
expectedly unusual case in which there is a claim that racial 
discrimination is a tenet of religious belief. Cf. Newman v. 
Piggie Park Enterprises, Inc., 256 F. Supp. 941, 944, 945 
(D.S.C. 1966), rev'd in part on other grounds, 377 F.2d 433
(4th Cir. 1967), modified on other grounds and aff'd, 390 U.S.
400 (1968) . Appellants1 reading of the opinion also contradicts

[footnote continued on next page]



-20-

heavy emphasis on that reading virtually compels the conclusion 
that they knew of the potential reach of this lawsuit long before 
they ultimately decided to intervene, and it supports the common- 
sense notion that the widely publicized 1971 Green ruling put the 
Day School on notice that it might be within the scope of the 
litigation. This is particularly so in light of the IRS July, 
1970, announcements, discussed above.

[continuation of footnote no. 17]
the IRS' consistent interpretation of its application to sectar­
ian schools since 1970. See Statement, supra, at 5-6; n.10 and 
accompanying text. It is hardly unreasonable to expect that, if 
the District Court had intended its 1971 decree to bind the IRS 
only with respect to private, nonsectarian schools in Mississippi, 
it would have said so in its order or opinion.

Appellants also imply that they were entitled to ignore the 
Green litigation because the 1971 opinion and decree "did not 
constitute a ruling even with respect to whether a segregative 
private secular school qualifies for tax exemption under Section 
501(c)(3)." (App. Br. at 15 n.*.) This is a drastic misreading 
of the Supreme Court's comment about this case in Bob Jones Uni- 
versity v. Simon, 416 U.S. 725, 740 n.ll (1974) . All that the 
Supreme Court indicated was that its own summary affirmance of 
the 1971 Green ruling by the District Court (which is certainly 
the law of the land as well as the law of this case until over­
ruled) was not entitled to as much precedential weight in another 
case as a decision reached with full written opinions after ple­
nary consideration by the Supreme Court. Furthermore, since the 
Bob Jones ruling was not announced until three years after Green, 
it could have had nothing at all to do with the Day School's 
decision not to seek post-judgment intervention in this case be­
tween 1971 and 1974.

We maintain that the District Court in 1971 reserved only 
the question whether a school claiming that racial discrimination 
in its operations was required as a matter of religious principle 
would be entitled to an exemption. This should have put the Day 
School, which states that none of its religious principles "re­
quires or implies exclusion on the basis of race" (A. 21 13;
see also App. Br. at 13), on notice of the potential impact of 
this case upon its status.



-21-

2. Even assuming that, in 1971, there could have been some 
doubt as to the inclusion of all-white church schools, founded 
after desegregation orders in their locales, within the class of 
schools which would be affected by a suit designed to prohibit 
tax exemption for private schools serving as an alternative to 
desegregated public schools, there could be absolutely no ques­
tion as to such inclusion after the developments in Norwood v. 
Harrison, supra, particularly on the remand in the trial court. 
See Statement, supra, at 6-8. The opinion on remand made it 
absolutely clear that church schools could come within a judicial 
definition of a prima facie racially discriminatory school. As 
noted in the Statement, the opinion of Judge Ready specifically 
dealt with three church schools, including a Presbyterian Day 
School in Cleveland, Mississippi. It is inconceivable that a 
private church school in Mississippi could have been unaware of 
the Norwood opinion. And since that opinion several times re­
ferred to the opinion in Green v. Connally (see 382 F. Supp. at 
929, 932, 934), the close relationship between the two cases in 
defining what constitutes a prima facie racially segregated
school had to be apparent to school administrators, whether or

18/
not they are lawyers.

18/ Cases arising in states adjacent to Mississippi during this 
time also subjected church-related and non-sectarian schools to 
the same standards of racial nondiscrimination. In Gilmore v. 
City of Montgomery, 417 U.S. 556, 569 (1974), the Supreme Court 
unanimously upheld a district court injunction prohibiting city 
authorities from allowing private schools (and affiliated groups) 
to use public recreational facilities because

the city's actions significantly enhanced 
the attractiveness of segregated private 
schools, formed in reaction against the

[footnote continued on next page]



-2 2-

Moreover, the IRS had announced explicitly, in May, 1975 , 
that organizations, "including churches", which conduct schools 
with a policy of refusing to accept children of certain racial 
and ethnic groups would not be recognized as tax-exempt. As 
noted in the Statement, this announcement was supplemented by 
one which set forth the showing that had to be made to establish 
a nondiscriminatory policy —  a showing substantially in accord 
with the terms of the Green injunction, if lacking its focus on 
"badge of doubt" schools. If the Day School knew, as it had to 
know, that the Green litigation involved tax exemption for pri­
vate white schools in Mississippi, it had to know that a white 
church school established after a desegregation order was poten­

tially affected by that litigation.

[continuation of footnote no. 18]
federal court school order, by enabling
them to offer complete athletic programs.

That injunction applied to church-related as well as nonsectarian 
schools in Montgomery, Alabama. Gilmore v. City of Montgomery, 
337 F. Su p p . 22; 24 (M.D. Ala. 1972) (St. James School), rev d 
in part on' other grounds, 473 F.2d 832 (5th Cir. 1973) , rev d in 
part and remanded on other grounds, 417 U.S. 556 (1974).

In Brumfield v. Dodd, supra, 405 F. Supp. 338, the federal 
district court in Louisiana established a certification procedure 
similar to that developed in Norwood, to be administered by the 
state Board of Elementary and Secondary Education in connection 
with loaning state-owned textbooks to private schools. In that 
case, as in^Norwood, religious as well as secular schools^ were 
subjected to the same standards for determining whether they had 
nondiscriminatory policies. See 405 F. Supp. at 346 [Del^a 
Christian Academy); 425 F. Supp. at 534-35 (Grawooa Christian
School).



-23-

3. Proposed intervenors were under a duty to keep abreast
of developments in the Green case since they had to know that
tax-exempt church schools were potentially concerned. They thus
had to realize that, if they wanted to assert an interest in their
alleged right to be free of all inquiry as to their tax-exempt
status, they had to move to intervene, at the very latest, when

19/
plaintiffs made the motion for additional relief in 1976.
That obligation became even clearer in the face of the IRS Aug­
ust 22, 1978 proposed guidelines for determining whether a school 
should be deemed racially discriminatory. Those proposed guide­
lines clearly concerned church schools. A number of religious 
organizations, including the Association of Christian Schools 
International, to which the Day School belongs, testified at the 
December, 1978, hearings held by the IRS on the proposal. Since 
the guidelines related to tax exemption, their relationship to
the Green case had to be self-evident to any interested person,

20/
layman or lawyer.

19/ Plaintiffs' motion, together with its attachments, is part 
of the District Court record which was not transmitted to this 
Court. It is reproduced in Appendix D, infra.
20/ The IRS itself consistently made clear that development of 
the proposed guidelines was undertaken because of the Green case. 
For example, in a January 9, 1978 address to the PLI Seventh 
Biennial Conference on Tax Planning for Foundations (the text of 
which was issued as News Release IR-1930 by the Service), Commis­
sioner Kurtz stated (at 8-10) (emphasis supplied):

. . .  As I will relate in a moment, the 
Service has taken significant steps in 
recent years to improve compliance with 
its private school policy. We expect 
further guidance from the court since 
we are presently involved in litigation

[footnote continued on next page]



-24-

4. The Day School does not explain why it became aware of 
the May 5, 1980 order in this case in time to contact counsel on

[continuation of footnote no. 20]
about our enforcement program.
. . . Service ruling policy is found in
Revenue Rulings 71-447 and 75-231. Guide­
lines and procedures are found in Revenue 
Procedure 75-50. Essentially, these three 
documents deny tax exemption to private 
schools that discriminate in their admis­
sions policy on the basis of race or eth­
nic origin. Church-related private schools 
are covered within this policy as well as 
the churches that operate and control them.

. . . One question is how we should evaluate
the bona fides of the admission policy of 
schools located in communities subject to 
desegregation orders that operate over a 
long period of time without actually enroll­
ing any minority students. Does that fact 
create a presumption calling for more careful 
scrutiny? Might a similar rule be applicable 
even in the absence of local desegregation 
orders? And, on the other side of that ques­
tion, what steps can an exempt school take in 
such a situation to establish that it, in 
fact, has been open to children of all races 
and ethnic groups?

Similarly, Commissioner Kurtz opened the December, 1978 hearings
on the proposed guidelines by stating:

The plaintiffs in the original Green case I 
mentioned earlier have reopened the case and 
at aoproximately the same time a nation-wide 
class action was filed challenging the ade­
quacy of the Service's enforcement in this 
area. The Civil Rights Division in the 
Department of Justice and the Commission on 
Civil Rights also have been critical of the 
Service's rules in this area. We have re­
viewed our current rules and have concluded 
that more objective rules may be necessary 
to identify those schools which, while

[footnote continued on next page]



-25-

May 21, 1980 (see A. 122), but was unaware of the case before 
that time. From the papers that are attached to appellants' 
brief, it appears that the Internal Revenue Service did not con­
tact the Day School until June 30 , 19 8 0 (see App. Br. at 45) . It 
is a reasonable inference that the IRS, which seemed to have dif­
ficulty in identifying tax-exempt church schools in Mississippi, 
had not reached the Day School with any inquiry before the May 5, 
1980 order, and it may be that the Day School was not interested 
in making the IRS aware of its exempt status by moving to inter­
vene in the action until it became clear from the May 5 order 
that the school would be a subject of inquiry. Be that as it 
may, it is abundantly clear, from the court opinions and the IRS 
releases, that no minimally responsible Mississippi school admin­
istrator could have been unaware, before 1976 at the very latest, 
that the Green litigation potentially involved white church 
schools established after desegregation orders in their areas.
The proposed intervenors, if they cared about their tax-exempt 
status at all, had to know that such status could be implicated

[continuation of footnote no. 20]
claiming a nondiscriminatory policy, are 
operated in a manner excluding minority 
students. The Court has deferred any 
action on the two cases at this time, 
pending resolution of the Service's final 
action with regard to the proposed revenue 
procedure.

Internal Revenue Service, Hearing: Proposed Revenue Procedure
on Tax Exempt Private Schools (December 5, 1978) at 9-10 (empha­
sis supplied). Excerpts from the hearings, including the remarks 
of Commissioner Kurtz and ACSI Attorney Ball, are reproduced in 
Appendix E, infra.



-26-

in the Green case. If they wanted to represent their interest, 
vis-a-vis the controversy between the Green plaintiffs and the 
IRS, they should have moved to intervene much earlier than they 
did. At the very latest, they should have so moved at the time 
of the motion to modify the injunction order in 1976. They could 
not ignore the potential effect and wait for certainty in the 
outcome before moving to intervene.

The burden is on the movants to show why they should be 
allowed to come into this case at this late date. Nevilles v. 
EEOC, 511 F.2d 303, 305 (8th Cir. 1975). The fact that the pro­
posed intervenors did not know with certainty the terms that 
would be imposed by the final order (although in view of the IRS 
proposed guidelines, they could have fairly anticipated what the 
ultimate ruling would be) does not excuse their delay since they 
surely knew the risks. See Alaniz v. Tillie Lewis Foods,
572 F.2d 657, 659 (9th Cir.), cert, denied sub nom. Beaver v. 
Alaniz, 439 U.S. 837 (1978).

The motion to intervene was thus properly denied as un-
21/

timely.

21/ The District Court also ruled (A. 124) that the morion to 
Intervene should be denied because "The movants lack any protec- 
tible interest under the modified permanent injunction entered 
by this court on May 5, 1980 and clarified on June 2, 1980 be­
cause they do not come within the description contained in Para­
graph 1 of that order." Appellants also challenge this ruling, 
but this Court need not consider the question since the alterna­
tive ground of untimeliness is clearly adequate to sustain the 
District Court's disposition of the motion to intervene.



-27-

B. The proposed intervenors' interests can be fully adjudi­
cated in a separate action under 26 U.S.C.§7428, which 
would develop the particular facts of appellants' particu­
lar situation without the necessity of disturbing the final 
judgment in this case.

While, as we discussed above, we believe that the motion to 
intervene could properly be denied on the basis of untimeliness 
alone, the denial of the motion in this case was particularly 
appropriate because the School's interests can be protected and 
the claims which it wishes to assert adjudicated in an individual 
action under 26 U.S.C.§7428. It is thus unnecessary to reopen 
the judgment in this long-pending case. Cf. Brumfield v. Dodd, 
supra, 425 F. Supp. at 531 (post-judgment intervention in text­
book aid case unnecessary since school will have opportunity for 
judicial review of administrative determination of ineligibility).

All that the District Court order of May 5, 1980, requires 
in relation to church schools is that the IRS obtain information 
about the organization and status of the school (see Question­
naire attached as an Appendix, App. Br. at 47). Appellants do 
not and could not reasonably contend that the mere furnishing of 
such neutral information would in any way impinge upon their
freedom of religion. See United States v. Freedom Church,

2 2?
613 F .2d 316, 320 (1st Cir. 1979). Their claimed objection to
the injunction in this case stems from the fact that the District 
Court adopted the view that an all-white school established after 
a desegregation order would be deemed presumptively discrimina­
tory and required to show by objective means that it did not in 
fact discriminate on the basis of race. Appellants assert that

22/ But see App. Br. at 38-39 1! (f) ; 40 «! (j) .



-28-

their religious mission precludes the kind of showing suggested 
by the District Court. While the order of the District Court 
suggests some of the types of evidence by which the presumption 
could be overcome, it does not, however, direct that nondiscrim­
ination can be shown only by these means. The order directs the 
IRS to consider "any other similar evidence calculated to show 
that the doors of the private school and all facilities and pro­
grams therein are indeed open to students or teachers of both 
the black and white races upon the same standard of admission or 
employment" (A. 10). Appellants are therefore free to bring be­
fore the IRS any and all evidence which they believe would tend 
to show that the Day School does not discriminate on the basis
of race, despite the time of the school's foundation and its

23/
all-white enrollment.

Whether or not the school is racially discriminatory will 
be determined by the IRS on the basis of all the facts before it. 
If, because the school declines to answer certain questions which 
it deems improper, or because its answers do not convince the IRS 
that it is nondiscriminatory, and the IRS declines to accord tax- 
exempt status, the school will have the opportunity, in an action

23/ The District Court's decree thus does not inexorably burden 
the exercise of the Day School's religious mission even if one 
accepts appellants' far-fetched interpretation of what the Dis­
trict Court meant when it identified "active and vigorous recruit­
ment programs to secure black students or teachers," "meaningful 
public advertisements stressing the school's open admissions pol­
icy," and "meaningful communication between the school and black 
groups . . . "  (A. 10) as evidence tending to rebut the inference
of discrimination which attaches to "Paragraph 1" schools. See 
App. Br. at 36-38.



-29-

under 26 U.S.C. § 7428, to assert whatever claims it has, under
the First Amendment or otherwise, as to why it should be accorded
tax-exempt status without having to make the showing suggested by

24/
the District Court.

An action under 26 U.S.C. § 7428 will have the advantage of 
focusing on the particular facts relating to this school's partic­
ular situation. Such a concentration on the facts of an individ­
ual case is, as the district court initially held in this case, 
desirable when passing on religious claims. See 330 F. Supp. at 
1169. In moving for an advanced hearing on this appeal, appel­
lants have asserted that an action under 26 U.S.C. § 7428 would 
not be as expeditious as intervention because, under the statute, 
they must first exhaust administrative remedies. This merely 
serves to emphasize that the District Court's order in this case 
does not affect appellant's interest to the point of requiring 
denial of exemption, and that appellants do have an opportunity 
to present their claims: first administratively, and then, if
necessary, judicially.

The right to seek a declaratory judgment under 26 U.S.C. § 
7428 to review an IRS denial of tax exemption to a church orga­
nization existed before appellants made their motion to intervene

24/ While the merits of appellants' claims are not before the 
Court in this proceeding, it should be noted that what is at is­
sue here is, not the rxght of the school to conduct its affairs 
and limit its students as it sees fit, but its right to receive 
aid from the government in the form of tax exemptions even if 
the school follows a policy of racial discrimination. See Green 
v. Connally, supra, 330 F. Supp. at 1166; Goldsboro Christian 
Schools, Inc. v. United States, 436 F. Supp. 1314, 1318-19 (E.D. 
N.C. 1977) .



-30-

in this case. Intervention was thus not then, and is not now, 
necessary to enable appellants to assert whatever claims they may 
have that a decision to deny their tax exemption based upon the 
IRS' application of the District Court's decree would violate 
their First Amendment rights.

On the other hand, opening this case now would greatly de­
lay the already long-deferred enforcement of plaintiffs' rights. 
The proposed intervenors tried to come into this case only after 
final judgment; they sought, not only to press their own particu­
lar interest, but to open up the whole judgment, including the

25/
issue of plaintiffs' standing to bring suit. Manifestly, they
were not entitled to intervene to seek such broad relief. But 
even if their application could be deemed limited to the narrower 
question of whether the IRS should be directed to make a deter­
mination as to the tax-exempt status of church schools, the in­
tervention would go far beyond the Day School's particular inter­
est and interfere with the ability of the IRS to make determina­
tions as to other schools which might not contest the right of 
the IRS to make a determination as to their status.

Since appellants have a full and complete remedy without 
intervention, while intervention would prejudice the rights of 
the plaintiffs, the motion to intervene was properly denied. The 
existence of other means by which a late intervenor's rights can 
be determined is an important factor, closely related to the con­
cept of practical timeliness, by which the propriety of the

25/ The government moved to dismiss the action after the filing 
of the plaintiffs' motion for further relief (see Statement, 
supra, at 9), on the ground, inter alia, that plaintiffs lacked 
standing. The motion to dismiss was denied May 25, 1977.



-31-

denial of a motion to intervene is to be judged. See Hodgson v.
United Mine Workers, supra, 153 U.S. App. D.C. at 418, 473 F.2d
at 129-30; Brumfield v. Dodd, supra, 425 F. Supp. at 531. Indeed,
in United States v. Marion County School Dist., 590 F.2d 146 (5th
Cir. 1979) , the court considered the relative prejudice to the
existing parties and the would-be intervenor to be a function of
timeliness. In NAACP v. New York, supra, 413 U.S. at 368, the
Supreme Court noted, as a factor supporting the denial of late
intervention, that proposed intervenors were free to attack, in
a separate suit, the redistricting plan, rejection of which was
the main object of their proposed intervention.

Here, the grant of intervention would hamper and delay the
implementation of an order already too lone delayed. Since the
proposed intervenors have a full and complete remedy if the IRS
decides that the Day School is not entitled to tax exemption, a
remedy which was in existence at the time it sought to intervene

2_6/
here, its late motion to intervene was properly denied.

CONCLUSION

The judgment of the District Court should be affirmed.

26/ Even if the Court should conclude that untimeliness is not 
established on this record, the matter should be remanded to the 
trial court for an evidentiary hearing on intervention, at which 
the extent of the wide publicity given in Mississippi to the pro­
ceedings in the Green case could be even more fully documented.



Respectfully submitted,

William L. Robinson 
Norman J. Chachkin 
Beatrice Rosenberg 
Lester Goldner

Lawyers' Committee for 
Civil Rights Under Law 

733 15th Street, N.W. 
Washinaton, D. C. 20005 
(202) 628-6700

Frank R. Parker
Lawyers' Committee for 
Civil Rights Under Law 

720 Milner Building 
210 South Lamar Street 
Jackson, Mississippi 39201 
(601) 948-5400

Attorneys for Plaintiffs-Appellees

CERTIFICATE OF SERVICE

I hereby certify that, on this 3th day of October, 1980,
I served two copies of the foregoing Brief for Plaintiffs-
Appellees upon counsel for the other parties to this appeal, by 
depositing same in the United States mail, first-class postage
prepaid, addressed as follows:

Charles J. Steele, Esq. 
Whiteford, Hart, Carmody

and Wilson 
1828 L Street, N.W. 
Washington, D. C. 20036

William Bentley Ball, Esq.
511 North 2nd Street 
Post Office Box 1108 
Harrisburg, Pennsylvania 17108

(1 copy)
(1 copy)

Michael L. Paup, Esq. 
Chief, Appellate Section 
Tax Division
U.S. Department of Justice 
Washington, D. C. 20530

(2 copies)



APPENDIX A



APPENDIX A

Rule 24 of the Federal Rules of Civil Procedure provides, 
in pertinent part:

(a) Intervention of Right. Upon timely
application anyone shall be permitted to inter­
vene in an action: . . .  (2) when the applicant
claims an interest relating to the property or 
transaction which is the subject of the action 
and he is so situated that the disposition of 
the action may as a practical matter impair or 
impede his ability to protect that interest, 
unless the applicant's interest is adequately 
represented by existing parties.

(b) Permissive Intervention. Upon timely
application anyone may be permitted to intervene 
in an action: . . . (2) when an applicant's
claim or defense and the main action have a 
question of law or fact in common. . . .  In 
exercising its discretion the court shall con­
sider whether the intervention will unduly de­
lay or prejudice the adjudication of the rights 
of the original parties. . . .

Section 7428 of the Internal Revenue Code of 1954, as 
amended in 1976 (90 Stat. 1717) and 1978 (92 Stat. 2924) pro­
vides, in pertinent part:

(a) Creation of remedy. In a case of actual 
controversy involving —

(1) a determination by the Secretary —
(A) with respect to the initial 
qualification or continuing quali­
fication of an organization as an 
organization described in section 
501(c)(3) which is exempt from tax 
under section 501(a) . . . upon
the filing of an appropriate plead­
ing, the United States Tax Court, 
the United States Court of Claims, 
or the district court of the United 
States for the District of Columbia 
may make a declaration with respect 
to such initial qualification or

-la-



or continuing qualification . . . .  
For purposes of this section, a 
determination with respect to a con­
tinuing qualification or continuing 
classification includes any revoca­
tion of or other change in a quali­
fication or classification.

(b) Limitations.

(2) Exhaustion of administrative remedies.
A declaratory judgment or decree under this 
section shall not be issued in any proceed­
ing unless the Tax Court, the Court of Claims, 
or the district court of the United States 
for the District of Columbia determines that 
the organization involved has exhausted ad­
ministrative remedies available to it within 
the Internal Revenue Service. . . .

-lb-



APPENDIX B



Attachment 1 to MS (ll)6G-58

News a
Internal R evenue S e rv ic e

For Release: U : 00 PM ,ED'5 Fri .
July 10, 1970

Tel. (202) WO 4-4021

IRS Announces Fosition on Private Schools

Washington, D.C. —  The Internal Revenue Service announced today that 
it has been concluded it can no longer legally justify allowing tax-exempt 
status to private schools which practice racial discrimination nor can 
it treat gift* to such schools as charitable deductions for income tax 
purposes.

The Internal Revenue Service will proceed without delay to make 
favorable rulings of exemption immediately available to private schools 
announcing racially nondiscriminatory admissions policies and to deny 
the benefit of tax-exempt status and deductibility of contributions to 
racially discriminatory private schools.

The Service said that favorable rulings given to private schools in 
the past will remain outstanding where the school is able to show that it 
has racially nondiscriminatory admissions policies.

All private schools with favorable rulings outstanding will receive 
a written inquiry from the District Director of Internal Revenue and it 
is anticipated that in most instances evidence of a nondiscriminatory 
policy can be supplied by reference to published statements of policy or 
to the racial constituency of the student body.

Where a school fails to establish that it has a racially nondiscriminatory 
admissions policy, an outstanding ruling of exemption will be withdrawn. 
However, a school seeking to clarify or change its policies and practices 
will be given a reasonable opportunity to do so in order to retain its 
ruling of federal tax exemption. In any event, full opportunity to present 
evidence and be heard will be provided in accordance with usual revenue 
procedures and the right to appeal to the courts will be available. Similar 
principles will be followed in acting upon requests made by new schools for 
rulings.

# # #
U:00 PM, EDT 
7/10/70

Manual Supplement O f f ic ia l  U s e  O n ly



Attachment 2 to MS (ll)6G-58

News
For RaieoMe SundayJuly 19, 1970

Internal Revenue Service
W®sODflra@S®mo g®gg4}
Tol. (202) WO 4-402X
IR-1052

Washington, D. G. —  The Internal Revenue Service today announced it has

issued favorable rulings of exemption to six private schools that have an­

nounced racially nondiscriminatory admissions policies. The schools are 

located in five different southern states.

The rulings were the first to be issued under the statement of position 

announced by the IRS on July 10 concerning the tax status of private schools. 

Other applications for exempt ruling^ pending at the time of the announcement, 

which meet the stated standards will be processed expeditiously, the IRS 

said.

The IRS said the written inquiry on admissions policies to be sent to 

all private schools that currently hold favorable tax exemption rulings is 

now being developed. Inquiry letters are expected to be sent out by the 58 

IRS district directors within a few weeks.

The six schools to which new favorable rulings of exemption were issued 

had provided the IRS complete information that they had a racially nondiscri­

minatory admissions policy announced within their respective communities.

The schools are:

Nathanael Green Academy, Inc. 
Siloam, Georgia

The Heritage School, Inc. 
Newnan, Georgia

The Gaffney Day School 
Gaffney, South Carolina

Desoto School, Inc.
Helena, Arkansas

Southeast Education, Inc. 
Dothan, Alabama

Pamlico Community School 
Washington, North Carolina

(More)

Manual Supplement O f f ic ia l  U s e  O n ly



Attachment 2— Cont. to MS (ll)6G-58

In response to questions it has received, the IRS also issued a more 

detailed explanation of its July 10 statement of position on the tax status 

of private schools. In that statement the IRS said, in the future, favorable 

rulings of tax exemption would be available where schools announced racially* 

nendiscriminatory admissions policies.

The IRS said its July 10 statement does not affect a school's ordinary 

admissions policies which have no relation to race. The IRS specifically 

added that a school's ordinary academic standards will not be affected.

The IRS explained that its July 10 statement is applicable to all pri­

vate schools throughout.the United States, except as limited by the order of 

a three judge Federal District Court in the District of Columbia, in 

Green v. Kennedy and Thrower. That court has ordered that rulings be issued 

in .Mississippi only under terms and conditions approved by the court.

In its initial nationwide review of the present status of private schools, 

the IRS said that where a school has adopted and publicly announced a racially 

nor.discriminatory admissions policy, it will assume, in accord with normal 

procedures in requests for rulings, that such policy has been adopted and will 

be maintained in good faith. If subsequent examination by an IRS field office 

indicates that a school has not administered such a policy in good faith, 

the tax exempt status of the school will be challenged.

The IRS also said that, should an existing ruling of a private school be 
revoked as the result of such a challenge, persons contributing to the school 
will be allowed to deduct contributions made prior to the date of the public 
announcement by the IRS of the revocation. This follows the usual IRS rules 
and procedures cn contributions.

The IRS added that its statement of position on racially nondiscriminatory 
admissions policies would be applicable to all private schools, whether 
church related or not. Selectivity of students, as by a religious seminary, 
having no relation to racial discrimination would not be inconsistent with 
the IRS statement of position.

. *§?•'' # # #
7/19/70

- 2 -

Manual Supplement O f f ic ia l  U s e  O n ly



APPENDIX C



____J

IN IKE UNITED STATES DISTRICT COURT 
FCR THE DISTRICT OF COLUMBIA

WILLIAM H. GREEN, et al., 
Plaintiffs

>ri°

v.

DAVID M. KENNEDY, Secretary of the 
Treasury of the United States of Ameri 
and RANDOLPH W. THROWER, Commissioner 
of Internal Revenue,

Defendants

ca}

Civil 
No. L.

Action
.355-69

AFFIDAVIT

Randolph W. Thrower, Commissioner of Internal Revenue, being 
duly sworn deposes and says r

I. After receiving copies of affidavits filed by the 
plaintiffs with, the Court on or about November 12, 1970, the 
Internal Revenue Service conducted an inquiry with respect 
to various allegations contained in such affidavits. 
Representatives cf the schools referred to in the affidavits 
were provided copies of such, affidavits and were given an 
opportunity to respond. The sane opportunity was provided to 
officials of Macon, Mississippi, referred to in one of 
plaintiffs1 affidavits. Thera are attached hereto, marked 
Exhibits A-l to 6, affidavits received from representatives 
of che following schools:
A-l

A-2

A-3

Central Holmes Academy, Lexington
Affidavit dated December 7, 1970 of S. W. Hooker,
J. 3. Yates and Frank A. Jones

Copiah Educational Foundation, Hazelhurst
.Affidavit dated December 5, 1970 of Hardy W. Graves

Indianola Educational Foundation, Indianola
.Affidavits dated December 7, 1970 of Glenn A. Cain,
James C. Robertson and Henry Paris
Latter from Richard M. Allan dated December 7, 1970

A-4 Lula-Rich Educational Foundation, Clarksdale
Affidavit dated December 5, 1970 of Leon C. 3rasb!acc

A-5 Noxubee Educational Foundation (Central Academy), Macon 
Affidavit •dated December 3, 1970 of Polk Farrar 
Affidavit dated December 4, 1970 of John L. Barrett 
Affidavit dated December 5, 1970 of Jesse ?. 3tennis

"A-6 Quitman County Educational Foundation, '.-larks
Affidavits dated Decemoer 4 and 5, 1970 of R. A. Carsot

-Ac*
i



.4

rh<= al1 e^ations contained in the ? In response to tne . 10 7 0__~ ._ - , Tnhn w Hunter dated Novemoer 3, 1970,aftidavat or ^ - ^ t ^ r s  concerning a meeting held on svbmitced 07 the plaint , ves 0f t’ne black and white
January 13, 1970, between - ? the Internal Revenue Service
coranrunities -n , ' * nxs, co interview the Mayor and Chief
dispatched two “ niCf *fi3sipoi and the affiant, Rev. Hunter.
Attac.hed*hereto is’a memorandum dated Dece^er 4,^1970j y ^ ^

1* T “  ^7orV“ .d RicSLd Adaas, Chl.f
: f ? S S so°-%i=o;; «***« »-*«* »-* «.?«=-u™w •

Ho further inquiry was made with respect to Saints^
-  ̂ ,nd Literary School, Lexington, Decause piaint^-sindustrial an- W .a s ny ^ oroQOSed conCinuance or ecvar.ce 
raises no objection Co C .. p Schools, Crenshaw,assurance co that school,or to Nortn uei ffidavl-s.
because it was net mentioned in plair.ti— s

4 Based upon the roregeing, a..d the yar-ner . • , a^-idavit dated Octooer 14, 197-, wnac-set torth chis court, the affiant reaffirms the
v“  S t a i  «o reason co £*«,f  *
oTornSlrindnacion adopced « 4
inscicncions vas noc adopted o . ^  i=s dace— ina-
good faith, and thererore, -- - Jeduc.-dbilitv of contributions
cion that the advance « « « “ £• ^ f ^ u i d S  he susoer.dad made to the above-stated astiw- . h h field examinationbut should be approved subje-t to a t^o-ougn Revenue
which will be «ad. Jr 13 months as statedService at some time during c.-e 
in the affidavit of October 14, s.9/0.

5 During the course of the inquiry_by -he _ntê ..
Revenue Service described abov^ inrormation^e
attention rrem sources -ecul-ing clarification with respect which raisec questions -equ^-ingf internal Revenueto the Deer Creek Educational ?nst - a  i-e_i
‘• ^ a V - h S S S S  advance assurance
c fC deduc rib ill ty for this school will depend upon the resu-s 
of this inquiry.

„u„ ,-vf --#> affidavit of Octooer 1-*,6. Subsequent to the date o£ -•* a_---ica3 of
1 9 -TQ ---e Internal Revenue Service, -hrou*., -ts os --i*/U, utr^rs to approximately o,Juu
l-3Crlc= ^ reic°^thi- the Uni-ad States which had previously orivate senoo-s witnii- ca __ - -n,e ia-car asas
received favorable rulings o -_ , . policies of admissioneach school to state whether or not it* polio esc-discriminatory or nondiscriminatory and, -f the -a.---, are aiscru— n 3^7 that the policy is xnowr. co -he puolic.submit evidence showing chat -ne ^ J 10,000
t- is estimated that tnere are, m  addit-on more >
private schools which are coverec =7 group rul-ngs^ -s_ ^  -
a rul_ng »i'—1 __ f i r m i s beinz obtainec as -oprivate schools. Simi-ar s“dools. The advance assurance
the admissions pol-<--3 - *-vnrable ’-ulin^s will oeof deductibility proviced by these -tvoraole_rul;ngs^^^_
withdrawn for any school rail-ng -o 3

-3,0-





APPENDIX D



/

in t h e u n i t e d s t a t e s d i s t r i c t c o u r t
FOR THE DISTRICT OF COLUMBIA

WILLIAM H. GREEN, at al.
Plaintiffs

CIVIL ACTION NO
v 1355-69 

Judge Waddy
JOHN B. CONNALLY, et al

Defendants

MOTION FOR AN ORDER SUBSTITUTING 
PARTIES DEFENDANT, TO ENFORCE DECREE

AND FOR FURTHER DECLARATORY AND INJUNCTIVE RELIEF

Plaintiffs move che Court, pursuant to Rule 25(d)(1), Fed. 

R.Civ.P., to enter an order substituting William Simon and 

Donald C. Alexander for the previously named defendants herein. 

Plaintiffs additionally move the Court, pursuant to 23 U.S.C. 

§52201 and 2202 and Rules 34(c) and 63(d), Fed.R.Civ.P., for 
an order enforcing the prior judgment herein and for further -e 

lief, as specified in the prayer to this motion. In support of 

this motion, plaintiffs show as follows:
1. Plaintiffs, black taxpayers and their minor children 

attending Mississippi public schools, commenced this class action 

by complaint filed May 21, 1969 seeking declaratory and injunc­

tive relief against the Secretary of the Treasury and the com­
missioner of Internal Revenue with respect to granting tax-exempt 

status to racially discriminatory private schools in Mississippi.

2. By opinion and order entered January 12, 1970, tne 
three-judge Court preliminarily enjoined the Secretary and the 
Commissioner from according tax-exempt status to any Mississippi 

private school that "is . . .  a part of a system of private



2

schools operated on a racially segregated basis as an alterna­

tive to white students seeking to avoid desegregated public 
schools." Green v. Kennedy, 3C9 F. Supp. 1127, 1140 i.D.D.C.
X9 7 0), appeal dismissed sub nom. Cannon v. Green, 398 U.S.

956 (1970), appeal from subsequent orders dismissed sub nom.

Coit v. Green, 400 U.S. 986 (1971).
3. On June 30, 1971, the three-judge Co-art entered a deci­

sion on the merits and an order? (1) declaring that tax exemptions 

for, and deductions for contributions to, racially discriminatory 

educational organizations are impermissible under §§501(c)(3) 

and 170(a)-(c) of the Internal Revenue Code of 1954, and (2) 
permanently enjoining the Secretary and the Commissioner to ad­

here to specified procedures designed to ensure that tax-exempt 

status would not be accorded to such racially discriminatory 
educational organizations and that tax-exempt status previously 

accorded such organizations would be terminated. Green v.
Connally, 330 ?. Supp. 1150, 1179-30 (D.D.C.), aff'd sub torn. 
-------  1/
Coit v. Green, 404 U.S. 997 (1971) . With respect to nine 
specific Mississippi private schools which IRS had accorded tax- 
exempt status, the Court declined to grant injunctive relief be­

cause of the sworn assurances of the Commissioner, which the 

Court received "as a good faith representation that will be 

honored," that the IRS would conduct audit examinations of those 

nine schools within 18 months of October 14, 1970 and, as to 
such schools, would "take into consideration ail factors raised 

in the present litigation as well as any material matters raided

i/ Subsequent developments in the law of three-judge courts in- 
dicate that this Court's nonconstitutional decision and order of 
June 30, 1971 should have been made and entered by a single ?udge. 
See Hacans v. lavine, 415 U.S. 528, 543 -45 (1974) ; Phi1brook v. 
Glodaett, 421 U.S. 707, 712-13 n. 8 (1975).



3

in the future." See 330 F. Supp. at 1176 n. 53 and accompany­

ing text; October 14, 1970 Affidavit of Randolph W. Thrower,
3 1 1 . The nine schools subject to this commitment were the 

following (Thrower Affidavit, q 7):
Central Holmes Academy 
Copiah Educational Foundation 
Deer Creek Education Institution 
Indianoia Educational Foundation 
Lula-Rich Educational Foundation 
North Delta Schools 
Noxubee Educational Foundation 
Quitman County Educational Foundation 
Saints Industrial & Literary School

4. On June 25, 1973 the Supreme Court decided Norwood v. 

Harrison, 413 O.S., 455 (1973), holding that Mississippi-owned 
textbooks could not constitutionally be loaned to racially dis­
criminatory private schools. On remand from the Supreme Court, 

c^tef District Judge Ready established a certirication proce­

dure and engaged in a school-by-school examination to determine 

whether each Mississippi private school was a racially discrim­

inatory institution and thereby ineligible fcr state-loaned 

textbooks. Norwood v. Harrison, 382 F. Supp. 921 (M.D. Miss. 

1974).
5. Pursuant to the certification procedure ar.d school-by­

school examination conducted in Norwood, counsel for plaintiffs 
learned that a number of racially discriminatory private schools 

in Mississippi, including some of the nine schools referred to
in i 3 above, had been accorded tax-exempt status, or had not 

had their tax exemptions revoked, by IRS. By letters dated 
March 11, 1974 and July 17, 1974 (Exhibits 1 and 2, respectively, 

hereto) counsel for plaintiffs brought these matters to deren- 
dants' attention, as did counsel fcr the Norwood plaintiffs by 

letter dated April 19, 1974 (Exhibit 3 hereto). Plaintiffs' 

counsel identified the following 12 private schools as having

3a



- 4 -

__ _ 1 r- . , - L ■: ^

J

tax-exeir.pt status notwithstanding the Norwood determination 

that they were ineligible for state-loaned textbooks:

Columbia Academy
Copiah Educational Foundation, Inc.
Deer Creek Educational Institute, Inc.
Clinton Educational Foundation, Inc.
Marshall County Educational Founda­

tion, Inc.
Lucedale Education Foundation, Inc.
Lula-Rich Educational Foundation, Inc.
Indianola Educational Foundation, Inc.
Killcrest (Baptist) Academy
West Panola Schools, Inc.
North Delta School, Inc.
Quitman County Educational Founda­

tion, Inc. (County Day School)
Six of these schools are among the nine schools subject to IRS' 

1370 commitment to audit within IS months and to re-examine in 

response to future information (see *! 3 above). Defendants re­

plied to counsel for plaintiffs herein by pro forma letter 

dated August 16. 1974, stating: "While we cannot reveal spe­
cific actions concerning the individual schools involved, we 

assure you that your information is being considered." (Ex­

hibit 4 hereto.)
6. During this time plaintiffs' counsel also, by letter 

dared April 15, 1974 (Exhibit 5 hereto), requested a meeting 

with defendants and their representatives for the purpose of 

attempting to work out a mutually agreeable procedure, without 

further formal proceedings herein, for implementing this Court’s 
1971 decree in light of the developments in Norwood■ Defendants 

responded affirmatively by letter of May 17, 1974 (Exhibit 6 

hereto), indicating that they were looking into these matters 

and were re-examining their practices in light of Norwood.
7. In June 1974 counsel for plaintiffs herein and counsel 

for the Norwood plaintiffs met with representatives of the Civil

Rights Division of the Department of Justice for the purpose



5

.

4rV - r-»

i

of recommending appropriate standards to govern tax-exemptions 

and tax-deductibility determinations vis-a-vis private schools.

3. On December 13, 1974 plaintiffs' counsel again met 

with IRS and Civil Rights Division representatives to request, 

among ether things, that defendants promptly terminate the tax- 

exempt status of the previously-identified Mississippi private 

schools which the Norwood court had judicially determined to be 
ineligible for stnte-lcaned textbooks. Defendants responded, 

inter alia, by s-ating that they were devising a new Revenue Pro­

cedure co deal with the problem on a nationwide basis, and that, 
notwithstanding this Court’s decree, they did not wish to take 
any action against Mississippi private schools until the new pro­

cedure was finalized. (New regulations were finally issued on 

November 18, 1975, 40 Fed. Reg. 53409.)
9. Between December 1974 and January 1976 plaintiffs re­

ceived no information indicating what action, if any, defendants 

had taken with respect to the Mississippi private schools in 

question. By letter dated January 21, 1976 (Exhibit 7 hereto), 
plaintiffs' counsel requested to be informed of defendants' ac­
tion on plaintiffs' numerous prior requests. By letter of Feb­

ruary 6, 1975 (Exhibit 3 hereto), defendants responded, stating 

that one of the subject schools had failed to establish tax-exempt 

status, that one school had ceased operations, that one school 

did not exist according to defendants' records, and that one 
school continued to enjoy tax-exempt status. As to six other 
schools, including some of tne nine schools referred tc in 1 3 
above, defendants stated that such schools had been "contacted.” 

Moreover, and notwithstanding this Court's decree, defendants 

stated: “The suspension of advance assurance issue is presently

before the National Office of the Service." (Plaintiffs have 
heard nothing further, and have received no additional information,

from defendants.)



<cs■■J •"S
J

• • . ' - '5 - ■ '

: iO Defendants have 1 treated "bosh’the letter and the spirit

of this Court's 1971 decree with conteir.pt. They have appar­

ently not even lived up to their sworn commitment to this 
Court to investigate nine specific Mississippi private schools 
(see 1 3, supra); and their new regulations are net adequate 

tc comply with the law of this case. Defendants have, in short, 

substituted their will, their judgment and their preferences 
for the binding judgment of this Court. The need for a specific 

detailed permanent injunction is apparent.
11. The need for further relief is also apparent. The 

inadequacy of the present decree and the procedures being em­

ployed by IRS is illustrated by defendant's treatment of the 

County Day School (Quitman County Educational Foundation, Inc.) 

which has been and continues to be tax exempt. This is one of 
the nine schools subject tc defendants' 1970 commitment (*! 3, 

supra) , and it is one of tne 12 schools aoout which po.ainwi.fs 

have Complained to defendants'over the'past 'two years. Not­

withstanding the tax-exempt status accorded this school by IRS, 
the Norwood Court determined it to be ineligible for state- 
loaned textbooks (see 3 82 F. Supp. at 923-2 9) . The Ncrweed 

court found (id. at 929):
In this case, where it appears that an open 
admissions policy was obviously stated per­
functorily, at isolated intervals, and only 
to obtain tax advantages, we are unconvinced 
that the school has a position other than one 
taken to procure the benefits but without 
sacrificing the goal of white segegated edu­
cation.

The prior decree of this Court must thus be broadened as it has 
proved inadequate to accomplish the broad purpose of prohibit­

ing tax exemptions to racially discriminatory educational or­

ganizations.



WHEREFORE, for the foregoing reasons, 

this Court to set this matter for hearing 

convenience and, upon such hearing, to *

y N

plaintiffs pray 

at the Court's early

(a) Enter an order substituting William Simon and Donald

C. Alexander as defendants herein;
(b) Enter a supplemental declaratory judgment pursuant to 

23 u.S.C. §§2201 and 2202 that defendants are bound by adversary 
judicial and administrative determinations with respect to the 

racial policies and practices of Mississippi educational organiza­

tions which have or which seek tax-exempt status pursuant to

§§501(0(3) and 170(a)-(c) of the Internal Revenue Code;
(c) Enter a detailed, permanent decree (with the details 

to be determined upon the hearing of this motion), modifying 

and superseding the Court's prior decree, enjoining derendants 

frcm according tax-exempt status to, ana from continuing the 

tax-exempt status r.ow enjoyea oy, all Miosissip-i pr*va-e 
schools or the organizations'which operate them, which:

(1 ) have been determined in adversary judi­
cial or administrative proceedings to be 

racially discriminatory; or
(2 ) which have insubstantial minority enroll­

ments, which are located in or serve desegre­

gating public school districts, and which 
either (i) were established or expanded at or 

about the time the public school districts in 

which they are located or which they serve 
were desegregating, or (ii) cannot demonstrate 

that they do not provide racially segregated 

educational opportunities for white children 

avoiding attendance in desegregating public

school systems.



ROBERT A. MURPHY 
WILLIAM S. CALDWELL 
NORMAN J. CHACHKIN

Lawyers' Committee for Civil 
Under Law

Suite 520, 733 15th Street, N.W. 
Washington, D.C. 20005

Attorneys for Plaintiffs

Dated: July «?3, 1976.



J
. : \ \ \

\ v :• ••• >' •’ y. r
s c tii I’VDl’V Vv*

f * s i  r w  c r  p. 2  ̂t « JACKSON. MiSSIS-SVPf3 r> Vi O N F. (KOI) 2

Raich l-T ,• j 5 / ̂

Mr. Donald Alexander 
Commissioner of Internal Revenue 
n. 3 . Internal Revenue Service
Washington, D. C. 20214

Ra: Enforcement of Injunction, Green r\- -ti =>1 1 v
330 F. Sup?. USo'tD.D.C. 1371!, affd, <04
u.s. 997. { fi vH 1 Nc„ A . ,7' — * ■ *— 13 5 5-JaI

Da ar M r . %A1 axancer:
4-0 rail vour attention to recent developments i. am V, itx-.Cj to -all (19 72), on remand, Civil No.

j !?: & cU .  h o U l W  thit
State if Mississippi nay net loan p^lic te:tttooKS ^ ^ " ' r e o l . t
atter,ding racially 4i»en®inatesi -t/ice to revolte anddevelopnenrs require tne ^ ^ - a x ^ e v e n a e  .Mississippi
4-orTnin aJ'p tne tax exempt status o- - vpreviously recognized as exempt, and to disallow deauc-io.3 - 
contributions to such schools.

In Norwood the Supreme Court c rdered that a certification
r~cc*u-o -ya"e¥cablished to determine th. , . - .î rwct— —  - . qu’in’ i-d textocoxs . anuMississippi private schools cor o at« «uyp— ...u .established that rulings under this procecuif o e s 0 0,0 0,
-iudi^ai review. The standards or eligibility —  — — L-' ^

eligibility of

c-.r.-ono rp'ivr v®re made with full knowledge of the cri w£h.a
N N A I s I I D b y  t £ e  c o u r t  i n ^ G r e ^  * “  “ “

U*7p̂ er-- standards. Hence it follows that if a^choo^has been^
determined to be ineligible f o r  _ t e x t b c o r s  nier --
application of the same standards it should intx-^ 
tax benefits under Green.

A cte- Chief 'J. S. District Judge William C. Keany es tab linnet 
the certification criteria in Norwood on o„^
Mississippi private schools failed to ap^iy ~fw jl
under the'non-discriminatory standards -and/or J u  e 
supplied textbooks in their possession. /uf‘* . * a^ s3;0r:

concession that thev do net have a non-aucr-unarf - ̂  ^
V-- -v“and that thev would fail to meet certification s.anoa-u.,. 
Schools which are shill recognized as ta:t ere^.p. oy - 5  -4t 
..7;v:ch 4n effect have conceded discrimination in ho..wcoc a— .

EXH IBIT 1



Mr. Donald Ale!^v)der
Commassioner oiT'intemal Revenue
Page 2
March 11, 1974

Columbia Academy (did not apply ror certincation)
?. 0. Box 189 
Columbia, Ms. 39429
Cooiah Educational Foundation, Inc. (returned booxs} 
317 Gallatin Street 
Hazelhurst, Ms. 39033
Deer Creek Educational Institute, Inc. (returned book-0 
Hollandale, Ms. 38743
Educational Foundation, Inc., 
106 East Cynthia Road 
Clinton, Ms. 39205
Educational Foundation, Inc., 
Holly Springs, Ms. 38635

of Clinton (did not apply;

of Marshall County (did not apply

Education Foundation, Inc., of Lucedale (dad not apply) 
P. 0. Box 65 
Lucedale, Ms. 39452
Lula Rich Educational Foundation, Inc. (returned books) 
(Lula Rich Academy)
F. 0. Bex 338 
Lula, Ms. 38644

tax
thei

Accordingly, the eligibility of 
deductible contributions should 
r exempt status revoked.

these institutions to receive 
be immediately suspended, and

In other instances, certain schools applied ror certification 
to receive state textbooks, but after objections were filed b y ^  
counsel for the plaintiffs, in effect conceceu discrim-na ^  
an order was entered by Judge Ready vacating their certuica^or. 
ard o^de^ing them to return their state textbooks. A copy Oi 
Judge*"Ready^s Order of March 1, 19 74 is enclosed. These schools
are :

Indianola Educational Foundation, Inc. 
305 East Gresham Street 
Indianola, Ms. 38751

(presently recognized 
as tax exempt)

Hillcrest (Baptist) A.cademy 
Route 1
Senatobia, Ms.

(presently recognized as tax 
exemot under the umbrella exemp­
tion* of the Baptist Church)

West Panola Schools, Inc. 
Box 713
Eatesville, Ms. 38606

(application for tax exempt status 
currently pending before IRS)

— f 0 ci ■—



Mr. Donald Aic^)nder 
Commissioner of Internal Revenue 
'Page ■ 3 • • ■ - * ' :
March 1 1 , 19 74 f ......

,• • Aftax a hearing-.civ- plaintiffs ' objections , an additional -. .... . .
school,' currently, recognized by IRS, as., tax. exempt,, vo _ed_ to 
returo its"te;ttfccoks7 latter frb’i Viliam f  ' Corr, ' Jr .attorney 
for the North Delta School, Inc., to District Judge Wxl.icir, C.
Ready, March 4, 1974 (copy enclosed). This school is:

North Delta School, Inc.
P. 0. Box D
Crenshaw, Ms. 38621 -
Accordingly, the eligibility of these four schools to 

receive d  deductible contributions should be immediately suspended, 
and their tax exempt status revoked.

One school, which currently is recognized as tax exempt, 
has'been certified, but its eligibility has been objected to 
and a contest to its eligibility currently is pending be-ore 
Judge Ready. This school is:

Quitman County Educational Foundation, Inc.
P. 0. Box 56
Marks, Mississippi 33646
■m-i ■; s corporation operates the "County Day School" in Marks , 

Mississippi, and was one of the original segregation academies 
in the state, having, opened its 'doors simultaneously wi xi tie - 
desegregation of the Quitman County public schools coun^_
Day School was cited as a segregationist acacemy by tne Districu 
rrxr" in Coffev v. State Educational Finance Ccmm s,uP-r ‘,
13 89 , 1393 '(STD. Mu s s . 1959")". Its xcuncers have oeen aligns^ wi.n, 
and attended meetings sponsored by, the Citizens Council, â uhi^ 
segregationist organization. All students, faculty members, 
fcSSIrs, and board members are, and have been since inception, 
white. I understand that forms filed with the iRo omit po maxcat- 
whether the school has ever formally adopted a written °?®n -
admissions policy (see Question 15(a) of Certification anc Bac..grc 1 - 
Information Form and attachments tnerstc).

Pending Judge Ready's ruling, the eligibility of the Quitmari 
County Educational Foundation, Inc., to receive tax deductible 
contributions should be suspended. I wil_ notify you of Juage 
•Readv's ruling when it comes down.

As counsel for the plaintiffs in Greer., I am. concerned that 
the procedures of IRS for ruling on the tax exempt status o_ 
private schools in Mississippi appear to^ne mere permissive =nd 
more lax than the judicial standards applied oy tne j . =>.
Court for the Northern District or Mississippi. _The evidence in 
Non-rood suggests that schools have been certified by IRS as 
eligible for tax exempt status and tax decuctioxe contribution On

~ [ \ d -



Mr. Donald Alexander 
Commissioner of Internal Revenue 
Page - 4 ■ •.
March’11# 19 74

as

the basis of professed open admissions policies wnen in j.act 
they have been formed and operaue as racially segregated 
institutions designed to provide an alternative to public 
integrated education. These tax exempt schools in erfê -u. 
have"admitted their true colors when they voluntarily have 
returned their state textbooks and do not contest objector.^ 
to their certification to receive such textbooks.

Given these developments, I request that IBS review its 
certification and auditing procedures and me<e such changes 
are necessary ro tighten its standards. Perhaps a public ^
adversarv administrative hearing, in which the private scnool nas 
the burden of proof, and with notice permitting public participa 
tior. or judicial review of IBS decisions, may be required uO 
close this present tax loophole._

As to these tax exempt schools which virtually have admiuued 
discrimination in Norwood", you may want to determine whether . 
criminal prosecutions are warranted.

Since these matters nay involve the continuing jurisdiction 
of the~*District Court in Green regarding enforcement of its _ 
decree, I would appreciate a response from you to this additional 
information, indicating what action you have taken with regard to 
each of these identified segregated private schools, and whan 
changes in your procedures you have adopted to insure^ tdia u 
private schools which profess a non-discriminatory poxicy c u ^ ^  
which are in fact discriminatory do not receive the tax oenent- 
which have been granted, but to which they are not in ract 
entitled under the Green decision.

Thank you very much for your consideration of my requests.
Yours very truly,

Frank R. Parker

FRP:1jh 
Enclosures
cc: Meiwn R. Leventhal, Esq.

Clerk, U.S. District Court for the 
District of Columbia

Assistant Attorney General, Tax Division,
U.S. Department of Justice 

Staff Director, U.S. Commission on Civil Rights



C D C O R R  A N D  CARLSON
ATTOPNEVB AT LAW 

P. O. BOX ABO 

S A F t O i d .  N ' I S S f S B I P P !  a f J « 3 t J G  

.. . qiftois < «-Q4 > . 417. 2»2f
• BATRSViUV-f ';.eo; > r«2.£53ii

W'L'Jam a. rcnn..jR. 
GEonCE c.- 'tAhtaoN. wh..

■March /i ■'0 7 4

■ -  c 
\ D 1 c t c t a d Ms '*■ "5*»ai t«ii  ̂ , 1974)

lr, *

►A j*
r , i •. r*; t. 0 •a / 4 >* «J«

LATA C. UGHTSEY

f D )IT

Judge William C. Keady 
United States District Court 
P. 0. Drawer 190 
Greenville, Mississippi 38701

'Re: Norwood vs. Harrison
No. WC 70-5 3 - K

* *

Dear Judge Keady:

The Board of Directors of North Delta School, Inc. 
met this morning and unanimously voted to return to the 
State of Mississippi all State owned textbooks presently 
in the possession of the school and children attending 
the school. Arrangements have been made with the Superin­
tendent of Education of Panola County to return the State 
owned books Wednesday, March 6, 1974. A copy of the tex t ­
book inventory of the return books will be filed with.the 
clerk of the Court in Oxford and copies mailed to you and 
Mr, Leventhal.

I appreciate the courtesies extended to mo and my 
clients by you, the Court officials and by Mr. Leventhal.

Very truly yours ,

William E. Corr , J r .

WECimtf

cc: Mr. Melvyn Leventbal^/^
Mr. Bill Slssell - County Superintendent of Education 
Mr. Lawrence Meeks 
Mr. Otis Jenkins 
Mr. Bill A11 a 1n

i

- l i d -



IN .THE UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF MISSISSIPPI 

WESTERN DIVISION

DELORES NORWOOD, ET AL, Plaintiffs

V.
NO. WC 70-53-K

». L. HARRISON, SR., ET AL, Defendants

ORDER

y It appearing that Indianola Academy, Hillcreot Academy

and West Panola Schools, Inc., three of the private schools 

against whom plaintiffs have filed objections as to eligibility 

for the receipt of free state-owned textbooks, have represented 

that they do not desire to contest the appeals and are deliver­

ing to the state all state-owned textbooks in their possession 

or under their control; it is 

ORDERED
That the certification of eligibility heretofore granted 

by the Mississippi Textbook Purchasing Board be set aside ana 

rescinded and the state-owned textbooks in the possession or 

under the control of the three said schools be, not later than 

March 8, 1974, delivered to agents,of said Board.

This, 1st day of March, 1974.

C .n—A'-*—  ̂ • ‘-1
Chief Judge

United States District Court
/ l L A  -



o * J '
»__j

_sJLĴ <2. { &&*-
•fc'C /}M4y£&*̂&£a

LAW YERS' COMM!'r TEE
F O R  C I V I L  K I G H T G  L N' DER L AW

SOUTH P A R I S H  S T R E E T JACKSON M I S  3  I S  S  i P 3 2  0  1 S ( s o 9 4 8-040

a
’ July 17, 1974

Honorable Donald C. Alexander 
Commissioner of Internal Revenue 
U. S. Internal Revenue Service 
Washington, D. C. 20224

Re: Green v. Connally
Dear Mr. Alexander:

I am writing to follow up my letter to you of_March 11, 
1974, regarding the IRS enforcement of the injunction entered 
in Green v. Connally, and to inform you of subsequent de­
velopments in Norwood v. Harrison, the Mississippi case en 
joining state textbook assistance to segregated private 
schools.

District Judge William C. Keady on July 1a., 19 /■*, issued 
his ruling in Norwood and specifically found that four private 
schools in Mississippi, the Svlva Bay Academy (formerly Sylva- 
rena Academy), Bay Springs, Jasper County, Mississippi, the

U1 A C1 rWest Tallahatchie Academy, Tutwiler, Tallanatcnie 
Mississippi, South Haven Menncnite School, Prairie roint, 
Noxubee County, Macon, Mississippi, and the Quitman County _ 
Educational Foundation (County Day School), Marks, Mississippi, 
were racially searegated private schools with racially discrim­
inatory admissions policies formed to perpetuate white, segre-^ 
'gated education. Of these four, the Quitman County Educational 
Foundation currently has tax exempt status. However, the_South 
Haven Mennonite School indicated m  its textbook application 
form that it is in the process of being included 
umbrella exemption provided the Church of God in 
nonite Church (Opinion, Exhibit "3", p. 1).

within the 
Christ Men-



Honoirabi.e Donald. C. Alexander-..
'July' 17/19-74. ' •
Page 2 •

'Judge Keady- noted 'that the fact that the Quitman County 
Educational Foundation had been certified by IRS as eligible 
fcr tax benefits was not determinative of the question or its 
admissions policy, holding:

"Recognition by Internal Revenue Service that a school 
is entitled to tax exempt status and its donors may 
have their gifts deducted for income tax purposes is, 
of course, seme indication that a school has an open 
admissions policy, but it is not alone determinative.
In this case, where it appears chat an open admissions 
policy was obviously stated perfunctorily, at isolated 
intervals, and only to obtain tax advantages, we are 
unconvinced that the school has a position ocher than 
one taken to procure tax benefits but without sacri­
ficing the goal of white, segregated education. We 
conclude that the absence of substantial, convincing 
evidence presented by the Quitman County Educational 
Foundation to offset its history of segregation re­
quires us to hold that it fails to qualify for state 
textbooks." (Opinion, p. 14)
This judicial determination that the Quitman County Edu­

cational Foundation continues to pursue the goal of white, 
segregated education, plus the failure or four other schools 
to challenge objections to their eligibility to receive state 
textbooks ""(Indianola .Academy, a/k/a Indianola Educational 
Foundation, Inc.; Hillcrest Academy; West Panola School; and 
North Delta School) (Norwood Opinion, p. 28) clearly raises 
"serious doubt concerning uhe continued qualification of 
[these organisations] to receive deductible contributions," 
which should require IRS to suspend the advance assurance of 
ductitility of contributions to these five schools pursuant t 
Rev. Proc. 68-17, Sec. 4.05.

ce-

I have been informed that .IRS is currently reviewing its 
oolicies and procedures relative to its enforcement or its 
policy to deny tax exempt status and deductibility of contri­
butions to schools with discriminatory admissions policies. 
However, the clear evidence of the discriminatory admissions 
policies of these five schools provided in the July 12 Norwcod 
decision indicates at least that suspension of advance as­
surance of deductibility of contributions regarding these five 
schools need not await this policy review, but should be



t-j.

Honorable Dcnal.d- C* .Alexander, 
uly.17, 1974 
age 3'.

effectuated "ilmediately -to 'Implement' presently existing - . • ____j___ — ____j-u v-■; = r'.-f +-}Ka cir-opn v. Connail y
ineirpolicies and to insure the tights cf tne ~sn y - __

Diaintiff class. In Mississippi, many schools begin 
school year in August, and it is important that immediate_ 
action be taken prior to the opening of these scnoois to in­
sure that whatever action IRS may ultimately take regarding 
the eligibility of these schools will be effective.

I am enclosing copies of the decision and order recently 
handed down in the Nor-wood case.

Please inform me at your earliest convenience or IRS 
action taken with regard to these five schools. I hope to 
receive a response from you within 30 days.

Again, thank you for your early consideration of and 
attention to this urgent matter.

Yours very truly, 

Frank R. Parker

FRP:eg

cc: Melvyn R. Leventhal, Esquire
Assistant Attorney General, Tax Division, 

U. S. Department of Justice 
Brian Landsberg, Section Chief, education 

Section, Civil Rights Division, U.S. 
Department of Justice 

J. Harold Flannery, Director
Lawyers’ Committee for-Civil Rights 
Under Law

- H A -



A n d e r s o n , Ba n k s , N ic h o l s  &. l e v e n t h a l
Attorneys at Law

B3a'/1 north parish STREET 
JACKSON. MISSISatRRf 39303

f J U

R C U R C N  v .  A N O E R R O N  
T R E O  L . R A N K S . J R . 
J O H N  A . N IC H O L S  
M C L V Y N  R . L E V E N T H A L  
N A U R E A O  R T E W A R T

April 19, 1974
P O S T  O F F IC E  D R A W E R  290 
A R E A  C O O E  6Q 1 9A 8-7301

Mr, Donald Alexander 
Commissioner of Internal Revenue 
United States Internal Revenue 

Service
Washington, D. C. 20224
Re* Green v. Conallv & Norwood v. Harrison,
' 37 L,Eel. xd m  t & T T )

Tax exemption for Mississippi 
segregationist academies

Dear Mr. Alexander:
I have Mr. Flannery's letter to you of April 15, 1974.
Perspective on the question before us (the adequacy of_pres­
ent Srtification a2d auditing standards) is best obtained  ̂
through an examination of the Indianola Academy. I enclose.

1 A copy of the certification and background in­
formation’ form completed by the Academy ^response to Judge 
Kpadv's order on remand in Norwood v. Harrison. it demon
traces that the school is all white both aTTo students and 
faculty, and was formed and enlarged at^critical moments m  
the hi story of public school desegregation m  Inaianola.
This f o m  was filed with the Mississippi Textocok Board and 
the Academy certified as eligible for textbook assistance. 
Thereafter, I filed in the district court, in behalr or plain 
tiffs a motion to deny textbook assistance. Upon the filing 
of objections the Indianola Academy witndrew its- request for 
?ex?biok assistance and returned its inventory to state de­
positories.

2 A copy of page IS of my Norwood briei. ̂ in the 
^un-eme Court. This excerpt provides a capsule history or 
desegregation events in Indialoia and the role or the Acadeoix 
in frustrating public school desegregation.
Notwithstanding the overwhelming evidence that the Indianola 
Academy is a slgregationist institution your agency has de­
termined to approve it for tax-exempt status. This nas been

EXHIBIT 3



IJ

■Mr..-Donald - Alexander 
April 19, 1974 
Page 2

thS wake of public.school desegrega^on ^ e r  the

F « k s s ^ - s ^ s  sstgs t£vice
adoption of an open admissions pol-cy and i P
lication in a local newspaper.
I remind you that the Indianola Academy is but one example 
in a category of schools approved by your a g e n c y  and is 
viewed ablvFto illuminate the issues not exhaust the sub
j ect.
I look forward to discussions with.you and representatives 
of the Green plaintiffs.

MRLimsc
Enclosures

cc: J. Harold Flannery, Esquire 
J. Stanley Pottinger, Esquire 
Brian K. Landsberg, Esquire 
Frank R. Parker, Esquire

-
„ 5 nf rnurse the Indianola Academy is a member of t.-=
Athletic^Conference. ̂ Not^a^singie^blac^peEson^is involved
in any activity or program of these organizations.

schedule in a post season game. .. £itn L Acacemy
Prince Edward Academy of Farmville, M r g i m a .  m e  a y
principal was then quoted as follows.



Mr. Donald Alexander 
April 1 9 JL9-74. . .• >;.: 
.Page 3 ;

Very close ties exist between these two schools 
and this event should be the highlight o: our 
athletic year.
Several local citizens visited Farmville prior 
to the founding of the Academy to observe their 
operation and to secure information the 
Virginians had gained from their experience in 
building a school. These contacts have been 
kept and there have been several exchange visits

- A o J '



18

enrollments of 597 and 426 white students respectively- 
virtually the entire white student population of the 
school district. (Henderson Deposition, Exhibit 9 ; Chart, 
Interdependence of Public School Desegregation and 
Formation and Growth of Private Academies; Nowell 
Deposition, pp. 5-6; Home Deposition, p. 5.) The Amite 
County Private School houses grade one in the local 
Mormon Church, grades two and three in the Methodist 
and Presbyterian Churches, grades four and five in the 
“Old Baptist Parsonage,” and grades seven through 12 in 
the Baptist Church.

5. Indianola Municipal Separate School District

Indianola Academy, serving grades 1-2 and enrolling 79 
pupils, opened in September, 1965 concurrently with 
integration of grades 1-4 of the public schools under 
freedom of choice. As additional grades of the public 
schools were desegregated the academy added grades to 
its curriculum and students to its rolls so that by 
September, 1969, it housed 578 students in grades 1-12.

During the first semester of the 1969-70 school year 
the public school district enrolled 991 white students. 
However, in February, 1970, the district was required to 
implement a terminal plan of pupil assignment pursuant 
to Green and Alexander; and at that precise moment all 
white students and 30 white teachers of the district 
withdrew to the security of the segregated Indianola 
Academy. Accordingly, the Indianola Academy s enroll­
ment surged from 578 white students in December, 1969 
to 1,504 such students by February 9, 1970. (Cain 
Deposition, pp. 5. 9; Floyd Deposition, p. 13; Henderson 
Deposition. Exhibit 9: Chart, Interdependence of Public 
School Desegregation and the Growth of Private 
Academies.)

19

6. Grenada Municipal Separate School District

The failure of HEW to obtain voluntary desegregation 
of the Grenada public schools (luring the 1965-66 and 
1966-67 school year resulted in the termination of all 
federal financial support for this district as of September 
22, 1966. However, a court order was subsequently 
entered requiring freedom of choice desegregation for 
grades 1-12 effective September, 1967. Enter the Kirk 
Academy, in September, 1967, serving grades 1-12 and 
enrolling 133 students. This academy grew to an enroll­
ment of 412 white students by September of 1969, to 
511 by February of 1970, and to 639 by September,
1970. 1

Effective March 1, 1970, the public school district was -
required to implement a terminal plan of pupil y
assignment. On the same day a second private academy, 
Grenada Lake Academy, opened in an abandoned public 
school building for 180 white students formerly enrolled 
in Grenada public schools. (Jaudon Deposition, pp. 3, 5.)

The histories reviewed above are not exceptional. The 
pattern-public school desegregation followed by the 
withdrawal of a substantial number of white students to 
private academies and the rcsegregation of public 
schools—was repeated in school district after school 
district throughout the state.

III.
THE STATE’S TEXTBOOK PROGRAM 

A. The Program Generally

Sections 6634-6659.5 of the Miss. Code of 1Q42 
(Appendix B, Jurisdictional Statement) piuvide the 
framework for the selection, purchase and distribution of





roES THE SCU 0  MAINTAIN EDUCATIONAL STT JMDS ESTABLISHED 
S  li?STATE DEPAR^F-NT'or EDUCATION? ...r- A — - t •• ' —
\'A&sa^snx?s ^ c w u r i P S - A T ^ O T c y / ^ ^  .
SCHOOL? No — _ — -— — --;— ;— — -------- ' ' .
,.f Y eS state the ttaber. or such s c h o l a r s h i p s ,  offered during - "
■ ̂ ri^-73-. school yeair toiv a);.; whi.t̂ : students : , • •.— >•• ,
-• and.-is).:bia-cx.students— .. ■,-.■>•;.•♦•• ; .; • . • v

M  SCHOLARSHIPS AWARDED BV PRIVATE INDIVIDUALS TO STUDENTS 
OF YOUR SCHOOL? YES __----. N -------

,u=h scholarship aaaiata„=a Ouri» ’ t. 3t,dents _____
a> black students----------- ■*
HAS ANY TUITION W E  THE SCHOOL BEEN WAIVED? _ J ° ------------
If yes, then state the number of students. by .^ 9 , _ a-uo. 1Q72-73 school year: wnireauch waiver during the 1972 s ^  students ______ ____
students n/a _j.---------311

■ s  sjsrjsr.ssfjrxsss 3 tc _
If yes, state the number of such students for the 1972-73 
school year __2/2------

*. DOES THE SCHOOL HAVE A WRITTEN AFFIRMATIVE POLICE OF ADNXTTINO 
STUDENTS IRRESPECTIVE OF RACE.------ ------ - “

- mat ~,iicv and state the date of itsIf yes, attach a copy of that pol ■ Y  ̂ 9/7/71______adoption by the governing board or th
... • j tv;c toi u-v in a manner that is

>• w a s ? . . - ...■ it- to the attention o- persons. - - i, _ .. non—
4 fr> «r ~wnites? ________ * - w.fainmies or printedin all newspapers, brochures, -v,,, time the schooladvertisements appearing or prepared at the 
was first opened and aunng the pas. scho V

c. Has any member of the school’s
%  S 5 S , * S T ^ 2 . S T « " ^  —  — —

Mo------ ---- -------------------------
16. s t a t e  toe NAMES AND ADDRESSES AND RACE OF THE SCHOOL'S: 

a) Incorporators:
j. A. n v. Jr.. P 17 n ■ c;haw- Miss-

- 2 -

- Z 3 J -





■ I  = <  : - V  - -1 - . ? :  ■'•#&§£ '
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• / .
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V. • I • . ;: ' the foregoing information is true and accurate to toe best or '™y;< -••■'. •

r-^ s^ L g ^ :•* ; 3 *  ta b *  le d g e . :. i *?; .

• - “ ^•.^fidkvit i» ■executed'is^a'^ditibh-for-supplying Mississippi ..,.; :,>.y....ii?i;

u\*;- 

• ♦ .

f
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il

State-owned textbooks to toe above named private school, and chat 
full and accurate answers are required by order of the United 
States District Court for the Northern District of Mississippi 
dated July 25, 1973, in civil action No. WC 70-53-K. styled 
Norwood, et al, v. Harrison, et al, on the docket or the court.

This, 10th day of _______ August-------- •' 197-----'

y)e.CL - S i  f e - v
( j .  A. E ly , J r .  \ ' ’>

Title:
Sworn and subscribed to 
before me this /r'/*day 
of L-v-u-*? 197&- .

P res iden t. Indiano la Educational 
Foundation, Inc. 

fo r
Ind iano la  Academy

(Name of School)
-So. JXNotary Public 
My Commission Expires':

^ r W,
(SEAL)

-4 -



T he guvorninR body of In dlan ola A cad em y , at it s  r e g u la r  m ectia  g . 
T u estlov  a ffirm e d  the A ca d e m y 's  r a c ia l ly  n o n -d iac r im .n a to ry  po licy  a s  >o 

tu den ts'an d  that It a d m it , the stu d en t, of any race to a ll  the t u H .
n r iv ile e c s , p ro g ra m s  and a c t iv it ie s  g e n e ra lly  acco rd ed  o r  m ade a v a il 
to stu den ts accep ted  at the A cadem y; that i t s  p o licy  i s  to m a *c  no d i a ~

* -nation on the b a s i s  o f r a c e  in a d m in istra tio n  of ed u cation al p o l ic ie s , 
^ ^ i c a t i o n  fo r  a d m is s io n , and ath le tic  and e x tr a -  c u r r ic u la r  p r o g r a m s .

X ce rtify  the above and foregoin g to be an ac tu a l, c o rre c t  and l ite r a l  
excerp t of the m inutes of Indianola E d u c iio n a l Foundation , Inc. , of 
its  re g u la r  Septem ber 7 , 1971, m eeting. ^

W itness my sign atu re  th is the 8th day of A ugust, A. D. , 1973.

S e c re ta ry

I



C / S . TR EA SU R Y  DEPARTM Ei J
I N T E R N A L  R E V E N U E  S E R V I C E

' D I S T R I C T  D I R E C T O R

.Jackson,.Mississippi 
: September 2,' 1964 IM MC» LY R I *r r» *  r *j

F 'orrn 2954 
434:WCE:emo 
JAC-SCT-64-38

Indiauola Educational Foundation, Inc* 
303 East Gresham Street 
Indianola, Mississippi

Gentlemen;

PURPOSE

Educational
FORM 390 A REQUIRED 
□  YES £] NO
ACCOUNTING PERIOO ENtVIMG May 31

> Based upon the evidence submitted, it is held that you axe exempt from Federal income tax as an 
organization described in section 501(c)(3) of the Internal Revenue Code, a s it is shown that you 
are organized and operated exclusively for the purpose shown above. Any questions concerning 
texes levied under other subtitles of the oode should oe submitted to us.

You are not required to file Federal income tax returns so long as you retain an exempt status, un- 
le ss  you are subject to the tax on unrelated business income imposed by section 511 of the Lode 
and are required to file Form 990-7 for the purpose of reporting unrelated business taxcoie income. 
Any changes in your character, purposes or method of operation should be reported immediately to 
this office foe consideration of their effect upon your exempt status. You should also report any 
change in your name or address. Your liability for filing the annual information return, Form 99UA, 
is set forth above. That return, if required, must be filed after the d o se  of your annual accounting 
period indicated above.

Contributions mode to you are deductible by donors aa provided in section 170 of the Code. Be­
quests. legacies, devises, transfers or gifts to or for your use are deducting .or Federal estate  

' and gift tax purposes.under tht provisions of section 2055, 21Go and of the- Loae.

You are not liable for the taxes imposed under the Federal Insurance Contributions Act (social 
security taxes) unless you file a waiver of exemption certificate as provided in such Ac You are 
not liable for the tax imposed under the Federal Unemployment i ax Act. .nquines aPout .he 
waiver of exemption certificate for so c id  security taxes should ne addressed to this office.

This is  a determination letter.

Very truly yours,

L. ^ . Cf \ ^
Jj. G. Martin, Jr. 
District Diractor

9 0  t l l l l l
1 7 A-

ro e * 2954 iftv . *-«n



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I.TrfiJUVoli ?UtuC*tionaI Foundation, Inc. 

305 S.»#t Jreahnr* St*

t/. UJc'‘. /OO

Indianolc, “ iaa#

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ft. /-*' P!ae#

Olilf C' L»ii»cior cl

:j« tku».tiohi

1 y r ?1,»S AT PM * M K**.? h « n  *Ho h i !  I'U '[ ?*■•».sly  secured ail i A c n t . l ».» » at. . • , . n
* '* * * ' » r .1 * *e ee« 4  't - 11 K a iif .! '<1 m «« m  nviabtr lot iAc'«s.»n ane itru.a. tfairtci'i of oOi«r« ,
■ lnlv ..o- . r r ,.<.iH I • no I.^m i.f4i:, n ooi.l-o. -Husl.J o» til. I. raganll.us „( r(.< nu.ni.-t of r j- .l lnl-ii.-ntr. Thu it

... -i.» I - ...- I .u i I JU.Hf i.f .( r»..l lu i.n tu  *  . . . J ,  n«n«< hack crryuMtlirn .(  <11 tttii 4I«.| fimip

an..u- • r : ' r « r  ■ • -i a<cr:< >»• a •• 1. ».<i *:.< • a m - w t  a. pl.aa .jo I. a I at.nrii , .  * .1  1 ... l-aoulr-r.i ,n d  n-» -an ,. .U.,, 

■ «.i ha-- . . o.i -■ -••JJt ;ie iS .u .1 . u  rha umulicaiiua n « i  aaji(0<.t o tk» p , .  r , o u t  .soar. toil ;mn» h i t  as
•f^.UrttuA r »  J . /.:j •%*'— I f >t a i»#<* a jend/u 4L-»n aura -ee.

•Ill Pf '*» 7 I Mv \ M l UtM' j»* 1 '! I’l .* ®.ib,HeM.S Puffifi P i it c io i  *1 iaterntl HfT#n«c *itf» •  ! %n tUt I e»ie «i
\ • r. ir  l

’ * * .in'- S I K *T. ''N M )• ff ’ l>* Mr ( h o t *  wIk* p#r w m jt *  >»n c» cĥ  d« v «|ttr tli- u «tr »« •♦ »**

••• .. »»• . h . 1. » '«**'• i-««* iui *« • i*,fnr ficjiicnt iUMiifi !•< mciu 'rti 10 return, much. r»», k.*/ rr
1m  r» »
i i n r  i ; * • . f •• ■ f i f »?. .!»• • • mi m i  i » v
b«»i k If ullt •• •«« <•*#

All Aii.tvers si miiu ‘*e f ̂  e^nMro .< p infe-t j,.' «m,f ••»*» l.mln m«i n
*•>*«; 7 r . 't e t  1 • fs^.- 

p.if.t̂er Uf tl*4"| .* 
’<• t 1I4 4IIK loMI T

f
l ie  4

• *.*e l i e *  ».t«: esifer ,a fi -.n . trail* p«m* if mt •.lopte I Ijr
7 i.mmv i. y» lin u«l epntW', « rr̂ rautani <t Min he rr«dc r«*nr w/ 'iIm i
 ̂m liJ t>* (ninrJ .it iir.n l *rd '’ cf InMuisnt" ... lce-» ^

i'l00
M O rr - It i(» a .» r f  h-, . . . s a , ,  n-im  „ • lat o. J » r r a «  i « i n .  m i |  «  a t i l t tp  i f . m o  . * .H  a sc la .a l ,  j r  o . Iruai. .t , iS a ,

• 'tr»j»»nf f  iff in i.na I the ft... rtjg» . **c* iui/c«J (hereunder If • cufpo'tr ewer ir. f»e*n J (Me mm, me !»•. »♦ mm

«et forth .0 its .Htttrr f»# » ‘irt iek-l i... . *»■» it|u * | uy ?h; Corem-« itt ireaufg «t ’n ire cite f • d i*f. .he u -me of 

•he (riM e%»0fe % h m ,iJ n# e ,c » « the n a m e  the uustee m Urn. l.« .he c u r  „f «n eata e «l • ue-e.lent,

ins..t*ett« etc the name .1 uir m .ir  .1 j he en-e'eJ m It-w 1 «n«i »t.e n« e h- «.jnimstn tw« 01 jth-* fi^i.^.err .n 
Ireei :  If .he »r.e eu-,. .no*-..,;* U  , «t ^ id  Ne sho^n in a statew .1 .ait I .rm If. surl «ae • .. 0 *

*era««" ./ the ear. * tu-auto >*e »>e .ted lc- nee* of cn«n form tad em*r«d L« lira



STATE OF Mississrrri 
COUNTY OF SUNFLOWER 

CITY OF 1NDIANOLA:
77,;<7zPersonally appeared before me, a .......

In and for said County and State, ^  ~ ....... of
; Enterprise-Tocsin, a newspaper published In said City, County and State, who upon

*. being duly sworn, deposes and says:
The notice, of which a true copy Is hereunto annexed, was published In

Anri I further certify that I have examined the several copies of the *7 EnterptSe-TocsIn, above referred to, and find that the said notice has been 
¥ -- published as stated.

to, before me, this r.^S^day of .^ J s r .iC iU .: .: ^ . T9

Academy affirms racially  ̂

non-discriminatory

Ihe governing body of Indla- 
nola Academy, at Its regular 
meeting, Tuesday affirmed the 
Academy’ s racially non-discri­
minatory policy as to students 
and that It admits the students 
of any race to all the rights, 
privileges, programs and acti­
vities generally accorded or

made available to students aj 
cepted at the Academy.

The board also affirmed i 
policy is to make no disci 
mlnation on the basis of ra 
In administration of educatic 
at policies, application for ? 
mission, and athletic and exli 
curricular programs.

Subscribed and sworn 

Cost: $..........- ..............
My Cctimission Cxpirei July 23. 1975

- , .A



v . . B O A R D  OF DIRECTORS * ' .
• ' " ‘ I HE INDIANOLA EDUCATIONAL FOUNDATION, INC.

J; A: E l y , Pres. . . Shaw;, Miss. 33773 .
Turner Arant Blaine, Miss.
George Baird Inverness, Miss.
Tom Barron Woodbine Dr., Indianola, Ms.
Mrs. C. E. Dunlap 1410 Maple, Cleveland, Ms.

33732
Mrs. Hugh Gayden Fisher Rt. 3, Box 23, Indianola 
Mrs. Leslie Fletcher E. Percy, Indianola
W. W. 'jresham, Jr. Gresham Petroleum Co., Indianola
Max Hodges Rt. 2, Box 135, Indianola
John Hough, Jr. 
Louis Ingold Seymour Johnson

501 Alexander, Indianola 
210 E. Percy, Indianola 3 Seymour Dr., Indianola

'Wayne King Inverness, Mi ss.
George Lice Rt. 2, Box 55, Indianola
John McPherson Gresham Service StationIndianola
N. H. McMath P.O.Box 195, Isola, Ms. 3375<l
Hoe1 Morgan Box 38, Sunflower, Ms. 33778
T. A. Murtagh Moorhead, Ms. 38761
Henry Paris Lewis Grocer Co., Indianola
Mrs. W. M. Pitts 202 E. Parkway, Indianola
Scott Poindexter Irwerness, Ms.
James Robertson Holly Ridge, Miss.
Bobby Shepard 310 Clover Dr., Indianola
Mrs. Guy Robinson- ' 603 E. Percy, Indianola
Bill Toler Inverness, Miss.

All are members of the white race.



internal Revenue Service

AUG 1974 j...........
-----  CPjA jE:?

Mr. Frank R. Parker 
Lawyers' Committee for Civil Rights 

Under Law
233 North Farish Street 
Jackson, Mississippi 39201

Dear Mr. Parked

On behalf of the Commissioner, I would like to thank you for your 

July 17 letter in which you informed us of additional developments in 

Norwood v. Harrison. While we cannot reveal specific actions concerning 

the Individual schools involved, wa assure you that your information is 

being considered. We appreciate your continued interest in the private 

school area.

Sincerely yours,

(Signed)_S.3. Woifa

S. B. Wolfe
Director, Audit Division

EXHIBIT 4

1 •
•' V



April 15, 1974

Mr. Donald Alexander 
Commissioner of Internal Revenue 
U. S. Internal Revenue Service 
Washington, D. C. 20224

Dear Mr. Alexander:

This refers to Frank R. Parker's letter to you of March 11, 
1974, concerning your Service's enforcement responsibilities with respect 
to Green v. Connally, 330 F. Supp. 1150 (D. D. C. 1971), aff'd, 404 F.2d 
997 (D. C. Cir. 1972), in light of the Supreme Court's decision in Norwood 
v. Harrison, 37 L. Ed. 2d 723 (1974).

As Mr. Parker's letter indicates, post-Norwood proceedings 
have disclosed that a number of ineligible Mississippi private schools 
continue to enjoy tax exempt and deductible contribution status. We would 
like to try to resolve, as economically and expeditiously as possible, the 
question which this raises about your certification standards and auditiog 
procedures of these and similarly situated schools.

Therefore, I request an opportunity for representatives of 
the plaintiffs, including Mr. Leventhal, Mr. Parker, and myself, to 
meet with you, Assistant Attorneys General Crampton and Pottinger, 
and any other officials whom you may identify as appropriate to explore 
ways of securing our clients' rights short of further proceedings in Green.

We would like to meet at your convenience during the period
.April j30 through May 9, 1974* and I shall appreciate hearing from you 
m sufficient time for us to coordinate our arrangements.



ly yours,

Mr. Donate Alexander 
April 10, 1974 
T'prrp Tv;a

Thank you for your consideration.

yT rs’yrt v Ci J ~~

J . Harold Flannery 
Director

cc: Honorable J . Stanley Fottinrjcr 
Honorable Scott P. Crumpton 
Brian K. Landcbcrg, Esq. 
Melvyn R. Leventhni, Esq. 
Rrank P.. Parker, Esq.



Department of the Treasury /  Internal Revcnu . Service Washington, D C. 20 2 24

C o m m is s io n e r
MAY 171974

Mr. J. Harold Flannery, Director 
Lawyers' .Committee for Civil Rights 

Under Lav/
733 Fifteenth Street, K 
Washington, D. C. 20005
Dear Mr. Flannery:

■ W. , Suite 520

m

’hank you for your letter of April 15, 1974, concerning the
sitle impact.of the decision in Wcrwood v. 413

455 on the Internal Revenue Service's certification standards 
and auditing procedures relating to tan exemptions for private 
schools. As Mr. Pottinger and I told you in our telephone con­
versation, I met Monday with Assistant Attorneys General Crampton

:o discuss the matters raised by your letter and by 
»r's letter of March 11, 1974, or. this same subject.

The purpose of this letter is to provide written confirmation

and Pottinger
Mr. Frank Park'

The purpe
of 'what I told
off ice to look
the Department
Sei­vice in sue.
che s tandards
end our expert
l j «C • Cramntcn a

you, Fir: we have already advised our field

:a:: exemptions in light

vil Riga, fcs
'ith the Int'
te. We are
of the Norv/'

■oerier.ee under Rev. Proc 72-54 ,
nd Mr. Pottinger will assi:

1972-2, 
in that

wo would be oleased to have your vrev/s a:
may oe ■ranted Appropriate personnel iron

to w

Division will be in touch with, you scon co obtain
Sincerely yours,

C.3. 334. 
re-evaluatJ 

hat changes 
Civil Rights 
such views.

i of 
: venue 
.uatir.g 
.sion
.on,

Donald C. Alexander

EXt 31T 6



r : \i
A

LA WY E R S '  C O  M  M  ITT" K
F O R  C I V I L  R I G H T S  U N D E R  LAV.

3 "> N  a  P  T  H F  A P  I S  H  S T . R E E J A C K S O N .  M I S S I S S I P P I  3 3 2 0 1  • P H O N E  ( S O I )  9 4 8 - 5 4 0 3

January 21, 19 / a

Meade Whitaker, Zsquire 
Chief Counsel 
Internal Revenue Service 
1111 Constitution Avenue, N.W. 
Washington, D. C. 20224

Re : Green v. Cor.rally
Dear Mr. Whitaker:

On December 13, 1974, we met with vou and other offici
consider to 
d by the Dis

the Internal Revenue Service regarding what we 
laxity in IRS enforcement cf the decree renders 
Court in the above-styled case. In particular, we were concerned 
that in proceedings in District Courts in the South racial!' 
segregated private schools were being cut off 
assistance (tuition grants, textbooks, etc.) b 
discriminatory admissions policies, while at the same time these 
same schools were continuing to enjoy Federal tax benefits (tax 
exemption and deductibility cf contributions) under IRS rulings.

th rgp i  -3 1 1 \ -
m stats did and
use cf 4- U ̂  4 ̂

"We specifically brought to your attentic ■1 V,- -o scncois
in Mississippi which either had been determined by tine District 
Court in Norwood v. Harrison, Civil Me. MC-70-53-K (M.D. Miss.), 
to have discriminatory admissions policies or had admitte 1 their 
ineligibility for state textbooks under the Norwood guidelines b 
returning their textbooks or by failing 
list of those'schools is enclosed.

:o reaepiv ror thorn.

We would like to know (1) what steos the Internal Revenue
1 r o conform its policies and enforcementService has taken, if an

to the guidelines and requirements announced 
in Norwood, and (2) wnat steps, if any, has IRS taken

U v .ulne uistr;

p. 3 ̂ rl “OO r* .q 
. >— u

U) wnat Stecs ,
urar.ee c f Clcduct
ax exempt status
me n t ?

rm four'
^ .3 n .-iu* o -■ ‘

■ f the 10 schools
ontrioutions to or m

a *• ma . —  o  ^

This matter 
final resolution

nas draggea on for several vears without ar.v
arout which we n a v e  o CIC.* 2.. ;rmed. u e c a u s e  t m e

-3 S'd-

rf 
tr 

»VI



Meade v\hitaker, Esquire 
January 21, 1976 
Page 2

is an urgent natter deserving expedited consideration, I would 
appreciate hearing fron you within 20 days of your receipt of 
letter.

Thank you for your speedy attention to and consideration 
this important matter.

Yours very truly,

Frank R. Parker 
Chief Counsel

FR?:1jh 
Enclosure
bcc: Paul R. Dimond

Larry Newton

-3 ltd*

this 

of



Norwood Action

‘Columbia Academy 
P. C. Box 139 
Columbia, Ms. 39429

■Segregated Private School

Copiah Educ- Edtr.. , Inc.
317 Gallatin Street 
Hazlehurst, Ms. 39033
Deer Creek■Educational Inst., Inc. 
Ho liar, dale, Ms. 2 2743

Clinton Educ. Edtr.., Inc.
10 6 E. Cynthia Road 
Clinton, Ms. 33205
Marshall County Educ. Edtr.. , Inc. 
Holly Springs, Ms. 22535

^Educational Foundation, Inc.
P. 0. Bo x 6 5 
Lucedaie, Ms. 39452
India.oola Educ. Fdtn., Inc.
30 5 East Gresham. St.
Indiana la., Ms. 3S75I

ila Rich Fr3 ■  ̂ T r*— v_« W * * •  /  « » »  u  ■

?. 0. Box 233 
Lula, Ms. 33544

0. Box D

Admitted ineligibility in Comood by failing to apply for state 
textbooks under new non-ciscnm: na 
requirements; returned stare rexrc

Same

Same

Same (may be defunct)

S ame

Same

Entered no contest plea after 
textbook eligibility was challenge-: 
in Norwood, and ruled non eligible 
to receive snane textbooks by
order of 3/1/74

tea ineiigiai.iry;
apply; returned snare ns

School, Inc. Entered no con.t
textbook align

3 25 21 and after avids
Norwood, and re
textbooks by le
r-. . ** u

: nLea efne 
. ty was on a
rr.ed snan-e

Quit mar. County Educ. Eden. , Inc.
P. 0. Box 55
Marks, Ms. 32545
a/k/a County Day School

After onaflange ana near_ng . 
Morwcod, he id to have a racr
ci s c r im in a co ry 
and ordered to 
by c o m  ion and

JL — O 3__ «
re-urn s

- 3 1  A -



s
f J J  <•»1 * 1 \ t t i, .' 1 1 vL.wUI

c : \ m
rv->. ̂t a ;"0*0! .* \j •- >

;m.7i i •v' or. uo 3 a r vice
shine] ton, p.C. 20224

r:rrr»* 6 D?5

n 1 3;

Mr. Frank R. Parker
Lawyers1 Co mil: Lee for Civil Rights Under Law 
233 North Parish Street 
Jackson, Mississippi 392U1

Dea: Mr. Parker;
In reply to your January 21 letter concerning the 

Service's private* school program, we are providing the_ 
following information. As we informed you in our meeting 
on December 13, 1974, the Service has been giving priority 
to a review of the entire private school program, he arĉ  
still working on certain portions of it, but we believe that 
we have already strengthened the program with the puolication 
of Revenue Ruling 75-231 on church-related schools and_ 
Revenue Procedure 75-50 with guidelines and recordkeeping 
requirements for private schools. Copies are enclosed.
For a fuller discussion of our progress, we are also enciosin 
a copy of a recent letter we sent to the U. S. Commission 
on Civil Rights in which we provided updated information on 
our private school program.

We :e finalizing private school examination guidelines 
to conform our audit instructions to the requi:
Revenue Procedure 75-50. We will, of course, cons: 
comments or suggestions for items you oelieve should be 
included in these guidelines. As the examination guidelines 
will be part of the Internal Revenue Manual, they will be 
available for public inspection when adopted.

You asked for a status report on ten specific Mississiop 
private schools. Columbia Academy naileci to cstablisn. t̂ -x- 
exempt status. Clinton Educational Foundation, Inc., has 
b e e n  terminated because it ceased operations. We have deter­
mined that there is no organization called Educational 
Foundation, Inc., of Lucedale; we had such an entry on our
Exempt Organization Master Fi. 
entry for another organization. 
Foundation, Inc., is exempt.

DUt It W
Marshall

is an erroneous 
County Education

3



2

Mr. Frank R. Parker

The six remaining schools have been contacted concernin 
the continuation of their tax-exempt status and the advance 
assurance of deductibility of contributions. The suspension 
of advance assurance issue is presently before the National 
Office of the Servj.ce. Any change to a specific school's 
right to advance assurance of deductibility or tax-exempt 
status will be published in the Internal Revenue Bulletin.

Sincerely,

MEADE WHITAKER 
Chief Counsel

t 1--

Enclosures•(3)
Rev. Rul. 75-231 
Rev. Proc. 75-50 
1/5/76 letter- to U 

on Civil Rights
S. Commission



l

Section 501

of business or principal afccc ^ e  
ornar.t/uuori. Sen setuens IrjO^-l xa) 
a n d :l.o 0 l ( a ) - l  of tlmregulutions.

2 5  c r /t’ J  .  h 4 ft ’* t* * tZm f t | O ̂  * *  *

‘,crnrir.i. " ’bnc to r j '^ h c  
uurcry % h lr e n  or er.ur.als.crrrrr.irun o! c. . n . ,  i » r  •
(.11 tySection uO, I .l/J- l " J  

C h a r ita b le  ccm liilsi'tions; church  
operated schools with discrim ina­
tory policies. O rganizations, inc. tid­
ing churches, that conduct se .iuois  
with a policy of refusing to a cce p . 
children from certain raoia. ana  
ethnic croups will not b a recog­
nized a s  tax-exempt cn aru ies un

^ ^ r  section s 1 /0  <-nd 5QI(Cj U ) 
^ n e  Code.

Rev. Rul- 75*2311
Advice has been r^ i.ft ic d  whether 

the organizations described below, 
wMrh otherwise qualify (or exemption 
from Federal income tax mu-rr sec­
tion 301 (c )(3 ) of the Internal fi­
nite Code of 193!. me opera wd ex­
clusively lor charitable purposes.

devotion of other amounts of tune to 
religious -.hemes and sublets, the 
school complies with r e la w  r ;  
cuiremenw for public education, i 
school has a policy of rclusmg to 

erept anv children from certain 
rr.ci.it and ethnic -roups.

Situation t.
, i i  <eoaratcv  v i s  orr-nm-tu a -<-i

corporate entity under the auspices 
of an organization q ta .u u n  m •;

. • :^r .},/% express nuipo - c 1
I a 'school ‘ for the children
}  of the local community in 

ciu.rch ^ " ^ v e 'm i s i s  bodyrencimis set. a . s. i l c a .
of 'the church is a council whose

t -o selected from die members are r r q
church's congregation. The cou .

■ selected the original members of A
board of directors and oia.m.nns fu l
control over all aspects ot us op-rat
in- program. -v-.nt
x »» "<* °?m r  "Ior— am that corresponds with

P VI; - school urogram tor the samepublic SCIICOI , -
grades. Although us prcgr.mi me. 
i  1 0 -minute rclupous service at 
start of each school t.av ana

released a, T1R-137P. dated May 
22. 1075.

Situation 2.

\ n organization qualifying as a
ch'arth. t a i n s  *  M
active religious functions u *ec 
supervises and co n tro l as part ot u s  

overall operations, Y scr.ool. i  «  * 
scoaratcly incerporatcti. V s operations 
do not (lifter in any matenal respect 
from those carried on ay A • w *
::on /, including. as a matter of *h o  
Policy, the exclusion of student f.orn 
certain racial and ethnic groups.

Situation 3. _
7  -in organization qualifying as

eh ,lid ., oporacc. a ichaol
V in S i t a - t a  S- 2  * •  
controls as a separate corporate a.lny
a school identical to A m .5du«t«o« •
Z U r u  that the policy ooserva-d by
the two schools of e x c l u d i n g  clu.c.rcn
:  , r -.Vn mcial and ethnic group*from ccitn.n —ct-t . , -ti.
is squ ired  by the tenet* M ..k
cion it embraces. . ,

Section 170 of the ^ c  ? r c ^
in part, that mere sha.t -e_.il.
a 5  a deduction r.nv char.tao.e

Tax Regulations specifies the r.q mc- 
ir.cnts which an orymuzr.. m ■ mu 
inc,n to ho “organized aim m , m.u 
exclusively" for one , .  more exempti>u;SV ..5o i ^ m - i ; :; ) m ^

'c ) (3 )  of the Code m it. .-> • *
Accepted legal sense and is. thcictc.e, 
“notTo'bc construed -as Umttcu ny the 
separate enumeration m action - *
/ V ( 3 ) of other tax exempt p u ^ c s
vc * thc bread out-which may fan witmn me ore
|';ncs of “ charity" as deve.op -1 by
judicial decisions. Such mctio i »  * 
J . . ...... r*-m nidutio

tribution, as c‘^‘"17.~. • , vvl.h;n arc earned c
(c ) , payment of w in- ;• hc rCa;onab'

v id a , ill P " ~ m!U ? ar'" "•
table contribution meam a L
tier, or gift to or for the u>. *
poration, trust, or community c..c 
fund or foundation organiwu . •• 
operated exclusively for religious, 
charitable, scientific, literary o r - -

tioil of cra-ily . 0  c»l.or.n

Section 501 (cU31 o:. i.__ .OF .liC

fined section 170

: h it such t-rin n:r.mer prov.u-s -'.t.
advancement of education. ,

_ . t feU 3 ''- l (d l ( j  (n) CiSection t.o01(c) vJ J ‘ v .. . nfi.  
the regulations provtoes v nl a

or - c -  ^  inntgularly emouud bo-> f
attendance at a p l a « w n - r c ^ 5v ^

cational activttir • *■ ^ m :.(ion as
ried on may qualify -of ‘ • .
an cducat.on.u or u... _ <
character eor.tcmp.uteu ^
301(c) 1 3 1  cf tnc t-ccc .t -  -
wi*e meets the rcom reu-m i u. -

KCl':on'p t ____ lr,7<l.2t..P.7.30,
Rev. Rut. u /  v  r

ti.c Code, conciu -■  . • f

»ii»»» “ ■ Rgfiituia
charitable p u :p -v * • “  ,.;i. c, ,n
arc carried or. m *  : ;  — ‘l ' ........... .;,'v clasuii”1

VI uties, among other • | . i i o r  *.nc
c » *.ncoir*C!exemption from hcdcml,Sr''"'iu/cd r.r»u î3of orgamzruion* o. i t ­

erated CNclui.iv.-ly for_ren ’•otis, c.i.in-

contu1 1 7
he rca;ona.j..« ......—  , ,

.-.-.qiV'icd 'r"del.'-, pu...to wcil-es.aU..■ ■ tea
roliev. Rev Rul. / l-b -w .)-  ,
cipally on Proton ^  ^
Hen. 317 U.S. ah-
later judicial c  y.s.mu u _
efTv-t. and Ccrm infpr:.v i ,, . .s
Civil Uignts A-t , , -  ; .
. ■ .  .. cu .r. ;.:i’ .;sh.;u t c v  —there is a ••c.- . , • v

. I■ ̂  .• against t.i.i.i .-Ci.i* i*nuohc po... > .
■ ,.<:•■  c r ; o'i, wu in- r •

private._ K c .. _u;cnl :v
holds, ni'.-reiori.. '••••■  ' ; . -
having a ra* •* < .;,v j-,.
policy as to Vl‘ C c : - 1  T '.n . ! ‘ conin''to be charitable with.n the c

table . . • or cuum  
Section 1.501(c)(3)-

 ̂ »f .̂ N ’ye cr*ui ...........
cJw ruxn U  p'.irpo'd- £  *  c ; „ : c:,:p lr= J SCCf.t

~ < l o J



I/O and 5 0 1 (c )(3 ) a,id. other rele­
v a n t  Federal swumes.. ■ •••I;' t . *■ • ’ ’ *” y ; *

T-git educational programs a- ‘coj?«
ducted h>: A* and Y (tourist of -secular 
subjects of- the sansr sdope'ansi • tvpel 
commonly dealt with- in .die.puhjiq  
schools or in private schools tiiat arc 
not religiously oriented. There is no 
basis for treating separately incorpo­
rated schools that, although church- 
related, teach secular subjects and 
generally comply with State law re­
quirements for public education for 
the grades for which instruction is 
provided, any differently than private 
schools that arc not church-affiliated. 
Accordingly, in Situation, i, because 
A” fails to maintain a racially or 
ethnically nor.discriminatory policy as 
‘̂ fcffidents, A* is not operated cxciu- 
ssTOy for charitable purposes and docs 
not, tiicrefore, qualify as a charity 
for Federal income tax deduction and 
exemption nurposcs under sections 170 
and 501(c) (3) of die Code. The dis­
qualification of A’ will not affect the 
exempt status of the organization 
qual.fying as a church solely as a 
result of the organization and control 
of A", as set tortii in Situation 7, prior 
to die effective date of the disqualifi­
cation.

Situation 2 differs from Situation 1 
only in that Y is not separately incor­
porated, and is directly supervised and 
(■ ^rolled within ‘die same legal orga- 
nlotion as the clturch. A racially or 
ethnically discriminatory policy as to 
students is as contrary’ to Federal 
public policy under these circum­
stances as it is when the educational
institution is separately incornoratcd. 
An analysis of the historical develop­
ment of this fundamental expression 
of national policy reaffirms the con­
clusion that the form of the educa­
tional organization is not relevant for 
these purposes. See. H or wood v. lia r : t- 
IC>rTi -113 U .S. 455 (1973), in which 
the Supreme Court Held tiiat a state 
may not provide free textbooks to a 
private school if their availability 
would have a "significant tendency to

facilitate, reinforce, and support pri- 
' .‘vatc di5CHfp;iiac:'o;i.’*. In tins: ease iiie  

Court made no. exception for tiic 
sclioois that were not separate legal 

: organizations but were din-rdy op­
erated by churches'that were receiv­
ing free textbooks. It follows that die 
legal organization operating Y is frus­
trating Federal public policy bv 'lav­
ing a racially or ethnically discrimina­
tory policy as to students. Under 
these circumstances, tiiat organization 
is not operated exclusively for chari­
table purposes within the meaning of 
section 501 (c )(3 ) of the Code and 
the regulations thereunder. Accord­
ingly, the organization does not quali­
fy as a charity for Federal income tax 
deduction and exemption puqioses 
under sections 170 and 5 0 1 (c )(3 ).

Situation 3 differs from Situation 1 
and 2  only in that A asserts tiiat a 
tenet of the religion which it embraces 
requires that the schools maintain a 
racially discriminatory policy as to 
students. It is well-settled that a reli­
gious basis for an activity will not 
serve to preclude governmental inter­
ference with that activity if it is 
otiierwi.se clearly contrary to Federal 
public policy. Thus, for example, the 
Supreme Court in Mormon Church 
£■’. United States, 136 U.S. 1 (1950), 
upheld the constitutional validity of 
a series of Federal statutes that, among 
other tilings, had abrogated the cor­
porate charter previously granted to 
the members of a specific church by.-.- 
a  special act of die territorial legisla­
ture of Utah and had directed the 
institution of judicial proceedings for 
a complete winding up of its affairs, 
all because of its persistent promotion 
and defense of polygamy in direct vio­
lation of Federal statutory-law.

T iiat th osc responsible for a given 
course of conduct may sincerely be­
lieve that they nave a religious duty 
to act in a certain manner docs not 
alter the situation. The First Amend­
ment, which provides in part that 
Congress shall make no law prohibit­
ing the free exercise of religion, docs

mere rcngiom • >oi :cfs anc ■ •pi n'or.s,
bar government..! .in:~r:Vre::c<; with.
hiit ft .cices not ,;, „ t # t . j, con-
sequences otherwise a: tend:: . '.vcn
practice or action thru is-iHAt in!: front-
!y religions. See Hcysmlds t*. 7' Mite d
States, 56 U.S. 1 r5. 165-iGV (i.f;73); 
Mitchell o. Pilgrim Holiness Ch nr eh 
Cot ̂ oration, 2 1 0 F. 2d 679 (7;h Cir. 
1954), errL denied, 317 U.S 1013 
(1954) : U.S. it. Craft, 423 F. 2d 329, 
333 (9th Cir. 1970:; and I.insentt v. 
Millers Calls Co., 440 F. 2d 14 (1st 
Cir. 1971).

'ITie important distinction between 
religious belief, on the one hand, and 
die legal consequences that may 
validly be attached to action induced 
by religious belief, on die ojiicr, is 
well illustrated by one recent lin- of 
eases interpreting die Federal drug 
laws. The courts have repeatedly re­
fused to engraft a religious excel don 
on any criminal statute outlawing the
transportation of heroin. n.ariju: -fun,
and peyote ii::io the Unii ie* 1 St.n-s,
notwithstnndin fT :in .*.]pp.-.n . juci:cud
rccog nition til«lt a give *“> r.cc ■ red
niigli : sincere! y Fciic c 1. .u »J t »• of
such drugs has prop er pi!ac c . n -rr-
tain religious err•ctr.o*»• C j v ;,i:h are
prmc ribed in both the Kor■an a:.a th.e
Hible,. See U.S u S'<car., i j  i . 2 d
395 ((5th Cir. 1 0 /‘ I)! and Ol.(tor cUZCS
therein cited.

Accordingly, in SillMotion > M : • i. , -
the separately i.accrpo rated sc!, or ! nor
A itself is operated ;si vri for
charitable purpores and r.ui: ,-  .’.ii-
fies as a chnritv lor Fettera! it.»< > c, 1C
tax deduction and exei ntuit.iIt "W : ,*u<i
under sections 179 and 501 f-\ ( 3 . of
the Code.

The conclusions rcache d ini the
Revenue Ruling woulc1 be : !nj s*: tit'.’ if
a convention or associa tit... of elm iv lies
were substituted for d .0 . pnn ix. t.-r-.s
qualifying as cmirchc-r ic:. . V. U :c in
Situations 7, 2, and 3. -

2o c m 1.5011c) C )- !: Or.
orr„r.i;e.-i cr.d ofi, i tilt’d / : ’ r,
tai/ir, icientitle. U.Unf ;.ir
literary, or p-r*o:



a f t  H I. A d m in i s t r a t i v e ,  P r o c e d u r a l ,  a n d  I V iS s c .e i 'a n e c u s
:'f£*3 tfQn;.’J0 r:tcr•• Ne.v-.l S3 . .’•/ tcf.sUidem* -nor:v^»l ify. a * •• ajt or.-
tr ie  five • 'ft ovinriidr ‘.14, ‘1-3T3)' / ' gdmzatioa Fcdcrar
attenwicle Authority to M .t:« p e r  •
rmisuttiSfis ;otv, CsrjJpri ,-G A Related..
su«  • -.d  a  7  •
Pursuant to authority vested in the

omnusssnner ot Internal Revenue by
1C 7fT2, :G CI-'Is 1.4112 and Trcas-
•v Department Order .No. IuQ-o7t
;c nationwide auihoruv to determine >
A. Intercompany nnd.-intracomnaay 

■ amfer prices of foftmm-pfoduced 
rude oil and products refuted there* 
otn, and j
]J. The acccptr.n/e of the average 

rcight rate assessment (A.F.R.A.) as 
n intercompany/charge for shipping 
f fJfcign-prcdyiced crude oil and
r o u lK  j

i hereby delegated to the Regional 
lorr.tnissiontjf, Southwest Region.

This delegation decs not extend to 
oses pcr.dihg before the United States 
Pax Couy(, tier inosc witr.in the juris- 
lictien of the Department of Justice.

This authority may net be rcccle- 
'.ated.

same meaning it-.has in section j • 0  
•i i b‘) ( LJ I Ai) (ii'- of the Dace. ■

come tax. Res*. Rul. 71-447, !9 /l-e -  gK(- 4 G gidf.u nf.s .

7 D o n a l d  C. At.tx.sNpr.R,
..-Commissioner.

Kited by the Office c: the Federal Recister 
,hn November 6, 19”3 ; 3:4.) a m ., cut: 
'published in the i-sue at 'he Feerrm 

K<T,is!er for Novernber 7, 197a, tD i -R.

6 C :TR 001.20!: end JeUrminj-
ion U:'.eri.
Aiio reft I, Orcticn 501; 1.501 (e) (3)-/.) 

I cy. Pros. 73-50 1

SECTION !. PVRVOSE
.01 This Revenue Procedure sets 

forth guidelines and recordkeeping 
requirements lor determining whether 
private schools that are applying for 
recognition of exemption from Federal 
income tax under section 501 ,cl (3, 
of the Internal Revenue Code of 1954. 
or are presently recognized as exemp. 
frem tax, ha\e racially noncuscrurina- 
torv policies as to students.

Sue. 2. Background.
.Cl A school that decs not have a 

racie.Uv nondiscriminatory pones as
l  A U .  r » .  T lH - lU T .  -!*>«*  N . t .  i. ! « •

C.S. 230. .
. .02 .V  schcor ihustt'shev.- .••afilrma- ■ 

tiveLy bozh that it-.has. adopted a  
raciallv nondiscriminatory policy as 
to students that is made known to the 
rermrr.l public and that since the 
adoption of that, policy it has operated 
in a bona tide manner tn accordance 
therewith.

.03 Internal Revenue Service ex­
perience ■ with private schools has 
shown a  need for more specific guide­
lines to insure a uniform approach 
to tiie determination of whether a 
private school has a racially nondis- 
crimimtorv policy, as to student;.

•.04 This Revenue Procedure 
not apply to public schools.

Sec. ?. DF.HNtTross.

students means:

to -ail the rieh;«. privtlcep-. >ire.:rsar.« 
activities r.ee.crailv accorded or m y r  
able to students at mat tcimol a:.e y ..school cîcs r;■ t cii'Cnru.nir.l'd on 
o> rice in aa.T.uusirauon- 1 ts ccmc-
policies, acMus'ionj poiiCio:.. s c . 
znd Ic.in prr«:ra:ii'. anci athletic and «ehlv>1 -adrmn:5tered programs.

.02 The Service considers discrimt- 
nation on the basis of race to incmoc 
discrimination on the basis of color 
and national or ethnic origin. A policy 
of a school that favors racial minority 
groups with respect to admissions, 
facilities and programs, and financial 
assistance will not constitute discrimi­
nation on the basis of race wnen the 
purpose and effect is to promote tnc 
establishment and maintenance cf that 
school's racially nondiscriminatory 
policy as to students.

.03 A  school that selects students 
on the basis of membership in a re­
ligious- denomination or unit thereof 
will not be deemed to have a dis­
criminator,’ policy if member-nip in 
the denomination or unit is open to 
all on a racially nondiscriminatory 
basis.

.0-1 For purposes of this revenue 
procedure, the term “ school" has the

■. .0! Organizational rt'/jviymcntt. A 
school must include a statement in its 
charter, .bylaws, or' ether 'pjvemm.g 
instrument, or in a resolution of its 
governing body, that st has a racumv 
nondbcriiainntmy police as to students 
and therefore does not discriminate 
against applicants and students on the 
basis of race, color, and national or 
ethnic origin.

.02 Statement of Policy. F.vmy 
school must include a statement Pi us 
racially nondiscriminatory policy xs to 
students in ail its brochures : nd

missions, piogrnrns, and scliolais!:; V>̂
docs A statement substantially similar cO

the Notice described in subsection ;a)
of section 4.03, fufrrx, will be ace1 pe­
able for. this purpose. Further, evrry

tat a school must include a reference to itsorl raciallv nondiscriminatory policy in
other written ado-ertising that it :.ICS

; ns a means of mionutng prosper >•••*%
Rf.d students of its programs. Th.e fothJ’A*-.TV.u: • 

- ; *he u-fetcnees will he acceptr.’ulo:
nTf *1 !.C A I SCi.tiCii Cl C.» 51 • I» 5 of

l {i«- r. t i rricc, color, ar*ci tviiticm! or c'.:. »»• r.vrj.f.;;;
ociu-r or irrin.

.03 P u b lic it y . That school must m T V f*
its raciallv nondiscriminanty ;u .:cv 
known to all segments of tire gen-Tal 
ccmnumity served by tnc schO?1

! The school must use one of 'he 
following two methods to satisfy this 
requirement:

(a) The school may publish a
notice of us racially nonCiscr.!.......*
tors- policy in a newspaper of ger.-’ ral 
circulation that serves ail racial u-g- 
mmts of the community. Ib is  publica­
tion must be repeated at least once
annually during the nericdthe period of the 
school's solicitation for students or. in 
the absence of a sc licit ition ping. am. 
during the school's registration period. 
W here more than one comummi c is 
served by a schorl, the school mav 
publish its notice in t:to«o ncwm.mers 
that arc reasonable likely to ue icau 
by all racial segments cf d.e t 
uiunitics that it seres. The notice 
must appear in a section of the u

‘t S d -



NCtf«” ’ K i a  .4i»i& w i n j -  i a i f U i l t ^  a m i  It

."it 1‘T-rsri tiller (t)lumn inches, 
tt must In* captioned in .it least 1 2  
j.-finl bold face typo a« a tint-re of 
noiulisrj ittinia(t»ry j •, •';Cy as to students, 

. and.its test rnu* i • be jjri.ntt*st in at 
.•least/ .If . point *vpo. 'The following 
notice wifi be acceptable:

NOTICE-Gp
n g m d i s c r i m i n a t o r y  POLICY 

’ AS TO STUDENTS
T K? M irh- of adm it* stud-vus of .\:iv race, 
. ,"r* rational and -iiit-ii: origin to ail the 

rictus, nnvilertes. pn.ter.uiis. and activities 
sr i.c ra iiy  ufc^^cicd ->r jn.icic .iv.nt \K|f« {., 
stnci.-ntr. at the «rho-l. It d.*w not dis- 
rrinniMic no die Imms ,,( rac-. color, n.i- 
tion.ai and ethnic origin in .vlitiinistcati»>a 
. 1(5 educational policies. a.iimwion* poti- 

c 1 TT- scholarship and !<vm oreeram s, anti 
athletic and other schuoi-adm m i'icrrd 
program s.

(b) The school m.is* use the broad- 
cast media to publicize us racially 
nordiscri minatory policy if this u*e 
mal.rs sttch nondiscriniiraiorv policy 

to ai! segments of the’ general 
ccri^Pmity t!ic school scr.es. If this 
method is chosen, the school must 
provide documentation tii.it the means 
by which this policy was communi­
cated to all segments of the general 
community was rcasr-nabiv expected 
to he effecttve. Tn this case, appro­
priate documentation would include

■ was an 
nccnirnts, 
ng hours 
ere likelv

ven^nf sufficient duration to convey 
clearly, and tiiat they 

'ere oroaticas; on ratlin

“Opics of the :laps*? or s<:r:pt
rncord i s!! *. in*X tin t !:hea-
,1 c C-JH.Ate r. i m;hcr of a »•i.'lO '.il

t!i.at t;.rv wc;re nir.i |c ciuii
*viten t»iC .innonneen ti A
,0 be mrtmiuncatcd to all
'( tliC KC!acral comm M il.itv.

t.itions likeli­
er television

to be listened to bv
uh'-tantial numbers of members of all 
• iciai segments of the general com- 
rnnity. Announcements uniat he made 
tiring the period of the school’s 
-lica.ttinn fur students or, in the 
hsence of a solicitation program, dur- 
ig the school s registration period. 
Communication of a racially nnn- 

tMTimittntofy jN-licy as to students 
y a sctiooi to leaders of r.iciai groups 
' !he sole means of ptiotit itv getierallv 
-** not be considered effective to 
iak/; t/'.c policy known to ail segments 

the community.

I oi tfus section •■ ..II nut apply when 
one of the ftii.uwimj paragraphs 
applies:

(a) If for the preceding three years 
die enrollment of. a parochial or odicr 

_c.hurch:tHatyd ■ s,• iunot consists, of stu- 
• tlcmts. at icast 75 percent of whom are 
members of the sponsoring icligious 
denomination or unit, the school may 
mane Known its raeiaily nondiscrimi- 
natory policy in wiiatcver newspapers 
or circulars the rciigious denomin.i- 
tim, or unit utilizes in the communities 
from "inch the students are drawn. 
These newspapers and circuiais m ar 
he those distributed by a particular 
religious denomination or unit or by 
an association that represents a num- 
Ik t  of religious organizations of the 
same denomination. If, however, the 
school advertises in newspapers of 
general circulation in the community 
or communities from which its stu­
dents are drawn and paragraphs- (b) 
tm<t ^c) ot this subsection are not np- 
plienble to it, tiien it must comply 
with paragraph fa) of subsection ! of 
tin’s section.

(b) If a school customarily draws 
a substantial percentage of iis students 
nationwide 0r worldwide or from a 
large geographic section or sections of 
die United -States and follows a 
racially noi'discriminatorv policy as to 
students, t.".c publicity requirement 
may he satisfied by complying with 
seemm 4.02. supra. Such a school may 
demonstrate that it follows a racially 
noruliscriminatory policy within the 
meaning of -the preceding sentence 
either by showing that it curremlv 
enrolls students of racial miuoritv 
groups in tin amugful munbers or, 
when minority students arc not en­
rolled in meaningful numbers, that its 
promotional activities and recruiting 
efforts in each geographic area were 
reasonably designed to inform students 
of ail racial segments in the general 
communities within the area of the 
availability of the school. The ques­
tion whether a school satisfies the 
preceding sentence will be determined 
or. the basis of the facts and circum­
stances of each case.—

(c) If a school customarily draws 
its students from local communities 
and follows a racially ncndiscrimina-

iei|i!t"*metit mav he satisfied r,,f:u 
plying with section 4.02. tupr-i y.,r|a 
a school may demon*tra-c *li.it > 
foiluws a i.iciallv nondii. limr.amr J 
jioiicv within the meaiiit 
ceding sentence h>.

caning ..f *j, p:c-
s.-.iv.vm** ;ij.»f

indents of » a- ...!
tucanmgful nnrv.-
"iiethcr a i»; h r*< > i

ig sentence •.• ill
basis of the fict*

aiul circumstances of each case'. G:u 
oi the facts and circumstances that :ho 
Service will consider is whether th_* 
school s promotional activities ar.d re­
cruiting eflijrts in each area were 
reasonably designed to inform students 
of a:! rarial segments in the genera! 
commuintics within the area i f the 
availability of 'die school. The Si nice 
recognizes rhat the failure by a 
school drawing its students from iocai 
communities to enroll racial mii.ititv 
group students may no: neresoiniv 
indicate toe absence of a facially nnn- 
ciJ' criminatory police as to students 
when there are relatively few or r.n 
sucii students in these communities. 
Actual enrollment Is, however, a 
meaningful indication of a racial!'- 
nomli* criminatory policy m a <c:r.-| 
its unity in which a public scr.cc! *~r 
schem's became s»11 a j <~ •. t to a dew:*: '•*... 
tion order of a federal court o’ her- 
wi'e expiesslv became obligated t,, 
tmpiettu’nt a desegregation plan’under 
the terms o! any wtitten contract or 
other coinmitir.cm to which aav 
Federal agency was a pariv.

I he Service encourages «c:*.oo|. ;o 
satisfy the puhlicuv requirement bv 
the methods described in suh^-ri■ sr. 
i ot tiiii section, icg.tr.i'c'i - f w:.i - :cr 
a school considers itself within ";h- 
section 2 , because it beliescs :: e
methods to be the most e'fcctivr to 
make known a schools ta. I.iilv r. a- 
disermnnatory policy. In tlhs me ud 
it is each school's responsibility :o de­
termine whether patagiapb 'a ; ,  :!■ ), 
or (c) of subsection 2 applies to it. 
On audit, a school mu**! be prepared 
to demonstrate that t.ie humic to 
publish its taciailv noudi'criiuiu.uc rv 
policy in accordance ’..id: subsection 
1 of this section was justified by tine 
nm.'licauon to it of "■ nun f '
l a ; ,  or (c) of subsection 2. Further,

47



.. . *  prepared to demon- of metal daemmaatson r.t cm- m- ir ; nt 
T ?  hasmubliclv disavowed of faculty and aummiMratvy' yum -s 

V3. ; rf anv statements pur- imficauvc ot a racially nom.:„..rr..n..-
tVr Kavc- -bemV /.madb; o.l ..Its ::;;̂ orV-^hry-ns-m students/ :
after' November ju’. 1073} dial "An 'Feature .. io .comply- ')■  -mure ■ to- ■
traiy «  its. publicity ot a

,;ub
.noc.discruuinz.mry policy as-
.■ ntr. to. the e-ytr-vt .that tuc 
:r  its onnrTpaT cfhcird were"

‘sciitit'f 1 
must be at 
programs 

d in a rac 
inner.
icholcrshiir and bon programs. 
enoral rule, ail scholarship or 
orv.narable benefits procurable

comply with- flu: guideline*‘wiit prep 
• narily.rcauit ihychc nropCM-d ccvojancfl. 
'o f thr exemt’t icVtus' "of~n <e!mormv' 

aerertiaTTcc" with *ih i* prtwMhr** -set
its. tori:i
programs. A 7CG.
shew that ail

Si.e.facilities arc
nonaiscr.min a-

1972-1 C.R.

ArrutCATio.-ts Fen. 
UXLMt’T STATUS.

TAX

be

: a: r.nv <;ivcn : eh col nnxst he with tar

on a racially nor.discr.rninri* 1 Ra;
asis. Their availability on this current
nv.si known tiirougnout tnc so far a
Icon" u n it y  being served by the sequent

tc in
.blicity required by tins section 
cr for that school to be con- 
; racially r.ondiscriminatcry as to 
ts. Consistent with section 3.02, 
scholarships ar.d loans that are 
pursuant to financial assistance 
ir.ts fm.oring memorrs ot one 
"re racial mhmrity croups that 
crisp.cd to. pro;neve, a . scr.coU 
iv nondiscriutirtatory peltry :*>U 
elvers civ affect t.'.e seneal s ex­
status, financial assistance pro- 
i favoring ns 
racial, srou ns

•mbets of one or
that do not sigmf- ore:
; o:U the schoo, s .01*
immatorv polios &.C
.dverse-.v atrect the rt.a:

submitted. Kwry school lilir.tr an ap­
plication for recognition of a tax 
exempt status mi'.'’ 'tipple me Service 

owing information'.
_____  composition, as of the

current arodontic year and prujerted 
v be feasible for the sub­
limate year, of— .

(a) Student body, and
(M Faculty and administrative 

stad.
2 Amount of scholarship and loan 

funds, if any, awarded to students 
enrolled and racial composition of 
students who have received such 
awards.

.3 A listing of incorporate,!found­
ers--, board members, and donors of 
land or huildir.es, whether individua.i 
or organizations.

\  statement v.hcmcr any of me 
ratal inns described in subsection 

have at the time

otherwise does not require. However,
a statement of the method by which 
the.'racial composition was determine,*

. 'must be snppltect.
r T  C h g ' fnformation requited- .to./«r . 

•submitted under S'-ctmn 5.0! ■ dmula 
.not identify' individual .students 

• tvierr.hers- oi t-hc. facuitwn:ui adirdnU- 
iraai'-c- skuT,, j  ; . •

S ec. 6. P u b l ic  c o m p l a in t s  c ?  
p .A C t .s t .  d i s c r i m i n a t i o n .

The Service is interested in receiv­
ing any information that an exempt 
private school is not operating tinuer a 
raciailv nonciscrimmatory pcttcy as to 
students, including any judicial or 
administrative determinations to this 
ciTect. This information may be sent 
to the ’.oral Distiict Director -f inter­
nal Revenue or to the Cm:.mbstoner 
of internal Revenue, 1111 Constitu­
tion Avenue, NAT, Washington, D .U  
20224, Attention Iv.EO.

S ec. R;-coKn:;F.K?tNG r e q u ir e ­
m e n t s .

.01 Spceilb records. Except as pro­
vided in section 7.03, each exempt

2 of this section
the application is led an objective of

individual 
action on

tly will r.<
I s ex mpt status.
Certification. An 

rirvd to take official 
f of a school that claims to be 
]y nonciiscriminatory as to stu- 

must certify annually, under 
ties of perjury, on an Internal 
nuc form to be issued, th.it to 
of Ids knowledge ar.d belief the 
4  has satisfied the applicable rc- 
rrr.cnis of sections 4.01 through 
of this Revenue Procedure, r F e e b l y  ar.d S t o J . The existence 
t racially discriminator/ policy 
respect to empio; men: of faculty 
administrative staff is indicative 
racially discriminatory pohvy as 

tudents. Conversely, the amor.ee

so,vatc school education and, 
statement whether any of tho tnaivir.- 
uali described in subsection^ .01-3 of 
this section arc oiTicers or active mem­
bers of such organizations at the time 
the application is ncld.

5 Year of organization.

.02 Limit aliens.

1 For purposes of section 5.01, the 
racial composition of the student ooca., 
faculty, and administrative staff may­
be an estimate based on the ben m- 
fot mation readily available to me 

without requiring studen.
faculty, or ad- 

mi nisi ru nvc start to submit miorma- 
tiic school that the scr.ool

private sciu.'C’1 must matntain :or a
minimum pci iod of timea yeaiS, be-
ginning with the wear at -.cr ’.iie year
o f  coiapih.ti' ,n or aery.•.is'.doa. me
ft*l-;rvv.;ni' rccorciS ,ior : use C\ the
Service on ;.r-.ryer request

1 Records ir.ciictitir.5
, . 1 the rac.ai

C gs: t *' o Z11 •f) • J of the sttadent Ooc.y,
faculty, n:;c! admin istrr.t •vc staff for
cat!', acatieinic year.

2 Records sufficient ’:o document
tb.at scholarsiiip and ct!her f.r.anr'.al

assistance is awarded on a rac.auy
nondisc runma'.civ basis.

3 Copies of all brochures, cata­
logues, and advertising dealing with 
student admissions, programs, ar.a 
scholarships. Schools ad'.ertis.n. 
ticnally cr in a large evograpme seg­
ment or segments of the - - l 1
-seed onlv maintain a reccic
to indicate

school,
applicants, stunert

...hen and in what puo-...'- 
tior.s their advertisements weie pl.weu.
•1 Copies of all materials usrc by or 

on be1 aali of the school to solicit con- 
ti ibutions.

.02 Limitation.
i For purposes o! section - 

-acial ccumosition of die stuccn: bod;,
non

4 3

-  4 ‘id



*.cuhy,' and administrative stntT m ay 
he an estimate based  ott tlie best in­
formation reaudv av ail.tide .to die 
J th o o !, w ithout tvqu'inm ' stu d en t-h p-
.plicams.-? ev en ts,. f n<y Ity. or. adminis- ' 

'- tritivo spiff : »  submit; itif> 'n‘n.vun:i..t(v 
the school.- tl.nt the set:oc*l ; otherwise 
does not require.' For each. a endemic 

v-'year,-however, a re err'd of ihc.picthot.i- 
. jjy wiuch., facial composition, .is- dgv  

tenr.ir.iid must be maintained. A 
school may not discontinue maintain­
ing a system of records tha: reflects 
racial composition of students, faculty, 
and administrative statT usei on No­
vember 6 , 19*5, unlcss.it substitutes 
a different system that compiles sub­
stantially the same information, with­
out the advance approval of the In­
ternal Revenue Service.

2 The Service tines not require that 
a school release personalis identifiable 
rt^ords or personal information con- 
t f l j  therein except in accordance 
with the requirements of the “ Family 
Educational Rights and P'ivacy Act 
of 1974," 20 U.S.C. ?i232g(l974). 
Similarly, the Service does no: require 
a sch.ool to !;eep recotd> the mainte­
nance of which is prohibited under 
state or federal law.

.03 Exceptions. The records de­
scribed in section 7.01 need not be 
incre.pcr.uer.tly maintained for Internal . 

• Revenue.Service .use'if
1 Suhsto.rti.dly the same informa­

tion that each cf these uTuicis would 
provide has been inciuucd tn a report 
oj^renorts filed in accordance with 
i M  s ith an agency or agencies of 
Federal, state, or local government, 
and this ir.fc i illation is current within 
one >ear, and

2 The school maintains copies of 
these reports from which this informa­
tion R readilv obtainable. Records 
described in section / . 0 1 ptovidmq 
iwfcirtnaf.on not incluucti m reports 
filed with an agency or .vrnrics must 
be maintained by the si bool for Serv ­
ice use.

.0? Failure to ine-r.:,i:n record:. 
Failure to maintain or to province 
upon the proper request the required 
rcrotds and information will create 

j a presumption that tnc cream.’anon 
lias failed to comply with these guide- 

| lines.

!
i
i

See. ft. Mtsarostri't schools.
The United St ties District Court 

for. the District of Coiumbia has Or­
dered snccilie I’ lhbeiitics and record- ** ’ ' m 
keeping licrj’.uie'u.-.utT.. for ■ Mi.yijMppt
private. sertoois. '(vrcch ' a*. • Cor.nAtty' 
1:.30 F; Sujip-. H 50, a(Td.' sub nom. 
Coil ,t\ Green, ',104 U.S-. 99* (1971). 
TdVt&c4 extent that dhe'-requiremcrits 

,.ei tile. Conit- s Order, vary . frctti- dice 
guidelines and recordkeeping require­
ments set fontt'n in this Revenue Pro­
cedure, the Court's Order is control­
ling for Mississippi schools.
SftC. 9. Ei: FhCTtVE DATE.

.01 Section 4.02 is not applicable 
until February 4, 1976.

.02 To tire extent that the pub­
licity requirements set forth in sec­
tion 4.03, shot a, differ from those set 
forth in Rev. Tree. /2-54, 19/2-2 C.B. 
834.. they shall not be effective until 
a school’s fust period of solicitation tor 
students or, in the absence of a solicita­
tion program, dining the school’s a r t  
registration period beginning after 
November G, 1975.

.03 The recordkeeping requirements 
set-forth in section 7, suf.ru. shail not 
be effective until January 1, i97o-
Sxc. 10. 1:.f !-t c t ;ve on OTitnn occt;- 

MittTS.
. Rev. Tree. 72-54 is superseded.

CF!i CQL.201; Xulinv ar.i dfler~.ir.a- 
i: i f i t e n .

i*r.rt l, Stciiom 401, 402; 1.401-1, 
l . - iu j i  a i-1 .}

Rev, Prcc. 75-511
\

S ection 1. Portcse

.01 Tills Revenue Procedure pro-; 
vides supplemental and revised pro­
cedures of the Internal Revenue Serv­
ice pertaining to the issuance of opin­
ion letters bv the. National Office as to 
the-acceptability of the form of certain 
master and prototype pension, annuity, 
and profit-sharing plans that include 
self-employed individuals, and tire 
status for exemption of related toasts 
or custodial accounts.

. 0 2  This revision is made to permit 
die issuance of opinion letters with re­
spect to the acceptability of the form 
of these plans under sections 401 and, 
301(a) of the Internal Revenue Code

1 A .«c r i t  TIH-1 • 19. i4 i*4  No»rmt»«r 13. i *3TS.

49

of 1954, as amended by the Eam’e y o  
Retirement Income Security .-'ct of 
1974 (Public Law 93-li d'., approved 
September 2,' 1974, (hcrcirtafn r r >  
.ferre’d . to.as• “.the Act” ). - .. .  p
S ec . 2. 'RaCk « : iq i??.'o '.no ' g e Nkraj. •

INFORMATION
- . .0.1 Rev. - Proc. . 72-7, .l972-.l C.R- 
• 715',•'contains procedures relating' to 
'the issuance of opirilon letters as to the' 
acceptability of the form of master 
and prototype plans deigned to in­
clude scif-cinploycci individuals.

.02 Rev. I’roc. 74-39, 1974-3. CM. 
•194, was issued to temporarily limit 
titc issuance of opinion lettets until 
guidelines could be developed for de­
termining whether plans meet die re­
quirements of section 40! o? the Cod.-, 
as amended by the Act. Rev. Free.
75-33, 197:i-39 I.R.ft. 17, and.orbed
the issuance of opinion lettc.s wi'h
rest/oc? to those master a»
plans for vI’hicii guidelhv. had been
developed. Additional g.iiddir.i ' have
now been developed permitting the
publication of this Revem;ic Fre ’cdure
extending the area in wideli '.ph.ien
letters on n’.aster and pro to typo plans
may be isjucd.

S ec. 3. R I.'UNCS AND Ort.Nto:;
I.Fit t e k s

.01 E.xcr;pt for the pi a deter: bed
in subsectior;t .02 below. ;i i'l N.l uVI *1 11
Olticc cf the Service, titsor. r mt:
will furnish a written cp.in ;-r. a: to the
acceptabili:Y 1 - nr i-r.r.'o:-.• g n • cl*#-* q-s

■•01 of the Code, as am." .tried bv due
Act, and suction 50 i L*F.) of t'..e ‘fur; i
of any defined contribution manor . r 
prototype plan d'dgr.i-d to inch'dJ 
self-employed individuals who me .• 
adopt the plan. If the fern cf plan 
includes a master trust or c.c cdi.J 
account, a ruling will a So be issued 
witli respect to the exempt status cf 
the trust or custodial account which 
forms part of the master oiart.

.02 Subsection .01 above do -s not 
permit the issuance of opinion letter; 
and rulings with respect to the follow­
ing:
j ( l )  a plan yjliru. ittet! by a s; or.ser

ir.  ̂ urgani«:.it:o:i o:: ,er titan ;i rt.tdc m
:: rciVb.Monul 5̂cc: : .ion, a bank with!.
t'r.fj cf .on JOi'd:  • '!) , a-
insurance rompar.y,. or a rcguia'cd ir.
vestment company;

- ‘K d



I(
ii
; .

JAM /*»’ <

—  —

O)



_ o _

Mr. John A. Bug&s

b.

that the "Service considers discrimination cn
e to include discrimination 

].or and national or ethnicthe basis oi: r
on the basis ot c.o 11
origin

: V. :

■O'
Prohib j. u c rr n ]. o v m c n t d i s crimination.

Section 4.07 of Revenue Procedure 75-50 states 
that the "existence of a racially discriminatory 
poliev with respect to employment of i:acuity and 
administrative staff is indicative of a racial, 
discriminatory policy as to stu-dents.^ Conver-y_y» 
the absence or racial discrimination^ m  e...p o.,l̂ l“- 
of faculty and administrative staff is indicative. „
of a racially nondiscriminatcry policy as to suUu--n-s.

c. Rased on Tit3 c .
jv

- 1072, pron i.nj u U l..
s ervi.ee s 1

C
J r 
, 

t * O 1 U
L on

u i.ecriminati on in tee x.o o t

The underlying discussion at page 197 oi 
Commission’s report outlines several notable 
statutory exceptions to the Title 3.x rule pmt  
otherwise generally prohibits sexual discrimina­
tion in any educational program^or activity F C* d C IT T? 1 ’ ̂ 1 pi p n ̂ I r ! r\ ^ 1_ S tl cTl T1 G • • a. i.

t- ] i uUC

reccivin;; . r : L J. LHC •TLsUnnce 
:ivon - G ~ r *  tthese statutory exceptions were given ruil  ̂

in the comprehensive Title IX regulations^ recent.., 
issued. In view of tine number and breadth cl such 
exceptions and the continuing absence of judicial, 
precedents that would support a contrary conclusion, 
the Service continues_to bcl' 
crimination in education has 
incompatible with charitable 
matter of any well-cstablisr

nc-bs cnce of 3 r .
a r*s.-ont rary 0LI
,vc tha t sexun.1
.0tl yet come *• 0
:XCm T ip t:.on st r [ i. u
[ Fcderal pu,b]_i

dis-

Hon'.i ire 
school

r.v111:1 n 1 e nubl 1.cation by
— a"Tinnni. scrKninatorv ixoi:ey

11 private

Section 4 of Revenue Proccdur " 7  r C O,e / j - a 0
every school "include a statecent of
llv nonuiscr :minatory■ policy as to s

50 rccuires
tudents



» '■ - 3 -

Kr. John .A. Euggs

stuaent ad.ni
Further, each school cusL 
disci* j.ra 1 a n t o r y p o 1 i 
the rcnernl comm.uuj.v. *cer ta in cxcop L ians, 
requirement by pubi
or by broadcasting announcements ns to 'their 
racially no r.d .i. s crj.mina to ry pollct

ca talc i \ucs ,dpali p.o t. *»Llv
•ams, and scho larc;hipeg.• f'■na kg its rapin]d J. c- -Ll_y 0 r.-
\ t*r» Co ail sc — ionfs 0 n
■ved bv tb.e schoo ].• r * th
chO 0 1  s mus - sati sfy rUi k.is
; a not ice in a r,e*.t gpaPc r

pacific
guidelines ore riven for either method, includi--**

U/C al->uc
a requirement tr.at publication be repeated at 
least once annually and the announcements be 
during the period of the school's solicitation 
for students or, in the absence cf a solicitation
progr an 4 y during the school's registration period.

Rc-ouire '*’.11 tax- c?;c*-riot mrivatc school? to collect
and c’-es.s - C. 1. *‘V si. f s* ethnic anc: rrx data on stud..- r.ts
facu itv , :' 1 : C • S f • r; for a'ids don, ana roc ipic.p.is
o f s cholvsrs.iins m.d aweras.

.With certain limitations and exceptions, 
section 7 of Revenue Procedure 75-50 requires 
that schools’ maintain-,•'for them use df'"the Service" •' 
upon proper request, records to indicate- the racial
composition of the student body, faculty, and ad

t o y
]-

ministrativc staff for each academic year and
records sufficient, to document that scholarships 
and other financial assistance are awarded on a 
racially n.cndiscrirninatcry basis.

Recommendation 2
reality ofYou recommenced that we increase the size ana qia^.w; 

our enforcement effort in the private school area-. Sped
suggestions induced:

a . Exoauc! ex v l :v:\t.ions to at 1 onst 10 of exrrr.p.t
n rivp. t <: k s .i o !. - nn a provide ru.ic.c l in.es i:or uad: 
select Ton • • • school:;.

Our examination program for fiscal 1976 prcvi< 
for the examination of 1 0 % of nonchurch-related

■1 r. <

-• -«Tr" * r r
- m - »r,Tj / f \

rr>



4
/ ;ir. John A. Humps

school exempt- under'- irdividu-a' or
. feterninat ions , a f : Lehat . least . 5.0 m iuve net 
beciv previously, examined.-.-•• Schools- w-il1 be selected 

.. ■. /on t lie b.a s i s . 9 f;' .1 ;>f o man t. ion c an Lai hed. on our 
Exempt Organ bent ion Master Ei.ie, supplemented 
by comp Laint s received and each key district's 

. knowledge of local conditions.
b. Pave Ion field instructions defining what should 

b e  co ve  r.a.u in  an lout;on n a t i o n .

V.'e arc. now final i.7.j.ng private school examination 
guidelines and a private school examination checksheat 
to conform our examination procedures to the require­
ments of Revenue Procedure 75-50. Thus, when the 
guidelines are issued, examiners will have compre­
hensive instructions for reviewing all the key 
factors covered in the-Revenue Procedure.

Require inmocli ate correct’’ ve aotie 11 v’r,ere a 
private scffioo [*’ if to unci 1 0  f  a 177" xiconn;ranee
C o n d u c t  i o t lev:-;::: . nnej.ca:-: vac re •nr: j. ranee
1.s j.ounc; ana connect j ve action 3.s promt sec:.

When a school is found to be in noncompliance, it 
is given a reasonable opportunity to clarify or 
change- 'its-policies■‘dr.d- practices' in’ order to retain

i c- ! ‘ - h j* *“■' v * •_ ' i''
i »Ca i5 c r iminato
0 cl s a. s expedi-1' - ±. .-> ex cm.nt sta

If a school is unable- or unwilling
e* >* irni nntory r c era ire me. n t s , it

• -. 1 k- evidence and be heard in
la r appeal. procedures. Hcw-
11 as availed itself of all its
L a N  n  I • cm ** 1 k *- 'J tll‘d lias not conformed.1*3minatory requirements, tnc Service .
ousiy as possible to revoke the 

school's exempt status. The Service has procedures 
for recommending a future examination of any exempt 
organixatioa. In our private school examination 
guide 1 3 nr s . \;e ill cmphas ime 1 11 o need to recomm-oad 
future examinations for private schools where nen- 
comp] unite lias been found and corrective action has 
been promised.

• T --v - • , . f  y  .«-} v > {***# <— *T**



*  ' M r .  John A. Burrs

• .R-'oc.onir.rnjnLgon- 3 h v« ' ; v-.y.'vyo A ' . •> wW '••••

'You re co.7rr.cn Jo cl --that:' Aha Service apply.the.same standard's 
hand-. procedures''.'. to ■'church-sponsorerf-private-' schools as airâ  
..-.applied to- -all- other: private School s''and that weF give'"'priority 
to reviewing a broad cross section of church-sponsored private 
schools.

Revexvje Rn 1 i:i;; 7 57 s _ i r>l orovi.des that Fnurch-rcl ated s; :o 1
arc subject to the requirement of a racially nor.discriminatorv

:o students in order to qualify for ex-emotion fr:roapolicy
Federal income tax. Cur fiscal year 1970 examination' program 
provides for the examination of some church-related schools in 
ci manner consistent with the effective dates in section 9 of 
Revenue Procedure 75-5050. Generally,— --------- j  j  — t ‘

selection of elementary and secondary•schools.
plan to emphasize the

»Reco::rm?.ndnti on

\ou recommended that IRS and HEW devc-lon uniform complianc 
standards and coordinate private school reviews and that' an 
information-sharing mechanism should be adopted to avoid any 
duplication of effort.

As we have previously discussed with you. n r ,-7
U t v.i

Service do not have identical legislative responsibilities in 
. }lP^5 b̂p,.-,2AhoQ,l - . a r c t s i * a e h  -.nece-ssa-ri-lv ' 1  Lmi.ts--the--- •'
' odgree'of uniformity* possible. .However, . cur staff • members have 
met with-HEW personnel'several times’v/ithin the last year. As 
a result of these meetings:

T..7c are on the mailing list to receive the Inter- 
cigGiny Repo c t and tne Lrst ot Title VX Assurances 
Received that are published by HEW's Office for 
Civil Rights.

We have_obtained information on racial and ethnic 
classifications that will be useful to our examiners
when disseminated in our private school ex, 
guidelines. Lnation



* Mr.* John A. Buggs

•; J:,r- iv:-;
\ -K^-T ^ T T j t n u  ̂ to "each, of our .region^ and_kcv^ ^  ;

, distrxea.. ifc'c:d- • ':

b ,̂ C:'V :“M.•/-;■,.:m ;.Vc ;,t-, in our examination program.Schools 1
i f n > - n i s h  HEW a. raon^hl} 

U s t nbfpri51t4 schcoLs^hnt have bean recognized as tax-exempt:

contacts v/n.t ..a,., n-  g;; f Ju- p Cc to• explore Inc
1/ •■ l — W t k » ‘ k —o f  A . g r i c u i t a r e  a;’.d _ t h •:. e-Ul w 1 *  ̂‘ 11 “ - ,  ̂ r

• V \ • *> • i-.. v —> ••- i v n 1 p scl'lOO 1 cate! O I- [ avauabj.L.. ■ O j. t— ■'‘yy' ' , t -i nror^or"t*- tee nrovrsicn-.
selection p u l s e s .  - '•« «;»» * procedure 75-50 into cut
of Revenue nuixnn c M ~ M  organization lost.*, end
tramm^, i>< Tr-crral Mevenue Manual. Whaleapplicable portions Oi .nc l n w C i ^ W v W ^  ^  rccoi~;ondat
t h o y M r M f c l r o i M M  M M  o M t l W  stops we have taken that no
relate to your reccnrr.endations.

With kind regards, *
ey-v, vr:̂ ;-̂ VSr: w M i'-M.-y tfb MM.; -W

cssi.bI c value :or audt

10 k 1. h j

Sincerely,
, / C A2.cr.aude:/s/ iCXUu t.

Comriissroner
Enclosures (2)



■-$ *jz ‘ ■ *';
;r

’•'**. •■**•• '-7*'! " *%
’ S* . !< '

£4 f  - ’ .I'" •“
A* *%; '  .*: ,Vi4v?7. . .  V  ' ' /

w *V : A' _ f-’

0 0 V* v—W

•• CERTIFICATE OF SERVICE •
*%; •.’ •; - :V.- .-a v h.'y ... '• ’.. • *'• ' ■

• ■ •••-• r ‘ .--.-s • • .•.?.• ' •• • •■ . •■ •.’ ’ • ; • '  ’ "
The undersigned certifies that a copy of the foregoing

Motion for an Order Substituting Parties Defendant, to En­
force Decree, and for Further Declaratory and Injunctive Reiis 

has been served, this day of July, 1976, by first-class 

mail, postage prepaid, on the following:
Honorable Meade Whitaker 
Chief Counsel, Internal Revenue 

Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Honorable Scott P. Crampton 
Assistant Attorney General 
Tax Division
U.S. Department of Justice 
9th £ Constitution Avenue, N.W.
Washington, D.C. 20530

eys for Defenear, ts

3 . Leonard, Esquire
9 th S treetf N . W *
.gton , D.C. 20036

.ntervenoc

/ i /yf /
;/ CJL

norma:; J': chachkin

f.. ___  .... - s a d -



APPENDIX E



VOLUME I

UNITED STATES DEPARTMENT CF THE TREASURY 
INTERNAL REVENUE SERVICE

HEARING

PROPOSED REVENUE PROCEDURE ON TAX  EXEM PT P R IV A T E  SCHOOLS

Tuesday, December 5, 1978
Departmental Auditorium 

14th a Constitution Avenue, N.W. 
Washington, D .C .

c h a i r m a n : a l  w i n b o r n e
A s s i s t a n t  C o m m i s s i o n e r  and  

Exemp t O r g a n i z a t i o n

THE PANEL: JEROME KURTZ
C o m m i s s i o n e r  o f  I n t e r n a l  R e v e n u e

STUART SEI GEL
C h i e f  C o u n s e l

LAURALEE MATTHEWS
A s s i s t a n t  t o  t h e  C o m m i s s i o n e r

JIM FULLER
S t a f f  A s s i s t a n t  t o  C h i e f  C o u n s e l  

JOE TEDESCO
D i r e c t o r ,  E x e mp t  O r g a n i z a t i o n s  D i v i s i o n

MILT CERNY
E x e mp t  O r g a n i z a t i o n s

\ c r r e  ^ s p o r t i n g  C o m p a n y



1
2

3

4

5

6

7

8

9

10

1 1

12

i:i

14

In

Hi
17

l>

15

21

•>

• >

•>

2

J D C A W C O PAGE

COMMISSIONER JEROME KJRTZ, Opening Remarks

ORRIN G. HATCH
United States Senator, Utah

JOHN B. ANDERSON
Representative, Illinois, 16th Congressional District 

MARJORIE HOLT
Representative, Maryland, 4th Congressional District

20

31

LAWRENCE P. MCDONALD
Representative, Ohio, 23rd

BARRY M. GOLDWATER, JR.
Representative, California,

ROBIN L. BEARD, JR.
Representative, Te inessee,

36
Congressional District

39
26th Congressional District

42
6th Congressional District

RONALD M. MOTTL
Representative, Georgia, 7th Congressional District

PEGGY JUNE GRIFFIN
Evansville, Tennessee

STEVEN D. SYMMS
Representative, Idaho, 1st Congressional District 

GEORGE E. REED
General Counsel, U lited States Catholic Conference

WILLIAM 3. 3ALL, Counsel
National Committee for Amish Religious Freedom 
Association of Christian Schools International 
Organized Christian Schools of North Carolina

THOMAS LUKEN
Representative, Oh o, 2nd Congressional District

WILLIAM J. McMILLAN, President,
Florida Association of Academic Non-Public Schools

Acme Report ing C o m p a n y
'.•32) 5̂ 8 ure*

_  O p -

4 6

52

53

59

6 6

34

i



6

1 

2 

:»

4

5

6

7

8

9

10 

11 

12 

1.1 

14 

i.r* 

10

17

18

19

20 

21 

22 

20

24

25

CHAIRMAN WI 'IBORNE: Good morning and welcome to the 

Internal Revenue Service public hearing on the proposed revenue 

procedure relative to private schools. I want to welcome all 

of you. Before we get started, let me introduce the members of

our panel.
At my far left we have Joe Tedesco, who is the 

Director of our Exempt Organizations Division. To Joe s 

immediate right we have Jim Fuller who is Staff Assistant to 

the Chief Counsel for the IRS. To Jim’s right we have Laura 

Matthews who is an Assistant to the Commissioner of IRS. And 

to Laura's right we have the Chief Counsel for the IRS, Stu 

Seigel. To my immedi ite left we have the Commissioner of IRS, 

Mr. Jerry Kurtz. I t link the Commissioner would like to make 

a couple comments bef jre we get started. ( C e m j , py

COMMISSIONED KURTZ: Good morning. I welcome you to

tnis public hearing o i the proposed revenue procedure that 

would establish guidelines for determining whether certain 

private schools claim L.ng tax exemption have a racially, non-

discriminatory policy as to students.
We are here to receive comments and suggestions from 

members of the public and for representatives of organizations 

affected by the propo >ed revenue procedure.
During the ihree-month period since the proposed 

procedure was published in the Federal Register, we have

A c m e  R e p o r t i n g  C o m p a n y
: a 4 3 S d

_  ZZa



7

1

2

3

4

5

6

7

8

9

10 

11 

12

13

14

15

IS

17

18

19

20 

21
22

23

24

25

received a great many written comments and numerous requests 
to speak at this hearing. As a consequence, this hearing is 

scheduled to continue for four days, through December 3, so 

that all who requested a time to speak will have it. xhe pro­

ceedings will be recorded and a transcript will be prepared.

I want to take a few minutes to explain our reasons 

for promulgating this proposed revenue procedure, and to 

address what we perceive to be some fundamental misunderstand­

ings reflected in many of the comments we have received about 

the role of the Internal Revenue Service and the proposed pro­

cedure itself. Many <>f the written comments, although critical* 

offer constructive suggestions and comments. However, others 

have strongly criticised the Service on the grounds that we are

somehow exceeding our authority.
The primary function of the Internal Revenue Service 

to collect the revenues of the United States. In doing so 

we are bound to carry out the laws as enacted by Congress and

as interpreted by the Courts.
Section 501(c)(3) of the Internal Revenue Code grants| 

exemption from income tax to entities organized and operatec j 

exclusively for relig-.ous, charitable, scientific, or educa—
Ii Itional purposes.

Section 170 of the Code grants a tax deduction for 

contributions mace to such organizations.
• • |j The Internal Revenue Service, in its role of admims-j

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1 tering the tax laws, nust determine whether a particular organi-

2 zation claiming tax exemption is entitled to exemption under 

n the statute and whether contributions to such organization 

4 qualify for deduction under the terms or the statute.

The Internal Revenue Service has no interest in the 

admissions policy of any school except as that policy may 

affect its claim for special tax treatment under the tax laws.
In 1971, a Federal District Court in Green v. Connallv,

a case which was affirmed by the Supreme Court of the United 

States, construed the statutory language of Internal Revenue 

Code Section 501(c)(3) wnich, as I've stated, exempts from tax 

those entities "organized and operated exclusively ror 

religious, charitable, scientific, . . .  or educational pur­

poses," and held that private schools with a racially dis­

criminatory policy as to students were net entitled to tax 

exemption and tax decuctible contributions. Under the common 

law, an organization, to be recognized as a charity, may not 

operate illegally or contrary to public policy. The Court 

recognized those principles and ruled that private schools are 

not entitled to tax benefits accorded to charities if they 

contravene the well established Federal public policy against 

racial discrimination in education as expressed in Brown v . 

Board of Education and the Federal Civil Rights Laws.

Accordingly, that court enjoined the Secretary of 

the Treasury and the Commissioner of internal Revenue ^rom

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ranting tax exemption to private schools in Mississippi that 

iad racially discriminatory admissions policies. The Service 

mblished Revenue Ruling 71-447, stated the policy that private 

schools with a racially discriminatory policy are not entitled 

:o tax exemption.
In 1975, the Service held that the rule against 

racially discriminatory admissions policies by tax exempt 

private schools was e [ually applicable to schools operated or 

controlled by churches. This Service position has been upheld 

in Federal District Court against challenges that it violated

first amendment guarantees.
The Service has required private schools that claim

tax exemption to adopt a written policy of nondiscrimination 

and to publish it annually. However, in spite of these requir 

ments, there are schools that have been adjudicated by Federal 

courts to be racially discriminatory, and therefore ineligible 

for state aid, yet have retained their Federal tax exemption

under our existing procedures.
The plaintiffs in the original Green case I mentioned

earlier have reopened the case and at approximately the same 

time a nation-wide class action was filed challenging the 

adequacy of the Service's enforcement in this area. The Civil ; 

Rights Division in the Department of Justice and tne uommissior^ 

on Civil Rights also have been critical of the Service's rules j

in this area. We naie reviewed our current rules and have

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concluded that more objective rules may be necessary to identi­

fy those schools whicn, while claiming a nondiscriminatory 

policy, are operated in a manner excluding minority students. 

The Court has deferred any action on the two oases at this 

time, pending resolution of the Service's final action with 

regard to the proposed revenue procedure.
In determining whether a school is racially dis­

criminatory, Federal courts have held that the fact that a 

school was formed or substantially expanded in the wake of 

public school desegregation, together with an absence Ol 

minority enrollment, creates a "badge of doubt" which places 

the burden of proof on the school to prove, by clear and con­

vincing evidence, that, in fact, the school's facilities are

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open to all races.
The courts have looked to factors such as vigorous 

recruitment programs, scholarships for minorities, and minority 

faculty members, for clear and convincing evidence of non­

discrimination in the case of such "badge of doubt" schools.

Of course, the plainest evidence of nondiscrimination is the

oresence of some minority students.
The proocsed revenue procedure is directed to school^

that have already been adjudicated to be racially discrimina- | 

torv or that would be "badge of doubt" type schools under the j 

approach of the Federal courts. It is our attempt to bring the 

Service's procedures for testing claims to exempt status into

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ine with the approach of the Federal courts in a reasonable 

nd uniform way.
The proposed procedure spells out two ways in which 

ichools can demonstrate that they are operating in good faith 

.n a nondiscriminator/ manner. The first and most obvious way 

_s for a school to show it currently has minority enrollment 

of more than an insignificant number. For this purpose, the 

revenue procedure reli.es on an objective safe-harbcr test— is 

the percentage of minority enrollment equal to 20 percent Oj. 

the percentage of the minority school age population in the 

community? Thus if t le minority student population m  the 

community is 30 percent, a 6 percent minority enrollment in 

the scnool will satisfy the "safe-harbor" test. If a school's 

minority enrollment meets this test, that will be the end of

the inquiry.
Many have incorrectly characterized this objective 

safe-harbor approach as establishing a quota contrary to the 

Supreme Court decision in the Bakke case. It does net. I- is 

simply a guide for our examining agents. It merely says that 

:his level of minority student enrollment itself is evidence |

of nondiscrimination.
In cases where the safe-harbor test is not met, the 

school will not be determined to be discriminatory. Rather, 

the Service will extend its inquiry into other facts to make

such determination.

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The proposed procedure sets out criteria by which a 

reasonable determination can be made as to the question of 

discrimination in cases not covered by the safe-harbor, based 

on factors used by the Federal courts.
We are very concerned about schools that claim to 

have special facts and circumstances not covered in the pro­

posed procedure.
We will be reviewing the procedure, for example, to 

determine whether it applies unfairly to schools such as cer­

tain religious schools that may face special conditions in 

attracting minority students. We recognize that efforts have 

been made by many sectors of the religious community to 

eliminate discrimination in education. It is not our intent 

aether to impede these efforts or to hinder the educational.

programs of those organizations.
The testimony we receive at this hearing, as well as 

the written comments submitted to us, will enable us to evalu­

ate more fully the problems involved in the proposed new pro-

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:edures and assist us in making any appropriate changes. We 

^ant to make every re isonable effort to avoid hardship to 

scnools whose practices and policies are genuinely nondis- 

zriminatory in charac ;er. At the same time, however, we believe

we are required under the law to enforce the well settled 

Federal policy to den/ exemption from tax under Code Section 

501(c)(3) and the deductibility of contributions under Code

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MR. SEIGEL: Thank you very much.
CHAIRMAN WINBORNE: Any more questions? Than* you

very much, Sir. Is Mr. William B. Ball present and ready to

speak?
MR. WILLIAM 3. BALL, COUNSEL, NATIONAL COMMI-TEE 

FOR AMISH RELIGIOUS FREEDOM: Ladies and Gentlemen, I should

like to say at the outset, in speaking on behalf of the 
National Committee for Amish Religious Freedom, the Association 

of Christian Schools, International, and Organized Christian 

Schools of North Carolina that I do not represent any racists 

schools and my own background would preclude my Going so. 

was attorney for important groups of Amicci Courier in Loving

v. Virginia, the miscegenation case, in Jones v._Meyer, and

I was volunteer counsel for several years in the 1960's for 

the Pennsylvania Equal Rights Council. Consequently, what I 

have to say today is not against the background of hostility
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to efforts to provide for racial justice. j
I am, however, very much concerned about religious 

liberty. And that's the point of my testimony on benaif of 

these groups today. The founding of the various religious 

schools for which I speak has been recognized by the courts 

as a most obvious expression of religious raith and a matter
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of fundamental right. But ic's important also to understand ji
that tne point in tine and the place at which any such school j 

is founded or maintained is likewise dictated cy the

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ecessities of faith. That is to say if Amish settlers, for 

xample, locate in an area where they can form and sustain 

immunity life, there, too, and then, too, must the Amish 

ichool be established. So also are fundamentalist Christians 

laced with the same necessity; where their jobs and tneir 

lomes are, there they must establish their schools.
But under the proposed revenue procedure, those 

schools may well lie in a danger zone. That is to say that if 

a religious school, by virtue of the proposed revenue proce­

dure, is a reviewable school, it's therefore prima facie 

discriminatory, it's therefore prima facie liable to lose it's 

tax exemption, it's therefore prima facie in danger of extinc­

tion. That's because the definition of community contained 

in Section 3.06 of the proposal, coupled with the time period 

contained in Section 3.03. |
Now, the term community as used in the proposal bears 

no rational relationship whatever to the religious necessities 

of the communities of faith which I represent today. They 

attempt to tie the faith community to public school population j 

patterns. The great error in the proposed revenue procedure 

in this respect is that it attempts to force the schools of 1
the faith communities to be related to population patterns of j 

public school districts.
The church school is forced either then to bear the 

very significant consequences of being Government classified as

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discriminatory or else it must accept the hitherto unheard or 

intrusion upon its liberties o£ having Government say whom 

it shall enroll as a student. This imposes a secular enroll­

ment standard in schools which have been defined by the 

Supreme Court of the United States as "integral parts of the 

religious mission" of the churches which operate them. And

this, under the First Amendment, may not be.
It would be bad enough if the definition of 

community in Section 3 were clear and stable. Unfortunately, 

it is not. Community is not only the public school in which 

the religious school is located, it is that "together with any 

other public school district from which the religious school 

enrolls at least five percent of its student body." So let's 

now consider a religious congregation which founds a school 

lying on the outer edge of school district A and which draws 

children of that church's faith from that and four other 

school districts— 3, C, D, and E. Some of these districts 

have what the proposal calls minority children, and some don't 

The administrator of, let's say, a 50-pupil religious school 

is then put to the exquisite task of checking out the roxlow- 

ing: (1) find out the exact school age population of each 

of the five school districts; (2) ascertain exactly the number 

in school districts a , B, C, D, and E of school age children 

in each of the named categories— Black, Hispanic, and so on 

and of any ethnic categories which might be mcludec under

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nat rather dubious term which you have inserted in your 

efinition of minorities, namely, including; (3) figure the 

ercent which the population of the minority children bears to 

he school age popilation of each of the five school districts;

4) ascertain per district the number of children in one school 

rho are residents in school districts A, B, C, D, and E;

5) figure out whether in each case that number equals five 

jercent of one’s student body; (6) to avoid being a reviewable 

school with ail the cire consequences which that entails, 

idmit to enrollment a sufficient number of new pupils irrespec- 

;ive of any religious consideration in order to ccme up to the 

20 percent factor, even if this necessitates dismissing 

rhildren from your scnool whose parents enrolled them in your 

school in obedience to religious conscience.

The problem is further complicated by the time 

factor which appears in 3.03. It is true that if your school 

lacks the 20 percent minority factor stated m  the latter 

section, it will net be a reviewable school unless it was 

formed cr substantially expanded "at or about" the time or j

public school desegregation in that community. But what does j

"at or about the time" mean? !
In Section 3.03 IBS gives itself a blank check; note j

the wording. "Generally, a school formed or substantially 

expanded during any calendar year within the period beginning 

one year before implementation of an initial public school

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desegregation plan in the community and ending three years 

after final implementation of such desegregation plan or 

modifications thereof will be considered as formed or sub­

stantially expanded at or about the time of public scnocl 

desegregation.” IRS thus tells America what the public 

employees of IRS will be willing to consider as falling within 

the time span generally? that is to say, usually, but not 

necessarily always. As we keep in mind that this proposed 

revenue procedure is intended to operate throughout the nation 

as law for nonconformance to which a church's educational 

ministry can be economically destroyed, we come to look at the 

terms of the time span itself, whether it is generally observe^ 

of not. There we see the words "final implementation or such 

desegregation plan or modifications thereof." But "modifica­

tions thereof" leaves the terminal date open because the 

equity powers of the courts give them a future jurisaication 

to continue to modify the plans. The wide-openness of tie 

time period is made even more evident by the following words: 

"The time of the initial and rinal implementation of a 

desegregation plan will be determined with reference to the 

effective date specified by the terms or the appucabxe court

order or voluntary plan."
That does not say that the time runs from a date 

certain to a date certain. It says something else: "with

reference to." That means that the IRS Administrator need

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only in some way to take the effective dates into account or 
in some manner refer to them. Attention now must be turned to 

the meaning of "substantially expanded." The proposed revenue 

procedure 3.03 says this: "Whether a particular school will

be considered substantially expanded is dependent on all the 

facts and circumstances of such expansion including the per­

centage increase in the school's enrollment and the relation- 

snip between the school’s expansion and the public scnooi 

desegregation plan."
Here, again, IRS gives itself a blank check and 

gives the little religious school administrator a headache. 

Seemingly, IRS must have the latitude while the administrator 

must have all the fortitude. IRS administrators will con­

sider "all the facts and circumstances" then make their own 

subjective 3udgment unregulated by any knowable public standards 

Thev will ponder "the percentage increase in the schcoi s 

enrollment," but according to no knowable public standards.

The will contemplate "the relationship between the school's | 

expansion and the public school's desegregation plan," out 

without any knowable public standard to bind them down. They i 

will, in a wore, do their own thing because there is nothing 

he-e to bind them to do otherwise. But it may be objected tnai
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a religious school may purge itself of the harsh presumption 

that it's racially discriminatory by evidencing under 

Section 4 that it is operating in good faith.
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As he now comes to read Section 4, one religious 

school master is necessarily dismayed. As has been seen, it is 

as though he had been told to hurdle a 100-foot wall. Now in 

the balance of Section 4's provisions, he's told if you can’t 

hurdle it, try jumping from it. Section 4.03 sets forth 

five items of evidence, at least four of which must be mani­

fested by the religious school if it is to be considered 

operated in good faith. I would like briefly to comment on

those points.
1. The granting of scholarships or other financial 

assistance "on a significant basis" to minority students.

Comment:
(1) The church funds are trust funds for reli­

gious purposes. They cannot be diverted by government to other 

purposes, save as these would relate to matters, for example,

of i-ecairs, fire safety, intimately related to health or safety]
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and then only pursuant to patently clear and reasonable statutes.i!
(2) The phrase "on a significant basis" is

further a-oordian-like language giving the IRS administrators j
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unconstitutional discretion in evaluating the evidence.
(3) T know of no religious school today which II

has a n: c .< e 1 to spare. Their resources are only as deep as 1
their parisnioners' pockets. The schools which I represent

are all relatively small schools; they are not publicly funded..
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The oarents who enroll their children there typically do so at j
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great personal sacrifice. They already pay public school 

taxes. Government is without constitutional power to extract 

from them their monies dedicated to religious education of 

their children to support an administrator's social program.

2. Active and vigorous minority recruitment programs

(1) Apart from the total unconstitutionality of 

Government's purporting to make private non-tax supported 

religious institutions engage in recruiting programs is 

fact that Government has no power to make these institutions 

pay out of their limited resources for a non-Congressionally

authorized social program.

(2) Here, again, through the use of the broad

language "active and vigorous" we have wording which makes

the public administrator the legally uncontrolled judge of tne

evidence and the religious schoolmaster like a yoyo on the

string of the administrator's discretion.

(3) IRS's unfamiliarity with the subjects it

seeks to regulate is no more clear than here. The funda 

mentalist schools do not recruit. They evangelize; and 

evangelization is not a thing subject to Governmental direo-

t ion.
CHAIRMAN WINBORNE: Mr. Ball, you have run sub- i

stantially over; you're pretty close to the end new. j

MR. 3ALL: I'm just gerring near the end. May ;

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CHAIRMAN WINBORNEs 

it.

Could you just wind it up? We'd

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MR. BALL: I will do that. I was going to comment

briefly on the fourth point, which was employment of minority

teachers or professional staff.
(4) The schools that I represent have as a prime

criterion religious selction of their staffs and teachers.

The requirement of the Amish is that these people be Amish, 

and of the fundamentalist Christians that these people be 

born again Christians who totally comport with the moral and 

faith standards of the church. They cannot be made to accept

teachers on any other criteria.
I'd like th>:n to simply come to my conclusions, if I

may, and they are four; I'm sorry; they are eight.
VOICE: Mr. Chairman, excuse me just a minute. I

would very respectfully request that we hear Mr. Ball out. I 

think that he voices a great many massive points that this 

group is interested a: this time in hearing.
CHAIRMAN WINBORNE: Mr. Ball has said he is reaching

his conclusion, as I understand it.
MR. BALL: Yes, Mr. Chairman. I appreciate your

courtesy in this matter. I was originally scheduled, ao you 

know, speaking for three groups to be able to speak for 20 

minutes and that was reduced by Mr. Cerny s texephone ca^x 

the other day, which I accept, but I'm at the conclusion now.

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The first conclusipn1 that I think, Ladies and
t". i.

Gentlemen, is very clear. These regulations do violence to 

the civil rights of religious schools and pastors, parents, 

and children who relate to them. Government is never going to 

advance the legitimate interests of minority groups by imped­

ing the enjoyment of the religious civil liberties of all the

people.
Secondly, the proposed revenue procedure fails the 

rests laid down by the Supreme Court of the United States for 

determining the constitutionality of Governmental action under | 

the First Amendment. It does, in fact, as we have shown, 

restrict and impede and, indeed, threaten the existence of 

bonifide peaceable religious activity, which under well known 

court decisions has been held to be protectable.
This regulatory scheme also violates the establish­

ment clause of the F.rst Amendment, because the Supreme Court 

has held that clause to be violated not only by Governmental 

action which excessively entangles Government and church 

schools, but also, under the Marberger case, by action which 

pcses the potential lor such an entanglement. I believe these

guidelines to be entanglement itsel-.
The proposal, I think, clearly in Section 602 pro­

vides a violation of equal protection by singling out newly 

formed schools and making that solely the criteria of the 

classification. It's a very dubious statutory authority and

i

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'll be happy to explore that if you should question me about 

I think these regulations are shot through with self- 

snferred grants of wide open standardless powers for IRS 

iministrators. I have tried to indicate that previously.

I'm concerned, of course, about the burden of proof 

uestions but I have not taken those up because I think at 

he very threshold of inquiry is the religious liberty question 

here respectfully refer you to the subsequent testimony of 

lr. Thomas Neuberger of the Christian Legal Society who pro­

vides an excellent analysis of the decisions of the Supreme 

:ourt with respect to burden of proor, and so on.
Then, second to last is the fact that we are fearful 

:hat if based solely upon IRS administrators' interpretations 

3f Supreme Court decisions, which we feel are not in point,

IRS may fasten this proposed revenue procedure on religious 

schools, there's no reason why in succeeding years the admin­

istrative imagination will not produce further and worse 

intrusions upon those schools. I refer you to the letter of 

Mr. Jeffrey Miller of March 20, 1978, of the U.S. Commission

on Civil Rights.
Plainly, in conclusion, the present proposal may be 

only a hint of what some public servants have in mind with 

respect to the rights and liberties of the citizenry. It s 

no answer, Gentlemen, to say that IRS employees are expert in 

ail manner of religious, racial, and social questions and must

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e celied upon no deal wisely and fairly as administrators, 

ly clients are as little desirous of the favor of public ser- 

■ants as they are fearful of their disfavor. Their reliance 

.s not upon public employees, but upon laws given by the 

legislature and within the constitution.

Thank you very much.
MR. FULLER: I have a question, Mr. Ball. You talk

a lot about constitutional rights. Is it your position that a 

private school that’s operated by a church has a constitutional

right to racially discriminate?
MR. BALL: What do you mean by racially discriminate,'

MR. FULLER: Have a racially discriminatory policy.

MR. BALL: What would you mean by that, if I may ask

MR. FULLER: Exclude minority students. Is that

your position?
MR. BALL: No, that is not the position. First of

all, Green v. Connal.^, which I think we have to accept as law 

as it has been developed this far, arising cut of the facts or 

rhat case, tell us that a private school —

MR. FULLER: Church school?
MR. BALL: Wait a minute. A private school which

has a policy of racial exclusion will be denied tax exemption. 

Now there was reserved in that decision by Judge Leventhai 

the very question w h i c h  you posed, namely, wnether there a^e 

other considerations involving religious freedom m  tne case

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f religious schools. I won’t give you my personal opinion on 

his as a citizen. An opinion as far as being a lawyer goes 

s simply another lawyer's opinion on what the reach of 

rcen v. Connally is. But one thing is clear; one thing I 

.hink is very clear: It’s one thing to observe the holding in 

:he facts in Green v. Connally; namely, exclusion or children 

jecause of race. It’s another thing entirely to seek to impose 

ipon religious schools a whole administrative arrangement such 

is this, multiple regulations such as these are— the Supreme 

:ourt never got near that issue of whether you could regulate

those schools. Wouldn't you agree?
MR. FULLER: Are you familiar with the Goldsborough

Christian School's case?

MR. BALL: Yes, I am.
MR. FULLER: Do you have any comment on that?

MR. BALL: Mo, I have no comment on that case at all.

I'm familiar with it and it's the sole case that is in point.

MR. FULLER: What does it hold?
MR. BALL: The District Court in that case held that:

a religious school which practices racial discrimination may 

not have tax exemption. Is that your understanding?

Now, it says nothing at ail about imposing upon the
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schools a whole body of regulations. It didn't field that;

those weren't fact3 in the case. j
MS. MATTHEWS: I have a question about your comments j

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on substantial expansion, and the determination of whether a 

school has been substantially expanded and therefore would be 

reviewable under the proposal. You stated, if I'm correct, 

that looking to the facts and circumstances of the expansion 

and the relationship of that expansion to the public school 

desegregation was, in your view, an unsatisfactory standard 

because it was too flexible. What standards would you suggest

as being more precise, or more reliable?
MR. BALL: Well, I tall you, I'd like to provide

you— and I don’t mean this sarcastically at all — I'd like to 

provide you advice or seme good thoughts on that. I didn t 

come prepared to make a suggestion on that score. But I do 

know that the way to do it isn't this wav. You can't cure a 

problem by worsening a matter. This language is Sxmply w-de 

open language. It's unconstitutionally vague as I understand 

tne cases. It's just wide open language. And under that, 

plainly, Ms. Matthew:;, the Administrator can decide I 11 
take into consideration all the facts and circumstances. 

That's no standard at all. This is law for the United States

It's incredible law for the United Stares.
CHAIRMAN W3NBORNE: Thank you very much, Mr. Ball.

MR. BALL: Thank you.
CHAIRMAN WIN30RNE: Do we have as yet any of the

Members of congress who were scheduled to testify? I- you 

would like to testify, come forward.

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