Goldsboro Christian Schools, Inc. v. United States Supplemental Memorandum for the United States

    Nos. 81-1 and 81-3

October Term, 1981

Goldsboro Christian Schools, Inc., petitioner

v.

United States of America

Bob J ones U niversity, petitioner

v.
United States of America

ON WRITS OF CERTIORARI TO THE UNITED STATES 
COURT OF APPEALS FOR THE FOURTH CIRCUIT

SUPPLEMENTAL MEMORANDUM 
FOR THE UNITED STATES

Lawrence G. Wallace 
Acting Solicitor General 
Department of Justice 
Washington, D.C. 20530 
(202) 633-2217



In tip (tart nf % HHnitvb BMm
October Term, 1981

No. 81-1
Goldsboro Christian Schools, Inc., petitioner

v.
United States of America

No. 81-3
Bob J ones University, petitioner

v.
U nited States of America

ON WRITS OF CERTIORARI TO THE UNITED STATES 
COURT OF APPEALS FOR THE FOURTH CIRCUIT

SUPPLEMENTAL MEMORANDUM 
FOR THE UNITED STATES

We wish to inform the Court that on January 25, 
1982, the government filed a response to the Plain­
tiffs’ Motion to Vacate Stay of Proceedings, etc., in

(1)



2

the related litigation styled Green v. Regan, Civ. 
Action No. 1355-69 (D.D.C.).

For the convenience of the Court, we have re­
printed that response in the Appendix, infra. At­
tached to that response is a copy of proposed legisla­
tion submitted by the President on January 18, 1982, 
which would give the Secretary of the Treasury and 
the Internal Revenue Service express authority to 
deny tax-exempt status to private non-profit educa­
tional organizations with racially discriminatory 
policies. Copies of the statement by the White House 
press secretary, the proposed bill, the text of Presi­
dent Reagan’s letter to the President of the Senate 
and the Speaker of the House, the Press Release of 
the Department of the Treasury dated January 18, 
1982, and an affidavit of the Assistant Commissioner 
of the Internal Revenue for Employee Plans and 
Exempt Organizations, were attached to the govern­
ment’s response in Green and are likewise reproduced 
for the information of the Court. We are advised 
that both the House Ways and Means Committee and 
the Senate Finance Committee have scheduled hear­
ings on the President’s proposal in early February, 
1982.

Respectfully submitted.

Lawrence G. Wallace 
Acting Solicitor General *

February 1982

* The Solicitor General is disqualified in these cases.



l a

APPENDIX

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Civil Action No. 1355-69
W illiam H. Gkeen, et al,, plaintiffs

v.
Donald T. Regan, et al., defendants

DEFENDANTS’ RESPONSE TO PLAINTIFFS’ 
MOTION TO VACATE STAY OF PROCEED­
INGS, TO SHORTEN TIME FOR RESPONSE 
HERETO, AND FOR FURTHER INJUNCTIVE 
RELIEF TO ENFORCE DECLARATORY JUDG­
MENT AND PRESERVE THE STATUS QUO
Defendants submit that this Court’s Order of Jan­

uary 6, 1982, staying all proceedings herein should 
be continued in effect until the United States Su­
preme Court enters its decisions in the consolidated 
cases of Bob Jones University v. United States (No. 
81-3) and Goldsboro Christian Schools, Inc. v. United 
States (No. 81-1). Until the final status of these 
two Supreme Court actions becomes clear, defendants 
believe it would be premature to vacate the Janu­
ary 6,1982 stay order in this case.1

A significant development since the filing of plain­
tiffs’ motion is that on January 18, 1982 the Presi­
dent submitted proposed legislation to Congress to 
amend Code Section 501 to state expressly that effec­
tive after July 9, 1970, tax-exempt status may not

1 Defendants’ counsel was advised today, January 25, 1982, 
by the Clerk’s Office of the United States Supreme Court that 
no final action has been taken in the Bob Jones and Goldsboro 
cases, and that the Supreme Court will be in recess until 
February 22, 1982.



be accorded to private, non-profit educational organi­
zations with racially discriminatory policies. At the 
same time the legislation was proposed, the Treasury 
Department announced that the Internal Revenue 
Service has been instructed “not to act on any appli­
cations for tax exemptions filed in response to the 
Internal Revenue Service’s policy announced on Fri­
day, January 8, 1982, until Congress has acted on 
the proposed legislation (except as required by the 
memorandum in support of the motion to vacate as 
filed in the Supreme Court on January 8, 1982).” 2

With respect to the subject matter of the instant 
case, as set forth in the Affidavit of S. Allen Win- 
borne (Assistant Commissioner Employee Plans and 
Exempt Organizations), attached as Exhibit B, de­
fendants have continued to comply with the outstand­
ing injunction orders of this Court. Defendants have 
not taken any action to restore tax-exempt status to 
private schools in Mississippi which had their exist­
ing tax exemptions revoked or their applications for 
tax exemptions denied because of the injunction 
orders in this case.

Insofar as the revenue rulings and revenue proce­
dures referred to in plaintiffs’ motion are concerned, 
defendants believe that plaintiffs are erroneous in 
broadly interpreting the prior decisions in this case 
as limiting or prohibiting future administrative ac­
tions by defendants that affect private schools out­
side the State of Mississippi. These plaintiffs clearly

2 A copy of this proposed legislation and the related Treas­
ury Department News Releases are attached as Exhibit A. 
The exception noted in the parenthesis portion of the above 
quotation from the January 18 Treasury Press Release con­
cerns the petitioners in the two Supreme Court cases, neither 
of which operate a school in Mississippi covered by the out­
standing orders in this case.

2a



3a

lack standing to complain about IRS administra­
tive actions which have not resulted in defendants 
acting inconsistent with the extant injunction orders 
in this case. Nowhere in the outstanding declaratory 
judgment or injunction orders is there any directive 
concerning the adoption, modification or revocation 
of specific, national IRS revenue rulings or revenue 
procedures. Accordingly, since as indicated in the 
Winborne Affidavit, the defendants have continued 
to comply with the injunction orders of this Court 
with respect to Mississippi private schools, it is sub­
mitted there is no standing or other jurisdictional 
basis for plaintiffs’ claim to the further injunctive 
relief requested in paragraph d of their motion as 
to the referenced IRS administrative rulings.

Moreover, as the pleadings and prior decisions in 
this case make clear, the purpose of this suit was 
and is to prohibit defendants “from according tax- 
exempt status and deductibility of contributions to 
private schools in Mississippi discriminating against 
Negro students.” Green v. Connolly, 330 F. Supp. 
1140, 1151 [sie] (D. D.C. 1971), aff’d sub nom., Coit 
v. Green, 404 U.S. 997 (1971). It is also apparent 
that the scope of the injunction orders entered in 1971, 
as modified in 1980, pertain solely to “Mississippi 
private schools or the organizations that operate 
them.” 8 The inappropriateness of plaintiffs’ current 
request for injunctive relief affecting IRS adminis­
trative policy with respect to private schools outside 
of Mississippi is clearly illustrated by the fact that 
counsel for plaintiffs brought a separate nationwide 
class action in order to accomplish relief of the type 
plaintiffs now claim there is a basis for granting in

a See this Court’s Order and Permanent Injunction of 
May 5, 1980 at page 2.



4a

the Green case. See Wright v. Miller, 480 F. Supp. 
790 (D. D.C. 1979), rev’d 656 F. 2d 820 (D.C. Cir. 
1981), petition for certiorari filed November 23, 1981 
Regan v. Wright (S. Ct. 81-970). In effect, the 
bringing of the Wright action shows a recognition 
that the scope of this suit properly should be limited 
to IRS actions affecting tax-exempt status of private 
schools in the State of Mississippi, and as stated 
above, defendants have complied with the outstand­
ing injunction orders entered in this case. Accord­
ingly, defendants submit there is no jurisdictional 
basis in this suit for granting the broader injunctive 
relief plaintiffs now request.

Finally, defendants note that since every effort will 
be made by defendants to obtain prompt considera­
tion of the recent legislation proposed to Congress, 
and since Congress presumably will have an oppor­
tunity to consider the complex issues now pending 
before this Court, this legislative development pre­
sents an additional basis for continuing the stay 
order now in effect.

CONCLUSION
For the foregoing reasons, defendants respectfully 

submit that plaintiffs’ motion to vacate this Court’s 
Order of January 6, 1982 should be denied.
Dated: January25, 1982

Respectfully submitted,

/ s /  Glenn L. Archer, Jr.
Glenn  L. Archer, J r. 
Assistant Attorney General 
Tax Division
U. S. Department of Justice



5a

/&/ John F. Murray 
J ohn F. Murray
Deputy Assistant Attorney General 
Tax Division
U. S. Department of Justice

/ s /  Donald J. Gavin 
E dward J. Snyder 
Donald J. Gavin 
Michael J. Kearns 
Attorneys, Tax Division 
U. S. Department of Justice 
Washington, D.C. 20530 
Telephone: (202) 724-6346

Of Counsel:
Charles F. C. Ruff 
United States Attorney for 

the District of Columbia



THE WHITE HOUSE 
Office of the Press Secretary 

For Immediate Release January 18, 1982
FACT SHEET

Tax Exemption Bill Summary
The proposed legislation being submitted by the 
President to the Congress will, for the first time, 
give the Secretary of the Treasury and the Internal 
Revenue Service express authority to deny tax-exempt 
status to private, non-profit educational organiza­
tions with racially discriminatory policies. The legis­
lation recognizes and is sensitive to the legitimate 
special needs of private religious schools.
Section 1 of the bill adds to section 501 of the Internal 
Revenue Code a new subsection that expressly pro­
hibits granting tax exemptions to private schools 
with racially discriminatory policies, notwithstand­
ing that such schools otherwise meet the tests for 
exemption presently listed in section 501(c) (3).
Religious schools of all faiths are permitted to limit, 
or give preferences and priorities, to members of a 
particular religious organization or belief in their 
admissions policies or religious training and worship 
programs. However, the bill expressly provides that 
a tax exemption will not be granted if any such 
policy, program, preference or priority is based upon 
race or a belief that requires discrimination on the 
basis of race.
Section 2 of the bill amends several sections of the 
Internal Revenue Code dealing with deductions to 
provide, consistent with the exemption provisions of 
the new law, that no deductions will be allowed for 
contributions to a school with a racially discrimina­
tory policy.

6a



7a

A BILL
To amend the Internal Revenue Code of 1954 to pro­
hibit the granting of tax-exempt status to organiza­
tions maintaining schools with racially discrimina­
tory policies.

Be it enacted by the Senate and House of Repre­
sentatives of the United States of America in Con­
gress assembled,
Section 1. Denial of Tax E xemptions to Orga­

nizations Maintaining Schools W ith 
Racially Discriminatory P olicies.

Section 501 of the Internal Revenue Code of 1954 
(relating to exemption from tax) is amended by 
redesignating subsection (j) as subsection (k) and 
inserting a new subsection (j) reading as follows:

“ (j) Organizations Maintaining Schools W ith  
Racially Discriminatory P olicies.—

“ (1) IN GENERAL.—An organization that 
normally maintains a regular faculty and curric­
ulum (other than an exclusively religious cur­
riculum) and normally has a regularly enrolled 
body of students in attendance at the place where 
its educational activities are regularly carried 
on shall not be deemed to be described in subsec­
tion (c) (3), and shall not be exempt from tax 
under subsection (a), if such organization has a 
racially discriminatory policy.

“ (2) Definitions.—For the purposes of this sub­
section—

“ (i) An organization has a ‘racially discrimi­
natory policy’ if it refuses to admit students of 
all races to the rights, privileges, programs, and



8a
activities generally accorded or made available 
to students by that organization, or if the or­
ganization refuses to administer its educational 
policies, admissions policies, scholarship and loan 
programs, athletic programs, or other programs 
administered by such organization in a manner 
that does not discriminate on the basis of race. 
The term ‘racially discriminatory policy’ does 
not include an admissions policy of a school, or 
a program of religious training or workshop of 
a school, that is limited, or grants preferences or 
priorities, to members of a particular religious 
organization or belief, provided, that no such 
policy, program, preference, or priority is based 
upon race or upon a belief that requires dis­
crimination on the basis of race.

“ (ii) The term ‘race’ shall include color or 
national origin.”

Sec. 2. Denial of Deductions for Contributions 
to Organizations Maintaining Schools 
W ith  Racially Discriminatory P ol­
icies.

(a) Section 170 of the Internal Revenue Code of 
1954 (relating to allowance of deductions for certain 
charitable, etc., contributions and gifts) is amended 
by adding at the end of subsection (f) a new para­
graph (7) reading as follows:

“ (7) Denial of Deductions for Contribu­
tions to Organizations Maintaining Schools 
W ith Racially Discriminatory Policies.—No 
deduction shall be allowed under this section for 
any contribution to or for the use of an or­
ganization described in section 501 (j ) (1) that 
has a racially discriminatory policy as defined 
in section 501 (j) (2).”



9a
(b) Section 642 of such Code (relating to special 

rules for credits and deductions) is amended by add­
ing at the end of subsection (c) a new paragraph 
(7) reading as follows:

“ (7) Denial of Deductions for Contribu­
tions to Organizations Maintaining Schools 
W ith  Racially Discriminatory Policies.—No 
deduction shall be allowed under this section for 
any contribution to or for the use of an organiza­
tion described in section 501 (j) (1) that has a 
racially discriminatory policy as defined in sec­
tion 501 (j) (2).”

(c) Section 2055 of such Code (relating to the 
allowance of estate tax deductions for transfers for 
public, charitable, and religious uses) is amended 
by adding at the end of subsection (e) a new para­
graph (4) reading as follows:

“ (4) No deduction shall be allowed under 
this section for any transfer to or for the use 
of an organization described in section 501 (j) (1) 
that has a racially discriminatory policy as 
defined in section 501 (j) (2).”

(d) Section 2522 of such Code (relating to chari­
table and similar gifts) is amended by adding at the 
end of subsection (c) a new paragraph (3) reading 
as follows:

“ (3) No deduction shall be allowed under 
this section for any gift to or for the use or an 
organization described in section 501 (j) (1) that 
has a racially discriminatory policy as defined in 
section 501 (j) (2).”

Sec. 4. E ffective Date.
The amendments made by this Act shall apply 

after July 9, 1970.



10a

THE WHITE HOUSE 
Office of the Secretary

For Immediate Release January 18, 1982

TEXT OF LETTER SENT TO 
THE PRESIDENT OF THE SENATE AND 

THE SPEAKER OF THE HOUSE

Dear Mr. President/Mr. Speaker:
As you are aware, the Department of the Treasury 
announced on January 8 that the Internal Revenue 
Service would no longer deny tax-exempt status to 
private, non-profit educational organizations that 
engage in racially discriminatory practices but other­
wise qualify for such status under the present In­
ternal Revenue Code. That decision reflects my 
belief that agencies such as the IRS should not be 
permitted, even with the best of intentions and to 
further goals that I strongly endorse, to govern by 
administrative fiat by exercising powers that the 
Constitution assigns to the Congress.
I share with you and your colleagues an unalterable 
opposition to racial discrimination in any form. Such 
practices are repugnant to all that our Nation and 
its citizens hold dear, and I believe this repugnance 
should be plainly reflected in our laws. To that end, 
I am herewith submitting to the Congress proposed 
legislation that would prohibit tax exemptions for 
any schools that discriminate on the basis of race. 
This proposed legislation is sensitive to the legitimate 
special needs of private religious schools.
I pledge my fullest cooperation in working with you 
to enact such legislation as rapidly as possible, and



11a

urge that you give this matter the very highest 
priority.
I have been advised by the Secretary of the Treasury 
that he will not act on any applications for tax 
exemptions filed in response to the IRS policy an­
nounced on January 8, until the Congress has acted 
on this proposed legislation.
I believe the course I have outlined is the one most 
consistent both with our mutual determination to 
eradicate all vestiges of racial discrimination in 
American society, and with a proper view of the 
powers vested in the Congress under our constitu­
tional system.
I feel this legislative action is important to and de­
sired by all citizens of this great Nation; I am 
confident that you will give the issue the prompt 
attention it deserves.

Sincerely,

/ s /  Ronald Reagan 
Ronald Reagan



12a

TREASURY NEWS
Department of the Treasury 

Washington, D.C.
Telephone: 566-2041

FOR IMMEDIATE RELEASE 
Monday, January 18, 1982

Contract: Marlin Fitzwater
(202) 566-5252

TREASURY—IRS TO HOLD ACTION ON 
TAX EXEMPTIONS

Recognizing the President’s desire to have legisla­
tion introduced to prohibit the granting of tax ex­
emptions to certain educational institutions that en­
gage in racially discriminatory practices, the Secre­
tary of Treasury has instructed the Commissioner 
of Internal Revenue not to act on any applications 
for tax exemptions filed in response to the Internal 
Revenue Service’s policy announced on Friday, Janu­
ary 8, 1982, until Congress has acted on the proposed 
legislation (except as required by the memorandum 
in support of the motion to vacate as filed in the 
Supreme Court on January 8, 1982).



13a

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Civil Action No. 1355-69

W illiam H. Green, et al., plaintiffs 
v.

Donald T. Regan, et al., defendants

AFFIDAVIT

City of Washington )
) ss

District of Columbia)

S. ALLEN WINBORNE, being first duly sworn, 
deposes and says upon information and belief:

1. I am the Assistant Commissioner (Employee 
Plans and Exempt Organizations) and I am familiar 
with the steps taken by the Internal Revenue Service 
to implement the Orders of this Court dated May 5 
and June 2, 1980.

2. This affidavit is being submitted in connection 
with plaintiffs’ Motion to Vacate Stay of Proceed­
ings to Shorten Time for Response Hereto, and for 
Further Injunctive Relief to Enforce Declaratory 
Judgment and to Preserve Status Quo filed with the 
Court on January 13, 1982.

3. As set forth in detail in the affidavits I have 
previously filed in this case, the Internal Revenue 
Service has complied with the revised injunctive 
orders entered by this Court. The Internal Revenue 
Service is taking no actions to restore the tax exempt 
status of any organization operating a private school



in Mississippi which had exempt status revoked as 
a result of failure to comply with the criteria of the 
orders entered in this case. Any requests for recogni­
tion of exempt status made by organizations operat­
ing a private school in Mississippi are being con­
sidered in accordance with the criteria of the orders 
entered in this case.

/ s /  S. Allen Winbome 
S. Allen W inborne

Subscribed and Sworn to before me this 21st day 
of January, 1982.

Judith 0. Hinson 
Notary Public

My commission expires January 31, 1986.



15a

CERTIFICATE OF SERVICE

IT IS HEREBY CERTIFIED that service of the 
foregoing Defendants’ Response to Plaintiffs’ Motion 
to Vacate Stay of Proceedings, to Shorten Time for 
Response Hereto, and for Further Injunctive Relief 
to Enforce Declaratory Judgment and Preserve the 
Status Quo has been made this 25th day of Janu­
ary, 1982, by mailing a copy thereof to counsel for 
intervenors at the following addresses:

William Bentley Ball, Esquire 
Philip J. Murren, Esquire 
Ball & Skelly 
511 North Second Street 
P.O. Box 1108
Harrisburg, Pennsylvania 17108

Charles J. Steele, Esquire 
James Edward Ablard, Esquire 
Whiteford, Hart, Carmody & Wilson 
1828 L Street, NW.
Washington, D.C. 20036

By mailing a copy thereof to counsel for the plain­
tiffs at the following address:

William L. Robinson, Esquire 
Norman J. Chachkin, Esquire 
Frank P. Parker, Esquire 
Lawyer’s Committee for Civil 

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



16a

And by mailing a copy thereof to the other counsel 
of record at the f ollowing address:

George S. Leonard, Esquire 
206 N. Washington Street 
Room 328
Alexandria, Virginia 22313

/ s /  Donald J. Gavin 
Donald J. Gavin

☆  U . S . GOVERNMENT PRINTING OFFICE; 1 9 8 2 3 6 5 8 0 7  7 8 6