Goldsboro Christian Schools, Inc. v. United States Brief of Amicus Curiae in Support of the Judgements Below

    Nos. 81-1 and 81-3

I n  T h e

( ta r t  uf %  Imtrfc ^tatris
October Term, 1982

Goldsboro Ch r istia n  Schools, I n c .,
Petitioner,v.

U n it ed  States of A m erica ,
Respondent.

B ob J o nes U n iv ersity ,
Petitioner, v. ’

U n it ed  States of A m erica ,
Respondent.

On Writs of Certiorari to the United States 
Court of Appeals for the Fourth Circuit

BRIEF OF AMICUS CURIAE 
IN SUPPORT OF THE JUDGMENTS BELOW

William T. Coleman, J r.* 
Amicus Curiae, invited by 
Court, per Order of 
April 19, 1982

Richard C. Warmer 
Donald T. Bliss 
J ohn W. Stamper 
Ira M. F einberg 
David T. Beddow 
Randolf Hurst Hardock

O’Melveny & Myers 
1800 M Street, N.W. 
Washington, D.C. 20036 
(202) 457-5300

Eric Schnapper

10 Columbus Circle 
New York, New York 10019

* Counsel of Record

W ilson - Epes P r i n t i n g  C o . ,  In c . - 7 8 9 -0 0 9 6  - W a s h i n g t o n . D.C. 20001



AMICUS CURIAE9S COUNTERSTATEMENT 
OF THE QUESTIONS PRESENTED

1. Do Sections 501(c)(3) and 170 of the Internal 
Revenue Code authorize recognition of tax benefits for 
private schools that discriminate on the basis of race in 
the admission of students and adhere to other racially 
discriminatory policies and practices?

2. Does the recognition of tax-exempt status and 
eligibility to receive tax-deductible contributions for ra­
cially discriminatory private schools violate the Govern­
ment’s constitutional obligation to steer clear of giving 
significant aid to schools that practice racial discrimina­
tion?

3. Does the First Amendment require that private 
schools which practice racial discrimination because of 
religious beliefs be afforded tax benefits under Sections 
501(c) (3) and 170 of the Code even though such benefits 
are properly withheld from schools that claim no religious 
basis for their racially discriminatory policies?

(i)



TABLE OF CONTENTS
Page

AMICUS CURIAE’S COUNTERSTATEMENT OF 
THE QUESTIONS PRESENTED ___________   i

TABLE OF CONTENTS .................... ....................... . iii

TABLE OF AUTHORITIES..................   v

P R E L IM IN A R Y  STATEMENT OF AMICUS 
CURIAE _______     1

SUMMARY OF ARGUMENT..........................    6

ARGUMENT_________________        11

I. THE IRS RULING DENYING TAX-EXEMPT
STATUS TO RACIALLY DISCRIMINATORY 
PRIVATE SCHOOLS WAS A NECESSARY 
RESULT OF FUNDAMENTAL DEVELOP­
MENTS IN STATUTORY AND CONSTITU­
TIONAL LAW _____ ___________________ ___ _ 11

II. CONGRESS INTENDED TO GRANT TAX 
BENEFITS UNDER §§501 (e)(3 ) AND 170 
TO CHARITABLE ORGANIZATIONS IN THE 
COMMON LAW SENSE AND THUS NOT 
TO ORGANIZATIONS WHOSE ACTIVITIES 
ARE UNLAWFUL OR VIOLATE FUNDA­
MENTAL NATIONAL POLICIES __________  17

A. The Language of §§ 501(c) (3) and 170 Re­
flects Their Origins in the Common Law and 
in English and State Tax Exemption Stat­
utes _________ ________ ___ ____ _________  18

B. The Legislative History of §§ 501 (c) (3) and 
170 Demonstrates That Congress Intended 
to Enact an Exemption Only for Organiza­
tions Charitable at Law .......... ...................... . 24

(iii)



IV

C. Consistent Judicial and Administrative Con­
struction of §§ 501(c) (3) and 170 Makes 
Clear That They Were Intended to Provide 
Tax Benefits Only to Organizations Chari­
table at L aw ____________________ ______ 28

D. The Language of the Code Supports the Con­
clusion That Congress Intended That Exempt

TABLE OF CONTENTS—Continued
Page

Organizations Must Satisfy the Standards 
of the Law of Charity__________________  35

E. Petitioners Do Not Qualify for Favored
Tax Treatment as Charitable Organizations.. 40

III. RECOGNITION OF TAX EXEMPTION FOR 
RACIALLY DISCRIMINATORY PRIVATE 
SCHOOLS WOULD DISREGARD THE JUDI­
CIAL PRESUMPTION AGAINST ALLOWING 
TAX BENEFITS THAT SEVERELY FRUS­
TRATE SHARPLY DEFINED FEDERAL
POLICY .......... ...................... ................................... 44

IV. SINCE 1970 CONGRESS HAS EXPLICITLY 
RATIFIED AND APPROVED THE IRS AC­
TIONS CHALLENGED BY PETITIONERS.... 48

V. THE FIFTH AMENDMENT BARS GRANT­
ING THE TAX BENEFITS OF §§ 501 (c) (3)
AND 170 TO SCHOOLS THAT DISCRIMI­
NATE ON THE BASIS OF RACE ............ ....... 57

VI. THE FIRST AMENDMENT DOES NOT RE­
QUIRE THAT RACIALLY DISCRIMINA­
TORY RELIGIOUS SCHOOLS BE AFFORDED 
THE TAX BENEFITS OF §§ 501 (c) (3) AND
170 ________________ ______________ _______  63

CONCLUSION ___ ________ _______________________  69

APPENDIX A _______ ______________________ ____ _ la

APPENDIX B ............................. ............ ........... ............ . lb



V

TABLE OF AUTHORITIES
CASES: Page

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504
(1981) .................................... .................. ---- ---------  52

Ancient and Accepted Scottish Rite of Freema­
sonry v. Board of County Commissioners, 122
Neb. 586, 241 N.W. 93 (1932) ____ ___________  23

Board of Education v. Allen, 392 U.S. 236 (1968).. 60
Board of Governors v. First Lincolnwood Corp.,

439 U.S, 234 (1978) ____ ________ _________  55
Bob Jones University v. Johnson, 396 F. Supp.

597 (D.S.C. 1974), aff’d, 529 F.2d 514 (4th Cir.
1975)______________ ___ ________ __________  41, 66

Bob Jones University v. Simon, 416 U.S. 725
(1974) ____________________-........................ ......passim

Bob Jones University v. United States, 468 F. Supp.
890 (D.S.C. 1978) ....... ................................. ...2, 3,15, 42

Bob Jones University v. United States, 639 F.2d
147 (4th Cir. 1980).............................. ...........— passim

Bok v. McCaughn, 42 F.2d 616 (3d Cir. 1930) .... 29, 31
Bolling v. Sharpe, 347 U.S. 497 (1954)___ ____  11
Bowles v. Weiner, 6 F.R.D. 540 (E.D. Mich. 1947).. 37
Braunfeldv. Brown, 366 U.S. 599 (1961)______  63-64
Brown v. Board of Education, 347 U.S. 483

(1954) ..... ............... ........... ............... - ........... ..........passim
Brown v. Dade Christian Schools, Inc., 556 F.2d 

310 (5th Cir. 1977), cert, denied, 434 U.S. 1063
(1978)________ ____________ ____________ 40, 66, 68

Brown v. Hartlage, 102 S. Ct. 1523 (1982) _____  5
Bruton v. United States, 391 U.S. 123 (1968)___  5
CBS, Inc. v. FCC, 453 U.S. 367 (1981)________  55
C.F. Mueller Co. v. Commissioner, 190 F.2d 120

(3d Cir. 1951) ___ ___________ ______________ 29
Cammarano v. United States, 358 U.S. 498 (1959).. 31
Chapman v. Commissioner, 618 F.2d 856 (1st Cir.

1980), cert, dismissed, 451 U.S. 1012 (1981).....  56
Cheng Fan Kwok v. INS, 392 U.S. 206 (1968) ..... 5
Christian Manner International, Inc. v. Commis­

sioner, 71 T.C. 661 (1979)...................................  43
The Civil Rights Cases, 109 U.S. 3 (1883) ______ 47
Coit v. Green, 404 U.S. 997 (1971) ......... ......... ......passim



vi

TABLE OF AUTHORITIES—Continued
Page

Commissioner v. Bilder, 369 U.S. 499 (1962).......  52
Commissioner v. Portland Cement Co., 450 U.S.

156 (1981) ........................... .............................. .. 33
Commissioner v. Tellier, 383 U.S. 687 (1966) __  44
Commissioners v. Pemsel, [1891] A.C. 531 ............ 20-22
Committee for Public Education v. Nyquist, 413

U.S, 756 (1973) ............... ................... ............... 59-61, 68
Congregational Church v. Attorney General, 376

Mass. 545, 381 N.E.2d 1305 (1978)___ _____ 24
Consumer Product Safety Commission v. GTE Syl-

vania, Inc., 447 U.S. 102 (1980) ...................... . 52
Cooper v. Aaron, 358 U.S. 1 (1958).........................  6,11
Costanzo v. Tillinghast, 287 U.S. 341 (1932) ___  39
Crellin v. Commissioner, 46 B.T.A. 1152 (1942)..... 31
De Sylva v. Ballentine, 351 U.S. 570 (1956)____ 36
Duffy v. Birmingham, 190 F.2d 738 (8th Cir.

1951) .........................................................................   29-30
Edelman v. Jordan, 415 U.S. 651 (1974) ________  56
Everson v. Board of Education, 330 U.S. 1 (1947).. 60
FBI v. Abramson, 102 S. Ct. 2054 (1982) .............. 36
FCC v. Pacifica Foundation, 438 U.S. 726 (1978).. 36
Fales, Herbert E., 9 B.T.A. 828 (1927)___ _____  39-40
Faraca v. Clements, 506 F.2d 956 (5th Cir.) cert.

denied, 422 U.S. 1006 (1975) _____ ____ ______ 41
Fiedler v. Marumsco Christian School, 631 F.2d

1144 (4th Cir. 1980) ______________________  40,41
Fifth-Third Union Trust Co. v. Commissioner, 56

F.2d 767 (6th Cir. 1932) ______   31
Gilbert v. United States, 370 U.S, 650 (1962) ........  24
Gillette v. United States, 401 U.S. 437 (1971) .....64, 67, 68 
Gilmore v. City of Montgomery, 417 U.S. 556

(1974)......... .'_______ ___ ____ __________ .......57, 58, 62
Girard Trust Co. v. Commissioner, 122 F.2d 108

(3d Cir. 1941) ______   30
Goldsboro Christian Schools, Inc. v. United States,

436 F. Supp. 1314 (E.D.N.C. 1977)_____ ____ 2, 67
Goldsboro Christian Schools, Inc. v. United States,

No. 80-1473 (4th Cir. Feb. 24, 1981) 3



V ll

Granville-Smith v. Granville-Smith, 349 U.S, 1
(1955) ..................................... ........... ........................ 5

Green v. Connally, 330 F. Supp. 1150 (D.D.C.) 
aff’d per curiam sub nom. Coit v. Green, 404
U.S. 997 (1971)  ....................... ................... .....passim

Green v. Kennedy, 309 F. Supp. 1127 (D.D.C.), 
appeal dismissed sub nom. Cannon v. Green, 398
U.S. 956 (1970) .......... ............. . .... ............ ......passim

Griffin v. Breckenridge, 403 U.S. 88 (1971) ............ 13
Griffin v. County School Board, 377 U.S. 218

(1964) .............................................. ........... ..........13, 60, 66
GTE Sylvania, Inc. v. Consumers Union, 445 U.S.

375 (1980) _____ ____ ______ ____ _________  5
Haig v. Agee, 453 U.S. 280 (1981) _____ ______ 9, 50, 55
Hamling v. United States, 418 U.S. 87 (1974)....  36
Harris v. Commissioner, 340 U.S. 106 (1950)___  17
Harris v. McRae, 448 U.S. 297 (1980).....................  67
Harrison v. Barker Annuity Fund, 90 F.2d 286

(7th Cir. 1937)___ ___ ______ _________ _______ 30
Hazen v. National Rifle Association, 101 F.2d 432

(D.C. Cir. 1938) ___________ ____ ___________ 30
Heffron v. International Society for Krishna Con­

sciousness, 452 U.S. 640 (1981)______________  66
Helvering v. Bliss, 293 U.S. 144 (1934) ________ 28-29
Helvering v. Winmill, 305 U.S. 79 (1938)__ __ _ 55
Hicks v. Miranda, 422 U.S. 332 (1975) ................ 56
Hodges v. United States, 203 U.S. 1 (1906)____ 13,43
Holt v. Commissioner, 69 T.C. 75 (1977), aff’d,

611 F.2d 1160 (5th Cir. 1980)_______ __ ____ 45
Hoover Motor Express Co. v. United States, 356

U.S, 38 (1958)_______ _________ _________  44,45
Hunter v. Erickson, 393 U.S. 385 (1969) ......... ...... 47
Hutterische Bruder Gemeinde, 1 B.T.A. 1208

(1925) ........................... ............. .......... .............. . 30
Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).... 56

TABLE OF AUTHORITIES—Continued
Page



via

International Reform Federation v. District Unem­
ployment Compensation Board, 131 F.2d 337
(D.C. Cir. 1942) ____________ ___ ___________  20

Jackson v. Phillips, 96 Mass. (14 Allen) 539
(1867)------------ ---------------------- ------------ ---- 20, 27, 28

James Sprunt Benevolent Trust v. Commissioner,
20 B.T.A. 19 (1930) .............................................. . 31

Jarecki v. G.D. Searle & Co., 367 U.S. 303 (1961).. 8, 37 
Johnson v. Railway Express Agency, 421 U.S.

454 (1975) ________________ _______________  12
Johnson v. Robison, 415 U.S. 361 (1974)..... .........._ 65
Jones v. Alfred H. Mayer Co., 392 U.S. 409

(1968) --------------------------- --- ---------- ----------- 12,13
Kentucky v. Indiana, 281 U.S. 163 (1930) ..............  5
Keystone Automobile Club v. Commissioner, 181

F.2d 402 (3d Cir. 1950)______ __________ ___ _ 38
Knowlton v. Moore, 178 U.S. 41 (1900)___ __ ___  36
Lemon v. Kurtzman, 403 U.S. 602 (1971).... .......... 60
Lorillard v. Pons, 434 U.S. 575 (1978)_________  34
Loving v. Virginia, 388 U.S. 1 (1967)..... ............... 41
Lynch v. Overholser, 369 U.S. 705 (1962)............... 39
M.E. Church, South v. Hinton, 92 Tenn, 188, 21

S.W. 321 (1893) ___________ ________________ 23
McDonald v. Hovey, 110 U.S. 619 (1884)_______  24
McCulloch v. Maryland, 4 Wheat. 316 (1819) ___ 36
McGlotten v. Connally, 338 F.Supp. 448 (D.D.C.

1972) -------------------------- ---- ------ ------------------- 50,57
McGowan v. Maryland, 366 U.S. 420 (1961).........  67, 68
McLaurin v. Oklahoma State Regents, 339 U.S. 637

(1950)____________________ ____________ _ 41
Maguire v. Commissioner, 313 U.S. 1 (1941) .......  35-36
Massachusetts League v. United States, 59 F. Supp.

346 (D. Mass. 1945)_______________________  40
Mazzei v. Commissioner, 61 T.C. 497 (1974) .......  45,46
Mississippi University for Women v. Hogan, 102

S. Ct. 3331 (1982) ________ ____________ ____ 47
Molly Varnum Chapter, D.A.R. v. City of Lowell,

204 Mass. 487, 90 N.E. 893 (1910)_________ _ 23

TABLE OF AUTHORITIES—Continued
Page



ix

Monell v. Department of Social Services, 436 U.S.
658 (1978) _______ _________ _______ _______  55

Morgan v. Nauts, 6 AFTR 8011 (N.D. Ohio 1928).. 31
NLRB v. Amax Coal Co., 453 U.S. 322 (1981)......  24
NLRB v. Catholic Bishop of Chicago, 440 U.S.

490 (1979) _____________ _____________ _____ 57
NLRB v. Gullett Gin Co., 340 U.S. 361 (1951) ...... 34
National Lead Co. v. United States, 252 U.S. 140

(1920) _________________ __ ___________ ____ 34
National Muffler Dealers Association v. United

States, 440 U.S. 472 (1979)................. ........... ...8 , 33, 38
Neal v. Clark, 95 U.S. 704 (1878) ......................... 37
North Haven Board of Education v. Bell, 102 S. Ct.

1912 (1982) ______________________ _________ 5
Norwood v. Harrison, 413 U.S. 455 (1973) _____ passim
Ould v. Washington Hospital for Foundlings, 95

U.S. 303 (1877) __ _____________ __________.7,28,29
Patsy v. Board of Regents, 102 S. Ct. 2557 (1982).. 56
Pennock v. Dialogue, 2 Pet. 1 (1829) ______ ____  24
Pennsylvania Co. v. Helvering, 66 F.2d 284 (D.C.

Cir. 1933)_______ ________ __ _________ __ ___ 29
People ex rel. Doctors Hospital, Inc. v. Sexton, 267

App. Div. 736, 48 N.Y.S.2d 201 (1944) ......... 23
Perin v. Carey, 24 How. 465 (1861)___________ 7, 28, 37
Personnel Administrator v. Feeney, 442 U.S. 256

(1979) _____ __________ ______________ __ _ 58
Peters v. Commissioner, 21 T.C. 55 (1953) ...... . 29
Pierce v. Society of Sisters, 268 U.S. 510 (1925).. 67
Pierson v. Ray, 386 U.S. 547 (1967) ________ __  24
Plessy v. Ferguson, 163 U.S. 537 (1896)__ ______ 43
Plyler v. Doe, 102 S. Ct, 2382 (1982)__________  11
Poindexter v. Louisiana Financial Assistance Com­

mission, 275 F. Supp. 833 (E.D. La. 1967), aff’d,
389 U.S. 571 (1968)______ _________ __ _____ 13, 66

Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601
(1895) .............. ...................... ........... ............. ......... 18

Prince Edward School Foundation v. United
States, 450 U.S. 944 (1981) ___ __________ _ 35

Prince v. Massachusetts, 321 U.S. 158 (1944) .......  64, 67

TABLE OF AUTHORITIES—Continued
Page



X

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367
(1969) ...................................... ............................... . 9, 55

Reed v. Reed, 404 U.S. 71 (1971)________ ______ 47
Reiter v. Sonotone Corp., 442 U.S. 330 (1979)   35
Reynolds v. United States, 98 U.S. 145 (1878)___ 64
Richmond Television Corp. v. United States, 382

U.S. 68 (1965)......... ......... .......................................  5
Roe v. Wade, 410 U.S. 113 (1973) ___ _____ 4
Rogers v. Herman Lodge, 102 S. Ct. 3272 (1982).. 58
Rose v. Lundy, 102 S. Ct. 1198 (1982) ..................  39
Rosengart v. Laird, 405 U.S. 908 (1972) .............. 5
Runyon v. McCrary, 427 U.S. 160 (1976) ...........passim
St. Louis Union Trust Co. v. Burnet, 59 F.2d 922

(8th Cir. 1932) ........................... ............... ........... „ 29
St. Louis Union Trust Co. v. United States, 374

F.2d 427 (8th Cir. 1967)...................... ......... ....... 30
Samuel Friedland Foundation v. United States,

144 F. Supp. 74 (D.N.J. 1956) ........... ........... . 30
Schlesinger v. Ballard, 419 U.S. 498 (1975)_____  47
Scripture Press Foundation v. United States, 285 

F.2d 800 (Ct. Cl. 1961), cert, denied, 368 U.S.
985 (1962) ...... ....................................... ..................  43

Sherbert v. Verner, 374 U.S. 398 (1963)_____ __  65
Sibley v. Commissioner, 16 B.T.A. 915 (1929)......  29
Slee v. Commissioner, 15 B.T.A. 710 (1929), aff’d,

42 F.2d 184 (2d Cir. 1930)__________________ 31, 39
Slee v. Commissioner, 42 F.2d 184 (2d Cir. 1930).. 30
Stafford v. Briggs, 444 U.S. 527 (1980) .............. . 38
Stockton Civic Theatre v. Board of Supervisors,

66 Cal.2d 13, 423 P.2d 810, 56 Cal. Rptr. 658
(1967) .............................. .................. ............. - ....... 23

Storti v. Commonwealth, 178 Mass. 549, 60 N.E.
210 (1901) ______ ____________ __ ___________  37

Sullivan v. Little Hunting Park, Inc., 396 U.S.
229 (1969) ______________ ______ __ _____ 12

Swann v. Charlotte-Mecklenburg Board of Educa­
tion, 402 U.S. 1 (1971) __________ - .............. -  13

Swearingen v. United States, 161 U.S. 446 (1896).. 36
Tank Truck Rentals, Inc. v. Commissioner, 356 

U.S. 30 (1958).........................................................passim

TABLE OF AUTHORITIES—Continued
Page



Textile Mills Securities Corp. v. Commissioner, 314
U.S. 326 (1941) ..................................... .............. . 44

Thomas v. Review Board, 450 U.S, 707 (1981)___  65
Tillman v. Wheaton-Raven Recreation Associa­

tion, 410 U.S. 431 (1973)__________________  12
Tilton v. Richardson, 403 U.S. 672 (1971)_____ _ 68
Travelers’ Insurance Co. v. Kent, 151 Ind. 349,

50 N.E. 562 (1898) _______________ _____ _ 23
Trinidad v. Sagrada Orden, 263 U.S. 578 (1924).. 28, 43 
Turnipseed v. Commissioner, 27 T.C. 758 (1957).. 45
Turnure v. Commissioner, 9 B.T.A. 871 (1927).... 29
Underwriters’ Laboratories, Inc. v. Commissioner,

135 F.2d 371 (7th Cir. 1943)____ ____________  30
Union Insurance Co. v. United States, 6 Wall. 759

(1867) _________________ __________________  36
United States v. Byrum, 408 U.S. 125 (1972)____  56
United States v. Clark, 445 U.S. 23 (1980)______  57
United States v. Correll, 389 U.S. 299 (1967) ___  33, 55
United States v. Euge, 444 U.S. 707 (1980)_____  24
United States v. Fisk, 3 Wall. 445 (1865)_______  36
United States v. Jefferson County Board of Educa­

tion, 372 F.2d 836 (5th Cir. 1966) ___________ 13
United States v. Lee, 102 S. Ct. 1051 (1982)___63, 64, 67
United States v. Leslie Salt Co., 350 U.S. 383

(1956)____________________________________  38
United States v. Lovett, 328 U.S. 303 (1946)____  5
United States v. Moore, 613 F.2d 1029 (D.C. Cir.

(1979), cert, denied, 446 U.S. 954 (1980) .........  37
United States v. Morris, 125 F. 322 (E.D. Ark.

1903)__________________________________ __ _ 13
United States v. Price, 383 U.S. 787 (1966) .......... 13
United States v. Proprietors of Social Law Library,

102 F.2d 481 (1st Cir. 1939) ................................  30
United States v. Rutherford, 442 U.S. 544 (1979).. 50
United States v. Ryan, 284 U.S. 167 (1931) ..........  34
United States v. Scrimgeour, 636 F.2d 1019 (5th

Cir.), cert, denied, 102 S. Ct. 359 (1981) ............ 37
United States v. Stewart, 311 U.S. .60 (1940).... . 17
United States v. W.T. Grant Co., 345 U.S. 629

(1953) ........... ....... .......... .................. ‘......................  5
Walz v. Tax Commission, 397 U.S. 664 (1970)...... . 29, 59

x i

TABLE OF AUTHORITIES—Continued
Page



xii
TABLE OF AUTHORITIES—Continued

Page
Washington v. Davis, 426 U.S. 229 (1976)--- ------  58
Washington v. Seattle School District No. 1, 102

S. Ct. 3187 (1982) ..................... ................... ..........  H , 58
Waters v. Wisconsin Steel Works, 427 F.2d 476

(7th Cir.), cert, denied, 400 U.S. 911 (1970)----- 12
Weber v. United States, 119 F.2d 932 (9th Cir.

1941), aff’d per curiam by an equally divided
Court, 315 U.S. 787 (1942)____________ _____  5

Winters v. Commissioner, 468 F.2d 778 (2d Cir.
1972)  ---- --------------------- ---------------------------- 64

Wisconsin v. Yoder, 406 U.S. 205 (1972)_______  65, 68
Wright v. Regan, 656 F.2d 820 (D.C. Cir. 1981), 

petitions for cert, filed, 50 U.S.L.W. 3353 (Oct.
20, 1981) (No. 81-757), 3467 (Nov. 23, 1981)
(No. 81-970) _______ ___ __________________  62

Wright v. Regan, No. 80-1124, Order (February
18, 1982)  ...............- ................................... - .........  4

Young v. United States, 315 U.S. 257 (1942)-----  5
CONSTITUTION AND FEDERAL STATUTES:

United States Constitution:
First Amendment.........  .......   passim

(Establishment Clause)--------------10, 63, 67-69
(Free Exercise Clause)------------------------ 63-67

Fifth Amendment----------------- ------------ ........passim
Thirteenth Amendment ----------------- ----- - —6,12, 47
Fourteenth Amendment----------------------------- 6,11

Act of July 1, 1862, ch. 119, 12 Stat. 432 ________ 19
Act of June 30, 1864, ch. 173, 13 Stat. 223 _____  19
Act of June 27, 1902, ch. 1160, 32 Stat. 406____  25
Act of October 20, 1976, Pub. L. No. 94-568, 90

Stat. 2697.... .............. ............... .................- .............  49, 50
Civil Rights Act of 1866:

42 U.S.C. § 1981________________________ passim
42 U.S.C. § 1982 _______________________ -  12

Civil Rights Act of 1964, 42 U.S.C. §§ 2000a et
seq.     ..... .............. — .........-------------------------  12

Title IY, 42 U.S.C. §§ 2000c   ___________  12
Title VI, 42 U.S.C. §§ 2000d ......... ................... . 12, 41

Civil Rights Act of 1968, 42 U.S.C. §§ 3601 et seq... 12



xm

TABLE OF AUTHORITIES—Continued
Page

Education Act Amendments of 1972, Title IX, 20
U.S.C. § 1681(a) ( 5 ) ............................... -.............. - 47

Internal Revenue Code (I.R.C.) of 1954 (26 U.S.C. 
(1976)) :

. 45,46 
.'passim 
.passim 

50 
18 
36

8, 50-52 
- 18,36 

18 
18 
18 
18 
36 
18 
18 
18 
18 
18 
17
17 
36
18

. 47,49
Pub. L. No. 91-618, § 1, 84 Stat. 1855 (1970)............. 49
Pub. L. No. 92-418, § 1 (a ) , 86 Stat. 656 (1972).... 49
Pub. L. No. 93-310, § 3 (a ), 88 Stat. 235 (1974).... 49
Pub. L. No. 93-625, § 10 (c ) , 88 Stat. 2108, 2119

(1975) ...... .............. .................. ............ .......... .........  49
Pub. L. No. 95-227, § 4 (a ) , 92 Stat. 11, 15 (1978).. 49
Pub. L. No. 95-345, § 1(a), 92 Stat. 481 (1978).... 49
Pub. L. No. 95-600, § 703(b) (2), 92 Stat. 2763,

2939 (1978) ______ _________________ ______ _ 49
Pub. L. No. 96-222, § 108(b) (2) (B), 94 Stat. 194,

226 (1980) _________________________ _______ 49

§ 162______ ________
§ 1 70____  ____
§501 (c )(3 ) ...............
§ 5 0 1 (c)(7) ......... - .....
§ 501(c) (10) ........... .
§ 501(h) ........... .......
§ 501 ( i ) ___________
§ 642(c) -----------------
§ 2055(a) (2) .......... .
§ 2055(a) (3) .............
§2106 (a) (2) (A) (ii) 
§2106 (a) (2) (A) (hi)
§ 2522 ...........................
§ 2522(a )(2) ______
§2522 (a) (3) .......... .
§ 2522 (b )(2) ............
§ 2522(b) (3) .............
§ 2522(b )(4) ______
§ 3121(b) (8) (B) .... .
§ 3306(c) (8) ........ .
§4911 ...........................
§ 4911(e) (1) (A) .......
§ 7428 ......... .................



XIV

Pub. L. No. 96-364, §209 (a), 94 Stat. 1208,
1290 (1980) _______________ ____ ________ _ 49

Pub. L. No. 96-601, § 3 (a), 94 Stat. 3495, 3496
(1980) ____________ ___ ____ _________ ______ 49

Pub. L. No. 96-605, §106 (a), 94 Stat. 3521,
3523 (1980) _____________ __________ ___ ___  49

Pub. L. No. 97-119, § 103 (c)(1 ), 95 Stat. 1635,
1638 (1981) ....... ............... ................... ........... - ..... 49

Revenue Act of 1918, ch. 18, 40 Stat. 1057 (1919).. 39
Revenue Act of 1921, ch. 136, 42 Stat. 227 (1921).. 31, 39
Revenue Act of 1934, ch. 277, 48 Stat. 680 --------- 40
Tariff Act of 1894, ch. 349, 28 Stat. 509 (1894).... 18, 20
Tariff Act of 1909, ch. 6, 36 Stat. 11 (1909) _____ 18
Tariff Act of 1913, ch. 16, 38 Stat. 114 (1913) ....... 18, 39
Tax Reform Act of 1969, Pub. L. No. 91-172, 83

Stat. 487 (1969) _________________ ___ ____ _ 7, 34
Tax Reform Act of 1976, Pub. L. No. 94-455, 90

Stat. 1520 (1976)_______ ____________________  17,49
Treasury, Postal Service, and General Govern­

ment Appropriations Act of 1980, Pub. L. No.
96-74, 93 Stat. 559 (1979) __ _____ __________  52

Section 103, 93 Stat. at 562 (Ashbrook
Amendment) ...................... ............................  9, 52

Section 615, 93 Stat. at 577 (Doman Amend­
ment) ___ ___________ _________ ______ 9, 52

18 U.S.C. § 241 ............... ...................................... 13
28 U.S.C. § 2201    ___ _______ ________ _ 4
42 U.S.C. § 1985(3) ________ _________________ 13
Voting Rights Act of 1965, 42 U.S.C. §§ 1971 et

se q .___________ __________ ____ ____________  12
War Revenue Act, ch. 63, 40 Stat. 300 (1917) ___  18
War Revenue Act of 1898, ch. 448, 30 Stat. 448

(1898) _______________ ______ ______________  25

STATE STATUTES:
Ind. Rev. Stat. ch. 98, § 8525 (1892)________ ___  22
Mass. Pub. St. ch. 11, § 5 (1882).......... .......... ........ 22

TABLE OF AUTHORITIES—Continued
Page



XV

TABLE OF AUTHORITIES—Continued

FOREIGN STATUTES: Page
Income Tax Act of 1842, 5 & 6 Viet. c. 35, s. 61,

No. VI, Sehed. A ..... ................................. ..............  21

FEDERAL REGULATIONS:
Treas. Regs. Ser. 4, No. 4, Special Taxes § 27 (Jan.

1868) .......................... ....................... ..................... . 19
Treas. Reg. 45, Art. 517 (1921)_______________  31, 40
Treas. Reg. § 1.501(e) (3 )-l(c ) (1) (1959) .............  43
Treas. Reg. § 1.501(c) (3 )-l(d ) (1) (ii) (1959)..... 32
Treas. Reg. § 1.501(c) (3 )-l(d ) (2) (1959) ..... ..25, 32, 33

LEGISLATIVE MATERIALS:
H.R. 68, 92d Cong., 1st Sess. (1971) ........................ 49
H.R. 2352, 92d Cong., 1st Sess. (1971).........    49
H.R. 5350, 92d Cong., 1st Sess. (1971) ......   49
H.R. 1394, 93d Cong., 1st Sess. (1973)_____    49
H.R. 3225, 94th Cong., 1st Sess. (1975) _________  49
H.R. 96, 96th Cong., 1st Sess, (1979) ______ ____  49
H.R. 1905, 96th Cong., 1st Sess. (1979) ___ __ _ 49
H.R. 95, 97th Cong., 1st Sess. (1981)________ _ 48
H.R. 332, 97th Cong., 1st Sess. (1981) __________  48
H.R. 802, 97th Cong., 1st Sess. (1981) __________ 48
S. 995, 96th Cong., 1st Sess. (1979)_______ __ _ 49
Administration’s Change in Federal Policy Regard­

ing the Tax Status of Racially Discriminatory 
Private Schools: Hearing Before the House 
Comm, on Ways and Means, 97th Cong., 2d
Sess. (1982) (“1982 Hearing”) _____________passim

Equal Educational Opportunity: Hearings Before 
the Senate Select Comm, on Equal Educational 
Opportunity, 91st Cong., 2d Sess. (1970)
(“1970 Hearings”)      __ ____________ passim

Hearings on H.R. 82A5 Before the Senate Comm, 
on Finance Committee, 67th Cong., 1st Sess.
(1921) ..................... ........ ...................... ................. . 40

Hearings on H.R. 12863 Before the Senate Comm.
on Finance, 65th Cong., 2d Sess. (1918)______  26



Hearings on the Revenue Bill Before the House 
Comm, on Ways and Means, 65th Cong., 2d Sess.
(1918) .......................................................... ........... . 26-27

Miscellaneous Tax Bills V: Hearings Before
the Subcomm. on Taxation and Debt Manage­
ment of the Senate Comm, on Finance, 96th
Cong., 2d Sess. (1980)........ .............................. . 51

Tax Exempt Status of Private Schools: Hearings 
Before the Subcomm. on Oversight of the House 
Comm, on Ways and Means, 96th Cong., 1st
Sess. (1979)............................ ................................. 53,54

Tax Exempt Status of Private Schools: Hearings 
Before the Subcomm. on Taxation and Debt 
Management of the Senate Comm, on Finance,
96th Cong., 1st Sess. (1979) ............„___ _____ 53, 54

Tax Exemptions for Charitable Organizations A f­
fecting Poverty Programs: Hearings Before the 
Subcomm. on Employment, Manpower and Pov­
erty of the Senate Comm, on Labor and Public
Welfare, 91st Cong., 2d Sess. (1970) _____ ___ 48

H.R. Rep. No. 276, 53d Cong., 2d Sess. (1894) ...... 20
H.R. Rep. No. 1702, 57th Cong., 1st Sess. (1902) ... 25, 39
H.R. Rep. No. 1681, 74th Cong., 1st Sess. (1935)... 26
H.R. Rep. No. 1860, 75th Cong., 3d Sess. (1938)... 27
H.R. Rep. No. 2333, 77th Cong., 2d Sess. (1942) .. 26
H.R. Rep. No. 2514, 82d Cong., 2d Sess. (1952).... 26
H.R. Rep. No. 413 (Part 1), 91st Cong., 1st Sess.

(1969) _________________ ___ ____ _________ 34
H.R. Rep. No. 658, 94th Cong., 1st Sess. (1975) .... 49
H.R. Rep, No. 1353, 94th Cong., 2d Sess. (1976) .. 50
House Comm, on Ways and Means, 89th Cong., 1st 

Sess., Treasury Department Report on Private
Foundations (Comm. Print 1965)____________  62

S. Rep. No. 52, 69th Cong., 1st Sess. (1926) ..... . 26
S. Rep. No. 665, 72d Cong., 1st Sess. (1932)____  26
S. Rep. No. 1567, 75th Cong., 3d Sess. (1938) ...... 26
S. Rep. No. 1631, 77th Cong., 2d Sess. (1942) ...... 26
S. Rep. No. 1318, 94th Cong., 2d Sess. (1976) .....  8, 50
S. Rep. No, 1033, 96th Cong., 2d Sess. (1980)___  51

xvi

TABLE OF AUTHORITIES—Continued
Page



Senate Select Comm, on Equal Educational Oppor­
tunity, 92d Cong., 2d Sess., Toward Equal Edu­
cational Opportunity (Comm. Print 1972).... . 48

26 Cong. Rec. 584-88, 1609-10, 1612-14, 3562, 3781,
6612-15, 6693, Appendix 418-19 (1894) ............. 20

35 Cong. Rec. 5565 (1902)........      19,25
44 Cong. Rec. 4150 (1909).....................  26
50 Cong. Rec. 1306 (1913)...         39
55 Cong. Rec. 6728-29 (1917)............ ..........  26
56 Cong. Rec. 10,418-28 (1918) ..........    26,27
61 Cong. Rec. 5294 (1921) ................     27
79 Cong. Rec. 12,423-24 (1935) _..____     26
116 Cong. Rec. 24,120-22, 24,427-33, 24,836, 24,906-

07 (1970) ______ _____ ________ _____________  48
125 Cong. Rec. H5879 (daily ed. July 13, 1979) .... 53

H5882 (daily ed. July 13, 1979)..... 53
H5884 (daily ed. July 13, 1979)..... 54
H5980 (daily ed. July 16, 1979) .... 53
H5982 (daily ed. July 16, 1979).... 54
S l l ,979-80 (daily ed. Sept. 6,
1979) ...................... ............ .......... . 53,54

127 Cong. Rec. H5395 (daily ed. July 30, 1981)..... 53

REVENUE RULINGS AND PROCEDURES:
A.R.M. 104, 4 C.B. 262 (1921) ___    31
A.R.R. 477, 4 C.B. 264 (1921).............     31
Decision No. 110 (May 1863), reprinted in Bout- 

well, A Manual of the Direct and Excise Tax
System of the United States 273 (1863)___ __  19

G.C.M. 15778, XIV-2 C.B. 118 (1935) ___ __ _ 31
G.C.M. 19715, 1938-1 C.B. 499 ______________ _ 40
I.T. 1800, II-2 C.B. 152 (1923)________________  32-33
O.D. 510, 2 C.B. 209 (1920) ..... ............ .................... 31
Rev. Proc. 72-54, 1972-2 C.B. 834 ..............     14
Rev. Proc. 75-50, 1975-2 C.B. 587 .....................    14
Rev. Rul. 55-656, 1955-2 C.B. 262 _______    25
Rev. Rul. 59-310, 1959-2 C.B. 146 .............. ........... . 25, 34
Rev. Rul. 66-323, 1966-2 C.B. 216... ........................  25

xvii

TABLE OF AUTHORITIES—Continued
Page



xviii

Rev. Rul. 67-825, 1967-2 C.B. 113 ............................. 32, 84
Rev. Rul. 69-545, 1969-2 C.B. 117 ___   25
Rev. Rul. 71-447, 1971-2 C.B. 230_________  passim
Rev. Rul. 75-231, 1975-1 C.B. 158_____   passim
Rev. Rul. 76-204 1976-1 C.B. 152 ...... ............... . 25, 30
Rev. Rul. 77-126, 1977-1 C.B. 48 ____ _____ _____  46
Rev. Rul. 78-85, 1978-1 C.B. 150.......... ...................  25
S. 992,1 C.B. 145 (1919) .............. .......... ....................  30, 40
S. 1176, 1 C.B. 147 (1919)     ....... ..................  31
S. 1362, 2 C.B. 152 (1920) ......................................... 31
S.M. 1836, III-l C.B. 273 (1924)_____ _________ 31-32
Sol. Op. 159, III-l C.B. 480 (1924) ___ _______20, 30, 33

MISCELLANEOUS:

15 Am. Jur. 2d Charities §26 (1976) __________  23
42 Am. Jur. 2d Inheritance, Estate and Gift Taxes

§§ 209,234,439 (1969) _________________ ___  22
12 The American and English Encyclopedia of Law

(2d ed. 1899)____________________________ _ 27
Appendix, Norwood v. Harrison, No. 72-77 (U.S.

1973) .......... ......................... .....................................  59
Appendix, Boh Jones University v. Simon, No. 72-

1470 (U.S. 1974) __________________________  42
Brief for Petitioner, Bob Jones University v.

Simon, No. 72-1470 (U.S. 1974) ........................... 56
Brief for Respondents, Bob Jones University v.

Simon, No. 72-1470 (U.S. 1974) ______ __ ____  59
Bittker & Kaufman, Taxes and Civil Rights: “Con­

stitutionalizing” the Internal Revenue Code, 82
Yale L.J. 51 (1972) _____ _________ _________  62

Bittker & Rahdert, The Exemption of Nonprofit 
Organizations from Federal Income Taxation,
85 Yale L.J. 299 (1976)____________________ 19

Black, A Treatise on Federal Taxes (4th ed. 1919).. 22
Black’s Law Dictionary (rev. 5th ed. 1979) ...... 37
Bogert & Bogert, Law of Trusts (5th ed. 1973) .... 27
Bogert & Bogert, Trusts and Trustees (rev. 2d ed.

1977)

TABLE OF AUTHORITIES—Continued
Page

39,43



XIX

Brown, Regulations, Reenactment, and the Reve­
nue Acts, 54 Harv. L. Rev. 377 (1941) ..............  55

Brunyate, The Legal Definition of Charity, 61 Law
Q. Rev. 268 (1945) .... ................ ............. ..............  20

Carter & Crawshaw, Tudor on Charities (5th ed.
1929)—- .... - ............... .............. ........... .............. ....... 21

Eliot, The Exemption from Taxation (1874), in 2 
Charles W. Eliot, The Man and His Beliefs 667
(1926)..... .......... .................. ............. ......................... 23

48 Fed. Reg. 37,296 (1978).......................... .............  52
44 Fed. Reg. 9451 (1979)....... ..................................  52
Fiseh, Freed & Schachter, Charities and Char­

itable Foundations (1974).............................22, 23-24, 48
Foster, A Treatise on the Federal Income Tax

under the Act of 1913 (2d ed. 1915) ..... —...........  22
Hopkins, The Law of Tax-Exempt Organizations

(3d ed. 1979) -------- ---- -------- -------- --- -....... ----- 19
2 Perry, Trusts and Trustees (2d ed. 1874) — ....  20, 28
Reiling, Federal Taxation: What Is a Charitable

Organization? 44 A.B.A. J. 525 (1958) ..20,22,37,40
Restatement (Second) of Judgments (1982).......... 4
Restatement (Second) of Trusts (1959)............. 28,43-44
Ross, Inheritance Taxation (1912).......... ............ -  23
26 Rul. Case Law § 281 (Perm. Supp. ed. 1929).... 23
4 Scott, Law of Trusts (3d ed. 1967 & Interim

Supp. 1981).... ....................................20, 23, 28, 39, 40, 43
Simon, The Tax-Exempt Status of Racially Dis­

criminatory Religious Schools, 36 Tax L. Rev.
477 (1981) .....................................-........-----.........- -  43-44

U.S. Commission on Civil Rights, Southern School
Desegregation 1966-67 (1967) ..... ..................... . 13,14

Zollman, American Law of Charities (1924)......... 19

TABLE OF AUTHORITIES—Continued
Page



I n  T h e

Supreme (&mrt at %  Imftit
October T e r m , 1982

Nos. 81-1 and 81-3

Goldsboro Ch r istia n  Schools, I n c .,
Petitioner,

U n ited  States of A m erica ,
_______  Respondent.

B ob J ones U n iversity ,
Petitioner,

U n it ed  States of A m erica ,
Respondent.

On Writs of Certiorari to the United States 
Court of Appeals for the Fourth Circuit

BRIEF OF AMICUS CURIAE 
IN SUPPORT OF THE JUDGMENTS BELOW

PRELIMINARY STATEMENT OF AMICUS CURIAE

The Internal Revenue Service has ruled that 
§§ 501(c) (3) and 170 of the Internal Revenue Code do 
not authorize recognition of tax benefits for racially dis­
criminatory private schools. Rev. Rul. 71-447, 1971-2
C.B. 230; Rev. Rul. 75-231, 1975-1 C.B. 158. The Gov­
ernment has defended this well-established position suc­
cessfully in the Court of Appeals and previously before 
this Court, but the present Administration, without any



2
change in the Code, now contends that the IRS position is 
unauthorized. This Court therefore appointed an amicus 
curiae to defend the judgments below. A summary of the 
pertinent facts leading to that development is appropriate 
to explain the interest that amicus curiae has thereby 
come to represent.

These cases stem from the denial of tax-exempt status 
under § 501(c) (3) of the Internal Revenue Code of 1954 
(the “Code” ), 26 U.S.C. § 501(c) (3), to petitioners 
Goldsboro Christian Schools, Inc. (“Goldsboro” ) and Bob 
Jones University (“Bob Jones”) on the basis of their 
racially discriminatory practices. Goldsboro denies ad­
mission to all black applicants. J.A. 9. Bob Jones de­
nied admission to all blacks prior to 1971 and to all un­
married blacks until 1975, the last tax year in question.
J.A. A32-33. It continues to deny admission to persons 
who marry or date outside their race and to enforce other 
racially discriminatory rules. J.A. A197, A208.

Petitioners instituted separate tax refund actions.1 The 
district court in Goldsboro ruled for the Government and 
entered judgment against Goldsboro in the amount of 
$116,190.99 for federal social security (“FICA”) and 
unemployment (“FUTA” ) taxes due. J.A. 115; 436 F. 
Supp. 1314 (E.D.N.C. 1977). The district court in Bob 
Jones held that the school was entitled to an exemption, 
relieving Bob Jones of the Government’s FICA and FUTA 
claims totalling approximately $490,000 for the years 
1970 through 1975. 468 F. Supp. 890 (D.S.C. 1978).2

1 If successful, petitioners would pay no federal income, social 
security or unemployment taxes, would be eligible to receive charita­
ble contributions deductible from the donor’s gross income or estate, 
and would be included in the IRS publication of organizations hav­
ing advance assurance of eligibility for charitable contributions.

2 In a separate action filed following the district court’s decision, 
Bob Jones obtained preliminary injunctive relief compelling the IRS 
to restore its tax-exempt status under § 501(c) (3) and to provide 
advance assurance of the deductibility of contributions under § 170 
by including Bob Jones in the Cumulative List of Organizations 
published by the IRS. J.A. A3; Pet. App. A72-86. This order was



3

The district court concluded that Bob Jones’ “primary 
purpose is religious,” but also found that it “serves educa­
tional purposes,” 468 F. Supp. at 895. Bob Jones’ present 
assertion that it is exclusively a religious organization, 
B.J. Br. at i, is not supported by the record, which shows 
that the school provides accredited, secular instruction at 
all grade levels, offering courses in mathematics, science, 
fine arts, history, education, literature, business adminis­
tration and other subjects. See, e.g., J.A. A63, A127-28, 
A227; U.S. Br. at 2-3. Goldsboro concedes that it is an 
educational organization. G. Br. at i, 8.

On appeal, the United States Court of Appeals for the 
Fourth Circuit held in both cases that § 501(c) (3) does 
not authorize the granting of tax-exempt status to ra­
cially discriminatory schools, regardless of the religious 
basis for their practices, and that denial of this tax bene­
fit does not infringe upon First Amendment religious 
freedoms. Boh Jones, 639 F.2d 147 (4th Cir. 1980) ; 
Goldsboro, No. 80-1473 (4th Cir. Feb. 24, 1981) (per 
curiam) (Pet. App. la-3a).

Petitioners sought review here. In response, the Gov­
ernment argued that the Fourth Circuit decisions were 
correct but urged the Court to grant the petitions for 
certiorari in order to “dispel the uncertainty surrounding 
the propriety of the Service’s ruling position and foster 
greater compliance on the part of the affected institu­
tions,” U.S. Br., Sept. 9, 1981, at 17. The petitions were 
granted on October 13,1981.

Just before its brief on the merits was due, however, 
the Administration reversed its position.3 On January 8,

stayed by the Fourth Circuit pending appeal. J.A. A17; Pet. App. 
A97-99. The appeal was later consolidated with the Government’s 
appeal from the district court’s original decision, J.A. A8, and is 
before this Court on Bob Jones’ petition for certiorari.

s For the circumstances surrounding the change in position, see 
Administration’s Change in Federal Policy Regarding the Tax 
Status of Racially Discriminatory Private Schools: Hearing Before



4
1982, the Acting Solicitor General filed a memorandum 
informing the Court that the Department of the Treas­
ury intended to initiate the steps necessary to revoke 
Rev. Rul. 71-447 and other pertinent rulings and to rec­
ognize § 501(c) (3) exemptions for petitioners, suggest­
ing that these cases therefore were moot. But legal con­
straints made implementation of the Administration’s 
changed position impossible. In an action against 
the Government in 1971, a three-judge court had 
rendered a declaratory judgment that racially dis­
criminatory private schools are ineligible for tax-exempt 
status under § 501 (c) (3) and as donees of deducti­
ble charitable contributions under § 170. Green v. Con- 
nally, 330 F. Supp. 1150, 1179 (D.D.C. 1971). Upon 
appeal by intervening white parents and school children, 
this Court unanimously affirmed without opinion. Coit v. 
Green, 404 U.S. 997 (1971). This declaratory judgment 
remains in effect and is binding on the Government.* 4 5 
Moreover, in a case involving similar issues, the Court 
of Appeals for the District of Columbia Circuit, on Feb­
ruary 18, 1982, enjoined the Government from granting 
1501(c)(3) tax-exempt status to any school that dis­
criminates on the basis of race. Wright v. Regan, No. 
80-1124, Order (per curiam).

Because of the injunction in Wright the United States 
informed the Court that it would not revoke the revenue 
rulings and would not grant petitioners tax-exempt status. 
It therefore withdrew its request that these cases be dis­
missed as moot and instead suggested appointment of an 
amicus curiae to support the judgments below in favor 
of the United States.® The United States filed its brief

the House Comm, on Ways and Means, 97th Cong., 2d Sess. (1982) 
{“1982 Hearing”) .

4 28 U.S.C. § 2201 (“declaration shall have the force and effect 
of a final judgment”) ; see Roe v. Wade, 410 U.S. 113, 166 (1973); 
Restatement (Second) of Judgments § 33 (1982).

5 The Government and petitioners are correct in concluding that 
these cases are not moot. The Government has not granted exemp­
tions under § 501(c) (3) to petitioners, nor refunded the taxes paid,



5

on the merits on March 3, 1982, urging reversal of the 
Fourth Circuit’s decisions. The Court, by its order of 
April 19, 1982, invited William T. Coleman, Jr. “to brief 
and argue these cases, as amicus curiae, in support of 
the judgments below.” 50 U.S.L.W. 3837. Accordingly, 
amicus curiae files this brief in support of the position 
heretofore taken in these and other proceedings by the 
United States.

nor revoked the revenue rulings which deny such exemptions. The 
Administration’s changed view, therefore, does not moot the litiga­
tion. North Haven Bd. of Educ. v. Bell, 102 S. Ct. 1912, 1918 n.12 
(1982). Even if the Government were to implement its changed posi­
tion the case would not be moot. See United States v. W.T. Grant 
Co., 345 U.S. 629, 632-33 (1953); Green v. Connally, 330 F. Supp. 
at 1170.

The cases come to this Court on records developed through the 
adversary process. They are still adversarial in the operative sense 
because the Administration has not granted the relief petitioners 
seek and cannot do so while the declaratory judgment in Green and 
the injunction in Wright are in effect. There remains, therefore, a 
justiciable controversy. Kentucky v. Indiana, 281 U.S. 163, 173 
(1930); see GTE Sylvania, Inc. v. Consumers Union, 445 U.S. 375, 
382-83 (1980); cf. United States v. Lovett, 328 U.S. 303, 306 (1946). 
The Court has properly invited an amicus curiae to present the 
opposing view which had been successfully argued by the Govern­
ment in the court below. Cheng Fan Kwok v. INS; 392 U.S. 206, 
210 n.9 (1968); see also Granville-Smith v. Granville-Smith, 349 
U.S. 1 (1955); Brown v. Hartlage, 102 S. Ct. 1523, 1526 n.l 
(1982). Finally, the Court could not accept the present Adminis­
tration position, vacate the judgments below and order refund of 
the FICA and FUTA taxes paid by petitioners without conducting 
an independent review of the merits. See Rosengart v. Laird, 405 
U.S. 908 (1972) ; Richmond Television Corp. v. United States, 382 
U.S. 68 (1965); Weber v. United States, 119 F.2d 932 (9th Cir. 
1941), aff’d per curiam by an equally divided Court, 315 U.S. 787 
(1942) ; id. at 935 (dissenting opinion); see also Bruton v. United 
States, 391 U.S. 123, 125-26 (1968); Young v. United States, 315 
U.S. 257, 258-59 (1942).



SUMMARY OF ARGUMENT
Since Brown v. Board of Education, 347 U.S. 483 

(1954), the actions of Congress and the decisions of this 
Court have expressed a fundamental national policy, de­
rived from the Fifth, Thirteenth and Fourteenth Amend­
ments, condemning racial discrimination in education— 
public and private. This Court has consistently and un­
equivocally ruled that government support of segregated 
schools “through any arrangement, management, funds, 
or property” is unconstitutional. Cooper v. Aaron, 358 
U.S. 1, 19 (1958); see Norwood v. Harrison, 413 U.S. 455 
(1973). In Runyon v. McCrary, 427 U.S. 160 (1976), 
the Court squarely held that Section 1 of the Civil Rights 
Act of 1866, 42 U.S.C. § 1981, prohibits racially discrim­
inatory practices in private schools.

Recognizing the development of this fundamental na­
tional policy, the IRS, in light of the statutory require­
ments governing charitable organizations, decided in 
1970 that private schools practicing racial discrimi­
nation are not entitled to tax-exempt status under 
§ 501(c) (3) of the Code or eligible for deductible chari­
table contributions under § 170. See J.A. A235-239; Rev. 
Rul. 71-447, 1971-2 C.B. 230. Contrary to the Govern­
ment’s suggestion, this decision was not a reversal of 
previous IRS practice. Rather, given the evolution of 
constitutional and statutory law after Brown, this rul­
ing followed inevitably from the long-standing position 
of the IRS that §§ 501(c) (3) and 170 provide tax bene­
fits only for organizations charitable in the common law 
sense. A three-judge court upheld the denial of tax- 
exempt status to racially discriminatory private schools 
in Green v. Connolly, 330 F. Supp. 1150 (D.D.C. 1971). 
This Court’s affirmance of the three-judge court ruling, 
Coit v. Green, 404 U.S. 997 (1971), was a correct decision 
on the merits, and nothing has occurred since which sug­
gests any basis for overruling it. On the contrary, con­
gressional actions since 1970 have expressly ratified the 
IRS ruling upheld in Green.

6



7

The Commissioner’s obligation under the Code to deny 
tax-exempt status to private schools that discriminate on 
the basis of race is supported by several distinct but 
mutually reinforcing statutory grounds:

1. As the IRS ruled, § 501(c) (3) was intended to pro­
vide tax-exempt status only for charitable organizations 
in the common law sense. It is a basic precept of the 
common law that the special privileges afforded to chari­
table organizations are based upon their contribution 
to the general welfare, and thus that an organization is 
not entitled to charitable status if its purposes are incon­
sistent with law or fundamental public policy. Oulcl v. 
Washington Hospital for Foundlings, 95 U.S. 303, 311 
(1877) ; Perm  v. Carey, 24 How. 465, 501 (1861). The 
language and legislative history of 1501(c)(3) reflect 
congressional intent to adopt this principle. The courts 
and the IRS have been guided accordingly and have long 
relied upon common law concepts of charity to determine 
the applicability of § 501(c) (3) to “educational” organi­
zations. This long-standing construction of § 501(c) (3) 
was adopted by Congress when it re-enacted the Code in 
1954 and again in enacting the Tax Reform Act of 1969.

In this light, there is no merit to the argument of
the Government and petitioners that the term “educa­
tional” in § 501(c) (3) must be construed as entirely 
independent of the law of charity solely because the 
terms of the statutory expression “religious, charitable 
. . .  or educational purposes” are separated by the dis­
junctive. This argument tears the term “educational” 
from its statutory context and historic origins in the 
common law, ignores the statute’s legislative history, and 
disregards its long-standing judicial and administrative 
construction. Even in strictly grammatical terms, the 
more reasonable interpretation of the statute is that 
its specific terms provide descriptive examples of or­



8

ganizations that are charitable in the generic sense. 
See 26 U.S.C. § 170(c) (2) (defining “charitable con­
tributions” as contributions to “religious, charitable, . . . 
or educational” organizations). In interpreting other 
Code provisions listing terms sharing a common denom­
inator but separated by the word “or,” the Court has 
often held that a single word in the list—here “educa­
tional”—“does not stand alone, but gathers meaning from 
the words around it.” Jarecki v. G.D. Searle & Co., 367 
U.S. 303, 307 (1961) ; see National Muffler Dealers Asso­
ciation v. United States, 440 U.S. 472 (1979).

2. Recognition of tax-exempt status for racially dis­
criminatory private schools, moreover, would contravene 
the established judicial presumption against congressional 
intent to allow tax benefits where they would frustrate 
a sharply defined governmental policy. Tank Truck 
Rentals, Inc. v. Commissioner, 356 U.S. 30, 33-35 (1958). 
Here, recognition of tax exemption would be utterly 
inconsistent with federal law and fundamental national 
policy condemning racial discrimination in public and 
private education, severely undermining the Court’s man­
date to desegregate the public schools as well as the con­
stitutionally-based policy against government support for 
segregated private schools.

3. Congress has been fully aware of the IRS decision 
on this issue since the day it was made, and has re­
peatedly refused to alter the IRS ruling, even while 
amending § 501(c) (3) in other respects. Furthermore, 
in enacting § 501 (i) in 1976, Congress expressly adopted 
the IRS’ decision as “national policy.” S. Rep. No. 1318, 
94th Cong., 2d Sess. 8 (1976). Congress recognized that 
the court in Green had held that the existing language of 
1501(c)(3) barred tax-exempt status for racially dis­
criminatory schools and thus saw no need to adopt addi­
tional language to this effect. Instead, Congress extended 
this policy to private social clubs practicing racial dis­
crimination, a positive legislative action plainly signal­



9

ing approval of the IRS ruling on discriminatory 
schools. It is inconceivable that the Congress which 
mandated denial of tax-exempt status for discrimina­
tory social clubs, including school fraternities, could 
have intended to permit discriminatory practices by 
the tax-exempt schools themselves. Congress reaffirmed its 
support for the IRS ruling in 1979 when it enacted the 
Dornan and Ashbrook Amendments to bar implementa­
tion of proposed new “affirmative action” requirements 
for private schools. A fair reading of these develop­
ments since 1970 can leave no reasonable doubt that 
Congress has ratified and approved the IRS policy in 
Rev. Ruls. 71-447 and 75-231. Haig v. Agee, 453 U.S. 
280, 300-01 (1981) ; Red Lion Broadcasting Co. v. FCC, 
395 U.S. 367, 381-82 (1969).

Indeed, if § 501(c) (3) were construed to permit tax 
exemptions for racially discriminatory schools, the provi­
sion would be unconstitutional under the Fifth Amend­
ment. The Government has an affirmative constitutional 
duty to steer clear of providing significant aid to 
such schools, even in the absence of any purpose to further 
the schools’ racially discriminatory practices. Norwoodl v. 
Harrison, 413 U.S. 455, 465 (1973).

For all these reasons, the IRS properly concluded that 
racially discriminatory private schools are not entitled 
to exempt status under § 501(c) (3). There is no ques­
tion that both petitioners engage in racially discrimina­
tory practices. While Bob Jones argues that it is entitled 
to exempt status under § 501(c) (3) as a “religious” or­
ganization, the record demonstrates that it is not a church 
or seminary engaged exclusively in religious activities, 
but rather a school providing accredited secular education 
at all levels.

Ultimately, petitioners argue that the First Amend­
ment’s protection of religious freedom requires that they



10

be excepted from the rulings barring tax-exempt status 
for all other racially discriminatory private schools. But 
the right to free exercise of religion does not guarantee 
entitlement to tax-exempt status. Rev. Ruls. 71-447 and 
75-231 do not restrict petitioners’ right to hold or teach 
their religious beliefs, nor do these rulings prevent them 
from continuing their discriminatory practices without the 
benefit of government subsidy. If there is any burden 
on petitioners’ free exercise here, it is far outweighed by 
the compelling governmental interest in eliminating all 
forms of official support for racial discrimination in 
education. Norwood v. Harrison, supra. If the Establish­
ment Clause has any bearing here, it is to prohibit spe­
cial tax preferences for religiously-motivated racial dis­
crimination. To give favored tax treatment to racially 
discriminatory sectarian schools while denying tax bene­
fits to private schools that claim no religious basis for 
their racially discriminatory practices would impermissi­
bly entangle government with religion.

Since the United States does not support petitioners 
on their First Amendment claims, the principal issue 
here, as framed by the Government, is whether the Court 
should overrule Coit v. Green and the Commissioner’s 
firmly established practice, ratified by Congress, of deny­
ing tax-exempt status to racially discriminatory schools. 
The Government states that it fully subscribes to “the 
strong national policy in this country against racial dis­
crimination in any and all forms.” U.S. Br. at 11. But 
this is an empty assurance if schools that admittedly dis­
criminate on the basis of race are nonetheless afforded 
significant tax benefits. Surely, the constitutional and 
congressional command to eradicate the badges and inci­
dents of slavery demands more.



11

ARGUMENT

I. THE IRS RULING DENYING TAX-EXEMPT 
STATUS TO RACIALLY DISCRIMINATORY PRI­
VATE SCHOOLS WAS A NECESSARY RESULT 
OF FUNDAMENTAL DEVELOPMENTS IN STAT­
UTORY AND CONSTITUTIONAL LAW

On May 17, 1954, this Court established the funda­
mental principle that racial segregation in public educa­
tion violates the Fourteenth and Fifth Amendments. 
Brown v. Board of Education, 347 U.S. 483 (1954) ; 
Bolling v. Sharpe, 347 U.S. 497 (1954). In the interven­
ing 28 years, the courts and Congress have spelled out a 
national commitment to eliminate racial discrimination 
from virtually all institutions of American life. Nowhere 
is this commitment greater than in the field of education. 
From Brown, 347 U.S. at 493, to Washington v. Seattle 
School District No. 1, 102 S. Ct, 3187, 3196 (1982), and 
Plyler v. Doe, 102 S. Ct. 2382, 2397-98 (1982), the Court 
has repeatedly emphasized the surpassing importance of 
education in providing minority groups with a meaningful 
opportunity to achieve their rightful place in American 
society, and the devastating impact that racial segrega­
tion in education can have on children subjected to it. 
Accordingly, as the Court held in Cooper v. Aaron, 358 
U.S. 1,19 (1958) :

State support of segregated schools through any ar­
rangement, management, funds, or property cannot 
be squared with the [Fourteenth] Amendment’s com­
mand that no State shall deny to any person within 
its jurisdiction the equal protection of the laws. 
The right of a student not to be segregated on racial 
grounds in schools so maintained is indeed so fun­
damental and pervasive that it is embraced in the 
concept of due process of law.

Throughout the 1960’s, Congress translated the na­
tional policy against racial discrimination into legisla­
tion reaching most areas of American society. In the



12

Civil Rights Act of 1964, 42 U.S.C. §§ 2000a ei seq., 
Congress put the full force of federal law behind pro­
hibitions against racial segregation in public accommoda­
tions, employment and education. See Titles IV and VI, 
42 U.S.C. §§ 2000c & 2000d; see also, e.g., the Voting 
Rights Act of 1965, 42 U.S.C. §§ 1971 et seq; and the 
Civil Rights Act of 1968, 42 U.S.C. §§ 3601 et seq. 
(housing).,

This Court, at the same time, recognized that the Civil 
Rights Acts adopted in the post-Civil War era had al­
ready made private discrimination unlawful in many 
walks of life. In Jones v. Alfred. H. Mayer Co., 392 U.S. 
409 (1968), the Court held that 42 U.S.C. § 1982 pro­
hibits private racial discrimination in the sale or rental 
of property. The Court concluded that the Civil Rights 
Act of 1866 prohibited private interference with the 
enumerated rights and that this broad prohibition was 
within Congress’ power under the Thirteenth Amend­
ment to determine “the badges and the incidents of slav­
ery, and . . .  to translate that determination into effec­
tive legislation.” 392 U.S. at 440.

The conclusion of Jones—that the Civil Rights Act of 
1866 “operates upon the unofficial acts of private individ­
uals,” Sullivan v. Little Hunting Park, Inc., 396 U.S. 
229, 235 (1969)—clearly applied as well to 42 U.S.C. 
§ 1981, a companion provision which guarantees black 
citizens other equal rights, including the right to make 
contracts. Johnson v. Railway Express Agency, 421 U.S. 
454, 459-60 (1975) ; Tillman v. Wheaton-Haven Recrea­
tion Association, 410 U.S. 431, 439-40 (1973) ; Waters 
v. Wisconsin Steel Works, 427 F.2d 476, 483 (7th Cir.), 
cert, denied, 400 U.S. 911 (1970). Thus, when in 1970 
the IRS issued the ruling here challenged by petitioners, 
there was a sound basis upon which to conclude that 
racial discrimination by private schools in their admis­
sion of students violated 42 U.S.C. § 1981. In Runyon v. 
McCrary, 427 U.S. 160 (1976), this Court so held. In­
deed, by the time Runyon was decided, the Court could



13

state that § 1981’s prohibition of racial discrimination 
in the making and enforcement of private contracts was 
“now well established,” id  at 168, and that a segregated 
private school’s discrimination against blacks “amounts 
to a classic violation of § 1981,” id. at 172.®

While the national policy against racial discrimination 
in education, public and private, was thus being articu­
lated, implementation of the Brown decision proved to be 
far more difficult than anticipated. Swann v. Chariotte- 
Mecklenburg Board of Education, 402 U.S. 1, 13 (1971). 
The widespread proliferation of segregated white private 
schools, often supported by substantial state assistance, 
seriously undermined efforts to desegregate the public 
schools. See Griffin v. County School Board, 377 U.S. 
218 (1964).6 7 Throughout the 1960’s, the federal courts 
repeatedly struck down state and local efforts to provide 
financial assistance to such schools, usually in the form 
of tuition grants; this Court consistently affirmed these 
decisions summarily. See Norwood v. Harrison, 413 U.S. 
455, 463 & n.6 (1973), and cases cited. In consequence, 
the tax benefits provided by §§ 170 and 501(c) (3) as-

6 Although the Court, has not squarely ruled on the point, concerted 
activity to deprive blacks of rights secured by § 1981 may constitute 
a criminal conspiracy under 18 U.S.C. § 241. See Jones v. Alfred 
H. Mayer Co., supra, 392 U.S. at 441-43 n.78, overruling Hodges v. 
United States, 203 U.S. 1 (1906); United States v. Morris, 125 
F. 322 (E.D. Ark. 1903). See also United States v. Price, 383 U.S. 
787, 800-05 (1966). Such activity may also constitute a civil con­
spiracy under 42 U.S.C. § 1985(3). See Griffin v. Breckenridge, 
403 U.S. 88 (1971).

7 See also United States v. Jefferson County Bd. of Educ., 372 
F.2d 836, 848-49 (5th Cir. 1966); Green v. Kennedy, 309 F. Supp. 
1127, 1133-36 (D.D.C.), appeal dismissed sub nom. Cannon v. Green, 
398 U.S. 956 (1970) ; Poindexter v. Louisiana Financial Assistance 
Comm’n, 275 F. Supp. 833, 851, 856-57 (E.D. La. 1967), aff’d, 
389 U.S. 571 (1968); U.S. Comm’n on Civil Rights, Southern 
School Desegregation 1966-67 at 70-76 (1967); Equal Educational 
Opportunity: Hearings Before the Senate Select Comm, on Equal 
Educational Opportunity, 91st Cong., 2d Sess. 1931 et seq. (1970) 
(“1970 Hearings”).



14

sumed a “critical significance” in enabling these schools 
to flourish. Green v. Kennedy, 309 F. Supp. 1127, 1135 
(D.D.C.) (three-judge court), appeal dismissed sub nom. 
Cannon v. Green, 398 U.S. 956 (1970). See U.S. Com­
mission on Civil Rights, Southern School Desegregation 
1966-67 at 75-76 (1967); 1970 Hearings, supra note 7, 
at 1941-43, 1954-55, 1966, 1983-84.

Thus, in 1969 black parents and students in Mississippi 
brought the Green action challenging the IRS’ continued 
recognition of tax-exempt status for segregated private 
schools in that state. The three-judge court recog- -  
nized that tax-deductible contributions had become the- 
major source of funding for these private schools, pro­
viding crucial support to meet the schools’ capital needs 
and operating expenses and thus allowing the schools 
to expand segregated education at the expense of the de­
segregated public schools. 309 F. Supp. at 1135. Finding 
that plaintiffs’ challenge raised “grave constitutional 
questions,” id. at 1133, the court preliminarily enjoined 
the IRS in early 1970 from continuing to recognize tax- 
exempt status for segregated private schools in Mississippi.

Against this background, the IRS in July 1970 con­
cluded that it could “no longer legally justify allowing 
tax-exempt status to private schools which practice racial 
discrimination” under § 501(c) (3), “nor [could] it treat 
gifts to such schools as charitable deductions for income 
tax purposes” under § 170. J.A. A235. The IRS formally 
adopted this position in Rev. Rul. 71-447, 1971-2 C.B. 
230, the full text of which is set out in Appendix A to 
this brief.8 The IRS explained: “Both the courts and the 
Internal Revenue Service have long recognized that the

8 The IRS made clear at the outset that its position applied to all 
private schools, whether church-related or not. J.A. A237-239; see 
Rev. Rul. 75-231, 1975-1 C.B. 158. Procedures relating to enforce­
ment of these revenue rulings were promulgated in Rev. Proc. 72- 
54, 1972-2 C.B. 834; Rev. Proc. 75-50, 1975-2 C.B. 587.



15

statutory requirement of being ‘organized and operated 
exclusively for religious, charitable, . . .  or educational 
purposes’ was intended to express the basic common law 
concept [of charity].” In particular, the IRS emphasized 
the common law principle that an organization is not 
“charitable” if its purposes are illegal or contrary to 
fundamental national policy. The IRS found that “ [t]he 
Federal policy against racial discrimination is well- 
settled in many areas of wide public interest,” particu­
larly “in education, whether public or private.” 9

This ruling was not a product of mere IRS “whim,” 
Bob Jones, 468 F. Supp. at 905, nor was it simply a 
reaction to the preliminary injunction entered in Green. 
Rather, it was the outcome of years of serious considera­
tion of the issue in light of the emerging national policy 
against racial discrimination in education. 1982 Hear­
ing, supra note 8, at 84, 88-97; 1970 Hearings, supra 
note 7, at 2001.10 The decision was personally approved 
by President Nixon, 1982 Hearing at 84-85; 1970 Hear­
ings at 1998, and has been enforced consistently by every 
Administration until now.

9 Rev. Ruls. 71-447 and 75-231 remain in effect and had the sup­
port of the IRS, the agency charged with enforcement of the Code, 
as well as of the Tax Division of the Department of Justice, through­
out the debate leading to the Administration's change in position. 
See, e.g., 1982 Hearing* supra note 3, at 153, 156, 178, 226, 256, 259, 
454,472-531.

10 The IRS in iti& M is  study of this issue in the late 1950’s and 
began to impleineni^Jchanges regarding racially discriminatory 
schools in 1965. ‘|j|ll969, at the urging of Congress, a blue ribbon 
Advisory Committee on Exempt Organizations was appointed to 
analyze federal law and policy governing tax-exempt organizations. 
The Committee’s reaffirmation that tax-exempt status was intended 
only for organizations charitable in the common law sense, which 
do not violate fundamental national policy, was influential in the 
IRS’ 1970 decision. See 1982 Hearing at 84, 88, 90-94; 1970 Hear­
ings at 2001.



16

The IRS ruling was upheld by the three-judge court 
in Green v. Connally, 330 F. Supp. 1150 (D.D.C. 1971). 
The court recognized the force of the IRS’ reliance on 
the common law background of § 501(c) (3), id. at 
1157-61, but rested its holding on the well-established 
presumption against the allowance of federal tax bene­
fits that would frustrate other sharply defined govern­
mental policies. Tank Truck Rentals, Inc. v. Commis­
sioner, 356 U.S. 30 (1958). Noting that Tank Truck 
held that business expense deductions were properly denied 
on this ground, the court stated:

This public policy limitation on tax benefits applies 
a fortiori to the case before us, involving the charita­
ble deduction whose very purpose is rooted in help­
ing institutions because they serve the public good. 
The Internal Revenue Code does not contemplate the 
granting of special Federal tax benefits to trusts or 
organizations . . . whose organization or operation 
contravene Federal public policy.

330 F. Supp. at 1162. Concluding that the recognition 
of tax-exempt status for segregated private schools would 
frustrate the most fundamental and clearly established 
national policies, id. at 1163-64, the court in Green issued 
a declaratory judgment upholding the IRS’ interpretation 
of § 501(c) (3) and granted permanent injunctive relief 
barring tax-exempt status for discriminatory private 
schools in Mississippi. Intervenors appealed, raising 
arguments similar to those upon which petitioners and 
the Government here rely. See 1982 Hearing at 275-353. 
This Court affirmed per curiam, without opinion. Coit 
v. Green, 404 U.S. 997 (1971). For the reasons which 
follow, that decision was correct and should not now be 
overruled.



17
II. CONGRESS INTENDED TO GRANT TAX BENE­

FITS UNDER §§ 501(c)(3) AND 170 TO CHARITA­
BLE ORGANIZATIONS IN THE COMMON LAW 
SENSE AND THUS NOT TO ORGANIZATIONS 
WHOSE ACTIVITIES ARE UNLAWFUL OR VIO­
LATE FUNDAMENTAL NATIONAL POLICIES

Section 501(c) (3) of the 1954 Internal Revenue Code, 
as it was in effect during the relevant period,11 provided 
an exemption from federal income tax for

Corporations, and any community chest, fund, or 
foundation, organized and operated exclusively for 
religious, charitable, scientific, testing for public 
safety, literary or educational purposes, or for the 
prevention of cruelty to children or animals, no part 
of the net earnings of which inures to the benefit of 
any private shareholder or individual . . . .

Tax-exempt status under § 501(c) (3) controls the Code’s 
exemption for charitable organizations from federal so­
cial security taxes, § 3121(b) (8) (B), and from federal 
unemployment taxes, § 3306(c) (8), the taxes directly at 
issue here.

Eligibility to receive tax-deductible charitable contri­
butions under § 170 of the Code is determined in accord­
ance with a substantially identical standard. Section 
170(c) (2) (B) provides a deduction for income tax pur­
poses for a “charitable contribution,” defined to include 
contributions to organizations “operated exclusively for 
religious, charitable, scientific, literary, or educational 
purposes.” These two closely-related provisions must be 
construed in pari materia. U.S. Br. at 14. See Harris v. 
Commissioner, 340 U.S. 106, 107 (1950) ; United States v. 
Stewart, 311 U.S. 60, 64 (1940).12

11 Section 501(c) (3) was amended in 1976 also to embrace organi­
zations “to foster national or international amateur sports competi­
tion.” Tax Reform Act of 1976, Pub. L. No. 94-455, § 1313(a), 90 
Stat. 1520, 1730 (1976).

12 Thirteen other provisions of the Code contain similar or identi­
cal references to “religious, charitable . . .  or educational purposes”



18

A. The Language of §§ 501(c)(3) and 170 Reflects Their 
Origins in the Common Law and in English and 
State Tax Exemption Statutes

The operative language in §§ 501(c) (3) and 170 is 
derived from the earliest federal revenue statutes. The 
first general income tax law passed by Congress, the 
Tariff Act of 1894, exempted “corporations, companies, 
or associations organized and conducted solely for chari­
table, religious or educational purposes.” Ch. 349, § 32, 
28 Stat. 509, 556 (1894). That Act was held unconstitu­
tional, Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 
601 (1895), and was never implemented. But in enacting 
a tax on corporate incomes in 1909, Congress exempted 
“any corporation or association organized and operated 
exclusively for religious, charitable, or educational pur­
poses, no part of the net income of which inures to the 
benefit of any private stockholder or individual.” Tariff 
Act of 1909, ch. 6, § 38, 36 Stat. 11, 113 (1909). After 
the Sixteenth Amendment, Congress enacted the Tariff 
Act of 1913, the first modern income tax law. Chapter 
16, § (G) (a), 38 Stat. 114, 172 (1913), the direct prede­
cessor of § 501(c) (3), provided an exemption virtually 
identical in terms to the 1909 exemption, only adding 
“scientific” to the statutory phrase. The terms of the 
exemption have been carried forward in each subsequent 
income tax act without basic change.13

These exemption provisions are part of a long-standing 
practice in common law jurisdictions. The federal ex­

in establishing exemptions from, or eligibility for deductions under, 
income, estate, gift and excise taxes. 26 U.S.C. §§ 170(c) (4); 
501(c) (10); 642(c); 2055(a)(2) & (3); 2106(a) (2) (A) (ii) & ( ii i) ; 
2522(a)(2) & (3); 2522(b)(2), (3) & (4); 4911(e)(1)(A).

13 A deduction for charitable contributions to “religious, charitable 
. . . or educational” organizations, equivalent to that now contained 
in § 170(c), was first enacted in 1917, War Revenue Act, ch. 63, 
§ 1201(2), 40 Stat. 300, 330, and has likewise been carried forward 
without substantial change in each succeeding income tax law.



19

emption has “roots reaching back to the British Statute 
of Charitable Uses of 1601 and to early state constitu­
tional provisions.” Bittker & Rahdert, The Exemption 
of Nonprofit Organizations from Federal Income Taxa­
tion, 85 Yale L.J. 299, 301 (1976). See Hopkins, The 
Law of Tax-Exempt Organizations § 1.2, at 5 (3d ed. 
1979); Zollmann, American Law of Charities §§ 678, 701 
(1924). Indeed, the practice of exempting charitable or­
ganizations from tax was so well settled at common law 
and in legislative practice that when Congress failed to 
enact any express exemption in the 1862 income tax law 
passed to help finance the Civil War, Act of July 1, 1862, 
ch. 119, §§ 89-93, 12 Stat. 432, 473 (1862), the Commis­
sioner of Internal Revenue nevertheless ruled that it was 
not intended to apply to “ [t]he income of literary, scien­
tific, or other charitable institutions.” Decision No. 110 
(May 1863), reprinted in Boutwell, A Manual of the 
Direct and Excise Tax System, of the United States 273, 
275 (1863).14

The language of the early revenue acts is a compelling 
indication of congressional intent to exempt only common 
law charities. In enacting an exemption in 1894 for 
“charitable, religious or educational purposes,” Congress 
closely tracked the principal heads of charitable organiza­
tions under the law of charity, as enumerated in Lord 
MacNaghten’s authoritative restatement:

“Charity” in its legal sense comprises four principal 
divisions: trusts for the relief of poverty; trusts for 
the advancement of education; trusts for the ad­
vancement of religion; and trusts for other purposes

14 See also Act of June 30, 1864, ch. 173, § 111, 13 Stat. 223, 
279 (1864) (exempting “any charitable, benevolent or religious 
association” from excise tax on lotteries); Treas. Eegs. Ser. 4, No. 
4, Special Taxes §27 (Jan. 1868); 35 Cong. Eec. 5565 (1902) 
(comments of Eep. McCall on bill to exempt “religious, literary, 
charitable, or educational” bequests from 1898 inheritance tax: 
“it has always been the policy of our laws to spare” such institu­
tions from taxation).



2 0

beneficial to the community, not falling under any 
of the preceding heads.

Commissioners v. Pemsel, [1891] A.C. 531, 583. See also 
Jackson v. Phillips, 96 Mass. (14 Allen) 539, 556 (1867) ; 
4 Scott, Law of Trusts § 368 (3d ed. 1967) ; 2 Perry, 
Trusts and Trustees § 697 (2d ed. 1874). Congress, in 
1894 and in subsequent enactments, did not find it 
necessary to define these terms, for they had been well 
defined by hundreds of years of legal precedent. Sol. Op. 
159, III-l C.B. 480 (1924) ; see Reiling, Federal Taxa­
tion: What Is a Charitable Organization?, 44 A.B.A. J. 
525,526 (1958) .M

The statutory phrase used in the federal exemption 
follows the pattern of language found at the turn of the 
century in the tax statute in England, where charitable 
organizations have been exempted since initiation of the 
income tax in 1799.15 16 The English exemption was defini­
tively construed in the leading case of Commissioners v. 
Pemsel, [1891] A.C. 531. See Brunyate, The Legal Defini­
tion of Charity, 61 Law Q. Rev. 268, 269-70 (1945). The

15 Cf. International Reform Federation v. District Unemployment 
Compensation Board, 131 F.2d 337, 339 (D.C. Cir. 1942) (constru­
ing equivalent provision of D.C. Code):

That Congress had in mind these broader definitions is con­
firmed by the words used in the Act, for by its terms it em­
braces religious, charitable, scientific, literary, or educational 
corporations, thus including within the exemption clause every 
nonprofit organization designed and operating for the benefit 
and enlightenment of the community, the State, or the Nation— 
in short, to apply the exemption to those organizations com­
monly designated charitable in the law of trusts. Consequently, 
we may properly draw analogy from the trust cases.

16 The legislative history of the Tariff Act of 1894 shows frequent 
reference to the English income tax. See, e.g., H.R, Rep. No. 276, 
53d Cong., 2d Sess. 4-5 (1894); 26 Cong. Rec. 584-88 (report on 
English tax law and practice from Department of State), 1609-10 
(remarks of Rep. Hall: author of the proposed bill “could not have 
followed more closely” the English income tax legislation), 1612-14, 
3562, 3781, 6612-15, 6693, Appendix 418-19 (1894).



21

House of Lords there considered the Income Tax Act of 
1842, 5 & 6 Viet. c. 35, s. 61, No. VI., Sched. A., which 
exempted income from the property of “any hospital, 
public school,17 or almshouse, or vested in trustees for 
charitable purposes.” [1891] A.C. at 533. Thus, like the 
U.S. exemption, the English statute enumerated several 
specific terms along with a separate reference, in the dis­
junctive, to “charitable” purposes. The issue was whether 
the word “charitable” should be interpreted in its broad 
legal sense in accordance with the law of charitable trusts 
or in its “popular or vulgar” sense as involving only “the 
relief of poverty.” Id. at 574-75, 581-82 (opinion of Lord 
MacNaghten) ,18 As in the present case, appellants con­
tended that the presence of the specific terms separated 
by the disjunctive meant the word “charitable” must be 
given a more limited meaning. Id. at 535-36 (argument 
of Solicitor General of Great Britain).

The House of Lords held that the statute was in­
tended to provide an exemption “to all trusts known 
to the law of England as charitable uses” and ex­
pressly rejected the argument that each of the specific 
terms must be given a separate and independent mean­
ing. Id. at 574, 587. Lord MacNaghten explained: “It is 
not so very uncommon in an Act of Parliament to find

17 The “public” school in England is roughly equivalent to the 
American “private” school. See Carter & Crawshaw, Tudor on 
Charities 398-99 (5th ed. 1929).

18 In applying the Act the taxing authorities had construed the 
word in the broader sense for many years before reversing their 
position. [1891] A.C. at 574. Lord MacNaghten thought it “rather 
startling to find the established practice of so many years suddenly 
set aside by an administrative department of their own motion . . 
id. at 591, particularly since the former interpretation had been 
ratified by Parliament. “It is impossible to suppose that on 
every [re-enactment of the Act] . . . the Legislature can have been 
ignorant of the manner in which the tax was being adminis­
tered . . ., especially when the practice was fully laid before 
Parliament.” Id. In this sense, the present case is an instance of 
history repeating itself. See infra at 48-57.



2 2

special exemptions which are already covered by a gen­
eral exemption.” Id. at 589. He thought it “plain on the 
very words of Sched. A., that the Legislature considered 
the purposes of a public school to be charitable, and a 
public school to be a trust for charitable purposes, just 
so much as an almshouse or a hospital.” Id. at 587-88.10 
Immediately upon enactment of the 1913 federal income 
tax, Pemsel and other precedents defining the common 
law of charitable organizations were relied upon by 
American commentators in interpreting the scope of the 
predecessor to § 501(c) (3). See Black, A Treatise on 
Federal Taxes § 123, at 149-50 (4th ed. 1919) ; Foster, 
A Treatise on the Federal Income Tax under the Act of 
1913 § 41, at 168-72 (2d ed. 1915).

The statutory phrase adopted by Congress also closely 
paralleled the practice followed by many states in the 
nineteenth century in exempting charitable organizations 
from taxation. See Fisch, Freed & Schachter, Charities 
and Charitable Foundations § 879, at 658 (1974) ; Reil- 
ing, Federal Taxation: What Is a Charitable Organiza­
tion?, 44 A.B.A. J. 525, 526-27 (1958). Typically, 
these state constitutional provisions and statutes, like 
§ 501(c) (3), listed a series of specific purposes in addi­
tion to the term “charitable,” with unexplained varia­
tions In the particular purposes listed. See, e.g., Ind. 
Rev. Stat. ch. 98, § 8525 (1892) (exempting property 
used for “educational, literary, scientific or charitable” 
purposes) ; Mass. Pub. St. ch. 11, § 5 (1882) “liter­
ary, educational, charitable, scientific, or religious pur­
poses” ).* 20 Regardless of the particular wording em­

10 See [1891] A.C. at 574 (opinion of Lord Herschell) (specific 
terms intended merely “to quiet the fears” of those apprehensive 
that a particular institution may not fall within the general charita­
ble exemption).

20 Other early state constitutional provisions and statutes are listed 
in Appendix B hereto. Comparable statutes existing today in many 
states are referred to in Fisch, Freed & Schachter, supra, § 256, at 
229 n.6 (1974); 42 Am. Jur. 2d Inheritance, Estate and Gift Taxes 
§§ 209, 234, 439 (1969). As Professor Scott has noted, these statutes 
are “randomly worded,” leading to the inclusion of “general purposes



23
ployed, state courts had little difficulty in concluding that 
statutory language of this general type was intended to 
reflect principles established in the common law of chari­
table trusts.* 21 See 4 Scott, Law of Trusts § 368, at 60 (3d 
ed. Interim Supp. 1981). These statutory listings of spe­
cific charitable purposes were readily understood as 
simply an effort to clarify the exemption through illustra­
tive examples, and state courts have accordingly held that 
the particular purposes listed are not to be construed as 
distinct and mutually exclusive.22 See Fisch, Freed &

as well as specific provisions relating to certain charities which would 
have fallen naturally under the more general words.” 4 Scott, Law of 
Trusts § 348.4, at 46 (3d ed. Interim Supp. 1981); see also id. 
§ 368, at 59.

21 E.g., Molly Varmrni Chapter, D.A.R. v. City of Lowell, 204 
Mass. 487, 492-93, 90 N.E. 893, 894 (1910); Travelers’ Ins. Co. v. 
Kent, 151 Ind. 349, 351-53, 50 N.E. 562, 563-64 (1898); M.E. 
Church, South v. Hinton, 92 Tenn. 188, 190, 21 S.W. 321, 322-23 
(1893); see Ross, Inheritance Taxation 189-92 (1912); see also 
Eliot, The Exemption from Taxation (1874), in 2 Charles W. Eliot, 
The Man and His Beliefs 667, 700 (1926).

The same result has been reached in modern decisions. E.g., 
Stockton Civic Theatre v. Board of Supervisors, 66 Cal.2d 13, 16-22, 
423 P.2d 810, 813-816, 56 Cal. Rptr. 658, 661-64 (1967), and cases 
cited; People ex rel. Doctors Hospital, Inc. v. Sexton, 267 App. Div. 
736, 741, 48 N.Y.S.2d 201, 205 (1944).

See generally 26 Rul. Case Law § 281, at 320 (Perm. Supp. ed. 
1929) (exempted “educational” institutions intended to be “confined 
to those of the same general character as the benevolent and chari­
table institutions with which they are associated in the statute”) ; 
15 Am. Jur. 2d Charities §26, at 36 (1976) (statutory terms 
“ ‘charitable, religious, or benevolent’ purposes, or the like, . . . 
seem to be accorded the same meaning as in the general law of 
charitable trusts and donations”).

22 Ancient and Accepted Scottish Rite of Freemasonry v. Board of 
County Commn’rs, 122 Neb. 586, 595, 241 N.W. 93, 96 (1932). Rather, 
in that case a statute exempting property used for “educational, re­
ligious, charitable or cemetery purposes” was to be construed in 
accordance with the English and American law of charitable uses. 
Id. at 598-601, 241 N.W. at 97-98. A recent Massachusetts case held 
that the word “charitable” in the statutory phrase “civic, educa­
tional, charitable, benevolent or religious purpose” is not distinct



24

Schachter, supra, § 788, at 603 (specific purposes included 
“to insure that every purpose falling within the concept 
of charitable will be accorded exemption”) .

Thus, the Fourth Circuit did not overstate the matter 
in holding that petitioners’ interpretation of the statute 
“tears section 501(c) (3) from its roots” in the common 
law. 639 F.2d at 151. This Court’s decisions make clear 
that these obvious origins of the federal exemption may 
not be ignored. “Where Congress uses terms that have 
accumulated a settled meaning under either equity or the 
common law, a court must infer, unless the statute other­
wise dictates, that Congress means to incorporate the es­
tablished meaning of these terms.” NLRB v. Amax Coal 
Co., 453 U.S. 322, 329 (1981). Where the common law roots 
of statutory language are apparent, it is fair “to pre­
sume that Congress would have specifically so provided” 
if it had not intended to follow the traditional common 
law interpretation. Pierson v. Ray, 386 U.S. 547, 
554-55 (1967) ; accord Gilbert v. United States, 370 U.S. 
650, 655 (1962). See McDonald v. Hovey, 110 U.S. 619, 
621 (1884) (relying on construction of similar statutes 
in England and the states) ; Pennock v. Dialogue, 
2 Pet. 1, 18-21 (1829) (Story, J . ) ; cf. United States v. 
Euge, 444 U.S. 707, 712-14 (1980) (relying on analogous 
common law duties as guide to interpretation of Code 
summons provision).

B. The Legislative History of §§ 501(c)(3) and 170 
Demonstrates That Congress Intended to Enact an 
Exemption Only for Organizations Charitable at 
Law

The legislative history strongly reinforces the conclu­
sion that Congress intended to enact an exemption only 
for organizations that are charitable in the broader com-

from, but rather encompasses, the word “religious” and that the 
phrase should be interpreted by reference to “the evolved concep­
tion of the legal meaning of charity.” Congregational Church v. 
Attorney General, 376 Mass. 545, 549, 381 N.E.2d 1305, 1307-08 
(1978).



25

mon law sense.23 Despite its use of the standard “reli­
gious, charitable or educational” language, Congress has 
repeatedly declared that its purpose was to exempt “char­
ities,” “charitable organizations,” or “charitable contribu­
tions” generally. Thus, when in 1902 Congress enacted 
legislation, Act of June 27, 1902, ch. 1160, 32 Stat. 406, 
providing for the refund of all taxes paid on “religious, 
literary, charitable, or educational” bequests under the 
War Revenue Act of 1898, ch. 448, § 29, 30 Stat. 448, the 
House Ways and Means Committee explained: “ [T]hese 
institutions embrace the whole domain of the charities of 
the country.” H.R. Rep. No. 1702, 57th Cong., 1st Sess. 2 
(1902) (emphasis added). See also 35 Cong. Rec. 5565 
(1902) (remarks of Rep. McCall, the bill’s sponsor, de­
scribing these as “charitable bequests” and “charitable 
legacies” ) ; 44 Cong. Rec. 4150 (1909) (remarks of Sen.

23 The Government argues that the individual word “charitable” 
is used in § 501(c) (3) in its narrower popular sense, meaning only 
“relief of the poor.” U.S. Br. at 18 n.15, 20-21. But this conten­
tion does not meet the central issue. Even if the Government were 
correct in its interpretation of the word “charitable”, the question is 
whether Congress intended all exempted organizations—including 
educational, religious and “aid-to-the-poor” organizations—to be 
charitable in the broader common law sense and therefore did not 
intend to exempt organizations whose purposes are unlawful or 
against fundamental national policy. In any event, the Government’s 
position is highly doubtful because if the word “charitable” is lim­
ited to its narrower meaning, and if § 501(c) (3) as a whole does not 
reflect an overriding concept of charitable in the legal sense, then 
there remains no statutory basis for granting tax-exempt status to 
the many types of organizations that have been held by the IRS to be 
exempt even though they are not charitable in the narrower popular 
sense, because they do not serve primarily the poor, and do not fall 
within any of the other specific terms in the statute. E.g., Rev. Rul. 
78-85, 1978-1 C.B. 150 (preservation of public park ); Rev. Rul. 76- 
204, 1976-1 C.B. 152 (promotion of environmental conservation) ; 
Rev Rul 69-545, 1969-2 C.B. 117 (hospital); Rev. Rul. 66-323, 1966- 
2 C.B. 216 (blood bank); Rev. Rul. 59-310, 1959-2 C.B. 146 (com­
munity recreational facilities); Rev. Rul. 55-656, 1955-2 C.B. 262 
(community nursing bureau). See Treas. Reg. § 1.501(c) (3)-l(d) (2) 
(1959); infra at 32. See also 1982 Hearing, supra note 3, at 595.



26

Bacon, explaining that exemption to 1909 tax on corporate 
incomes, which he sponsored, exempted institutions de­
voted “to every charitable and just impulse”).

Similarly, in 1917, during congressional debate on the 
proposed deduction for contributions to “religious, chari­
table, scientific or educational” organizations, Senator 
Hollis, sponsor of this provision, explained his amendment 
as concerning “donations . . . for charitable purposes.” 
55 Cong. Rec. 6728 (1917). In 1918, during re-enactment 
of the revenue laws, Congress described this provision as 
a deduction for contributions to “charitable organiza­
tions.” 56 Cong. Rec. 10,426-27 (1918) (remarks of Rep. 
Robbins) ; see generally id. at 10,418-28. Again, in 1935, 
the House sponsor of the proposal to extend the deduction 
to corporate contributors explained that it applied to con­
tributions “for charitable purposes.” 79 Cong. Rec. 12,423 
(1935) (remarks of Rep. McCormack). See also H.R. 
Rep. No. 1681, 74th Cong., 1st Sess. 20 (1935) (minority 
views) ; 79 Cong. Rec. 12,423-24 (1935).24

The legislative history also shows that Congress pro­
vided favored tax treatment to “religious, charitable or 
educational” organizations in recognition of the public 
benefits they provide. Thus, in 1917 Senator Hollis de­
scribed the benefit the public derives from diverting tax 
dollars to charitable organizations: “For every dollar
that a man contributes to these public charities, educa­
tional, scientific, or otherwise, the public gets 100 per­
cent.” 55 Cong. Rec. 6728 (1917) ; see id. at 6729. See 
also Hearings on H.R. 12863 Before the Senate Comm, 
on Finance, 65th Cong., 2d Sess. 223-24 (1918); Hear- * 67

24 In addition to the sources cited above, see, e.g., H.R. Rep. No. 
2514, 82d Cong., 2d Sess. 16 (1952); S. Rep. No. 1631, 77th Cong., 
2d Sess. 240 (1942); H.R. Rep. No. 2333, 77th Cong., 2d Sess. 166-
67 (1942) ; S. Rep. No. 1567, 75th Cong, 3d Sess. 14 (1938); 
S. Rep. No. 665, 72d Cong, 1st Sess. 52-53 (1932); S. Rep. No. 52, 
69th Cong, 1st Sess. 8 (1926).



27

ings on the Revenue Bill Bef ore the House Comm, on Ways 
and Means, 65th Cong., 2d Sess. 372, 380-81 (1918) ; 
56 Cong. Rec. 10,426-27 (1918) (remarks of Rep. Rob­
bins: charitable contributions are encouraged because 
charities “supply a place which the Government cannot 
and will not fulfill” ); 61 Cong. Rec. 5294 (1921) (re­
marks of Rep. Green: “The gifts must be made ex­
clusively for public purposes” ). In 1938, in connection 
with legislation to limit the charitable deduction to con­
tributions to domestic organizations, the House Ways and 
Means Committee explained:

The exemption from taxation of money or property 
devoted to charitable and other purposes is based 
upon the theory that the Government is compensated 
for the loss of revenue by its relief from the finan­
cial burden which would otherwise have to be met by 
appropriations from public funds, and by the bene­
fits resulting from the promotion of the general wel­
fare. The United States derives no such benefit from 
gifts to foreign institutions, and the proposed limita­
tion is consistent with the above theory.

H.R. Rep. No. 1860, 75th Cong., 3d Sess. 19 (1938).

Thus, Congress adopted the basic rationale in support 
of §§ 501(c) (3) and 170 that is found in the common 
law precedents explaining the special treatment afforded 
to charitable organizations. At common law, charitable 
organizations are provided special privileges because of 
the contribution they make to the welfare of society. See 
Jackson v. Phillips, 96 Mass. (14 Allen) 539, 556 (1867) ; 
Green v. Connally, 330 F.Supp. 1150, 1157 (D.D.C. 
1971) ; 12 The American arid English Encyclopedia of 
Law 306 (2d ed. 1899) ; Bogert & Bogert, Law of Trusts 
§ 54 (5th ed. 1973) (in order to justify upholding trust 
as charitable, it must provide social benefits which will 
counterbalance the social disadvantages, such as freedom



28

from taxation) ; Restatement (Second) of Trusts § 368 
comment b (1959). An obvious corollai'y, of course, is 
that the purpose of a charitable trust, educational or 
otherwise, may not be unlawful or against public policy. 
4 Scott, Law of Trusts § 377 (3d ed. 1967) ; 2 Perry, 
Trusts and Trustees § 715 (2d ed. 1874) ; Restatement 
(Second) of Trusts § 377 comment c (1959). This Court 
acknowledged that principle a century ago: “A charitable 
use, where neither law nor public policy forbids, may be 
applied to almost any thing that tends to promote the 
well-doing and well-being of social man.” Quid v. Wash­
ington Hospital for Foundlings, 95 U.S. 303, 311 (1877) 
(emphasis added). See also Perin v. Carey, 24 How. 465, 
501 (1861) (“public charitable uses” must be “consistent 
with local laws and public policy” ) ; Jackson v. Phillips, 
supra, 96 Mass, at 556. In enacting an exemption for 
charitable organizations expressly based on their con­
tribution to the public welfare, Congress could not have 
intended to repudiate the companion principle that organ­
izations whose purposes violate fundamental national law 
and policy are not charitable in the legal sense.

C. Consistent Judicial and Administrative Construc­
tion of §§ 501(c)(3) and 170 Makes Clear That They 
Were Intended to Provide Tax Benefits Only to 
Organizations Charitable at Law

This understanding of the congressional intent under­
lying §§ 501(c) (3) and 170 is reflected in judicial deci­
sions construing these provisions. In its first encounter 
with the predecessor of § 501(c)'(3), ■ this Court recog­
nized that “the exemption is made in recognition of the 
benefit which the public derives from corporate activities 
of the class named, and is intended to aid them when not 
conducted for private gain.” Trinidad v. Sagrada Orden, 
263 U.S. 578, 581 (1924). Later, in Helvering v. Bliss, 
293 U.S. 144 (1934), the Court stated that the purpose 
of the charitable deduction now found in § 170 was “to



29

encourage gifts to religious, educational and other chari­
table objects.” Id. at 147 (emphasis added).25

Likewise, the lower courts have long looked to the com­
mon law of charitable trusts in determining the proper 
scope of §§ 501(c) (3) and 170. The courts have consis­
tently held that these and related provisions were intended 
to apply to organizations recognized as “charitable” at 
common law. See, e.g., Pennsylvania Co. v. Helvering, 66 
F.2d 284, 285 (D.C. Cir. 1933); St. Louis Union Trust 
Co. v. Burnet, 59 F.2d 922, 926 (8th Cir. 1932); Bok v. 
McCaughn, 42 F.2d 616, 618-19 (3d Cir. 1930) ; Peters 
v. Commissioner, 21 T.C. 55, 59 (1953) ; Sihley v. Com­
missioner, 16 B.T.A. 915, 917-18 (1929) ; Turnure v. 
Commissioner, 9 B.T.A. 871, 873 (1927).26 The cases have 
repeatedly emphasized the public benefit rationale under­
lying the exemption and have used this as a guide to its 
application. See, e.g., C.F. Mueller Co. v. Commissioner, 
190 F.2d 120, 122 (3d Cir. 1951); Duffy v. Birmingham,

25 While Walz v. Tax Comm’n, 397 U.S. 664 (1970), involved 
the validity of a New York property tax exemption, the Chief Jus­
tice’s explanation of the purposes underlying the state’s exemption 
of organizations serving “religious, educational or charitable pur­
poses,” id. at 666-67, is equally applicable here:

New York, in common with the other States, has determined 
that certain entities that exist in a harmonious relationship to 
the community at large, and that foster its “moral or mental 
improvement,” should not be inhibited in their activities by 
property taxation . . . .  The State has an affirmative policy that 
considers these groups as beneficial and stabilizing influences 
in community life and finds this classification useful, desirable, 
and in the public interest. Qualification for tax exemption is 
not perpetual or immutable; some tax-exempt groups lose that 
status when their activities take them outside the classification 
and new entities can come into being and qualify for exemption.

Id. at 672-73.
26 The cases (including Pennsylvania Co., Bok, Turnure, Sibley 

and Peters cited above) frequently rely upon this Court’s broad 
common law definition of charitable purposes as set out in Ould v. 
Washington Hospital for Foundlings, supra, 95 U.S. at 311.



30

190 F.2d 738, 740 (8th Cir. 1951) ; Harrison v. Barker 
Annuity Fund, 90 F.2d 286, 288 (7th Cir. 1937). See 
also St. Louis Union Trust Co. v. United States, 374 
F.2d 427, 432 (8th Cir. 1967) (Blackmun, J.). And, 
most important here, the lower courts have routinely 
applied the common law standards to organizations 
claiming “educational” or “religious” exemptions or de­
ductions under §§ 501(c) (3) and 170 and related provi­
sions. See, e.g., Girard Trust Co. v. Commissioner, 
122 F.2d 108, 109-10 (3d Cir. 1941); United States 
v. Proprietors of Social Law Library, 102 F.2d 481, 
483 (1st Cir. 1939) ; Slee v. Commissioner, 42 F.2d 
184, 185 (2d Cir. 1930); Hutterische Bruder Gemeinde, 
1 B.T.A. 1208, 1211 (1925); cf. Underwriters’ Lab­
oratories, Inc. v. Commissioner, 135 F.2d 371, 373-74 
(7th Cir. 1943) ; Hazen v. National Rifle Association, 
101 F.2d 432, 436 (D.C. Cir. 1938). Courts have ex­
pressly ruled that the “term ‘charitable’ [in the predeces­
sor to § 501(c) (3)3 is a generic term and includes liter­
ary, religious, scientific and educational institutions.” 
United States v. Proprietors of Social Law Library, 
supra, 102 F.2d at 483; accord Samuel Friedland Founda­
tion v. United States, 144 F. Supp. 74, 82 (D.N.J. 1956).

The IRS also has consistently taken the view that 
§ 501(c) (3) was intended to enact an exemption for 
charitable organizations as they were known at common 
law. In 1924 the Solicitor of Internal Revenue, in a com­
prehensive opinion, concluded that “ [tjhere being no 
statutory definition of the word [‘charitable’], it must be 
construed in accordance with its well understood common 
law meaning.” Sol. Op. 159, III-l C.B. 480, 481 (1924). 
The IRS has long recognized the tax-exempt status of 
many organizations in accordance with the common law 
concept of charity, e.g., Sol. Op. 159, III-l C.B. 480 (1924) ; 
S. 922, 1 C.B. 145 (1919); see Rev. Rul. 76-204, 1976-1 
C.B. 152, and from the earliest days has relied on prece­
dents involving comparable state tax exemption laws in



31

interpreting the scope of the Code provisions. S. 1176, 
1 C.B. 147 (1919) ; A.R.R. 477, 4 C.B. 264 (1921); O.D. 
510, 2 C.B. 209 (1920).27

Notably, the IRS has relied upon common law prin­
ciples and precedents in a wide variety of situations to 
determine the applicability of § 501(c) (3) to “reli­
gious” or “educational” organizations. It has denied 
exempt status to “educational” organizations on the basis 
of the common law prohibition of political activity before 
that prohibition was incorporated into the statute. 
Treas. Reg. 45, Art. 517 (1) (1921); Slee v. Commissioner, 
15 B.T.A. 710, 715 (1929), aff’d, 42 F.2d 184 (2d Cir. 
1930); S. 1362, 2 C.B. 152 (1920). See Cammarano 
v. United States, 358 U.S. 498, 512 (1959). The 
IRS has likewise denied exempt status to educational 
and other organizations because they served too lim­
ited a group of people and therefore did not 
provide sufficient public benefit to qualify under the 
common law test. See, e.g., Crellin v. Commissioner, 46 
B.T.A. 1152, 1155-56 (1942) (educational trust) ; James 
Sprunt Benevolent Trust v. Commissioner, 20 B.T.A. 19, 
24-25 (1930) (educational and religious trust); A.R.R. 
477, 4 C.B. 264, 265 (1921); S.M. 1836, III-l C.B. 273

27 Petitioner Goldsboro' argues that because charitable trusts were 
not covered by § 501(c) (3), the statute cannot be construed to 
exempt charitable organizations in the common law sense. G. Br. at 
20. It cites Treas. Reg. 45, Art. 517 (1921), promulgated under the 
Revenue Act of 1918, and A.R.M. 104, 4 C.B. 262 (1921). These 
authorities simply reflect that the exemption as first enacted only 
applied to “corporations or associations” and was construed at that 
time not to apply to trusts. Congress acted quickly to extend ex­
emption to any “community chest, fund, or foundation,” Revenue 
Act of 1921, ch. 136, 42 Stat. 227, 253 (1921), the language still 
found in § 501(c) (3). Following the amendment, the courts have 
uniformly held that § 501(c)(3) and its predecessor provisions ap­
ply to charitable trusts. E.g., Fifth-Third Union Trust Co. v. 
Comm’r, 56 F.2d 767 (6th Cir. 1932) ; Bok v. MeCaughn, 42 F.2d 
616 (3d Cir. 1930); Morgan v. Nauts, 6 AFTR 8011 (N.D. Ohio 
1928); cf. G.C.M. 15778, XIV-2 C.B. 118 (1935).



32

(1924) ; Treas. Reg. § 1.501(c) (3)-1(d) (1) (ii) (1959) 
(organization must serve “a public rather than a private 
interest” ). In 1967, the IRS relied on this principle to 
deny tax-exempt status and eligibility for charitable de­
ductions to an organization that restricted the use of a 
recreational facility on the basis of race, ruling that ra­
cially restricted access violated the obligations of charita­
ble organizations “in the generally accepted legal sense.” 
Rev. Rul. 67-325,1967-2 C.B. 113, 116.

This view of § 501(c) (3) is reflected in the IRS regu­
lations adopted in 1959 which define “charitable” in its 
broad common law sense, as encompassing the other pur­
poses specified in § 501(c) (3) :

The term “charitable” is used in section 501(c) (3) 
in its generally accepted legal sense and is, therefore, 
not to be construed as limited by the separate 
enumeration in section 501(c)(3) of other tax- 
exempt purposes which may fall within the broad 
outlines of “charity” as developed by judicial deci­
sions. Such term includes : Relief of the poor and 
distressed or of the underprivileged; advancement of 
religion; advancement of education or science; erec­
tion or maintenance of public buildings, monuments, 
or works; lessening of the burdens of Government; 
and promotion of social welfare by organizations de­
signed to accomplish any of the above purposes, or 
(i) to lessen neighborhood tensions; (ii) to eliminate 
prejudice and discrimination; (iii) to defend human 
and civil rights secured by law; or (iv) to combat 
community deterioration and juvenile delinquency.

Treas. Reg. § 1.501(c) (3)-1(d) (2). Contrary to the 
Government’s suggestion, this regulation is consistent 
with the interpretation of the term “charitable” the IRS 
has followed, with minor deviations, since the earliest 
revenue acts.28 It is plainly entitled to deference as a

28 Petitioners and the Government rely heavily on an unsigned 
1923 ruling of the IRS’ Income Tax Unit, I.T. 1800, II-2 C.B. 152,



valid and binding interpretation of § 501(c) (3). Com­
missioner v. Portland Cement Co., 450 U.S. 156, 169 
(1981); United States v. Cornell, 389 U.S. 299, 305-07 
(1967). As the Court unanimously held in Commissioner 
v. Portland Cement Co., the Court “must defer to Treas­
ury Regulations that ‘implement the congressional man­
date in some reasonable manner.’ ” 450 U.S. at 169 
(quoting Cornell, 389 U.S. at 307). Accord National 
Muffler Dealers Association v. United States, 440 U.S. 
472, 476-77 (1979).29

The Code is the product of a continual process of re­
vision and re-enactment. When Congress re-enacted the 
Code in 1954, it effectively incorporated the concept of 
tax exemptions for charitable organizations as developed

which stated in dicta that “charitable” was used in the more restric­
tive sense of relief for the poor. This statement was effectively 
superseded the next year by a formal opinion of the Solicitor of 
Internal Revenue, expressly approved by the Commissioner, which 
concluded that Congress “intended that [the statute] should cover 
all such bequests as might properly be classified as charitable from 
the standpoint of the common law.” Sol Op. 159, III-l C.B. 480, 484 
(1924). See also S.M. 1836, III-l C.B. 273 (1924).

The Government and petitioners also rely upon a superseded regu­
lation, initially issued under the 1924 Revenue Act, which provided 
that “Corporations organized and operated exclusively for charitable 
purposes comprise, in general, organizations for the relief of the 
poor.” U.S. Br. at 21-22; B.J. Br. at 15-16; G. Br. at 21-23. This 
regulation provides merely that a common example of organiza­
tions qualified under the word “charitable” in the statute: were 
those for relief of the poor and does not purport to set forth a 
comprehensive definition. It is not inconsistent with the position 
adopted in the precedents discussed above that all exempt organiza­
tions, of whatever type, must be charitable in the legal sense. See 
SMpra at n.23.

29 The Administration’s change of position in these cases does 
not affect this conclusion in any way. Treas, Reg. § 1.501(c) (3)- 
1(d)(2) remains in effect, and the Administration has informed 
Congress that it will continue to support the IRS in applying this 
regulation. 1982 Hearing, supra note 3, at 176 (testimony of Dep­
uty Secretary of the Treasury McNamar).



34

in the consistent judicial and administrative interpreta­
tion outlined above. “Congress is presumed to be aware 
of an administrative or judicial interpretation of a stat­
ute and to adopt that interpretation when it re-enacts a 
statute without change.” Lorillard v. Pons, 434 U.S. 
575, 580 (1978). See also NLRB v. Gullett Gin Co., 
340 U.S. 361, 366 (1951) ; National Lead Co. v. United 
States, 252 U.S. 140, 147 (1920). This presumption has 
particular force where the construction of the statute 
has been as consistent and long-standing as it is here. 
United States v. Ryan, 284 U.S. 167, 174-75 (1931).

If any doubt remained, Congress again adopted this 
construction of § 501(c) (3) in enacting the Tax Reform 
Act of 1969, Pub. L. No. 91-172, 83 Stat. 487 (1969), 
a major overhaul of the Code provisions governing chari­
table organizations.30 By 1969, the IRS regulation ex­
pressly adopting the common law concept of charitable 
organizations as the governing test under § 501(c) (3) 
had been in place for ten years. Indeed, the IRS had al­
ready ruled, in Rev. Rul. 67-325, 1967-2 C.B. 113, that 
a recreational organization practicing racial discrimina­
tion was not “charitable” and thus could not qualify for 
exemption under § 501(c) (3). See also Rev. Rul. 59-310, 
1959-2 C.B. 146, 148 (applying legal definition of charity 
in granting exemption to organization operating commu­
nity recreation facilities). In adopting the Tax Reform 
Act of 1969, Congress not only acquiesced in this inter­
pretation, but also expressly recognized that for purposes 
of § 501(c) (3) all exempt organizations must serve “the 
specified charitable purposes,” and that “charitable” is 
“a term, that has been used in the law of trusts for hun­
dreds of years.” H.R. Rep. No. 413 (Part 1), 91st Cong., 
1st Sess. 35, 43 (1969).

30 The Act substantially revised the tax law affecting many § 501 
(c)(3) organizations (see §101, relating to private foundations) 
and imposed a number of limitations on charitable deductions (see 
§ 201) .



35

D. The Language of the Code Supports the Conclusion 
That Congress Intended That Exempt Organiza­
tions Must Satisfy the Standards of the Law of 
Charity

Petitioners’ construction of the Code ultimately rests 
on the meaning they ascribe to Congress’ use of the dis­
junctive. U.S. Br. at 13-18; B.J. Br. at 11-13; G. Br. at 
15-17. They rely on canons of construction which “ordi­
narily suggest that terms connected by a disjunctive be 
given separate meanings, unless the context dictates 
otherwise.” Reiter v. Sonotone Corp., 442 U.S. 330, 339 
(1979) (emphasis added).81 Here, the context dictates 
otherwise. The words “educational,” “religious,” and 
“charitable,” of course, have variations in meaning, but 
the statutory and historical context makes clear that they 
were not intended to be entirely distinct. Rather, they 
share common characteristics and are descriptive of 
organizations that are charitable in the legal sense.

This meaning appears plainly on the face of § 170(c) 
where Congress used the term “charitable contributions” 
as a generic reference to contributions to “religious, 
charitable, or . . . educational” organizations. In using 
“charitable contributions” in this inclusive sense, 
§ 170(c) demonstrates that Congress considers “educa- 31

31 In dissenting from denial of certiorari in Prince Edward School 
Foundation v. United States, 450 U.S. 944 (1981), Justice Rehn- 
quist wrote that the separate references in § 501(c)(3) to “educa­
tional” and “charitable” organizations “ [a]rguably . . . reflect 
Congress’ intent that not all educational institutions must also be 
charitable institutions (as that term was used in the common 
law) in order to receive tax-exempt status.” Id. at 947. This 
observation was based expressly on “a reading of the relevant 
provisions” in their “ordinary, everyday sense,” id. at 947, 948, 
and apparently did not reflect consideration of the historic origins 
and legislative history of the provision or the judicial and ad­
ministrative construction discussed above, or the evidence of con­
gressional ratification set forth below. Moreover, as shown in the 
discussion which follows, on the face of the statute: the construction 
of the IRS is also “arguable” and is at least as reasonable.



tional” organizations to be part of a broader class fairly 
described as “charitable.” 32

Given this context, the use of the word “or” in 
§ 501(c) (3) simply cannot carry the heavy weight 
ascribed to it by petitioners and the Government. Cer­
tainly “or” does not always have one plain meaning.33 
Where appropriate, this Court has emphasized the am­
biguity of the word “or” and refused to give it a dis­
junctive meaning. De Sylva v. Ballentine, 351 U.S. 570, 
573-76 (1956) ; Union Insurance Co. v. United States, 
6 Wall. 759, 764 (1867) ; United States v. Fisk, 3 Wall. 
445, 447 (1865).

Thus, the Court has found that statutory terms sep­
arated by “or” can have overlapping meanings, or that 
one statutory term can be entirely encompassed by an­
other.34 The word “or” can also be used descriptively,

32 To the same effect, see the headings of § 501(h) (“Expendi­
tures by Public Charities To Influence Legislation,” referring to 
certain § 501(c)(3) organizations, including “educational institu­
tions”); § 642(c) (“Deduction for Amounts . . . Set Aside for a 
Charitable Purpose,” including “educational”, purposes); § 2522 
(“Charitable and Similar Gifts,” referring to gifts to “religious, 
charitable, scientific, literary, or educational purposes”) ; and § 4911 
(Chapter 41: “Public Charities,” referring to § 501(h) organiza­
tions). I t  is well settled that the Court may look to the headings 
of the Code as an aid to statutory interpretation. Maguire v. Com­
missioner, 313 U.S. 1, 9 (1941); Knowlton v. Moore, 178 U.S. 41, 65 
(1900).

33 See Chief Justice Marshall’s classic dictum, in McCulloch v. 
Maryland, 4 Wheat. 316, 414 (1819): “Such is the character of 
human language, that no word conveys to the mind, in all situations, 
one single definite idea.” See also FBI v. Abramson, 102 S. Ct. 
2054, 2061 n.7 (1982).

34 See, e.g., Hamling v. United States, 418 U.S. 87, 112 (1974) 
(“obscene, lewd, lascivious, indecent, filthy or vile” construed to 
mean “obscene”) ; Swearingen v. United States, 161 U.S. 446, 450-51 
(1896) (“obscene, lewd or lascivious” describe “one and the same 
offense,” having “the same meaning as is given them at common 
law.”). While the Court in FCC v. Pacifica Foundation, 438 U.S. 
726, 741 (1978), gave an independent meaning to “indecent”

36



37

to illustrate the concept the legislature intends to express 
and thus to provide the general context in which the 
words must be construed.35 It is reasonable to assume 
here that Congress included the terms “religious” and 
“educational” to this end. Certainly, iteration of exam­
ples is a useful way to explain the concept of charity, 
which, as this Court recognized in an early case, “is 
rather a matter of description than of definition.” Perin 
v. Carey, 24 How. 465, 494 (1861). This usage also 
serves to confirm beyond doubt that these major 
categories of charitable institutions were eligible. See 
Reiling, Federal Taxation, What Is a Charitable Organi­
zation?, 44 A.B.A. J. 525, 527 (1958) (by use of the 
specific terms, Congress “made certain that the exemption 
extends to all organizations that are charitable within the 
legal meaning of that term”) ; supra at 21-22 & n.19.

This interpretation of the provision is squarely sup­
ported by the doctrine of statutory construction known 
as noscitur a soeiis, a rule often used in interpreting lists 
of terms having a discernible common denominator. “A 
word usable in many contexts and with various shades 
of meaning . . . does not stand alone, but gathers mean­
ing from the words around it.” Jarecki v. G.D. Searle 
& Co., 367 U.S. 303, 307 (1961) (word “discovery” in 
phrase “exploration, discovery or prospecting” in the 
Code was limited to mining and did not include discovery

in a similar phrase, as it applies to the broadcast media, it did so 
in reliance on long-standing administrative practice, congressional 
intent and policy considerations respecting the protection of children, 
further demonstrating that the meaning of the word “or” depends 
on the statutory context.

35 See Bowles v. Weiner, 6 F.R.D. 540, 542 (E.D. Mich. 1947) 
(“or” used as a word of explanation showing relationship between 
similar term s); Black’s Law Dictionary 987 (rev. 5th ed. 1979) 
(“or” may be used “to clarify what has already been said”). 
See also United States v. Scrimgeour, 636 F.2d 1019, 1024 (5th 
Cir.), cert, denied, 102 S.Ct. 359 (1981) ; United States v. Moore, 
613 F.2d 1029, 1040-43 (D.C. Cir. 1979), cert, denied, 446 U.S, 954 
(1980).



38
through scientific research).86 This canon of construc­
tion “is often wisely applied where a word is capable 
of many meanings in order to avoid the giving of un­
intended breadth to the Acts of Congress.” Id. at 307. 
It has often been relied upon in construing provisions of 
the Code. Thus, in National Muffler Dealers Association 
v. United States, 440 U.S. 472 (1979), involving
§ 501(c) (6)—which allows a tax exemption for “bus­
iness leagues, chambers of commerce, . . .  or boards of 
trade”—the Court upheld the IRS’ regulation defining 
“business league” as “an organization of the same gen­
eral class as a chamber of commerce or board of trade.” 
Id. at 482.87

Here, the word “educational” derives meaning as part 
of a statutory expression (“religious, charitable, or edu­
cational” ) which, in context, is an obvious reference to 
the major categories of charitable organizations recog­
nized by the common law. Petitioners’ brittle grammat­
ical construction wholly disregards this context. But this * 37

36“ [T]he coupling of words together shows that they are to be 
understood in the same sense.” Neal v. Clark, 95 U.S. 704, 708-09 
(1878) (holding “fraud” in phrase “fraud or embezzlement” to 
mean, like embezzlement, an intentional wrong and thus to exclude 
implied or constructive fraud). See also Storti v. Commonwealth, 
178 Mass. 549, 553, 60 N.E. 210, 211 (1901) (Holmes, C.J.) (“un­
usual” in the phrase “cruel or unusual” in Massachusetts state con­
stitution must be construed with the word “cruel” and cannot be 
taken so broadly as to prohibit every unusual punishment).

37 The Court also confirmed the Commissioner’s reasoning in 
denying tax-exempt status to an organization that conceivably was 
a business league but that “lacked the characteristics that- a ‘busi­
ness league,’ ‘chamber of commerce,’ and ‘board of trade’ share in 
common and that form the basis for the exemption.” 440 U.S. at 481 
(emphasis added). See also United States v. Leslie Salt Co., 350 
U.S. 383, 393-94 & n.12 (1956) (meaning of “certificates of indebt­
edness” in Code provision taxing “bonds, debentures, or certificates 
of indebtedness” is limited to instruments similar to bonds or 
debentures); Keystone Automobile Club v. Commissioner, 181 F.2d 
402, 405 (3d Cir. 1950) (federal tax exemption for clubs operated 
for “pleasure, recreation, and other nonprofitable purposes” limited 
to purposes similar to pleasure or recreation).



39

Court has emphasized that grammatical rules of statu­
tory interpretation are to be used as a tool to ascertain 
congressional intent, not a strait jacket to compel disre­
gard for the obvious purpose of the statute. See Stafford 
v. Briggs, 444 U.S. 527, 535 (1980) (“in interpreting a 
statute, the court will not look merely to a particular 
clause in which general words may be used, but will take 
in connection with it the whole statute . . . and the ob­
jects and policy of the law . . .” ) (quoting Broivn v. 
Duchesne, 19 How. 183, 194 (1857)). See also Rose v. 
Lundy, 102 S. Ct. 1198, 1203 (1982) (court “must 
analyze the policies underlying the statutory provision to 
determine its proper scope”) ; Lynch v. Overholser, 369 
U.S. 705, 710 (1962); Costanzo v. Tillinghast, 287 U.S. 
341, 344-45 (1932).

Petitioners and the Government also argue that it 
would not have been necessary for Congress to insert 
certain terms in § 501(c) (3) if it had intended the 
provision to encompass the legal concept of charity. U.S. 
Br. at 20; B.J. Br. at 14; G. Br. at 19-20. But Congress’ 
inclusion of these terms—e.g., “literary” or “scientific,” 
or the prohibitions against private benefit and lobbying— 
merely confirm its intent to adhere to the common law 
model. The effect of the added terms is to codify corol­
laries of the legal concept of charity and in most in­
stances they are declarative of conclusions previously 
adopted by administrative interpretation.38 There is not

38 Thus, for example, in enacting amendments adding “scientific,” 
Tariff Act of 1913, ch. 16, § (G)(a), 38 Stat. 114, 172; organizations 
“for the prevention of cruelty to animals,” Revenue Act of 1918, eh. 
18, § 231(6), 40 Stat. 1057, 1076; and “literary,” Revenue Act of 
1921, ch. 136, § 231(6), 42 Stat. 227, 253, Congress simply clarified 
beyond dispute the application of § 501(c) (3) to organizations which 
were already qualified as common law charities. E.g., Bogert & 
Bogert, Trusts and Trustees § 375, at 122, § 379 at 198 (rev. 2d ed. 
1977) ; 4 Scott, Law of Trusts § 374.2 (3d ed. 1967). See 50 Cong. 
Rec. 1306 (1913); H.R. Rep. No. 1702, 57th Cong., 1st Sess. 2 
(1902). Congress amended the predecessor of § 170 to allow a de­
duction for contributions to government bodies in 1921. Revenue 
Act of 1921, ch. 136, § 214(a) (11) (A), 42 Stat. 227, 241. But the



40
the slightest evidence of any congressional intent to alter 
the scope or fundamental purpose of the statute. See 
Reiling, supra at 525-26.

E. Petitioners Do Not Qualify for Favored Tax Treat­
ment as Charitable Organizations

In its actions challenged in these cases, the IRS con­
cluded that the development of a clear federal public 
policy condemning racial discrimination in education 
made it impossible to grant petitioners tax-exempt status 
under § 501(c) (3). Certainly, the strength of this na­
tional policy cannot be questioned. U.S. Br. at 11, 12. As 
set forth above, supra at 11-16, there is here not only a 
sharply defined constitutional and legislative policy pro­
scribing government support for racially discriminatory 
private schools, but also a statutory prohibition of racial 
discrimination by the schools themselves. Runyon v. 
McCrary, 427 U.S. 160 (1976); 42 U.S.C. § 1981.39

IRS had already interpreted gifts for governmental purposes as 
“charitable,” S. 992, 1 C.B. 145 (1919), and Congress noted that the 
law had “always been construed that way anyhow.” Hearings on 
H.R. 824,5 Before the Senate Comm, on Finance, 67th Cong., 1st 
Sess. 54 (1921) (remarks of Senator. Smoot). In 1934, Congress 
prohibited exempt institutions from propagandizing and lobbying, 
Revenue Act of 1934, ch. 277, § 106(6), 48 Stat. 680, 700, but 
Treasury and the courts already had implemented such prohibitions. 
See Treas. Reg. 45, Art. 517(1) (1921) ; Slee v. Commissioner, 15 
B.T.A. 710, 715 (1929), aff’d, 42 F.2d 184 (2d Cir. 1930); Herbert 
E. Foies, 9 B.T.A. 828, 832 (1927); 4 Scott, supra, at § 374.6. The 
IRS described the 1934 legislation as approving “the long con­
tinued administrative construction” of the Code. G.C.M. 19715, 
1938-1 C.B. 499, 500. See also Massachusetts League v. United, 
States, 59 F. Supp. 346, 347 (D. Mass. 1945) (effect of amendment 
to social security tax exemption “was to give Congressional ap­
proval” to 1936 regulation containing the same prohibition).

39 Section 1981 contains no exception for religiously-affiliated 
schools. In Runyon, the schools did not claim religious grounds for 
their discriminatory practices and the Free Exercise Clause of the 
F irst Amendment therefore was not involved. 427 U.S. at 167 & n.6. 
However, the Court expressly rejected an analogous argument based 
on the schools’ alleged First Amendment right of association. Id. at



41

It is not seriously contested that both petitioners—de­
scribed as “identical twins” by the Court of Appeals— 
maintain racially discriminatory admissions practices in 
contravention of this national policy. U.S. Br. at I; B.J. 
Br. at i; G. Br. at i. Goldsboro flatly excludes blacks 
from enrollment. G. Br. at 6; J.A. 9. Bob Jones also 
denied admission to blacks during the tax years in ques­
tion. It denied admission to all blacks prior to 1971 and 
to all unmarried blacks from 1971 until 1975. J.A. A32- 
33.40 Since 1975, Bob Jones has continued to deny ad­
mission to partners in an interracial marriage, to expel 
students who date outside their race or encourage others 
to do so, to bar students who are members of organiza­
tions which “advocate” interracial marriage and to en­
force other racially discriminatory policies. J.A. A197, 
A208. These rules have had the effect of preserving Bob 
Jones as an overwhelmingly white institution.41 Such 
rules prohibiting social contacts between the races are 
condemned by § 1981. Fiedler v. Marumseo Christian 
School, 631 F.2d 1144 (4th Cir. 1980); Faraca v. 
Clements, 506 F.2d 956 (5th Cir.), cert, denied, 422 
U.S. 1006 (1975) ; cf. Loving v. Virginia, 388 U.S. 1

175-76. See Fiedler v. Marumseo Christian School, 631 F.2d 1144, 
1150-51 (4th Cir. 1980); Brown v. Dade Christian Schools, 556 F.2d 
310 (5th Cir. 1977), cert, denied, 434 U.S. 1063 (1978). Petitioners’ 
F irst Amendment contentions are discussed infra at 63-69.

40 In Bob Jones University v. Johnson, 396 F. Supp. 597 (D.S.C. 
1974), aff’d, 529 F.2d 514 (4th Cir. 1975), the court held that these 
discriminatory practices violated Title VI of the Civil Rights Act 
of 1964, and thus upheld the Veterans Administration’s termination 
of Bob Jones’ eligibility to participate in VA benefit programs.

41 The University enrolled its first black in the fall of 1975 and 
at the time of trial had five blacks enrolled, of a total student body of 
about 5,000. J.A. A36, A73. Its policy now, as in the past, is unmis­
takably intended to maintain an essentially all-white Bob Jones 
University. Indeed, the school has expressed an interest in establish­
ing a separate school “just exactly like this for blacks.” J.A. A71- 
72; see also J.A. A lll.



42

(1967); McLaurin v. Oklahoma State Regents, 339 U.S. 
637 (1950). In short, Bob Jones’ current policies are no 
less discriminatory than those of Goldsboro and equally 
provide the basis for denial of tax exemption.

Bob Jones argues that it is an “exclusively religious” 
organization, e.g., B.J. Br. at 8, and thus that it is not 
subject to the IRS ruling denying exemption to educa­
tional organizations practicing racial discrimination. This 
argument is not supported by the record. Bob Jones is not a 
church or seminary engaged solely in religious activities. 
As the record plainly demonstrates, it is a school open 
to the public and providing accredited, secular instruction 
at all levels, from kindergarten through college and gradu­
ate schools. U.S. Br. at 2-3; J.A. A63.42 While the dis­
trict court stressed Bob Jones’ religious functions, it also 
found that Bob Jones “serves educational purposes,” 468 
F. Supp. at 895, and the Court of Appeals properly relied 
on this finding in holding Bob Jones subject to IRS rul­
ings applicable to all private schools. 639 F.2d at 150.

This case therefore does not present any question 
whether the Code compels denial of tax-exempt status for 
exclusively religious organizations which practice racial

42 Bob Jones’ complaint admits it carries out “educational and 
religious activities”, J.A. A43; its charter states its purpose “to con­
duct an institution of learning for the general education of youth 
in the essentials of culture and in the arts and sciences.” 468 
P. Supp. at 893. See also J.A. A208. The IRS initially recognized 
Bob Jones’ tax-exempt status on the ground that it was organized 
and operated “for educational purposes,” and it was this exemption 
that Bob Jones sought to retain in Bob Jones University v. Simon. 
See No. 72-1470, Appendix at A13. See also id. at A18, A57. The 
overwhelming preponderance of its activity is the teaching of sec­
ular subjects—mathematics, science, history, literature, and busi­
ness administration, among others. U.S. Br. at 2-3; J.A. A63, A127- 
28. Bob Jones describes itself as “no more a preachers’ school or 
missionaries’ school than it is a teachers’ school, a business school, 
a music school, a speech school, or some other kind of school.” J.A. 
A260.



43

discrimination. Section 501(c)(3) requires that an or­
ganization be operated “exclusively” for exempt purposes, 
and it is well established that a religious organization 
is not entitled to exempt status “if more than an insub­
stantial part of its activities” further non-exempt pur­
poses. Treas. Reg. § 1.501(c) (3)-l(c) (1) (1959); see 
Trinidad v. Sagrada Orden, 263 U.S. 578, 583 (1924) ; 
Scripture Press Foundation v. United States, 285 F.2d 
800 (Ct. Cl. 1961), cert, denied, 368 U.S. 985 (1962); 
Christian Manner International, Inc. v. Commissioner, 71 
T.C. 661 (1979). Since Bob Jones’ non-exempt secular 
educational activities can hardly be described as “insub­
stantial,” denial of exemption on the basis of its racially 
discriminatory policies is entirely proper. See Rev. Rul. 
75-231, 1975-1 C.B. 158.43

It is immaterial here that the 1894 Congress which first 
enacted the predecessor of § 501(c) (3) may not have re­
garded racially discriminatory practices as unlawful or 
against public policy; nor is it relevant that this Court, 
unfortunately for the country, expressed this view two 
years later. There is no reason to believe that Congress 
intended to freeze the internal revenue laws into pro­
moting erroneous turn-of-the-century constitutional con­
cepts, as reflected in Plessy v. Ferguson, 163 U.S. 537 
(1896), and Hodges v. United States, 203 U.S. 1 (1906). 
The concept of what is charitable in the legal sense 
obviously must reflect subsequent constitutional, statu­
tory and judicial developments expressing the fundamental 
national policy against racial discrimination in education. 
See Bogert & Bogert, Trusts and Trustees § 369, at 66-67 
(rev. 2d ed. 1977) ; 4 Scott, Law of Trusts § 368, at 2856, 
§ 377, at 2972 (3d ed. 1967); Fisch, Freed & Schachter, 
Charities and Charitable Foundations § 256, at 229 
(1974); Restatement (Second) of Trusts § 368 com­

43 While no religious schools were before the court in Green v. 
Connally, 330 F. Supp. 1150, 1169 (D.D.C. 1971), the court made 
clear that its construction of § 501(c)(3) “applies to all private 
schools practicing racial discrimination,” id. at 1164, including those 
claiming “divine inspiration for racial segregation.” Id. at 1163.



44
ment b (1959). See also Simon, The Tax-Exempt Status of 
Racially Discriminatory Religious Schools, 36 Tax L. Rev. 
477, 488-89 (1981). In any event, since Congress re­
enacted the Code in 1954 and revised the Code provisions 
governing charitable organizations in 1969, it is the in­
tent of these more contemporary legislatures that is con­
trolling here.

III. RECOGNITION OF TAX EXEMPTION FOR RA­
CIALLY DISCRIMINATORY PRIVATE SCHOOLS 
WOULD DISREGARD THE JUDICIAL PRESUMP­
TION AGAINST ALLOWING TAX BENEFITS 
THAT SEVERELY FRUSTRATE SHARPLY DE­
FINED FEDERAL POLICY

The IRS ruling on racially discriminatory schools was 
independently required by the firmly established principle 
that Congress will not be presumed to intend federal tax 
benefits that would undermine clear governmental poli­
cies. Commissioner v. Tellier, 383 U.S. 687 (1966); 
Hoover Motor Express Co. v. United States, 356 U.S. 38 
(1958) ; Tank Truck Rentals, Inc. v. Commissioner, 356 
U.S. 30 (1958); Textile Mills Securities Corp. v. Com­
missioner, 314 U.S. 326, 339 (1941). In Tank Truck, 
the Court upheld the Commissioner’s disallowance of tax 
deductions for fines paid by a trucking company for vio­
lations of state maximum weight laws. As the Court 
unanimously held, allowance of a deduction cannot be 
permitted where this result “would frustrate sharply 
defined national or state policies proscribing particular 
types of conduct, evidenced by some governmental decla­
ration thereof.” 356 U.S. at 33-34. The “test,” the Court 
continued, is the “severity and immediacy of the frustra­
tion” which would result from allowance of the tax bene­
fit. Id. at 35. Accord Commissioner v. Tellier, supra, 
383 U.S. at 694.

Adherence to this basic principle of statutory construc­
tion requires that racially discriminatory private schools 
be denied exemption under § 501(c) (3) and eligibility 
for deductible charitable contributions under § 170.



45
Green v. Connally, 330 F.Supp. 1150, 1161-64 (D.D.C. 
1971). The constitutionally-based national policy against 
racial discrimination in education is manifestly more im­
portant than the State interest protected in Tank Truck. 
Further, the extension of tax-exempt status to racially 
discriminatory private schools would directly and severely 
undermine basic federal policy. Tax-exempt status and 
eligibility for charitable deductions would provide posi­
tive federal support for discriminatory private schools, 
thus promoting the development of schools whose admis­
sions policies are unlawful under 42 U.S.C. § 1981 and 
whose practices would severely impair efforts to desegre­
gate the public schools.

Contrary to the Government’s suggestion, U.S. Br. at 
25, Tank Truck was not simply an interpretation of the 
deduction for “ordinary and necessary” business ex­
penses allowed under § 162 of the Code. Rather, the 
Court explicitly based its decision upon “the presumption 
against congressional intent to encourage violation of 
declared public policy,” 356 U.S. at 35, a principle which 
plainly transcends the limited scope of § 162.44 Ac­
cordingly, at the urging of the Government, the courts 
have held the Tank Truck principle applicable in a 
variety of situations unrelated to § 162. Turnipseed v. 
Commissioner, 27 T.C. 758 (1957) (denial of exemption 
under § 151 for alleged dependent married to another); 
Mazzei v. Commissioner, 61 T.C. 497 (1974) (denial of 
deduction under § 165 for loss incurred in attempted 
counterfeiting scheme); Holt v. Commissioner, 69 T.C. 
75 (1977), aff’d, 611 F.2d 1160 (5th Cir. 1980) (denial 
of deduction under § 165 for value of marijuana seized 
by federal authorities) .45

44 A companion case, Hoover Motor Express Co. v. United States, 
356 U.S. 38 (1958), made crystal clear that the question of a tax 
benefit’s possible frustration of public policy was entirely independ­
ent of the question of the “necessity” of the business expense under 
§ 162. Id. at 39-40.

45 Similarly, there is no basis for the Government’s argument, U.S. 
Br. at 26, that Congress has eliminated the frustration of public pol-



46

As applied to §§ 501(c) (3) and 170, the Tank Truck 
rationale has particular force. There is no need for the 
Court here to rely on the presumed intent of Congress 
not to encourage violations of public policy because in 
enacting these provisions Congress adopted this very 
concept from the common law of charity. Green v. 
Connally, 330 F. Supp. at 1162. It would be an utter 
perversion of the public benefit rationale of §§ 501(c) (3) 
and 170 to hold that they apply to organizations whose 
practices undermine preeminent national policies.46

Petitioners argue that the Tank Truck doctrine sweeps 
too broadly and would permit the denial of tax-exempt 
status to institutions that discriminate on the basis of 
age or sex, or violate occupational health and safety 
laws, environmental laws, or even state zoning laws or 
building codes. B.J. Br. at 19-20. These concerns are

icy doctrine by codifying the result of Tank Truck in the 1969 and 
1971 amendments to § 162. While it may be arguable that Congress 
intended its amendments to § 162 to encompass fully the Tank Truck 
doctrine as it applies to that section, there is no reason to believe 
that Congress intended to preclude application of that principle to 
other sections of the Code. The Tax Court—again at the Govern­
ment’s urging—has specifically rejected this argument, Mazzei v. 
Commissioner, 61 T.C. 497 (1974), and the IRS has ruled that the 
grounds for disallowance of tax benefits on the basis of public policy 
outside the § 162 context “were not limited by Congress but remain 
the same as they were before 1969.” Rev. Rul. 77-126, 1977-1 C.B. 
48.

46 It is hard to believe that the Government, despite its position 
in these cases, contends that there is no implied limitation on the 
scope of the “educational” exemption based upon an organization’s 
illegal activities; otherwise, as Judge Leventhal put it, “Fagin’s 
school for pickpockets would qualify . . . .” Green v. Connally, 
330 F. Supp. at 1160. Since presumably the Government agrees that 
Fagin’s school would not be entitled to exemption, see 1982 Hearing, 
supra note 3, at 184, its position here is inexplicable in view of the 
illegality of racial discrimination practiced by private schools and 
the strength of the national policy against racial discrimination in 
education.



47

unfounded.47 First, the constitutionally-based policy 
against racial discrimination in education surely occupies 
a unique place.48 Moreover, Tank Truck is applicable here 
because petitioners deliberately and systematically engage 
in practices inconsistent with congressional policy, and 
these practices exert “a pervasive influence on the entire 
educational process.” Norwood v. Harrison, 413 U.S. 455, 
469 (1973). The doctrine presumably would not apply 
under §§ 501(c) (3) or 170 in the event of isolated viola­
tions of federal, state or local law. Finally, the Tank Truck 
test requires that the tax benefits result in a “severe” 
and “immediate” frustration of public policy. See 356 
U.S. at 35. This test is plainly met in the present case 
by virtue of the direct conflict between these tax benefits 
and the constitutional policy proscribing government aid 
to segregated schools. It is hard to conceive of circum­

47 There are ample safeguards against IRS abuse in any event. 
Under a 1976 amendment to the Code, immediate judicial review is 
now available to test IRS actions under §§ 501(c) (3) and 170. 26 
U.S.C. § 7428. Ultimately, of course, Congress exercises close over­
sight of IRS policies and can correct any perceived errors in ap­
plication of the Tank Truck presumption. See Bob Jones University 
v. Simon, 416 U.S. 725, 749-50 (1974) ; infra at 55-56.

48 The Thirteenth Amendment was intended to facilitate the aboli­
tion of “all badges and incidents of slavery in the United States.” 
The Civil Rights Cases, 109 U.S. 3, 20 (1883). And “the core of the 
Fourteenth Amendment is the prevention of meaningful and un­
justified official distinctions based on race.” Hunter v. Erickson, 
393 U.S. 385, 391 (1969). There is, of course, no constitutional 
amendment specifically barring sex discrimination, and while a 
strict standard applies, see Mississippi University for Women v. 
Hogan, 102 S. Ct. 3331, 3336 (1982); id. at 3344 (Powell, J., dissent­
ing), the Court has held that sex, unlike race, is not per se 
an invidious classification. See, e.g., Schlesinger v. Ballard, 419 U.S. 
498 (1975); Reed v. Reed, 404 U.S. 71 (1971). Nor does 42 U.S.C. 
§ 1981 prohibit private discrimination in education on the basis of 
sex. In enacting Title IX of the Education Act Amendments of 1972, 
Congress expressly exempted educational institutions which have 
traditionally had a policy of admitting only students of one sex. 20 
U.S.C. § 1681(a)(5).



48

stances arising out of the examples posed by petitioners 
under which the allowance of tax exemptions would have 
a comparable impact on governmental objectives.

IV. SINCE 1970 CONGRESS HAS EXPLICITLY RATI­
FIED AND APPROVED THE IRS ACTIONS CHAL­
LENGED BY PETITIONERS

If any doubt existed in 1970 as to the validity of the 
IRS position, it has been entirely dispelled by subsequent 
congressional actions. Congress has been aware of the 
IRS decision on this highly visible issue since the day it 
was announced,49 and has ratified it by repeated acts of ap­
proval. The Senate Select Committee on Equal Education 
Opportunity held hearings on the IRS decision a month 
later, and Commissioner Thrower testified at length. 1970 
Hearings, supra note 7, at 1992-2028.50 At the conclusion 
of its hearings in 1972, the Select Committee unanimously 
endorsed the position adopted by the IRS, “recom­
mend [ing] that firm steps be taken to enforce” the policy 
and noting that the Court’s affirmance in Green “firmly 
establishes the legal standard.” Senate Select Comm, on 
Equal Educational Opportunity, 92d Cong., 2d Sess., To­
ward Equal Educational Opportunity 269 (Comm. Print 
1972).

Since then, Congress has repeatedly refused to alter the 
IRS position. At least eleven bills to overturn the IRS 
construction of § 501(c) (8) have been introduced; none 
has been reported out of committee.51 In 1976, Congress

49 See 116 Cong. Rec. 24,120-22 (July 14, 1970) and 24,427-33 
(July 15, 1970) (remarks of Sen. Allen); 116 Cong. Rec. 24,836, 
24,906-07 (July 17, 1970) (remarks of Sen. Thurmond).

50 See also Tax Exemptions for Charitable Organizations Affecting 
Poverty Programs: Hearings Before the Subcomm. on Employment, 
Manpower and Poverty of the Senate Comm, on Labor and Public 
Welfare, 91st Cong., 2d Sess. 77-79 (1970).

51 See H.R. 802, 97th Cong., 1st Sess. (1981) ; H.R. 332, 97th 
Cong., 1st Sess. (1981); H.R. 95, 97th Cong., 1st Sess. (1981);



49

amended § 501(c)(3) to add an express reference to 
amateur sports organizations, Tax Reform Act of 1976, 
Pub. L. No. 94-455, § 1313(a), 90 Stat. 1520, 1730 
(1976), but took no action to modify the Commissioner’s 
interpretation of the statute with respect to racially dis­
criminatory private schools.52 Similarly, the Tax Reform 
Act of 1976 expressly overturned this Court’s decision in 
Bob Jones University v. Simon by permitting declaratory 
judgment actions to test the denial or withdrawal of tax- 
exempt status, Pub. L. No. 94-455, § 1306(a), 90 Stat. 
1520, 1717, codified at 26 U.S.C. § 7428; see H.R. Rep. 
No. 658, 94th Cong., 1st Sess. 283-84 (1975), but Con­
gress did nothing to affect the IRS interpretation of 
§ 501 (c) (3) at issue in the same ease.

This consistent pattern of congressional refusal to alter 
or amend § 501 (c) (3) in the face of the IRS’ well-known 
ruling would in itself be sufficient to demonstrate con­
gressional ratification:

S. 995, 96th Cong., 1st Sess. (1979) ; H.R. 1905, 96th Cong., 1st Sess. 
(1979); H.R. 96, 96th Cong., 1st Sess. (1979); H.R. 3225, 94th Cong., 
1st Sess. (1975); H.R. 1394, 93d Cong., 1st Sess. (1973); H.R. 5350, 
92d Cong., 1st Sess. (1971); H.R. 2352, 92d Cong., 1st Sess. (1971); 
H.R. 68, 92d Cong., 1st Sess. (1971).

52 Congress has amended § 501 of the Code in various respects 
at least fourteen times since 1970. Pub. L. No. 97-119, § 103(c)(1), 
95 Stat. 1635, 1638 (1981); Pub. L. No, 96-605, § 106(a), 94 
Stat. 3521, 3523 (1980); Pub. L. No. 96-601, § 3(a), 94 Stat. 
3495, 3496 (1980); Pub. L. No. 96-364, § 209(a), 94 Stat. 1208, 
1290 (1980); Pub. L. No. 96-222, § 108(b) (2) (B), 94 Stat. 194, 
226 (1980); Pub. L. No. 95-600, § 703(b) (2), 92 Stat. 2763, 
2939 (1978); Pub. L. No. 95-345, § 1(a), 92 Stat. 481, 481 (1978); 
Pub. L. No. 95-227, § 4(a), 92 Stat. 11, 15 (1978); Pub. L. No. 94- 
568, §§ 1(a), 2(a), 90 Stat. 2697, 2697 (1976) ; Pub. L. No. 94-455, 
§§ 1307(a)(1) & (d) (i), 1312, 1313(a), 90 Stat. 1520, 1720-21, 1727, 
1730 (1976); Pub. L. No. 93-625, § 10(c), 88 Stat. 2108, 2119 
(1975); Pub. L. No. 93-310, § 3(a), 88 Stat. 235, 235 (1974); Pub. 
L. No. 92-418, § 1(a), 86 Stat. 656, 656 (1972); Pub. L. No. 91-618, 
§ 1, 84 Stat. 1855, 1855 (1970).



50

[0]nce an agency’s statutory construction has been 
“fully brought to the attention of the public and the 
Congress,” and the latter has not sought to alter that 
interpretation although it has amended the statute in 
other respects, then presumably the legislative in­
tent has been correctly discerned.

United States v. Rutherford, 442 U.S. 544, 554 n.10 
(1979). Accord Haig v. Agee, 453 U.S. 280, 300-01 
(1981).

But this case presents an even more compelling demon­
stration of Congress’ endorsement of the agency’s stat­
utory construction. In 1976, Congress expressed its ap­
proval affirmatively by enacting what is now § 501 (i), 
Act of October 20, 1976, Pub. L. No. 94-568, 90 Stat. 
2697 (1976), which denies tax-exempt status to any 
social club, otherwise qualifying for exemption under 
§ 501(c) (7), if its charter or any written policy state­
ment provides for “discrimination against any person on 
the basis of race, color, or religion.” The legislative his­
tory of § 501 (i) makes clear that the statute was passed 
as a direct result of congressional dissatisfaction with 
the decision of the three-judge district court in McGlotten 
v. Connolly, 338 F. Supp. 448, 457-59, 462 (D.D.C. 1972), 
insofar as it held that recognition of tax-exempt status 
for segregated social clubs did not violate the Code. Both 
the House and Senate committee reports state that permit­
ting tax exemptions for such segregated private clubs is 
inconsistent with “national policy”, S. Rep. No. 1318, 
94th Cong., 2d Sess. 8 (1976), and specifically refer to 
the Court’s affirmance of Green v. Connally as estab­
lishing that “discrimination on account of race is in­
consistent with an educational institution’s tax-exempt 
status.” Id. at 7-8 & n.5; H.R. Rep. No. 1353, 94th Cong., 
2d Sess. 8 & n.5 (1976).58 *

*8 In 1980 Congress amended § 501 ( i) to except from its ban on 
religious discrimination “a club which in good faith limits its



51
Congress thus approved the IRS interpretation of 

§ 501 (c) (3) with positive legislation. It obviously was not 
necessary for Congress to enact new legislation to deny ra­
cially discriminatory schools tax-exempt status since Con­
gress knew Green had held that the existing statute barred 
exempt status for such schools. Instead, Congress went 
one step further and enacted legislation to extend the pol­
icy of Rev. Rul. 71-447 to private social clubs—despite 
the traditionally greater protection for privacy interests 
in social clubs than in “private” schools, which are com­
monly “advertised and offered to members of the general 
public.” Runyon v. McCrary, 427 U.S. 160, 172 (1976). 
Petitioners and the Government offer no explanation, and 
none can be imagined, why Congress would have forbid­
den racial discrimination by exempt social clubs—includ­
ing school-related organizations like fraternities—yet 
sanctioned the exclusion of blacks by tax-exempt schools 
themselves.* 54

membership to the members of a particular religion in order to 
further the teachings or principles of that religion, and not 
to exclude individuals of a particular race or color.” The amend­
ment provides further support for Congress’ commitment to deny 
tax-exempt status to organizations, including religious organiza­
tions, that discriminate on racial grounds. Congress intended to 
exempt organizations like the Knights of Columbus, which “never 
supported, promoted or accepted any form of racial discrimination 
in its membership practices.” Miscellaneous Tax Bills V: Hear­
ings Before the Subcomm. on Taxation and Debt Management of 
the Senate Comm, on Finance, 96th Cong., 2d Sess. 332 (1980). 
Congress left unchanged the statutory prohibitions against discrim­
ination based on “race” or “color,” and the Senate committee report 
made clear that the change in the religious prohibition was “not 
intended to authorize discrimination on the basis of race under 
the guise of religious affiliation.” S. Rep. No. 1033, 96th Cong., 2d 
Sess. 10 (1980).

54 Petitioners and the Government attempt to minimize the sig­
nificance of § 501 (i) by arguing that the committee reports’ refer­
ence to Green should not be read as approval, and that the commit­
tee reports, in any event, are entitled to little weight. These argu­
ments miss the point entirely. The significance of § 501(i) lies less 
in what the committee reports say than in the action Congress took, 
passing legislation that cannot be explained in any way other than



52
Congress’ enactment of the Dornan and Ashbrook 

Amendments to the Treasury, Postal Service, and Gen­
eral Government Appropriations Act of 1980, Pub. L. No. 
96-74, 93 Stat. 559 (1979), rather than detracting from 
the force of this argument, in fact bolsters it. The 
Dornan Amendment, id. § 615, 93 Stat. at 577, prohibited 
the funding of revenue procedures proposed by the IRS 
in 1978 and 1979, 43 Fed. Reg. 37,296 (1978); 44 Fed. 
Reg. 9451 (1979), which would have imposed new proce­
dures to verify whether the actual practices of private 
schools conformed to their announced policy of non­
discrimination. The Ashbrook Amendment prohibited the 
use of the appropriated funds for any other “procedures, 
guidelines . . . or measure which would cause the loss of 
tax-exempt status to private, religious, or church-oriented 
schools . . .  unless in effect prior to August 22, 1978.” 
Section 103 of the Act, 93 Stat. at 562 (emphasis added).

Both the Ashbrook and Dornan Amendments thus were 
prospective in effect and did not in any way affect the status 
of Rev. Ruls. 71-447 and 75-231. As petitioner Goldsboro 
acknowledges, G. Br. at 28 n.13, these amendments were 
expressly intended to “maintain the status quo” ; and 
hence, despite extensive consideration of the question, 
Congress once again deliberately chose to leave the Com­
missioner’s authority under these rulings untouched.

The legislative history of the Dornan and Ashbrook 
Amendments makes clear that what troubled Congress

as congressional approval of the policy adopted by the IRS in Rev. 
Rul. 71-447. Moreover, the Government is simply wrong in con­
tending that the committee reports are not entitled to significant 
weight in evaluating the legislative history of § 501 (i). U.S. Br. at 
32-33 & n.30. See, e.g., Commissioner v. Bilder, 369 U.S. 499, 502-04 
(1962) ; Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 519 & 
n.15 (1981). The case relied upon by the Government is inapt be­
cause it concerned a statement in a committee report “as to what 
the Committee believes an earlier statute means . . . ,” Consumer 
Product Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 118 
n.13 (1980) (emphasis added), whereas the reports here explain 
the intent of Congress regarding §501(i), a contemporaneous en­
actment.



53

was the “affirmative action” or “quota” aspect of the new 
IRS proposals.®3 But nothing in the Ashbrook or Dornan 
Amendments calls into question the continuing congres­
sional support for IRS rulings prohibiting tax exemption 
where racial discrimination is admitted or clear. On the 
contrary, Congressman Dornan stated in presenting his 
amendment: “Let me emphasize that my amendment will 
not affect existing IRS rules which IRS has used to revoke 
tax exemptions of white segregated academies under Rev­
enue Ruling 71-447 and Revenue Procedure 75-50.” 125 
Cong. Rec. H5982 (daily ed. July 16, 1979). Congress­
man Ashbrook similarly explained: “My amendment very 
clearly indicates on its face that all the regulations in 
existence as of August 22, 1978, would not be touched.” 
125 Cong. Rec. H5882 (daily ed. July 13, 1979).55 56 Like­
wise, when Senator Helms introduced the Ashbrook 
Amendment in the Senate, he stated: “My amendment 
today does not change the existing law contained in Reve­

55 See 125 Cong. Rec. H5879 (daily ed. July 13, 1979) (statement 
of Rep, Ashbrook); 125 Cong. Rec. H5980 (daily ed. July 16, 1979) 
(statement of Rep. Dornan). See also Tax Exempt Status of Pri­
vate Schools: Hearings Before the Subcomm. on Oversight of the 
House Comm, on Ways and Means, 96th Cong., 1st Sess. 336 (state­
ment of Rep. J. Anderson), 1261 (statement of Rep. J. Edwards), 
1303 (statement of Rep. Satterfield) (1979) ; Tax Exempt Status 
of Private Schools: Hearing Before the Subcomm. on Taxation 
and Debt Management of the Senate Comm, on Finance, 96th Cong,, 
1st Sess. 21 (statement of Sen. Dole), 23-24 (statement of Sen. 
Jepsen), 70 (statement of Sen. Warner) (1979); 1982 Hearing, 
supra note 3, at 103-04.

56 During consideration of re-enactment of the Ashbrook Amend­
ment in 1981, Congressman Ashbrook re-emphasized:

[The 1981 Amendment contains] the same language in the 
amendment of 2 years ago, the same cut off date. I made it 
clear at the time that IRS should be able to proceed on the basis 
of the regulations they had in existence. If they know of dis­
crimination, they can litigate, they can withdraw the tax-exempt 
status, anything that they could do prior to August 22, 1978.

127 Cong. Rec. H5395 (daily ed. July 30, 1981),



54

nue Procedure 75-50, and thus it preserves the ability of 
IRS to act against offending schools on a case-by-case 
basis.” 125 Cong. Rec. 811,979-80 (daily ed. Sept. 6, 
1979).57 Indeed, the legislative history of the Ashbrook 
and Dornan Amendments reflects overwhelming congres­
sional support, across a remarkably broad spectrum, for 
the IRS’ continuing authority to deny tax exemption to 
schools engaged in racial discrimination.58

. 57 In light of these explicit statements on the scope of the amend­
ments, the individual views of Congressman Ashbrook and Senator 
Helms, relied upon by the Government, U.S. Br. at 28-29 & n.25, are 
entitled to no weight. The statements quoted above represented the 
understanding of the amendments upon which congressional action 
was based.

58 See, e.g., Tax Exempt Status of Private Schools, House Hear­
ings, supra note 55, at 1261 (remarks of Rep. J. Edwards: “The Con­
gress did not intend for the IRS to set guidelines for affirmative ac­
tion in private schools, although it does allow the tax-exempt status 
to be withdrawn where there is evidence that a school does not have 
an open-door policy”) ; at 1262 (remarks of Rep. D. Evans: “the 
IRS already has the authority to take action where there is clear 
evidence that racial discrimination is practiced”) ; Tax Exempt 
Status of Private Schools, Senate Hearings, supra note 55, at 20 (re­
marks of Sen. Dole: “racial discrimination in any form is abhorrent 
and contravenes the public policy repeatedly reaffirmed by Congress 
in numerous civil rights measures. The courts have clearly held that 
a private school which engages in intentional racial discrimination 
in its student admissions policies is not entitled to Federal tax- 
exempt status”) ; 125 Cong. Rec. H5982 (daily ed, July 16, 1979) 
(remarks of Rep. C. Miller: “No one is saying that we should allow 
tax breaks for segregated schools, but IRS already has significant 
authority to act, and indeed, has done so in the past, where evidence 
of discrimination exists”) ; 125 Cong. Rec. H5884 (daily ed. July 
13, 1979) (remarks of Rep. Grassley: “Nobody argues that racial 
discrimination should receive preferred tax status in the United 
States”).

See also Tax Exempt Status of Private Schools, House Hearings, 
supra, at 586-87 (statement of Sen. Thurmond: “The object of the 
proposed procedure is to revoke the tax exemption status of private 
schools actively practicing racial discrimination. It is impossible for 
a reasonable man to argue against that purpose, and I wish to make 
it clear that it is not the purpose to which I am objecting”).



55

This legislative history conclusively demonstrates that 
Congress has ratified and approved the construction placed 
on § 501(c) (3) by the IRS, the three-judge court in 
Green and this Court. The Court has repeatedly held 
that “the construction of a statute by those charged with 
its execution should be followed unless there are compel­
ling indications that it is wrong, especially when Congress 
has refused to alter the administrative construction.” 
CBS, Inc. v. FCC, 453 U.S. 367, 382 (1981); accord 
Haig v. Agee, 453 U.S. 280, 291 (1981). This prin­
ciple has particular force where “an agency’s interpreta­
tion involves issues of considerable public controversy, 
and Congress has not acted to correct any misperception 
of its statutory objectives.” CBS, Inc. v. FCC, 453 U.S. at 
382. See also Board of Governors v. First Lincoln- 
wood Corp., 439 U.S. 234,248 (1978); Monell v. De­
partment of Social Services, 436 U.S. 658, 719 (1978) 
(Rehnquist, J., dissenting: “This is not some esoteric 
branch of the law in which congressional silence might 
reasonably be equated with congressional indifference.” ). 
Moreover, here “Congress has not just kept its silence by 
refusing to overturn the administrative construction but 
has ratified it with positive legislation.” Red Lion Broad­
casting Co. v. FCC, 395 U.S. 367, 381-82 (1969).

These considerations have even greater significance in 
the tax area, where congressional oversight committees 
exercise traditional year-by-year supervision and revision 
of the statutory scheme. See United States v. Cornell, 
389 U.S. 299, 305-07 (1967) ; Helvering v. WinmiU, 305 
U.S. 79, 83 (1938); Brown, Regidations, Reenactment, 
and the Revenue Acts, 54 Harv. L. Rev. 377, 379 (1941). 
This close congressional oversight provides assurance that 
Congress has in fact confronted the issue and made a 
conscious decision to leave the Commissioner’s interpreta­
tion of the Code in place.



56

These factors also strongly suggest that there is no 
basis for the Court to reconsider its affirmance in Coit 
v. Green, 404 U.S. 997 (1971).59 “ [Considerations
of stare decisis weigh heavily in the areas of statutory 
construction, where Congress is free to change this Court’s 
interpretation of its legislation.” Illinois Brick Co. v. 
Illinois, 431 U.S. 720, 736 (1977). Accord Patsy v. Board 
of Regents, 102 S. Ct. 2557 (1982) ; see id. at 2569 (White, 
J., concurring: “ [I]n a statutory case, a particularly 
strong showing is required that we have misread the rele­
vant statute and its history.” ) See also Runyon v. 
McCrary, 427 U.S. 160, 189-92 (1976) (Stevens, J., con­
curring). This rule is especially appropriate in the tax 
field where there is intensive congressional oversight of 
judicial decisions. See United States v. Byrum, 408 U.S. 
125, 135 (1972) ; Chapman v. Commissioner, 618 F.2d 
856, 869 (1st Cir. 1980), cert, dismissed, 451 U.S. 1012 
(1981). Congress surely has shown no reluctance to over­
rule the courts in this area, as it did with respect to the

59 There is no question that an affirmance without opinion is a deci­
sion with “precedential value.” Edelman v. Jordan, 415 U.S. 651, 
671 (1974). See Hicks v. Miranda, 422 U.S. 332, 344 (1975). The 
Court’s statement in Bob Jones University v. Simon, 416 U.S. 725, 
740 n .ll  (1974), that the affirmance in Green is entitled to lesser 
precedential weight because it was not “a truly adversary contro­
versy” may have derived from an inaccurate description of Green 
in the Bob Jones University brief in Simon. No. 72-1470, Brief for 
Petitioner at 22. Although the Government announced its change 
of position following issuance of the order for preliminary injunc­
tion, the intervenors in Green continued to dispute the authority of 
the IRS to deny tax-exempt status, both in the three-judge court and 
before this Court, addressing substantially the same issues as raised 
herein. See 1982 Hearing, supra note 3, at 275-353; Amicus Brief 
of the Lawyers’ Committee for Civil Rights under Law at 4-7 n.3. 
This Court’s action thus can only be construed as a decision on the 
merits. Indeed, shortly thereafter, the Court in Norwood v. Harri­
son, 413 U.S. 455, 463 & n.6 (1973), relied on the affirmance in 
Green in support of its holding that state aid to discriminatory pri­
vate schools is unconstitutional.



Court’s decision in Bob Jones University v. Simon and 
the three-judge court’s decision in McGlotten v. Connolly.

V. THE FIFTH AMENDMENT BARS GRANTING THE 
TAX BENEFITS OF §§ 501(c)(3) AND 170 TO 
SCHOOLS THAT DISCRIMINATE ON THE BASIS 
OF RACE

Under this Court’s unanimous decision in Norwood v. 
Harrison, 413 U.S. 455 (1973), it would be unconstitu­
tional to afford racially discriminatory schools tax- 
preferred status under §§ 501(c) (3) and 170 because 
those special tax benefits constitute significant gov­
ernment aid beyond the limited scope of permissible “gen­
eralized services,” such as utilities and fire protection.60 
Id. at 465; see Gilmore v. City of Montgomery, 417 U.S. 
556, 568 (1974). In Norwood, the Court held that a state 
program providing free textbooks to all school children in 
the state was unconstitutional to the extent that it pro­
vided books to children attending racially discriminatory 
schools. The program had been in effect long before the 
Brown decision, and the statute was not intended to fur­
ther racial segregation. 413 U.S. at 460. Thus, the state 
argued, as does the Government in these cases, that the 
statute could not violate the Equal Protection Clause be­
cause there was no discriminatory purpose in its enact­
ment or operation. Id. at 460; U.S. Br. at 39. The Chief

57

80 It is not necessary to reach this constitutional issue because 
petitioners clearly do not qualify as tax-exempt institutions under 
the statute. This Court normally “will not pass on the constitution­
ality of an Act of Congress if a construction of the statute is fairly 
possible by which the question may be avoided.” United States v. 
Clark, 445 U.S. 23, 27 (1980); NLRB v. Catholic Bishop of Chicago, 
440 U.S. 490, 504 (1979). The constitutional issue presented in these 
cases, however, has already been decided in Norwood v. Harrison, 
and, given current uncertainties regarding implementation of 
§ 501(c) (3), see U.S. Br., Sept. 9, 1981 at 16-17, it would be entirely 
appropriate to base petitioners’ ineligibility for special tax benefits 
on this solid constitutional ground.



58

Justice, writing for the Court, unequivocally rejected that 
argument because of the Government’s constitutional duty 
to “steer clear” of aid to discriminatory schools:

We need not assume that the State’s textbook aid to 
private schools has been motivated by other than a 
sincere interest in the educational welfare of all 
Mississippi children. But good intentions as to one 
valid objective do not serve to negate the State’s in­
volvement in violation of a constitutional duty.

413 U.S. at 466; see also Gilmore v. City of Montgomery, 
417 U.S. at 566-67.

There is no basis whatsoever for the Government’s sug­
gestion that this Court tacitly overruled the unanimous 
Nonvood decision in Washington v. Davis, 426 U.S. 229, 
239-44 (1976), and Personnel Administrator v. Feeney, 
442 U.S. 256, 279 (1979). U.S. Br. at 39 & n.36. None of 
the opinions in Davis or Feeney even mentioned Norwood, 
because both cases addressed a completely different issue. 
Those cases considered statutes which in operation 
allegedly had disparate impacts upon blacks and women, 
respectively, and the issue in each was whether this 
disproportionate impact alone made the statute uncon­
stitutionally discriminatory. Neither case involved ex­
press discrimination of any kind, let alone racial discrimi­
nation in schools, or government aid to schools admittedly 
engaged in such discrimination. Thus “one immediate 
and crucial difference” between these cases and the cases 
cited by the Government is that here the existence of 
racial discrimination is clear; the only issue is whether 
these tax benefits impermissibly aid the discriminatory 
institutions. Washington v. Seattle School District No. 1, 
102 S. Ct. 3187, 3203-04 (1982) ; cf. Rogers v. Herman 
Lodge, 102 S. Ct. 3272, 3289-93 (1982) (Stevens, J., dis­
senting) .

There can be no question that tax benefits under 
§§170 and 501(c)(3) provide significant financial aid



59

to private schools.61 See Bob Jones University v. Simon, 
416 U.S. 725, 729-30 (1974). The § 501(c) (3) exemption 
permits the institution to divert funds from the federal 
treasury to petitioners’ own practices, in amounts that far 
exceed the limited financial aid provided by the Mississippi 
textbook program at issue in Norwood.62 Bob Jones, 639 
F.2d at 152 n.7; see Walz v. Tax Commission, 397 U.S. 664, 
699 (1970) (Harlan, J., concurring: “exemptions do not 
differ from subsidies as an economic matter”) ; Com­
mittee for Ptiblic Education v. Nyquist, 413 U.S. 756, 
793 (1973). The §170 deduction provides even greater 
financial aid, as an essential inducement for the private 
financial support upon which petitioners rely. The bene­
fits provided by § 170 are “in the nature of a matching 
grant” by the government for each private contribution, 
Green v. Connally, 330 F. Supp. 1150, 1164-65 (D.D.C. 
1971), and are neither functionally nor legally distin­
guishable from cash grants.

Neither the Government nor petitioners contest the 
importance of tax-exempt status to a private school; they 
contend, however, on the basis of Walz v. Tax Commis­
sion, 397 U.S. 664 (1970), that tax benefits cannot con­
stitute “significant” aid. But Norwood considered and

61 As the Solicitor General wrote in the Government’s Bi'ief in 
Bob Jones University v. Simon: “ [Recognition by the Internal Rev­
enue Service of Bob Jones University’s tax-exempt status and the 
right to receive tax-deductible contributions, serves to ‘facilitate, 
reinforce, and support’ its racially discriminatory admissions policy 
within the meaning of Norwood.” No. 72-1470, Brief for Respond­
ents at 32.

62 The amount of aid in Norwood ranged from $170 per year for 
the smallest school to $25,000 for the largest, and averaged less than 
$4,000 per school. No. 72-77, Appendix at 31-37. The total amount 
of annual textbook aid for 114 schools in Mississippi, $452,000, id. 
at 36, was less than the $490,000 in tax benefits that would accrue 
to Bob Jones under § 501(c) (3) should it prevail.



60

rejected that argument as well. The state argued in 
Norwood that textbooks were “neutral” aid of a type 
already found to be permissible for Establishment Clause 
purposes in Board of Education v. Allen, 392 U.S. 236 
(1968). But this Court held the Establishment Clause 
analogy inapplicable to cases involving aid to racially 
discriminatory schools. Walz merely indicated that, in 
charting a course between the Free Exercise Clause on 
the one hand and the Establishment Clause on the other, 
the Government may maintain an attitude of “benevolent 
neutrality” toward religious institutions and may pro­
vide neutral benefits like the tax exemptions that have 
been granted to churches in this country for 200 years. 
397 U.S. at 669, 676-77. In contrast, the Government 
has a duty to avoid even such neutral aid to schools which 
discriminate on the basis of race:

However narrow may be the channel of permissible 
state aid to sectarian schools, Nyquist, supra-, Levitt 
[■v. Committee for Public Education, 413 U.S. 472 
(1973)], it permits a greater degree of state assist­
ance than may be given to private schools which en­
gage in discriminatory practices. . . .

Norwood v. Harrison, 413 U.S. at 470.63 Norwood’s cita­
tion to Nyquist in this passage is of particular significance. 
Nyquist, which was decided the same day as Nonuood, 
held that a program providing tax benefits to parents of

63 See also 413 U.S. at 464 n.7; Committee for Public Educ. v. 
Nyquist, 413 U.S. at 802 n.5 (Burger, C.J., concurring) ; Lemon v. 
Kurtzman, 403 U.S. 602, 671 n.2 (1971) (White, J., concurring in 
part and dissenting in p a r t) ; compare Everson v. Board of Educ., 
330 U.S. 1 (1947) (a state subsidy to sectarian school parents 
for the costs of bus fares did not violate the Establishment Clause), 
with Griffin v. County School Bd., 377 U.S. 218 (1964) (a state sub­
sidy to children attending segregated private schools violates equal 
protection).



61

children attending private sectarian schools violated the 
Establishment Clause. Norwood cites Nyquist to illus­
trate that even indirect aid in the form of tax benefits 
may constitute significant aid for Establishment Clause 
purposes. Norwood then emphasizes that the doctrine of 
equal protection permits even less aid to discriminatory 
private schools. That analysis compels the conclusion that 
petitioners cannot be afforded the benefits of §§ 170 and 
501.84

Rather than seriously contest this analysis, the Govern­
ment merely observes that “ [c] ommentators have sug­
gested” that treating tax benefits as government aid for 
constitutional purposes may have far-reaching conse­
quences. U.S. Br. at 39-40 n.37. Nyquist, of course, 
articulated that principle some years ago without dire 
results; in any event, there is here no need for a ruling 
that reaches beyond the ineligibility of racially discrim­
inatory private schools for special tax benefits “in the 64 * * * * * * * * * * * * * * * *

64 In fact, in the course of rejecting- the argument that textbooks
are different from tuition grants, Norwood equates the very tax
benefits here at issue with other forms of impermissible a id :

This Court has consistently affirmed decisions enjoining state
tuition grants to students attending racially discriminatory
private schools.6 A textbook lending program is not legally 
distinguishable from the forms of state, assistance foreclosed
by the prior cases.

413 U.S. at 463. Among those “prior cases” cited in note 6 as “not
legally distinguishable” from Norwood is the Court’s affirmance of
Green v. Connally. Because Green held that racially discriminatory
schools are not entitled to the tax benefits of §§ 170(c) (2) and
501(c) (3), that citation to Green necessarily means that such bene­
fits, like textbooks and tuition grants, are an impermissible form of
financial assistance to discriminatory schools. 413 U.S. at 463-65;
see also Nyquist, 413 U.S. at 802 n.5 (Burger, C.J., concurring);
Green v. Kennedy, 309 F. Supp. 1127 (D.D.C.), appeal dismissed
sub nom. Cannon v. Green, 398 U.S. 956 (1970),



62

nature of matching grants.” * 82 * * 85 The § 501(c) (3) exemp­
tion provides assistance to entities whose activities have 
been determined by Congress to advance the public in­
terest. Inclusion in that group therefore carries with it 
the stamp of government approval, see Green v. Kennedy, 
309 F. Supp. at 1135, at least in the sense that the or­
ganization is deemed entitled to this measure of official 
support as a participant in the diversified philanthropic 
sector that strengthens “the pluralism of our social or­
der.” House Comm, on Ways and Means, 89th Cong., 
1st Sess., Treasury Department Report on Private Foun­
dations 13 (Comm. Print 1965). That imprimatur dis­
tinguishes charitable exemptions and deductions from, for 
example, business expense deductions, which relate merely 
to neutral measurement of income, and other tax benefits 
whose availability does not imply that the taxpayer meas­
ures up to a public interest standard of any sort.

Racial discrimination, of course, has “no value” under 
our national charter and laws, see Norwood, 413 U.S. 
at 469-70, and the bar of official support for racial dis­
crimination is most crucial in the field of education. 
Whether other forms of discrimination or other deduc­
tions or exemptions will require the same constitutional 
conclusion cannot be determined in the abstract: “only by 
sifting facts and weighing circumstances on a case-by-case 
basis” is it possible to determine whether government has 
become impermissibly involved in private discrimination. 
Gilmore v. City of Montgomery, 417 U.S. 556, 574 
(1974).

65 Even the one commentator cited by the Government distin­
guished provision of such benefits to racially discriminatory schools 
from other charitable exemptions. See Bittker & Kaufman, Taxes 
and Civil Rights: “Constitutionalizing” the Internal Revenue Code,
82 Yale L.J. 51, 76-78 (1972); see also Wright v. Regan, 656 F.2d
820, 834 n.41 (D.C. Cir. 1981), petitions for cert, filed, 50 U.S.L.W.
3353 (Oct. 20, 1981) (No. 81-757), 3467 (Nov. 23, 1981) (No.
81-970).



63

VI. THE FIRST AMENDMENT DOES NOT REQUIRE 
THAT RACIALLY DISCRIMINATORY RELIGIOUS 
SCHOOLS BE AFFORDED THE TAX BENEFITS 
OF §§ 501(c)(3) AND 170

As the foregoing discussion demonstrates, private 
schools which practice racial discrimination do not qualify 
for tax benefits under §§ 501(c) (3) and 170. That rule 
applies generally to all private schools providing secular 
instruction regardless of the justification advanced for 
the racially discriminatory practices. Petitioners contend 
that as applied to them the statute violates the Free 
Exercise and Establishment Clauses of the First 
Amendment. The Fourth Circuit and the Government 
correctly reject that argument.

In support of their free exercise claim, petitioners must 
of course demonstrate that this construction of the statute 
impinges upon their religious practices. But even if the 
statute does impose some burden, it is necessary to de­
termine whether that burden is outweighed by the gov­
ernment interest served by the statute and whether ac­
commodating the religious practice would unduly inter­
fere with fulfillment of the governmental interest. United 
States v. Lee, 102 S. Ct. 1051, 1055 (1982). Petitioners 
contend that denial of tax-exempt status forces them to 
choose between operating their educational institutions 
on a racially discriminatory basis without the benefit of 
the charitable exemption or giving up their discrimina­
tory practices in order to qualify. The Court of Appeals 
assumed for purposes of its decision that that choice 
did impose some burden upon petitioners but correctly 
found that indirect economic burden to be outweighed by 
the compelling government interest.

Section 501(c)(3) does not restrict or prohibit peti­
tioners’ right to hold or teach their religious beliefs nor 
does it restrict any religious practice. See Braunfeld v. 
Brown, 366 U.S. 599, 603-05 (1961).68 Further, the stat- 86

86 Petitioner Goldsboro refers to Braunfeld as involving regula­
tions that had only an “incidental effect” on the practice of religion. 
G. Br. at 38. Yet, the free exercise claim in Braunfeld was that



ute leaves the schools entirely free to continue their ra­
cially discriminatory policies; they simply will not re­
ceive the benefit of a tax exemption if they do so. Such 
regulation is “wholly different than when the legislation 
attempts to make a religious practice itself unlawful.” 
Id. at 606.* 67

United States v. Lee recently applied these principles 
to uphold imposition of social security taxes upon a 
member of the Old Amish Order whose faith for­
bids paying such taxes or receiving social security bene­
fits. The Court noted that the diverse and cosmopolitan 
nature of our society makes it particularly difficult to 
accommodate all religious beliefs in the area of taxation, 
102 S. Ct. at 1056, that the line Congress had drawn 
in recognizing only limited religious exemptions from the 
tax was permissible, and that the government interest in 
the mandatory social security system outweighed Lee’s 
free exercise rights. Id. at 1056-57. See Braunfeld v. 
Brown, 366 U.S. at 606; Winters v. Commissioner, 468 
F.2d 778, 781 (2d Cir. 1972) (denial of § 170 deduction 
for contribution to religious school does not violate First

64

Sunday closing “will render appellant Braunfeld unable to continue 
in his business, thereby losing his capital investment. . . .” 366 U.S. 
at 601. Petitioners, on the other hand, have continued their opera­
tions without the contested tax exemption for more than a decade. 
If the Braunfeld burden was “incidental” and “therefore did not 
unconstitutionally burden the practice of religion,” G. Br. at 38, 
a fortiori, the burden here at issue is permissible.

67 This statute at most imposes only an indirect and insignificant 
burden upon religious practice, but Congress may actually prohibit 
such practices when they are contrary to important public policies. 
366 U.S. at 605. For example, in addition to United States v. 
Lee, discussed in the text, Gillette v. United States, 401 U.S. 437 
(1971) (Military Selective Service Act), Prince v. Massachusetts, 
321 U.S. 158 (1944) (child labor) and Reynolds v. United States, 
98 U.S. 145 (1878) (polygamy), all upheld laws which punished as 
crimes acts required by religious belief. Cf. 42 U.S.C. § 1981. See 
Rev. Rul. 75-231, 1975-1 C.B. 158 (First Amendment “does not 
affect the legal consequences otherwise attending a given practice 
or action that is not inherently religious”).



Amendment). See also Johnson v. Robison, 415 U.S. 361, 
385 (1974).

Petitioners simply ignore these principles and cite 
Sherbert v. Verner, 374 U.S. 398 (1963); Thomas v. 
Review Board, 450 U.S. 707 (1981); and Wisconsin v. 
Yoder, 406 U.S. 205 (1972). Those cases are inapposite. 
They merely demonstrate that the government cannot 
impose a severe and direct burden upon religion where 
accommodation of the free exercise rights would not 
interfere with fulfillment of the governmental interest. 
In Wisconsin v. Yoder, a compulsory school attendance 
law compelled the Amish, “under threat of criminal sanc­
tion, to perform acts undeniably at odds with funda­
mental tenets of their religious beliefs.” 406 U.S. at 
218. But the Court found that the proscribed Amish 
practice of providing vocational training in lieu of ad­
ditional formal education required by the state served 
all of the various government interests advanced in sup­
port of the law. Id. at 221-34. There was, therefore, no 
conflict of interests at all, and the religious practice 
could be accommodated.

Both Sherbert and Thomas involved persons who left 
their jobs because of religious principles and were denied 
unemployment benefits because the state did not recog­
nize religious conviction as an acceptable basis for refus­
ing employment. In Thomas, the state claimed that the 
statute was intended to avoid widespread unemployment, 
but failed to show that treating religious scruples as 
“good cause” for refusing employment, as do most other 
states, would have any impact upon unemployment. 450 
U.S. at 719. Thus, there was no significant state interest 
that could not be fulfilled while accommodating plaintiffs’ 
free exercise rights. In contrast, petitioners’ asserted 
right to discriminate directly conflicts with the govern­
ment’s interest in eliminating racial discrimination in 
schools and cannot possibly be accommodated.88 68

65

68 This Court has consistently rejected a First Amendment basis 
for the “right” to discriminate: “ ‘The Constitution . . . places no



A final and crucial distinction between these cases and 
those relied upon by petitioners is that the government 
interest here is far more compelling because of its con­
stitutional foundation. Indeed, it can fairly be said that 
“ [a] more compelling governmental interest has perhaps 
never been enlisted in opposition to a free exercise claim.” 
Brown v. Dade Christian Schools, Inc., 556 F.2d 310, 322- 
23 (5th Cir. 1977) (Goldberg, J., concurring), cert, 
denied, 434 U.S. 1063 (1978).

Goldsboro nonetheless argues that the government in­
terest in this case is insubstantial because only a rela­
tively small percentage of students currently attend 
church-related schools. G. Br. at 41. Norwood v. Harri­
son rejected that argument on the ground that the Gov­
ernment is constitutionally prohibited from aiding ra­
cially discriminatory schools regardless of the number of 
students involved. 413 U.S. at 467. In any event, peti­
tioners’ focus is much too narrow, because others may seek 
to bring themselves within the exception if granted. See 
Heffron v. International Society for Krishna Conscious­
ness, 452 U.S. 640, 652 (1981). The history of the deseg­
regation struggle since Brown v. Board of Education re­
flects all too clearly that many persons, and some political 
entities, are prepared to go to extreme lengths to avoid 
nonsegregated education.69

value on discrimination,’ . . . and while ‘[i]nvidious private dis­
crimination may be characterized as a form of exercising freedom 
of association protected by the First Amendment . . .  it has never 
been accorded affirmative constitutional protections.’ ” Runyon v. 
McCrary, 427 U.S. at 176 (quoting Norwood v. Harrison, 413 
U.S. 455, 463 (1973)). This same analysis has been applied to peti­
tioners’ religiously-based F irst Amendment claims. Bob Jones Uni­
versity v. Johnson, 396 F. Supp. 597, 607 (D.S.C. 1974), aff’d, 529
F.2d 514 (4th Cir. 1975).

69 See, e.g., Norwood v. Harrison, 413 U.S. at 467 n.9; Griffin v. 
County School Board, 377 U.S. 218 (1964); Poindexter v. Louisiana 
Financial Assistance Cortvm’n, 275 F. Supp. 833, 856-57 (E.D. La. 
1967), aff’d, 389 U.S. 571 (1968) ; Brown v. Dade Christian Schools 
Inc., 556 F.2d at 324 (Goldberg, J., concurring).

6 6



67

The concerns expressed in several of the briefs amici 
curiae—that all religions which discriminate on any basis 
may lose their tax-exempt status—are unfounded. First, 
these cases do not involve institutions devoted exclusively 
to religious worship, and therefore do not deal “with the 
right of the government to interfere . . . with the ‘in­
ternal affairs of the church itself’ ” as some amici curiae 
fear.™ Nor do these cases involve seminaries or other in­
stitutions devoted exclusively to sectarian education. 
Rather, petitioners are educational institutions which of­
fer secular education to the public on a commercial basis 
in competition with the public schools and other private 
schools. Goldsboro, 436 F. Supp. at 1316; see swpra at 
42-43. They may thus be required to conform to neutral 
laws of general application which govern education. Pierce 
v. Society of Sisters, 268 U.S. 510, 534-35 (1925) ; see 
also United States v. Lee, 102 S. Ct. 1051, 1056 (1982) ; 
Prince v. Massachusetts, 321 U.S. 158 (1944).

Bob Jones also asserts that § 501(c) (3) violates the 
Establishment Clause, arguing that § 501(c) (3) gives a 
“tax preference” to sectarian schools which do not prac­
tice racial discrimination. That contention is simply an 
insufficient basis for an Establishment Clause claim. Har­
ris v. McRae, 448 U.S. 297, 319-20 (1980). Obviously, a 
statute does not violate the Establishment Clause merely 
because it “happens to coincide with the tenets of some 
or all religions.” McGowan v. Maryland, 366 U.S. 420, 
442-44 (1961). In addition to showing that the statute 
affects different religions differently, “a claimant. . . must 
be able to show the absence of a neutral, secular basis for 
the lines government has drawn.” Gillette v. United 
States, 401 U.S. 437, 452 (1971). Petitioner makes no 
such showing. 70

70 See, e.g., Brief Amicus Curiae of the Center for Law and Re­
ligious Freedom of the Christian Legal Society in Support of Peti­
tioner at 5-7; Brief Amici Curiae of the American Baptist Churches 
in the USA joined by the United Presbyterian Churches in the USA 
at 10-12.



68

If anything, granting sectarian schools a special exemp­
tion from the § 501(c) (3) nondiscrimination requirement 
would raise Establishment Clause problems. If govern­
ment exercises its discretion to provide limited forms of 
neutral aid to sectarian schools, that aid must be suffi­
ciently restricted to assure that it cannot be used to ad­
vance the school’s religious activities. Committee for Pub­
lic Education v. Nyquist, 413 U.S. 756, 774 (1973) ; 
Tilton v. Richardson, 403 U.S. 672, 679 (1971). There 
is no doubt that tax benefits can constitute government 
aid for these purposes and that such aid is impermissible 
if it advances the school’s religious activities. Nyquist, 
413 U.S. at 790-91. Here the asserted basis for a special 
exception from the general rule requiring nondiscrimina­
tion is specifically to facilitate petitioner’s religiously- 
based practice of racial discrimination. Granting the 
exemption in these cases thus would impermissibly support 
both racial discrimination and religious activities.

Creation of a special exception for religiously-motivated 
racial discrimination would also entangle the government 
in questions of religious beliefs. If religiously-based racial 
discrimination were given a tax preference unavailable 
to other institutions that discriminate on the basis of race, 
there would be a strong incentive for such institutions to 
posit a religious basis for their discriminatory practices, 
Brown v. Dade Christian Schools, Inc., 556 F.2d 310, 324 
(5th Cir. 1977) (Goldberg, J., concurring), and the dan­
ger of fraudulent claims would be substantial. See Gil­
lette v. United States, 401 U.S. at 460. The government 
would have to examine each institution’s policies and de­
termine whether the beliefs, however sincerely held, were 
in fact religious. See Wisconsin v. Yoder, 406 U.S. at 
215-16. That is a particularly inappropriate form of 
government involvement in religion. See Gillette v. United 
States, 401 U.S. at 454-57; McGowan v. Maryland, 366 
U.S. at 516-20 (separate opinion of Frankfurter, J.).



69

All of these factors lead to the conclusion that Congress 
would have raised serious Establishment Clause problems 
had it chosen to grant petitioners a special exemption 
from the general rule that the government will not aid 
private schools which discriminate on the basis of race. 
The path Congress chose instead is a neutral law of gen­
eral application which minimizes government entangle­
ment with religion and, as such, is constitutional.

CONCLUSION

For the reasons stated, this Court should affirm 
the judgments of the court below. The Commissioner’s 
interpretation of the Internal Revenue Code is fully sup­
ported by the statutory language and by overwhelming 
evidence of congressional intent, and is in fulfillment of 
his constitutional duty to ensure that the federal govern­
ment in no way supports the maintenance of racially 
segregated or discriminatory schools.

Respectfully submitted,

William T. Coleman, J r * 
Amicus Curiae, invited by 
Court, per Order of 
April 19, 1982

Richard C. Warmer 
Donald T. Bliss 
J ohn W. Stamper 
Ira M. F einberg 
David T. Beddow 
Randolf Hurst Hardock

O’Melveny & Myers 
1800 M Street, NW. 
Washington, D.C. 20036 
(202) 457-5300

E ric Schnapper

10 Columbus Circle 
New York, New York 10019

Dated: August 25, 1982

* Counsel of Record



APPENDICES



APPENDIX A

Rev. Rul. 71-447
The Internal Revenue Service has been asked whether a 

private school that otherwise meets the requirements of 
section 501(c) (3) of the Internal Revenue Code of 1954 
will qualify for exemption from Federal income tax if it 
does not have a racially nondiscriminatory policy as to 
students.

A “racially nondiscriminatory policy as to students” is 
defined as meaning that the school admits the students of 
any race to all the rights, privileges, programs, and ac­
tivities generally accorded or made available to students 
at that school and that the school does not discriminate on 
the basis of race in administration of its educational pol­
icies, admissions policies, scholarship and loan programs, 
and athletic and other school-administered programs.

Section 501(c) (3) of the Code provides, among other 
things, for the exemption from Federal income tax of or­
ganizations “organized and operated exclusively for reli­
gious, charitable, * * * or educational purposes.”

Section 1.501(c) (3)-l(d) (3) (ii) of the Income Tax 
Regulations provides that a primary or secondary school 
that has a regularly enrolled body of students in attend­
ance at a place where the educational activities are regu­
larly carried on may qualify for exemption as an educa­
tional organization of the character contemplated by Code 
section 501(c) (3) if it otherwise meets the requirements 
of that section.

Under common law, the term “charity” encompasses all 
three of the major categories identified separately under 
section 501(c) (3) of the Code as religious, educational, 
and charitable. Both the courts and the Internal Revenue 
Service have long recognized that the statutory require­
ment of being “organized and operated exclusively for 
religious, charitable, * * * or educational purposes” was



2 a

intended to express the basic common law concept. Thus, 
a school asserting a right to the benefits provided for in 
section 501(c)(3) of the Code as being organized and 
operated exclusively for educational purposes must be 
common law charity in order to be exempt under that 
section. That Congress had such an intent is clearly 
borne out by its description in section 170(c) of the Code 
of a deductible gift to “a corporation, trust, fund, or 
foundation * * * organized and operated exclusively for 
educational purposes” as a “charitable contribution.” The 
Service has followed this concept, as is reflected in Rev. 
Rul. 67-325, C.B. 1967-2, 113, 116-117, which reads:

* * * (S)ections 170, 2055, 2106, and 2522 of the 
Code, to the extent they provide deductions for con­
tributions or other transfers to or for the use of or­
ganizations organized and operated exclusively for 
charitable purposes, or to be used for charitable pur­
poses, do not apply to contributions or transfers to 
any organization whose purposes are not charitable 
in the generally accepted legal sense or to any con­
tribution for any purpose that is not charitable in 
the generally accepted legal sense. For the same rea­
sons, section 501(c) (3) of the Code does not apply 
to any such organization.

Also see section 1.501(c) (3)-1(d) (2) and (3) of the reg­
ulations; Amy Hutchinson Crellin v. Commissioner, 46 
B.T.A. 1152(1942), and authorities cited therein.

All charitable trusts, educational or otherwise, are sub­
ject to the requirement that the purpose of the trust may 
not be illegal or contrary to public policy. This principle 
has been stated as follows in the Restatement {Second), 
Trusts (1959) Sec. 377, Comment c:

A trust for a purpose the accomplishment of which 
is contrary to public policy, although not forbidden 
by law, is invalid.



8a

Although the operation of private schools on a discrim­
inatory basis is not prohibited by Federal statutory law, 
the policy of the United States is to discourage discrimi­
nation in such schools. The Federal policy against racial 
discrimination is well-settled in many areas of wide pub­
lic interest as, for example, in transportation, housing, 
employment, hotels, restaurants and theaters. A recogni­
tion of a public interest in eliminating racial discrimina­
tion is shown in section 1.501(c) (3)-l(d) (2) of the regu­
lations providing that the “promotion of social welfare” 
includes activities “to eliminate prejudice and discrimina­
tion.”

Developments of recent decades and recent years re­
flect a Federal policy against racial discrimination which 
extends to racial discrimination in education. Titles IV 
and VI, The Civil Rights Act of 1964, Public Law 88-352, 
78 Stat. 241, 42 U.S.C. 2000c, 2000c-6 and 2000d and 
Brown v. Board of Education, 347 U.S. 483, 500 (1954), 
and many subsequent Federal court cases, demonstrate a 
national policy to discourage racial discrimination in edu­
cation, whether public or private.

The issue here is whether a private school that does not 
have a racially nondiscriminatory policy as to students is 
“charitable” within the common law concepts found in 
section 501(c)(3). The foregoing discussion demon­
strates that racial discrimination in education is contrary 
to Federal public policy. Therefore, a school not having a 
racially nondiscriminatory policy as to students is not 
“charitable” within the common law concepts reflected in 
sections 170 and 501 (c) (3) of the Code and in other rele­
vant Federal statutes and accordingly does not qualify 
as an organization exempt from Federal income tax.
1971-2 C.B. 230.



lb
APPENDIX B

Nineteenth Century State Constitutional and Statutory 
Tax Exemption Provisions Containing Language Com­
parable to That Found in § 501(c)(3)

Ala, Const, of 1875 art. IV, § 52 (“lots . . . used ex­
clusively for religious worship, for schools, or for purposes 
purely charitable” ); Ala. Code tit. 7, § 451(2) (1887) 
(same language) (enacted 1875-76 Ala. Laws No. 1, at 44 
(1876)); Ala. Rev. Code tit. 7, ch. 3, § 433(4) (1867) 
(“property of literary, scientific, and benevolent institu­

tions”) (enacted 1866-67 Ala. Acts No. 260, at 260 
(1867)).

Colo. Gen. Stat. ch. XCIV, § 2815 (1883) (“buildings 
. . . used solely and exclusively for religious worship, for 
schools, or for strictly charitable purposes” ) ; Colo. Rev. 
Stat. ch. LXXV, § 2 (1867) (territorial legislature) 
(“buildings of library, scientific, benevolent, and religious 
institutions” ) .

Conn. Gen. Stat. tit. 76, § 3820 (1888) (“buildings be­
longing to and used exclusively for scientific, literary, 
benevolent, or ecclesiastical societies” ) ; Conn. Stat. tit. 
LV, § 6 (1854) (“buildings belonging to scientific, liter­
ary, benevolent or ecclesiastical societies, used exclusively 
for scientific, literary, benevolent or religious purposes” ).

Del. Rev. Stat. ch. 44, § 1098 (1915) (all real and 
personal property “used for educational or school pur­
poses, or any corporation created for charitable pur­
poses”) ; Del. Rev. Stat. tit. II, ch. 11, at 114 (1852, 
amended to 1893) (property belonging to a “church, reli­
gious society, college or school, or to any corporation for 
charitable uses” ) ; see also 1877 Del. Laws ch. 16 (“lega­
cies for religious, charitable and educational purposes” ).

Fla. Const, of 1887 art. IX, § 1 (property “for munici­
pal, educational, literary, scientific, religious or charita-



2b

ble purposes” ) ; Fla. Rev. Stat. tit. VI, § 332 (1892) 
(“property of all literary, benevolent, charitable and scien­
tific institutions”) (enacted 1887 Fla. Laws No. 1, at 2) ; 
Fla. Laws ch. 174, §13(3) (McClellan’s Digest 1881) 
(same language) (enacted 1881 Fla. Laws No. 1, at 2).

111. Const, of 1870 art. IX, § 3 (property used “for 
school, religious, cemetery and charitable purposes” ).

Ind. Const, of 1851 art. 10, § 1 (§ 193) (property used 
“for municipal, educational, literary, scientific, religious, 
or charitable purposes”) ; Ind. Rev. Stat. ch. 98, § 8525 
(1892) (property used for “educational, literary, scien­
tific or charitable purposes” ) (enacted 1881 Ind. Acts 
ch. XCVI, at 613) ; Ind. Rev. Stat. ch. 12, § 5(7) (1843) 
(buildings “of any literary, benevolent, charitable, or 
scientific institution”) .

Iowa Code Ann. tit. 6, §1271(1) (McClain 1888) 
(“buildings of literary, scientific, benevolent, agricultural, 
and religious institutions”) ; Iowa Rev. Stat. tit. VI, § 711 
(1860) (same language) ; Iowa Code tit. VI, ch. 37, § 455 
(1850-51) (“buildings of library, scientific, benevolent, 
and religious institutions or societies” ) .

Kan. Const, of 1859 art. 11, § 1 (“property used ex­
clusively for state, county, municipal, literary, educa­
tional, scientific, religious, benevolent and charitable pur­
poses” ) ; Kan. Comp. Laws ch. 107, § 6212 (1885)
(“buildings belonging to scientific, literary or benevolent 
associations, and . . . moneys and credits belonging ex­
clusively to universities, colleges, academies or public 
schools of any kind, or to religious, literary, scientific or 
benevolent and charitable institutions or associations”) 
(enacted 1876 Kan. Laws ch. 34, at 55).

Me. Rev. Stat. Ann. tit. 1, ch. 6, § 6 (1871) (“the real 
and personal property of all literary institutions, and the



3b

real and personal property of all benevolent, charitable 
and scientific institutions” ) .

Mass. Rev. Laws eh. 12, § 5 (1902) (“property of 
literary, benevolent, charitable and scientific institu­
tions” ) ; Mass. Pub. Stat. ch. 11, § 5 (1882) (same lan­
guage) ; see also 1874 Mass. Acts ch. 375, at 413 (property 
of association taxable unless used for “literary, educa­
tional, benevolent, charitable, scientific or religious pur­
poses” ).

Mich. Comp. Laws ch. 98, § 3830(4) (1897) (property 
“owned and occupied by library, benevolent, charitable, 
educational and scientific institutions” ) (enacted 1893 
Mich. Laws No. 206, at 355) ; Mich. Rev. Stat. tit. V, ch. 20, 
§ 5(4) (1846) (“property of all library, benevolent, char­
itable and scientific institutions” ) .

Miss. Code Ann. ch. 116, § 3744(d) (Thompson, Dillard 
& Campbell 1892) (“property, real or personal, belong­
ing to any religious or charitable society, or incorporated 
institution for the education of youth” ) .

Mo. Const, of 1875 art. X, § 6 (“lots . . . used ex­
clusively for religious worship, for schools, or for pur­
poses purely charitable” ) ; Mo. Rev. Stat. ch. 138, § 7504 
(1889) (same language) (enacted 1877 Mo. Laws 393).

Neb. Const, of 1875 art. IX, § 2 (property used “for 
school, religious, cemetery and charitable purposes” ) ; Neb. 
Stat. Ann. ch. 46, § 3898 (Cobbey 1891) (same language) 
(enacted 1879 Neb. Laws 276, 277) ; Neb. Rev. Stat. ch. 
XLVI, § 1 (1866) (“buildings of library, scientific, benev­
olent and religious institutions” ) (enacted 1857 Neb. 
Laws 147 (territorial legislature)).

Nev. Const, of 1864 art. X, § 1 (property used “for 
municipal, educational, literary, scientific, religious, or 
charitable purposes” ), amended 1903 Nev. Stat. 240 
(property “for municipal, educational, literary, scientific 
or other charitable purposes” ) .



4b

N.M. Const, of 1911 art. VIII, § 7 (“all church prop­
erty, all property used for educational or charitable pur­
poses” ) ; N.M. Stat. Ann. ch. CVII, § 5430 (1915) (prop­
erty of “literary, scientific, benevolent, agricultural and 
religious institutions and societies” ) ; N.M. Comp. Laws 
tit. XLI, § 2808 (1884) (territorial legislature) (same 
language) (enacted 1882 N.M. Laws ch. 62, at 110).

N.Y. Tax Law § 4(7) (Birdseye 1895) (property of a 
corporation or association organized “for religious, bible, 
tract, charitable, benevolent, missionary, hospital, in­
firmary, educational, scientific, literary, library, patriotic, 
historical or cemetery purposes” ) ; 1893 N.Y. Laws 
ch. 498, at 1077 (property of a corporation or association 
organized “for religious, charitable, missionary, hospital, 
educational, patriotic, historical or cemetery purposes” ).

N.C. Const, of 1868 art. V, § 6 (“property held for 
educational, scientific, literary, charitable, or religious 
purposes”) ; N.C. Rev. Stat. ch. 110, § 5107 (Womack, 
Gulley & Rodman 1905) (“property held for the benefit 
of churches, religious societies, charitable, educational, 
literary or benevolent institutions”) .

N.D. Const, of 1889 art. 11, § 176 (“property used ex­
clusively for school, religious, cemetery or charitable pur­
poses” ) ; N.D. Rev. Code ch. 18, § 1177(5) (1895) 
(“buildings of library, scientific, educational, benevolent 
and religious institutions, colleges or societies” ) ; Dak. 
Terr. Comp. Laws ch. 15, § 1542(5) (Caldwell & Price 
1887) (same language) (enacted 1879 Dak. Laws ch. 
XLVIII, at 111).

Okla. Rev. Stat. Ann. ch. 75, § 5914 (Wilson 1903) 
(“buildings of library, scientific, educational, benevolent 
and religious institutions, colleges or societies” ) .

Or. Const, of 1859 art. IX, § 1 (property used “for 
municipal, educational, literary, scientific, religious, or