Goldboro Christian Schools, Inc. v. United States Reply Brief for the United States

    Nos. 81-1 and 81-3

3ht %  Hujjrrmr ( ta r t of %  Ittttrfr BUUb
October Term, 1982

Goldsboro Christian Schools, Inc., petitioner

v.

United States of America

Bob J ones U niversity, petitioner

v.

U nited States of America

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

REPLY BRIEF FOR THE UNITED STATES

Lawrence G. Wallace
Acting Solicitor General

Wm. Bradford Reynolds 
Assistant A ttorney General

Charles J. Cooper 
Deputy Assistant A ttorney General

Department of Justice 
Washington, D.C. 20530 
(202) 633-2217



TABLE OF AUTHORITIES
Cases: Page

CBS, Inc. V. FCC, 453 U.S. 867 ........................ ........ 16
Commissioner v. “Americans United”, Inc., 416

U.S. 752 ___________ ___-................. ............. ........  3,17
Commissioner V. Heininger, 320 U.S. 467 ----------  19
Commissioner V. Sullivan, 356 U.S. 2 7 ___ __-...... 19
Commissioners V. Pemsel, [1891] A.C. 531 ............ 3, 4
Dayton Bd. of Educ. V. Brinkman, 443 U.S. 526—  19
De Sylva  V. Ballentine, 351 U.S- 570 .... ........... ........ 9
Girard Trust Co. v. Commissioner, 122 F.2d 108.... 14
Green V. Connolly, 330 F. Supp. 1150 ................ ...... 15
Haig V. Agee, 453 U.S. 280 ............ ......... ................... 16
Eazen  v. National Rifle Association, 101 F.2d 432.. 14
Iselin V. United States, 270 U.S. 245 ..... .................. 15
Jarecki V. G.D. Searle & Co., 367 U.S. 303 ....... ...... 8
Lilly V. Commissioner, 343 U.S. 90 .......................... 19
Manhattan General Equipment Co. V. Commis­

sioner, 297 U.S. 129 ................. ...,------:................  15
McCoy V. Schultz, 73-1 U.S.T.C. If 9233 .................. 17
Merrill Lynch, Pierce, Fenner & Sm ith  V. Curran,

Inc., No. 80-203 (May 3, 1982) __ _____ ______ 16
Morrill V. Jones, 106 U.S. 466 ______ __________  15
National Muffler Dealers A ss’n  v. United States,

440 U.S. 472 ........... ................... .......... ................2, 6, 9,16
North Haven Board of Education V. Bell, No. 80-

986 (May 17, 1982) ___ ____................ 16
Norwood V. Harrison, 413 U.S. 455 ........ ..................  19
New England Theosophical Corp. v. Boston, 172

Mass. 60 --------- ------------ -------- ---- ---------- ..... 10,11
People’s Educational Camp Society, Inc. v. Com­

missioner, 331 F.2d 923 .....        ..... 5
Plessy V. Ferguson, 163 U.S. 537 ................... ....... 3
Pollock V. Farmers’ Loan & Trust Co., 158 U.S.

601 .............        — 3
Reiter X. Sonotone Corp., 442 U.S. 330 ...... .......... 4
SEC  V. Sloan, 436 U.S. 1 0 3 ______ ____________  16
Slee V. Commissioner, 15 B.T.A. 710, aff’d, 42 F.2d

184 ..... - .............. .......................................... ............  14
Speiser v. Randall, 357 U.S. 5 1 3__     ..... 19
St. Louis Union Trust Co. V. Burnet, 59 F.2d 922.. 14



Tank Truck Rentals, Inc. V. Commissioner, 356
U.S. 30 ........................... ...................... ................... 19

Textile Mills Securities Corp. V. Commissioner, 314
U.S. 326 ................ ................ ................ ....................  19

Underwriters’ Laboratories, Inc. V. Commissioner,
135 F.2d 371 ................................... ............... ...........  14

Union Insurance Co. v. United States, 73 U.S. (6
Wall.) 759 _____       9

United States V. Fisk, 70 U.S. (3 Wall.) 445___  9
United States V. Rutherford, 442 U.S. 544 .............. 16
United States V. Scotland Neck City Bd. of Educ.,

407 U.S. 484 ............ ................................. ................  19
Zemel V. Rusk, 381 U.S. 1 _____________________  16

Constitution and s ta tu tes:
United States Constitution:

Article I ____ ________ ___________________ 2
F ifth  Amendment ________ ____ ___________  19
Sixteenth A m endm ent_____ _____ ________  3,10

Internal Revenue Code of 1954, ch. 736, 68A Stat.
163 ......         14

Internal Revenue Code of 1954 (26 U.S.C.) :
Section 162(a) __ ___________ ________...... 19
Section 170 ____ __________ ______ _______  7,14
Section 170(b) (1) (A) (iv) ...................  7
Section 170(b) (1) (A) (vi) ___    8
Section 170(c)(4) _____________   7
Section 170(e) (1) (B) (i) __ ___ _________  8,17
Section 501 _____          12
Section 501(a) _____________      8
Section 501(c) (3) ___________  passim
Section 501 (c) (4) __ ______________ __ .....5, 6,11
Section 501(c)(6) ...   2
Section 501(c)(7)  ...............    17
Section 501 (i) ___     16,17,18
Section 507(g)(2) ___________________  7,17
Section 512(a) (4) ___       7
Section 512(a) (3) (B) (i) ____     7
Section 513(a) .......        7
Section 514(b) (1) (A) (i) ___    8

II
Cases—Continued Page



Ill

Section 8121(b )(8 )(B ) ........    8
Section 3306. (c) (8) ..............     8
Section 4911(e) (1) (A) ..............     8
Section 4942 (g) (1) ................... ................ . 8,17
Section 4944(c) ..... ...................... .............. ........  8,17
Section 4945 (d) (5) _____________________  8,17
Section 4947(a) (1) ______________________  8,17
Section 4947(a) (2) .....   8,17
Section 4947(b) (3) (A) .............. ....................  8,17

Revenue Act of 1918, ch. 18, Section 231(6), 40;
Stub 1076 ...................... .......... ................. ...............  12

Revenue Act of 1921, ch. 136, Section 231(6), 42
Stat. 253 ......... ............... ............................. ............ . 12

Revenue Act of 1924, ch. 234, Section 231(6), 43
Stat. 282 .................................. - ___________ __ _ 12

Tariff Act of 1894, ch. 349, 28 Stat. 509, 556...  3
Tariff Act of 1913, ch. 16, 38 Stat. 114, 116.......  5

Section II, 38 Stat. 166 ____ __ ___________  2
Section II (G) ( a ) , 38 Stat. 1 7 2 ..... .................. 5,10

Pub. L. No. 94-455, Section 1313(a), 90 Stat.
1730 ............................................................................  18

Miscellaneous:
26 C.F.R. 1.501(c) (3 )-1(d) (2) (1959) _______ 15
26 Cong. Rec. (1894) :

pp. 584-588 ......... ..................... ........................... . 6
pp. 1609-1610 .................... ............ ........ .......... 6
pp. 1612-1614 _______ __________ ________ 6
p. 3781 ____________ ______ _________ ___ _ 6
pp. 6612-6615  ____ _____ _______________  6

35 Cong. Rec. 5564-5565 (1902)  ........................  9
44 Cong. Rec. 4149-4150 (1909)       9
50 Cong. Rec. (1913) :

p. 1306 ___ ______ ____________ _____ _____ _ 10, 11
p. 3856 .............. - ........... ........ ............................... 11

55 Cong. Rec. 6728 (1917) ..... ................. ........... . 9
56 Cong. Rec. (1918) :

pp. 10418-10428 .......... ............................... ........ 10
p. 10426 ..... - ................ ............ ............. ............... 9

Constitution and statutes—Continued Page



65 Cong. Rec. (1924) :
p. 8171 ................ ................ .......... .................... . 12
p. 8172 ........................ ...........................................  12,13

79 Cong. Rec. 12423 (1935) ......... ........................  10
122 Cong. Rec. 25960 (1976) ................................. 18
122 Cong. Rec. 25961 (1976) ....... .................. ........ 18
125 Cong. Rec. H5884 (daily ed,, July 13, 1979)—. 18
H.R. 5313, 97th Cong., 2d Sess. (1982) .......... .........  1
H.R. Rep. No. 276, 53d Cong., 2d Sess. (1894).......  6
H.R. Rep. No. 1702, 57th Cong., 1st Sess. (1902).. 9
H.R. Rep. No. 1681, 74th Cong., 1st Sess. (1935).. 10
H.R. Rep. No. 1860, 75th Cong., 3d Sess. (1938).... 13
H. R. Rep. No. 91-413 (Pt. 1), 91st Cong., 1st Sess.

(1969) .......... ............. ............................ :_____ __ _ 17
I. T. 1800, II-2 Cum. Bull. 152 (1923) ___ ........ 6
Internal Revenue: Hearings on H.R. 82b5 Before

the Senate Comm, on Finance, 67th Cong., 1st
Sess, (1921) _____ _________ ____ __________  12

Rev. Rul. 56-185, 1956-1 Cum. Bull. 202 _____   14
Rev. Rul. 57-467, 1957-2 Cum. Bull. 313 ____   14
Rev. Rul. 57-297, 1957-2 Cum. Bull. 307 _________ 6
Rev. Rul. 61-72, 1961-1 Cum. Bull. 188..........   14
Rev. Rul. 64-231, 1964-2 Cum. Bull. 139____   14
Rev. Rul. 70-4, 1970-1 Cum. Bull. 1 26________   6
Rev. Rul. 77-272, 1977-2 Cum. Bull. 191_______   17
Rev. Rul. 75-384, 1975-2 Cum. Bull. 204 .........    17
Rev. Rul. 78-305, 1978-2 Cum. Bull. 172 _______   17
S. 2024, 97th Cong., 2d Sess. (1982) _____ ______  1
S.M. 2160, III-2 Cum. Bull. 151 (1924) ..... ........... . 7
Sol. Op. 159, III-l Cum. Bull. 480 (1924) ....... ...... 7,13
Tariff Schedules: Briefs and Statements on H.R.

3321 filed w ith the Senate Comm, on Finance,
63d Cong., 1st Sess. (1913) ____ ____________ 5-6,11

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) ................................. ..................... .......... ....... 18

Treas. Reg. 65 (1924) :
Art. 517 ........................... ........... ........................  7
Art. 519 ................................ ................ ..............  6,7

IV

Miscellaneous—Continued Page



In tl|F (Hmtrt ni tip Unit rd BinUs
October Term, 1982

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

v.

U nited States of America

No. 81-3
Bob J ones University, petitioner

v.

U nited States of America

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

REPLY BRIEF FOR THE UNITED STATES

The United States believes resolutely that Congress 
ought to deny tax-exempt status to any educational in­
stitution that pursues a racially discriminatory policy.1 
The overriding national commitment to the eradication 
from American society of differences in the treatment of 
individuals based solely on race or color is especially 
strong in the field of education, where racial discrimina-

1 The President early this year sent to both Houses of Congress 
legislation that would require such a result. See Senate Bill, S. 2024, 
97th Cong., 2d Sess. (1982); House Bill, H.R. 5313, 97th Cong., 2d 
Sess. (1982).

(1)



2

tion has long been condemned by this Court, by the Con­
gress, and by all elements of the Executive Branch.

The Government’s position in this case signals no com­
promise of this fundamental principle of nondiscrimina­
tion in matters of race. Rather, it rests on the equally 
fundamental tenet that Congress—not the courts or the 
Executive Branch—has exclusive authority, and respon­
sibility, under Article I of the United States Constitu­
tion to legislate. While we think Congress should by law 
authorize the IRS to deny tax exemptions to racially seg­
regated schools, nowhere in the Internal Revenue Code 
(or elsewhere) has it done so. And, in the absence of such 
a legislative mandate, the result desired—no matter how 
much desired—cannot constitutionally be accomplished by 
either judicial or administrative action.

At the center of the present controversy is § 501(c) (3) 
of the Code, which amicus curiae William T. Coleman, 
Jr. (“Amicus” ) argues can be construed to permit IRS 
denials of tax exemptions to petitioners and other bona 
fide educational institutions that engage in racially dis­
criminatory practices. We argued in our main brief 
(“Br.” ) that such a construction of § 501(c) (3) is con­
trary to both its language and its legislative history, and 
flies in the face of many years of administrative inter­
pretation by those charged with implementing the Code. 
This reply will be limited to supplementing those earlier 
remarks only to the extent necessary to respond to 
specific points relied upon by Amicus.

A. Understandably, Amicus does not argue that Con­
gress intended specifically to deny tax-exempt status to 
racially discriminatory private schools. Such an argu­
ment is foreclosed by American history; the statutory 
exemption for educational institutions was initially en­
acted at the turn of the century,2 a time when—as Amicus

2 Tariff Act of 1913, ch. 16, § II, 38 Stat. 114, 166. The intent of 
the 1913 Congress, of course, forms the core of the {question of 
statutory interpretation at issue in this case. See National Muffler 
Dealers Ass’n v. United States, 440 U.S. 472 (1979) (construing 
§ 501(c) (6)).



3

readily acknowledges (A. Br. 43-44)—racial segregation 
in education and other pursuits was widespread and in 
many places legally required.3

Rather, Amicus maintains that Congress intended to 
accord tax-exempt status only to organizations satisfying 
the requirements of a “charity” at common law. Thus, 
notwithstanding the carefully disjunctive statutory enu­
meration in § 501(c) (3) of eight discrete purposes qual­
ifying for exemption, it is Amicus’ thesis that Congress 
intended any organization devoted to “purposes beneficial 
to the community” (A. Br. 19-20, quoting Commissioners 
V. Pemsei, [1891] A.C. 531, 583) to be exempt, provided 
that—in the common-law sense of “charitable”—the or­
ganization engages in no practices that are illegal or in­
consistent with public policy. On this reasoning, the other 
seven separately enumerated exempt purposes—five of 
which were specifically added by different amendments to 
the statute—are said to be subsumed within the opera­
tive term “charitable,” and, in Amicus’ view, are merely 
intended as “illustrative examples” of purposes beneficial 
to the community (A. Br. 18-24, 35-40).

Amicus’ theory thus attributes to Congress the highly 
improbable intention of “vesting in the Commissioner 
virtually plenipotentiary power over philanthropic organ­
izations” (Commissioner v. “Americans United,” Inc., 
416 U.S. 752, 773 (1974) (Blackmun, J., dissenting)), 
by authorizing him not only to determine which purposes 
are “beneficial to the community,” but also to divine 
“public policy” and to police exemptions accordingly. 
Moreover, it drains all independent legal significance from 
seven of the eight separately enumerated exempt pur-

3 The exemption for educational institutions now contained in 
§ 501(c) (3) first appeared in 1894, two years before the Court’s 
decision in Plessy v. Ferguson, 163 U.S. 537 (1896). See Tariff 
Act of 1894, ch. 349, 28 Stat. 509, 556. The 1894 Act was invali­
dated in Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601 (1895), 
but the income tax, as well as the statutory exemption for edu­
cational institutions, was reinstated in 1913, after ratification of 
the Sixteenth Amendment. See note 2, supra.



4

poses in § 501(c) (3) and reduces to a meaningless exer­
cise Congress’ repeated amendments of the statute to in­
clude additional exempt purposes. The fulcrum for this 
extravagant authority that Congress allegedly reposed 
in the Commissioner—the word “charitable”—simply can­
not support the weight of Amicus’ tortured statutory 
construction.4 5

The starting point of Amicus’ analysis is Congress’ in­
itial enactment in 1894 of an exemption for “charitable, 
religious or educational purposes,” which, according to 
Amicus (A. Br. 19), “closely tracked” Lord Macnagh- 
ten’s classic enumeration of the four principal divisions 
of English common-law charitable trusts: “ [T] rusts for 
the relief of poverty; trusts for the advancement of edu­
cation ; trusts for the advancement of religion; and trusts 
for other purposes beneficial to the community * * *.” 
Commissioners v. Pemsel, supra, [1891] A.C. at 583.® 
Conspicuously absent from Congress’ formulation, how­
ever, is the very division on which Amicus’ entire argu­

4 Amicus’ argument that the seemingly carefully chosen words 
of §501 (c)(3) are tautologous must overcome not only logic, but 
the well-established presumption giving effect to “every word Con­
gress used.” Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979). 
Contrary to Amicus’ claim (A. Br. 35), here the context of § 501 
(c) (3) also compels a disjunctive reading, as we demonstrate below.

5 Amicus places heavy emphasis upon Lord Macnaghten’s opinion 
in Pemsel (A. Br. 20-22). There, the question was whether rental 
income devoted to the missionary work of the Protestant Episcopal 
Church in “heathen nations” was exempt from taxation under a 
statute exempting “rents and profits of lands * * * belonging to 
any hospital, public school, or alms-house, or vested in trustees for 
charitable purposes.” In determining that the term “charitable pur­
poses” was used in its broad legal sense rather than its narrow 
“relief of the poor” sense, Lord Macnaghten pointed to, among 
other things, a sister provision of England’s Income Tax Act of 
1842, which required a person “acting for such school, hospital, or 
alms-house, or other trust for charitable purposes" ([1891] A.C. 
at 584) to prove that the exempt income was being put to charitable 
uses. This language satisfied Lord Macnaghten 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 as much



5
ment rests—i.e., purposes beneficial to the community. 
Nonetheless, Amicus contends that the word “charitable” 
was at the time used and understood by Congress in its 
broad, English common-law sense,6 rather than its nar­
rower, traditional sense of “relief of the poor.” All avail­
able evidence of legislative intent argues otherwise.

B. Had Congress intended the term “charitable” in 
§ 501(c) (3) to be understood as applying to all organi­
zations devoted to purposes beneficial to the community, 
it surely would have been consistent in its selection of 
language for sister Code provisions. Analysis of lan­
guage elsewhere in the Code, however, fails to support 
Amicus’ thesis, and, indeed, plainly contradicts it.

In § 501(c) (4) Congress used the phrase “operated 
exclusively for the promotion of social welfare” in 
describing the exemption available to “ [ej ivic leagues 
or organizations not organized for profit * * *.” The 
exemption in § 501(c) (4) for “social welfare” purposes, 
like the exemption for “charitable” purposes in § 501 (c) 
(3), was initially enacted in Section 11(G) (a) of the 
Tariff Act of 1913, ch. 16, 38 Stat. 114, 172. It was in­
cluded in the 1913 Act “as a result of a belief that the 
provision then exempting religious, charitable or educa­
tional organizations [i.e., the predecessor to § 501(c) 
(3)] was not broad enough to cover many non-profit or­
ganizations whose activities benefited the general pub­
lic.” People’s Educational Camp Society, Inc. v. Com­
missioner, 331 F.2d 923, 930 (2d Cir. 1964; emphasis 
added) ; see Tariff Schedules: Briefs and, Statements on 
H.R. 3321 filed with the Senate Comm, on Finance, 63d

as an almshouse or a hospital” (id. at 587-588), a fact which he 
found sufficient “to displace the narrow view” of “charitable” taken 
by the lower court. Ibid. Here, in contrast, sister Code provisions 
of § 501(c) (8) (see pages 5-8), as well as all other available evi­
dence of the meaning Congress assigned to the term “charitable,” 
lead to the opposite conclusion.

6 Amicus notes that the legislative history of the Tariff Act of 
1894 refers frequently to the English income tax (A. Br. 20 n.16). 
These references, however, only discuss generally the experiences of



6
Cong., 1st Sess. 2001 (1913) (statement of U.S. Chamber 
of Commerce) (hereinafter “1913 Briefs and State­
ments” ) .T

The juxtaposition in § 501 of the phrase “for the pro­
motion of social welfare” in subsection (c) (4) and the 
term “charitable,” which appears as but one of several 
enumerated exempt purposes in subsection (c) (3), mani­
fests a clear congressional understanding of the latter 
term as embracing a narrower range of conduct than 
the former. The Commissioner so ruled in 1923 7 8 and 
the following year formally promulgated an interpretive 
regulation expressly providing that civic organizations 
“engaged in promoting the welfare of mankind, other 
than organizations comprehended within [§ 501(c) (3)], 
are included within [§ 501(c) (4)].” Treas. Reg. 65, Art. 
519 (1924).

Indeed, with respect to another type of organization ex­
empted under § 501(c) (4)—“local associations of em­
ployees, * * * the net earnings of which are devoted ex-

England, as well as other countries, with an income tax. See H.R. 
Rep. No. 276, 53d Cong., 2d Sess. 5 (1894) (discussing income tax 
laws of England, Prussia, Austria, and Ita ly ); 26 Cong. Rec. 584- 
588, 1609-1610, 1612-1614, 3781, 6612-6615 (1894). The exemption 
of certain organizations from England’s income tax is nowhere dis­
cussed in the 1894 legislative history cited by Amicus.

7 See National Muffler Dealers Ass’n v. United, States, 440 U.S. 
472, 478 n.8 (1979).

8 See I.T. 1800, II-2 Cum. Bull. 152 (1923) (interpreting “chari­
table” in its “popular and ordinary sense” as pertaining only to 
“relief of the poor”). The IRS continues to hold that some civic 
organizations devoted to the social welfare—though they would 
certainly qualify as common-law charities—are not “charitable” 
organizations qualified to receive deductions under § 170. See, 
e.g., Rev. Rul. 70-4, 1970-1 Cum. Bull. 126; Rev. Rul. 57-297, 1957- 
2 Cum. Bull. 307.

Amicus (A. Br. 20, 30, 33) attaches great significance to an 
opinion by then Solicitor of Internal Revenue Hartson holding that 
the term “charitable” in the. estate tax provisions was to be con- 
srtued in its broad, common-law sense. Sol. Op. 159, III-l Cum. 
Bull. 480 (1924). In light of Solicitor Hartson’s subsequent opin­
ion recognizing the continued validity of the Service’s interpreta­



7

ciusively to charitable, educational, or recreational pur­
poses”—the 1924 IRS regulation defined the term “char­
itable” as “relief of the poor,” as did the portion of the 
regulation pertaining specifically to § 501(c) (3) organi­
zations. Id. at Arts. 517, 519; see Br. 20-22. This regu­
lation was reissued a total of eight times before being 
substantially modified in 1959. See Br. 21-22.

Other related Code provisions further refute Amicus’ 
contention that the term “charitable” in § 501(c) (3) 
was intended by Congress to encompass all of the other 
enumerated purposes. For example, § 507(g) (2) provides 
that the tax normally assessed on termination of a private 
foundation may be abated if prescribed action is taken 
“to insure that the assets of such private foundation are 
preserved for such charitable or other purposes specified 
in § 501(c) (3) * * *.” Section 512(a) (3) (B) (i) ex­
cludes from the calculation of “unrelated business taxable 
income” all income set aside “for a purpose specified in 
§ 170(c) (4).” 9 Identical language is also found in § 512 
(a)(4). Section 513(a), as discussed in our principal 
brief (Br. 15-16), defines “unrelated trade or business”

tion of “charitable” in I.T. 1800 (see S.M. 2160, III-2 Cum. Bull. 
151 (1924)), and in light of the Service’s promulgation, in the 
very same year, of a formal regulation interpreting charitable as 
“relief of the poor” (Treas. Reg. 65, Art. 517 (1924)), Sol. Op. 
159 lends no weight to Amicus’ argument.

9 Section 170(c) (4) permits the deduction of contributions “for 
religious, charitable, scientific, literary, or educational purposes, or 
for the prevention of cruelty to children or animals.” Amicus finds 
support for a broad interpretation of “charitable” in Congress’ ge­
neric use of the term “charitable contribution” in § 170. The point 
collapses, however, in light of the numerous related Code sections 
that define or otherwise qualify certain statutory terms by refer­
ence to “one or more of the purposes described in § 170(c) (2) (B).” 
See Code sections cited in note 11, infra. Indeed, § 170 itself con­
firms Congress’ intent to accord the term “charitable” a meaning 
separate and distinct from that of any other exempt “purpose or 
function” enumerated in § 501. Section 170(b) (1) (A) (iv) places 
percentage limitations on the allowable deduction for contributions 
to “an organization which normally receives a substantial part of its 
support (exclusive of income received in the exercise or perform­



as any business “not substantially related * * * to the 
* * * performance by such organization of its charitable, 
educational, or other purpose or function  constituting the 
basis for its exemption under § 501 (or, in the case of 
[certain specified organizations], to the * * * performance 
of any purpose or function  described in § 501(c) (3 )).” 
Identical language appears in § 514 with respect to the 
definition of “debt-financed property.” See id. at § 514(b) 
(1) (A) (i) .10 Finally, in the Code provisions dealing with 
certain taxes imposed on private foundations, the phrase 
“one or more o f the purposes described in § 170(c) (2) 
(B) ” is repeated frequently.11

These references to related Code provisions emphatically 
confirm what is plain on the face of § 501(c) (3) : each 
term describing an exempt purpose has a separate, dis­
tinct, and finite meaning, and each of the enumerated 
purposes constitutes a sufficient and independent basis for 
exemption under § 501(a).12

ance by such organization of its charitable, educational, or other 
purpose or function constituting the basis for its exemption under 
§501 (a)) from the United States * * Identical language is 
found in § 170(b) (1) (A) (v i). See also § 170(e) (1) (B) (i).

10 In the Code provisions relating to employment taxes, Congress 
defined “employment” to exclude “service performed in the employ 
of a religious, charitable, educational, or other organization described 
in § 501(c)(3).” 26 U.S.C. 3121(b) (8)(B) and 3306(c)(8). Section 
4911(e)(1)(A), which imposes a tax on excess lobbying expendi­
tures by certain exempt organizations, defines “exempt purpose ex­
penditures” to mean the “amounts paid * * * to accomplish purposes 
described in § 170(c) (2) (B) (relating to religious, charitable, edu­
cational, etc., purposes)

1:1 See 26 U.S.C. 4942(g)(1), 4944(c), 4945(d)(5), 4947(a)(1), 
4947(a)(2) and 4947(b)(3 )(A).

12 Amicus invokes (A. Br. 37) the doctrine of noscitur a sociis, as 
enunciated in Jarecki v. G. D. Searle & Co., 367 U.S. 303 (1961). 
Jarecki, however, compels a disjunctive reading of the purposes 
listed in § 501(c) (3). As in Jarecki, the words of the provision 
“strongly suggest that a precise and narrow application was in­
tended * * *” and to hold otherwise would be to “adopt a strained 
reading which renders one part a mere redundancy.” Id. at 307. 
Indeed, Amicus’ reading is particularly strained since Congress has



C. Amicus’ contention that Congress used the term 
“charitable” in its sweeping common-law sense is further 
contradicted by the statute’s legislative history. Amicus 
attaches great significance to a few errant remarks by 
some individual legislators concerning “charitable or­
ganizations” or “charitable purposes” generally (A. Br. 
24-28). While casual review of the context of the cited 
remarks robs them of their proffered significance/3 our 
response does not depend on a parsing of these passages. 13

amended the sentence several times, adding- one “redundancy” after 
another. Further, the common-law meaning of “charitable” is so 
broad and elastic as to have no precise boundaries, the classic cir­
cumstance for invoking the narrowing doctrine of noscitur a sociis. 
Ibid.; see National Muffler Dealers Ass’n v. United States, supra. 
Nor can support for Amicus’ construction of § 501(c) (3) be found in 
decisions (A. Br. 36) in which this Court has. “look[ed] beyond the 
mere words to the obvious intent [and] cannot help seeing that the 
word ‘or’ must be taken conjunctively.” Union Insurance Co. V. 
United States, 73 U.S. (6 Wall,) 759, 764 (1867) ; see De Sylva v. 
Ballentine, 351 U.S. 570, 573-576 (1956) ; United States v. Fisk, 70 
U.S. (3 Wall.) 445, 447 (1865). Unlike the cited cases, reading the 
word “and” into § 501(c) (3) in place of “or” would not remove an 
absurdity, but rather would create one—we doubt that any organiza­
tion in the country is devoted to all of the enumerated purposes. 
See note 4, supra.

13 Amicus relies (A. Br. 25-26) largely on a single reference from 
the 1902 House Ways and Means Committee report that mentions 
“the whole domain” of charities; in context, that phrase refers to a 
specific listing of “charitable” organizations, all of which comfort­
ably fit the narrow “relief of the poor” concept. H.R. Rep. No. 1702, 
57th Cong., 1st Sess. 3 (1902). Representative McCall’s remarks in 
1902 similarly were made in the narrow context of a like listing of 
charities he referenced. 35 Cong. Rec. 5564-5565 (1902). Senator 
Bacon’s statement in. 1909 referred not to § 501 (c) (3), but to a sep­
arate amendment exempting a broader class of religious, educa­
tional, charitable and “benevolent” institutions from a tax on corpo­
rate income. 44 Cong. Rec. 4149-4150 (1909). Senator Hollis’ state­
ment in 1917 is misquoted; he actually explained his amendment as 
concerning “donations to charity.” 55 Cong. Rec. 6728 (1917). 
Moreover, shortly thereafter Senator Robbins argued forcefully that 
a tax deduction for contributions to “charitable organizations” 
should be enacted “in the interest of the poor people.” 56 Cong. 
Rec. 10426 (1918). Indeed, “relief to the poor” was a concept

9



Our point is simply this: After investigating § 501(c) 
(3)’s legislative history, which spans over 80 years and 
includes nine additions to its language, Amicus has not 
cited, and we have not found, a single passage stating 
or implying that Congress intended to exempt all organi­
zations devoted to any purpose “beneficial to the com­
munity,” that it intended the Commissioner to regulate 
eligibility for § 501(c) (3) exemptions in accordance with 
his perceptions of “public policy,” that it intended bov/i 
fide “educational” or “religious” organizations to qualify 
also as common-law charities, or that it used the term 
“charitable” in its common-law sense rather than its 
commonly understood “relief of poverty” sense. Had Con­
gress intended so unusual and sweeping a construction of 
the seemingly simple, straightforward language of § 501 
(c) (3), the statute’s legislative history would surely con­
tain clear evidence to that effect. The legislative history, 
however, is rich with evidence precisely to the contrary.

Section 501(c) (3) can be traced back to § 11(G) (a) of 
the 1913 Tariff Act, which was enacted on the heels of 
ratification of the Sixteenth Amendment. The bill in­
itially introduced in the House exempted only religious, 
charitable, and educational organizations, as had the 
Tariff Act of 1894. 50 Cong. Rec. 1306 (1913). On the 
House floor, Representative Rogers offered an amend­
ment adding “benevolent” and “scientific” to the list of 
exempt purposes. Citing a Massachusetts state court de­
cision,14 Rogers counseled that the terms “charitable” and

io

equated with the term “charitable” throughout the debates in 1917. 
See id. at 10418-10428. And in 1935 Representative McCormack (79 
Cong. Rec. 12423) and the House minority report (H.R. Rep. No. 
1681, 74th Cong., 1st Sess. 20), both referred to by Amicus, ex­
plained that charitable deductions are for the benefit of corporations 
contributing to “community chests and other charities” that help 
assume “the burden of caring for unemployables.” See also re­
marks of Rep. Kramer, 79 Cong. Rec. 12423 (1935).

14 Representative Rogers was apparently referring to New Eng­
land Theosophical Co-rp. V. Boston, 172 Mass. 60, 63 (1898), which 
held that “ [t]he word ‘charitable’ refers to hospitals and other



“benevolent” are not synonymous and that benevolent or­
ganizations are equally deserving of exemption. Ibid.

Rogers’ Amendment was defeated (ibid.),m but in the 
Senate the bill was amended to accord tax-exempt status 
to “scientific” organizations. Moreover, the same Senate 
amendment added § 501(c) (4) ’s predecessor, exempting 
“any civic league or organization * * * operated ex­
clusively for the promotion of social welfare” (50 Cong. 
Rec. 3856 (1913)), based specifically on the view that 
such “civic * * * organizations could not be held to be 
‘organized and operated exclusively for religious, char­
itable, or educational purposes.’ ” 1913 Briefs and State­
ments, supra, at 2002. Thus, Congress refused to include 
a sweeping term (“benevolent” ) designed to exempt any 
philanthropic purpose, yet at the same time enlarged the 
scope of § 501(c) (3) by adding another specific, limited 
purpose (“scientific”) to the list—a purpose that clearly 
would have been embraced within the exemption for 
“charitable” purposes had Congress intended that term 
to be construed in its common-law sense. And, with the 
same stroke of the pen, Congress elsewhere exempted, in 
plain and straightforward language, all civic organiza­
tions devoted to promoting the general welfare. See text, 
supra, at 5-6. In light of this legislative history, Amicus’ 
proffered interpretation of § 501(c) (3) is untenable.

Organizations devoted to “prevention of cruelty to 
children or animals” and “literary” purposes were ex- 15 * *

charitable institutions for the relief of the poor or the sick.” The 
Massachusetts court interpreted “benevolent” more broadly, to in­
clude “charitable” purposes as well as activities inspired by “kind­
ness, good will, or a disposition to do good * * *.” Id. at 62.

15 Representative Hull opposed the amendment, arguing that all 
nonprofit corporations were exempt, and that accordingly, there was
“no occasion whatever for undertaking to particularize.” 50 Cong.
Rec. 1306 (1913). Congress as a whole, however, did find a need 
to particularize, adding only “scientific” to the list of exempt 
purposes.

i i



12

empted in 1918 and 1921, respectively.18 The Revenue 
Act of 1924, ch. 234, Section 231(6), 43 Stat. 282, re- 
enacted the provisions of § 501(c) (3) without change, 
notwithstanding an enthusiastic effort on the Senate 
floor to reverse the Commissioner’s 1923 interpretation of 
“charitable” as “relief of poverty.” Senator Willis, ex­
plaining that the “Commissioner * * * has decided that 
under the existing law an allowance can not be made for 
gifts to a community chest unless those gifts shall be for 
the relief of the poor” (65 Cong. Rec. 8171 (1924)), 
sought to amend the section by adding the following par­
enthetical after the word “charitable” : “ (including pre­
ventive and constructive service for relief, rehabilita­
tion, health, character building, and citizenship)” (ibid.). 
While acknowledging that this amendment had been criti­
cized “in private conversation because it is thought that 
language is too broad,” Senator Willis nonetheless stated 
{ibid.) that his purpose was to bring “general welfare 
work” within the meaning of “charitable.” Senators 
Smoot and Walsh responded that the terms of the amend­
ment were too sweeping and indefinite. See id. at 8172. 
Arguing that the statute as written goes “just as far

18 Revenue Act of 1918, ch. 18, § 231(6), 40 Stat. 1076; Revenue 
Act of 1921, ch. 136, §231(6), 42 Stat. 253. Neither amendment 
sparked lengthy discussion. During the Senate hearings concern­
ing a series of amendments to § 501’s predecessor, the Treasury 
Department’s Tax Adviser testified that bona fide nonprofit Masonic, 
Odd Fellows, and similar organizations had been exempted by the 
IRS, but that the IRS “had the hardest kind of task to prove that 
they were educational institutions.” Intei'nal Revenue: Hearings on 
H.R. 82i5 Before the Senate Comm, on Finance, 67th Cong., 1st 
Sess. 76 (1921) (“1921 Hearings”). Proving that these oragniza- 
tions qualified under Amicus’ construction of “charitable” would 
have been no task at all.

Quoting a remark made by Senator Smoot during the 1921 hear­
ings, Amicus states (A. Br. 40 n.38) : “Congress noted that the 
law [regarding the “charitable” nature of gifts for governmental 
purposes] had ‘always been construed that way anyhow.’ ” Senator 
Smoot’s remark, however, had nothing to do with gifts for govern­
mental purposes, but rather concerned the IRS’ practices with re­
spect to calculating the maximum allowable deduction under § 170’s



13
as it is safe to go,” Senator Smoot stated {ibid.) : “It 
seems to me * * * that we have properly limited the ex­
emptions that ought to be allowed to gifts for religious, 
charitable, scientific, literary, or educational purposes. 
Now, if we are going virtually to use the word ‘welfare’ 
—and that is what the Senator says his amendment 
means—* * * no human being can tell "where it is going 
to end.” * 17 The amendment was rejected.

As noted in our principal brief (Br. 20-22), over the 
next three decades Congress repeatedly reenacted § 501 (c) 
(3), amending its language on three occasions to include 
provisions wholly redundant under Amicus’ interpreta­
tion.18 Similarly, the IRS regularly reissued its regula­
tions interpreting “charitable” as relief of poverty. See 
Br. 21-22. Thus, contrary to Amicus’ contention (A. 
Br. 33-34), when Congress reenacted the Code in 1954, 
the formal administrative interpretation of § 501(c) (3) 
had for 30 years been uniformly and directly contrary 
to Amicus’ proffered construction.19 Moreover, had Con­

predecessor. See 1921 Hearings, supra, at 54 (remarks of Sen. 
Smoot and Dr. Adams).

17 Senator Walsh expressed a similar concern. 65 Cong. Rec. 
8172 (1924).

18 Amicus also relies (A. Br. 26) on a 1938 House Ways and 
Means Committee Report, H.R. Rep. No. 1860, 75th Cong., 3d Sess. 
(1938), for his argument (Br. 26-28) that Congress must have in­
tended to require all § 501(c)(3) organizations to qualify as 
common-law charities. We deal with this point in our principal 
brief (Br. 22 n.19) and add only that the very House Report on 
which Amicus relies refutes his construction of “charitable.” In 
no less than four places, the Report discusses deductions and ex­
emptions for “charitable and other purposes” and in one telling 
passage acknowledges the deductibility of funds “used * * * for 
charitable and other purposes (such as missionary and educational 
p u r p o s e s ) H.R. Rep. No. 1860, supra, at 19-20.

19 Amicus’ contention (Br. 23-33) that the IRS and the lower fed­
eral courts have consistently applied common-law standards under 
§ 501(c)(3) is not well-taken. His reliance on Sol. Op. 159 is dis­
cussed at note 8, supra. A number of IRS rulings before and after 
1959 have shown clearly that providing relief for the poor is a cen-



14

gress “incorporated” the common-law concept of charity 
into § 501(c) (3) in 1954, as Amicus maintains (A. Br. 
33-34), certainly some hint of its intention would be re­
flected in the record of legislative deliberations accom­
panying passage of the Act. Instead, the record reflects 
only that Congress amended § 501 (c) (3) to “incorporate” 
another specific and limited exempt purpose20—a purpose 
(“testing for public safety”) clearly within the existing 
exemption for “charitable” purposes under Amicus’ in­
terpretation.

This extended record of legislative activities and regu­
latory interpretations overwhelmingly refutes Amicus’ 
claim that Congress at all times between 1894 and 1954 
used the term “charitable” in § 501(c) (3) and its prede­

tral element of “charitability” under § 501(c) (3). See, e.g., Rev. 
Rul. 64-231, 1964-2 Cum. Bull. 139; Rev. Rul. 61-72, 1961-1 Cum. 
Bull, 188; Rev. Rul. 57-467, 1957-2 Cum. Bull. 313; Rev. Rul. 56-185, 
1956-1 Cum. Bull. 202 (hospital and other organizations exempt 
only if indigents receive free or reduced-cost care).

Amicus’ citation of judicial authority is also unpersuasive. In 
Slee v. Commissioner, 15 B.T.A. 710, 715 (1929), aff’d, 42 F.2d 
184 (2d Cir. 1930), the Board of Tax Appeals specifically rejected a 
broad definition of the purposes qualifying for deduction. Judge 
Learned Hand affirmed, noting that, while a clinic providing free 
health Care to those who cannot afford to pay is a charitable venture, 
the organization’s lobbying activities in that case kept it from 
being exclusively charitable. 42 F.2d at 185-186. Although several 
courts have discussed common-law as well as statutory standards 
in eases dealing with §§ 501(c) (3) and 170, and related provisions, 
their holdings generally have been on narrow statutory grounds. 
See, e.g., Underwriters’ Laboratories, Inc. v. Commissioner, 135 
F.2d 371, 373 (7th Cir. 1943) (denying exemption due to private 
inurement); Girard Trust Co. v. Commissioner, 122 F.2d 108, 110- 
111 (3d Cir. 1941) (granting exemption to “religious” organization 
despite its attempts to influence legislation in the absence of a stat­
ute barring such activity) ; Hazen V. National Rifle Association, 
101 F.2d 432, 436 (D.C. Cir. 1938) (denying exemption because 
educational activities were “incidental and collateral”) ; St. Louis 
Union Trust Co. v. Burnet, 59 F.2d 922, 928 (8th Cir. 1932) (grant­
ing charitable deduction where testator “intended to provide for 
relief of the poor” but used the broader term “benevolent”).

20 Internal Revenue Code of 1954, ch. 736, 68A Stat. 163.



15
cessor provisions in the broad common-law sense. None­
theless, in 1959 the IRS issued regulations under § 501 
(e) (3) assigning to the term “charitable” its expansive 
common-law meaning. See 26 C.F.R. 1.501(c) (3)-1(d) (2). 
As noted in our main brief (Br. 23 n.21), a regulation 
so “out of harmony with the statute, is a mere nullity.” 
Manhattan General Equipment Co. v. Commissioner, 297 
U.S. 129, 134 (1936) ; Iselin v. United States, 270 U.S. 
245, 250-251 (1926) ; Morrill v. Jones, 106 U.S. 466, 467 
(1882).

D. Amicus contends (A. Br. 33-34, 48-56) that Con­
gress has since 1959 “ratified and approved the construc­
tion placed on § 501(c) (3)” by the IRS in its 1959 reg­
ulations and Rev. Rul. 71-447—and by the district court 
in Green v. Connolly, 330 F. Supp. 1150 (D.D.C. 1971). 
We have dealt with this contention in our principal brief 
(Br. 26-38), but a further comment is needed.

The statutory construction purportedly accepted and 
ratified by Congress assigns to the term “charitable” its 
all-encompassing common-law meaning. Thus, neither the 
IRS regulations, the Green court, nor Amicus suggests 
that Congress had a specific intent to deny exempt status 
to racially discriminatory schools. As previously noted 
(note 2, supra), such an interpretation is foreclosed by 
the history of racial segregation surrounding the statute’s 
enactment in 1913.

The inquiry into congressional ratification here is thus 
not governed by the narrow question whether Congress 
approves or disapproves of the result yielded by the ques­
tioned regulations, the Green decision and Amicus’ simi­
lar analysis (i.e., that racially discriminatory educational 
institutions are denied tax benefits). It is, instead, con­
cerned solely with the separate question whether the stat­
utory interpretation relied upon to reach that result (i.e., 
use of the expansive common-law meaning of “charitable” 
to define the contours of § 501 (c) (3)) has been approved 
by subsequent Congresses as reflective of the original leg­
islative intent. In short, as in all cases of statutory con­
struction, the issue is not whether a result yielded by



16

an administrative interpretation appears to be consistent 
with a subsequent analogous enactment, but rather 
whether “that interpretation is the one intended by Con­
gress,” CBS, Inc. v. FCC, 453 U.S. 367, 385 (1981), 
quoting Zemel v. Rusk, 381 U.S. 1, 11 (1965) ; see, e.g., 
Merrill Lynch, Pierce, Fenner & Smith v. Curran, Inc., 
No. 80-203 (May 3, 1982), slip op. 23; Haig v. Agee, 
453 U.S. 280, 301 (1981) ; United States v. Rutherford, 
442 U.S. 544 (1979).21

Amicus argues (A. Br. 51) that by enacting § 501 (i) 
in 1976, Congress “approved the IRS interpretation of 
§ 501(c) (3) with positive legislation.” 22 But passage of

21 Each of the cases relied upon by Amicus—CBS, Haig, and 
Rutherford, supra,—involved an administrative statutory construc­
tion that was (1) longstanding and consistent, (2) supported by or 
consistent with the statute’s plain language, (3) supported by per­
suasive legislative history, and (4) not overturned by Congress. 
Here, the IRS’ regulatory construction of the term “charitable” 
was “substantially contemporaneous” (see, e.g., National Muffler 
Dealers Ass’n V. United States, supra), longstanding and consistent 
until 1959, when the regulatory construction was broadened to in­
corporate common-law concepts. As the Court noted in North Haven 
Board of Education V. Bell, No. 80-986 (May 17, 1982), slip op. 9-10 
n.12, a change in an administrative construction “undercutfs] the 
argument that the regulations are entitled to deference * *
See, e.g., Haig v. Agee, supra, 453 U.S. at 303. Moreover, Amicus’ 
interpretation of the statute requires a contortion of its language. 
See, e.g., SEC V. Sloan, 436 U.S. 103, 121 (1978). Finally, Amicus’ 
interpretation of “charitable” is contradicted by the statute’s legis­
lative history and is inconsistent with every pertinent congressional 
action taken since 1913. That Congress has not taken formal ac­
tion to overturn the IRS’ 1959 regulation cannot, under these cir­
cumstances, be accorded weight. Indeed, we point out that a failure 
by Congress formally to overturn an agency’s statutory construction 
will be a feature of every case in which the administrative con­
struction is contested—else there would be no case.

22 Amicus also contends that Congress “acquiesced” in the agency’s 
1959 interpretation of “charitable” when it passed the Tax Reform 
Act of 1969. In reality, however, Congress in 1969 added to the Code 
no less than eight separate provisions containing language wholly 
at odds with Amicus’ all-encompassing construction of the term



17

that provision cannot be considered legislative approval 
of a reading of § 501(c) (3) that would lodge with the 
Commissioner “unfettered power” to grant or deny ex­
empt status on the basis of “the particular brand of so­
cial policy [he] happens to be advocating at the time.” 
Commissioner v. “Americans United,” Inc., supra, 416 
XJ.S. at 774-775 (Blackmun, J., dissenting).23 To the con­
trary, Congress framed § 501 (i) in precise terms, direct­
ing the IRS to deny tax-exempt status only to § 501 (c) (7) 
social clubs that have a written policy of racial discrimi­
nation.

As Amicus points out (A. Br. 51), in light of Green 
Congress had no occasion in 1976 to consider the ques­
tion of exemptions to racially discriminatory schools. If 
it had-—for example, if Green had recently been decided 
the other way—passage of § 501 (i) strongly suggests that 
Congress would likely have sought to achieve the same 
result with respect to exempt educational organizations. 
By no means, however, does enactment of § 501 (i) sug­

“charitable.” See 26 U.S.C. 170(e) (1) (B) (i) ; 507(g) (2) ; 4942(g) 
(1); 4944(c)'; 4947(a)(1); 4947(a)(2); 4947(b)(3)(A); 4945(d) 
(5). Moreover, while the House Report cited by Amicus (A. Br. 34) 
does indeed recognize that the term “charitable” had been “used in 
the law of trusts for hundreds of years,” it also recognizes that “in­
ternal revenue agents” determined the existence of a “charitable” 
purpose under “a concept of service to the poor and not merely use­
ful nonprofit service to those who can afford it.” H.R. Rep. No. 91- 
413 (Pt. I), 91st Cong, 1st Sess. 35, 43 (1969).

23 Notwithstanding Amicus’ effort to gainsay the importance of 
the public policy against sex discrimination (A. Br. 47 n.48), the 
theory relied upon by Amicus simply cannot be confined to racial 
discrimination. See note 25, infra. Indeed, the “public policy” de­
terminations made by the Commissioner since 1970 demonstrate 
the difficulties inherent in the exercise of such broad discretion. 
See Rev. Rul. 77-272, 1977-2 Cum. Bull. 191 (exempting program 
discriminating against non-Indians) ; Rev. Rul. 75-384, 1975-2 Cum. 
Bull. 204 (denying exemption to “disrup[tive]” antiwar protest 
group); Rev. Rul. 78-305, 1978-2 Cum. Bull. 172 (exempting group 
fostering tolerance of homosexuality). See also McCoy v. Schultz, 
1973-1 U.S.T.C. tf 9233 (1973) (exempting sexually discriminatory 
group).



18

gest congressional approval, much less ratification, of the 
contrived statutory interpretation yielding the result in 
Green. The term “charitable” was in no way involved 
in the amendment, and nothing in the legislative history 
of § 501 (i) suggests an intent to give an expansive read­
ing to that term in § 501 (c) (3).

Indeed, it clearly appears that the 1976 Congress had 
precisely the contrary understanding of § 501 (c) (3). For, 
in the same year that it added § 501 (i), Congress also 
amended the language of § 501(c) (3) , adding to the list 
of exempt organizations, those institutions “foster [ing] 
national or international amateur sports competition.” 
Pub. L. No. 94-455, § 1313(a), 90 Stat, 1730. Such 
organizations, while clearly “charitable” in the common- 
law sense (see 122 Cong. Rec. 25960 (1976)), were ex­
pressly exempted because of congressional uncertainty as 
to whether they qualified as educational organizations. 
See 122 Cong. Rec. 25961 (1976) (remarks of Sens. Long 
and Culver). No one suggested that amateur sports or­
ganizations would qualify as “charitable.”

Nor do the 1978 congressional debates concerning the 
Ashbrook and Doman Amendments support the expansive 
interpretation of § 501(c) (3) urged by Amicus. As re­
counted in detail in our main brief (Br. 26-31, 33), Con­
gress’ reaction to the Kurtz regulations leaves no room 
to argue that the common-law definition of “charitable” 
received legislative ratification.34

E. It is thus clear that Congress did not authorize the 
IRS in § 501(c) (3) to deny tax-exempt status to bona 
fide educational institutions on the ground that they are 24 *

24 Amicus’ sweeping assertion (A. Br. 54) to the contrary is erro­
neous. While numerous legislators expressed agreement with the 
result of denying tax-exempt status for racially discriminatory 
schools, many also indicated their belief that the IRS had acted with­
out authority in 1970. See Tax Exempt Status of Private Schools: 
Hearings Before the Subcomm. on Oversight of the House Comm, on 
Ways and Means, 96th Cong., 1st Sess. 586-587 (1979) (remarks 
of Sen. Thurmond) ; 125 Cong. Rec. H5884 (daily ed., July 13, 
1979) (Rep. Grassley).



19
not also “charitable” in the common-law sense.25 For all 
of the reasons stated here and in our principal brief,26 the 
judgments of the courts of appeals should be reversed.

25 Amicus’ separate reliance on Tank Truck Rentals, Inc. V. Com­
missioner, 356 U.S. 30 (1958), is equally misplaced. To our previ­
ous discussion of that argument (Br. 24-26), we add only that the 
extension of Tank Truck beyond deductions under § 162(a) of the 
Code contradicts language in Justice Clark’s opinion in that case 
(356 U.S. at 33) and other decisions of this Court. See Textile Mills 
Securities Corp. v. Commissioner, 314 U.S. 326, 338 (1941); Lilly 
V. Commissioner, 343 U.S. 90, 94-95 (1951) ; Speiser V. Randall, 357 
U.S. 513, 543 (1957) (Clark, J., dissenting on other grounds). See 
also Commissioner v . Sullivan, 356 U.S. 27, 29 (1958) ; Commis­
sioner v . Heininger, 320 U.S. 467, 473-74 (1943). Moreover, that the 
breadth of Amicus’ proffered interpretation of Tank Truck is with­
out discernible limits is amply illustrated by Amicus’ effort to show 
(A. Br. 47 n.48) that gender-based discrimination is insufficient to 
warrant denial of tax-exempt status. Surely the national policy 
against sex discrimination is no less clear and compelling than the 
policy underlying the vehicle weight statutes in Tank Truck. 356
U. S, at 34. If, as Amicus claims, the aim is to make exception only 
in cases involving policies that “occupy a unique place” (A. Br. 47), 
it is best accomplished through specific legislation, as in the past, 
rather than requiring Congress to “correct any perceived errors” 
in the wide-ranging “public policy” determinations that the IRS 
would be called upon to make under Amicus’ theory.

26 Amicus’ Fifth Amendment argument, based largely on Norwood
V. Harrison, 413 U.S. 455 (1973), is without merit (A. Br. 57-62). 
In Norwood, the State of Mississippi, by virtue of judicial findings 
of de jure segregation in its public schools, was under an affirmative 
duty “not to take any action that would impede the process of dis­
establishing the dual system and its effects.” Dayton Bd. of Educ. 
V. Brinkman, 443 U.S. 526, 538 (1979); see United States v . Scotland 
Neck City Bd. of Educ., 407 U.S. 484, 488 (1972). The State’s pur­
pose in violating that duty by providing textbooks to students at­
tending racially discriminatory private schools was irrelevant. Day- 
ton Bd. of Educ. v . Brinkman, supra, 443 U.S. at 538. Here, the 
United States is not subject to any similar judicial determination 
and is thus under no such affirmative duty. Accordingly, the 
Fifth Amendment imposes no bar to the granting of tax exemptions 
to petitioners absent proof that the United States acted with a 
racially discriminatory purpose. See our main brief at 38-39.



20

Respectfully submitted.

October 1982

Lawrence G. Wallace *
Acting Solicitor General

Wm . Bradford Reynolds 
Assistant Attorney General

Charles J. Cooper 
Deputy Assistant Attorney General

* The Solicitor General is disqualified in these cases. See also 
note *, page (I) of our principal brief.

☆  U .  s . GOVERNMENT PRINTING OFFICE; 1 9 8 2 3 8 9 8 S O  1137