Briggs v. Elliot Brief of the American Federation of Teachers as Amicus Curiae

    IN THE

UNITED STATES COURT OF APPEALS 
FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 81-1038

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

v .
G. WILLIAM MILLER, ET AL.,

Defendants-Appellees,

BAY STREET PRESBYTERIAN CHURCH AND 
WOODLAND PRESBYTERIAN CHURCH, ET AL.

Appellants.

BRIEF FOR PLAINTIFFS-APPELLEES

WILLIAM L. ROBINSON 
NORMAN J. CHACHKIN 
FRANK R. PARKER 
BEATRICE ROSENBERG 
LEZLI BASKERVILLE

Lawyers' Committee for 
Civil Rights Under Law 

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

Attorneys for Plaintiffs- 
Appellees



IN THE

UNITED STATES COURT OF APPEALS 
FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 81-1038

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

v.
G. WILLIAM MILLER, ET AL.,

Defendants-Appellees,
BAY STREET PRESBYTERIAN CHURCH AND 
WOODLAND PRESBYTERIAN CHURCH, ET AL.

Appellants.

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

the District of Columbia Circuit

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

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

-l-



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

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

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

Proposed Intervenors:
Bay Street Presbyterian Church, of Hattiesburg, Mississippi; 
Woodland Presbyterian Church, of Hattiesburg, Mississippi; Rev. 
John S. Ragland; Rev. Gerald G. Morgan; James Davis Elkin; P. 
Scott Griffith, Jr.; Barbara M. Porter; Doris F. Brown; Marian 
M. Griffith; Rev. William H. Smith; Ralph E. Abraham and Mary 
S. Abraham, his wife; William A. Gates and Vicki J. Gates, his 
wife.

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

or recusal.

Norman J . Chachkin 
Attorney of Record for 

Plaintiffs-Appellees.

- n -



TABLE OF CONTENTS

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

Page
1
2
3
3

STATEMENT 4

A. The Original Action 5

B. The Supplementary Proceedings 8

C. The Motion to Intervene 14

Summary of Argument 
ARGUMENT

16

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

A. The motion to intervene 
was not timely.

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

Conclusion 39

Appendices
A —  Rule 24, F.R. CIV. P., and 26 U.S.C. § 7428
B —  IRS News Releases of July 10, 1970 and July 19, 1970
C -- IRS Commissioner Thrower's December 10, 1970 affidavit
D —  Plaintiffs' 1976 motion for further relief
E -- IRS Form 5578 (October, 1976)

-iii-



TABLE OF AUTHORITIES

Cases: Pa9e

Alaniz v. Tillie Lewis Foods, 572 F.2d 557 (9th Cir.), 
cert, denied sub nom. Beaver v. Alaniz, 439 U.S.
837 (1978). . .......................................  2 2 n > 28

Associated Gen'l Contractors v. Secretary, 77 F.R.D.
31, 36-38 (C.D. Cal. 1977) ....... ............• 31

Bob Jones University v. Simon, 416 U.S. 725 (1974). . . . 22n
Brumfield v. Dodd, 425 F. Supp. 528 (E.D. La. 1976) . . . lln, 18n,24n, 32

Brumfield v. Dodd, 405 F. Supp. 338 (E.D. La. 1975) . . . lln, 36
Catholic Bishop v. NLRB, 559 F.2d 1112 (7th Cir. 1977),

aff'd 449 U.S. 490 (1979)..........................  34n
Gilmore v. City of Montgomery, 417 U.S. 556 (1974). . . . 23n
Gilmore v. City of Montgomery, 337 F. Supp. 22

(M.D. Ala. 1972), rev'd in part, 473 F.2d 832 
(5th Cir. 1973), rev'd in part and remanded,
417 U.S. 556 (1974).......... .. ...................  2 3 n > 24n

Goldsboro Christian Schools v. United States,
436 F. Supp. 1314 (E.D. N.C. 1977). .................  34n

*Green v. Connally, 330 F. Supp. 1150 (D.D.C.), aff'd
sub nom. Coit v. Green, 404 U.S. 997 (1971) ........  2,3,6,7, 10, 20,

23, 34, 34n

Green v. Kennedy, 309 F. Supp. 1127 (D.D.C. 1970) . . . .  2 , 5 , 6
Hodason v. United Mine Workers, 153 U.S. App. D.C.

407 , 473 F. 2d 118 (1972)............ ................ 18, 28, 36
Johnson v. San Francisco Unified School Dist., 500 F.2d

349 (9th Cir. 1974).................. ............* 30
Leaal Aid Society of Alameda County v. Dunlop, 618 F .2d

48 (9th Cir. 1980).............................. .. • 29
Liddell v. Caldwell, 546 F.2d 768 (8th Cir. 1976) . . . .  29

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

-xv-



Cases (continued) Page

Moten v. Bricklayers, Masons, and Plasterers
International Union, 177 U.S. App. D.C. 17,
543 F. 2d 224 (1976)........................ .. 18

*NAACP v. New York, 413 U.S. 345 (1973) . . .  .......... 18, 2 On, 37

Natural Resources Defense Council v. Costle,
136 U.S. App. D.C. 147, 561 F.2d 904 (D.C. Cir.
1977)........ ...................................... 28

Nevilles v. EEOC, 511 F.2d 303 (8th Cir. 1975) ........ 28

Newman v. Piggie Park Enterprises, Inc., 256 F. Supp.
941 (D.S.C. 1966), rev'd in part, 377 F.2d 433 
(4th Cir. 1967), modified and aff'd, 390 U.S. 400 
(1968) ..................... .................. * • • 2 In

Norwood v. Harrison, 413 U.S. 455 (1973) . . . . . . . . 8, 21

^Norwood v. Harrison, 382 F. Supp. 921 (N.D. Miss. 1974) . 8, 9, 9n,
10, lOn, 11, 
23, 24n, 35n

Prince Edward School Foundation v. Commissioner, 478 
F. Supp. 107 (D.D.C. 1979), aff'd U.S. App.
D.C. , F ,2d (June 30, 1980), cert, 
denied, 49 U.S.L.W. 3613 (Feb. 23, 1981) .......... 2, 30

Smuck v. Hobson, 132 U.S. App. D.C. 312, 408 F.2d 
175 (D.C. Cir. 1969) .................... .. 29

Stallworth v. Monsanto Co., 558 F.2d 257 (5th Cir.
1977) ............................. .................. 19, 30

Thomas v. Review Board, 49 U.S.L.W. 4341 (April 6, 1981). 34n

United States v. Freedom Church, 613 F.2d 316 (1st
Cir. 1979) . . . . . .  ....................  . . . . 32

United States v. McDonald, 432 U.S. 385 (1977) ........ 29

United States v. Marion County School Dist. , 590 F. 2d
146 (5th Cir. 1979).......... ...................... 36

Wheeler v. Barrera, 417 U.S. 402 (1974) ................ 34

Wright v. Miller, 480 F. Supp. 790 (D.D.C. 1979),
appeal pending, No. 80-1124 (D.C. Cir.) . . . . . . . 2

-v-



Statutes, Regulations and Rules: Page

*26 U.S.C. § 7428 ................... ....................  2 , 16 , 17 ,
30, 32, 34, 
35

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

Other Authorities:

Proposed Internal Revenue Procedure, 44 Fed. Reg.
9451-55 (February 9, 1979) ............ ............ 12

Proposed Internal Revenue Procedure, 43 Fed. Reg.
37296-98 (August 22, 1978) ........................  12

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

Internal Revenue Procedure 75-50, 1975-2 Cum. Bull. 587 . lln
Internal Revenue Ruling 75-231, 1975-1 Cum. Bull. 158 . . 11, lln
Internal Revenue Service News Release IR-1930 ..........  25n
Internal Revenue Service Technical Information

Release No. 1449 ............ .....................  lln
Internal Revenue Service, Hearing: Proposed Revenue 

Procedure on Tax Exempt Private Schools (December 
5, 1978) .................... ................ 27n

-vi-



IN THE
UNITED STATES COURT OF APPEALS 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 81-1038

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

v.
G. WILLIAM MILLER, ET AL.,

Defendants-Appellees,

BAY STREET PRESBYTERIAN CHURCH AND 
WOODLAND PRESBYTERIAN CHURCH, ET AL.

Appellants.

BRIEF FOR PLAINTIFFS-APPELLEES

COUNTER-STATEMENT OF ISSUE PRESENTED

Whether the District Court properly declined, in 1980, to 
permit appellants to intervene in a suit instituted in 1969, 
when: (a) a final judgment (of which they were aware) had been
entered in the case six months prior to their motion to inter­
vene; (b) steps to protect appellees' rights by implementing 
that judgment were well under way; (c) appellants knew or should



-,2-

have known, from the time the Presbyterian Christian School was 
established in 1976, and at all times thereafter, that the school 
would fall within the orbit of this action; and (d) the inter- 
venors can fully protect their interest by a separate action 

under 26 U.S.C. § 7428.

PRIOR AND RELATED PROCEEDINGS

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

Coit v. Green, 404 U.S. 997 (1971).
In 1976 a nationwide class action was filed seeking relief 

similar to that sought by plaintiffs in the instant case. The 
District Court's ruling dismissing that action, Wright v. Miller, 
480 F. Supp. 790 (D.D.C. 1979), is presently pending before this 
Court on appeal, D.C. Cir. No. 80—1124. A case involving issues 
similar to claims which appellants would seek to litigate here if 
granted intervention is Prince Edward School Foundation v. Commis­
sioner, 478 F. Supp. 107 (D.D.C. 1979), aff'd____U.S. App. D.C.
____, ____F.2d _____ (June 30, 1980), cert, denied, 49 U.S.L.W.

3613 (Feb. 23, 1981).
A previous post-judgment motion to intervene by parties 

including the Association of Christian Schools International and



-3-

the first Presbyterian Church of Jackson, Mississippi was denied 
by the District Court on July 9, 1980 and that Order denying 
intervention was appealed to this Court. That case was docketed 
here as No. 80-1913 and was argued before a panel consisting of 
Chief Judge McGowan, Circuit Judge Tamm, and Senior Circuit Judge 

Danaher on April 2, 1981.

STATUTES AND RULES INVOLVED

Rule 24 of the Federal Rules of Civil Procedure and the 
pertinent portions of 26 U.S.C. § 7428 are set forth in Appen­

dix A to this brief.

REFERENCE TO PARTIES AND RULINGS

This is an appeal from an order of Judge George L. Hart, 
Jr., of the United States District Court for the District of 
Columbia, entered December 9, 1980, denying a motion to inter­
vene. The ruling is not reported but appears at page 82 of the 

Appendix.
The appellants, proposed intervenors, are the Bay Street 

Presbyterian Church, Hattiesburg, Mississippi; Woodland Presby­
terian Church, Hattiesburg, Mississippi; their respective clergy­
men; teachers in a private school operated by the churches; and 
parents of children who attend the school.

The plaintiffs in the action are black federal taxpayers 
and their minor children attending public schools in Mississippi.



-4-

The adult plaintiffs are William H. Green, Vernon Tom Griffin, 
John D. Wesley, Warren G. Booker, and Essie Bernice Austin.

Defendants in the action are the Secretary of the Treasury_±J
of the United States and the Commissioner of Internal Revenue.

Persons previously allowed to intervene are Dan Coit and 

his minor children, Lauren and Linda Coit.

STATEMENT

Appellants challenge a District Court Order of December 9, 
1980, denying their post-judgment motion to intervene in this 
case, which was commenced in 1969, reopened in 1976, and termi­
nated with a final judgment six months prior to appellants' seek 

ing intervention.

1/ The current defendants are sbustituted for their predeces 
sors pursuant to F.R. CIV. P. 25(d) (1).



-5—

A. The Original Action

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

_2/sissippi having an all-white enrollment,established as a means 
of enabling white students to avoid desegregated public schools.

See 330 F. Supp. at 1155.
In January, 1970, the District Court enjoined the IRS from 

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

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



The preliminary injunction was based upon the record of 
private school interference with desegregation which had been 
made in an earlier Mississippi federal court case, Coffey v. 
State Educ. Fin. Conun1 n , 296 F. Supp. 1389 (S.D. Miss. 1969) 
(three-judge court), which successfully challenged the state's 
tuition grant program. See Green v. Kennedy, supra, 309 
F. Supp. at 1134; Green v. Connally, supra, 330 F. Supp. at 
1174. Coffey involved church-related, as well as non-sectarxan 
schools; at least one church-connected school is identified in 
the reported opinion, 296 F. Supp. at 1393 ("S.W. Miss. Chris­

tian" ) .
On June 26, 1970, the Green court directed the "defen­

dants to suspend the advance assurance of deductibility [of] 
contributions for segregated private schools in Mississippi 
which were . . . cited in the Coffey litigation . . . ," which
included church-connected schools. In August and December, 
1970, the Commissioner of IRS reported in sworn affidavits to 
the Green court that its orders were being carried out with 
respect to all Mississippi private schools, including those 
operated by churches. See notes 3 and 4, infra, and accompany­
ing text.



-7-

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

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

_3/
private schools, whether church related or not."

In an affidavit filed in this case on December 10, 1970,

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



-8-

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

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

B. The Supplementary Proceedings

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

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

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

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

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



-9

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

6/
student nor employed a black teacher or administrator.
(382 F. Supp. at 924-925.) He then listed illustrative factors 
which could overcome the presumption, including publicity of a 
nondiscriminatory policy, communication with black community

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

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



-10

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

religious schools, i.e., the South Haven Mennonite School, which^ 
he held ineligible for textbook loans (382 F. Supp. at 927-28); 
the Christ Episcopal Day School, which he found nondiscriminatory 
even though the step of adopting a nondiscriminatory policy was 
"taken as a direct result of Green v. Connally" (i.s. , this case) , 
(382 F. Supp. at 931-32); and the Presbyterian Day School of 
Cleveland, which was approved only conditionally because, al­
though the church itself did not discriminate, the school had 
failed to publicize its willingness to accept black students 

(382 F. Supp. at 932-35).
Plaintiffs discovered that a number of schools, including 

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

7/ Judge Keady's conclusion about this school was as follows: 
(~382 F. Supp. at 928) :

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



-11-

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

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

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

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

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

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

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



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

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

12/
been implemented.

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



13-

On cross-motions for summary judgment, the District Court 
held that the IRS had not violated the order of June 30, 1971, 
but that the order required supplementation and modification.
(A. 6.) Paragraph (1) of the 1980 ruling expanded the injunction 
to prohibit the grant of tax-exempt status to Mississippi private 

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

Paragraph (2) explained that the existence of the conditions set 
forth in paragraph (1) raises an inference of discrimination 
which can be overcome "by evidence which clearly and convincingly 
reveals objective acts and declarations establishing that such is 
not proximately caused by such school's policies and practices, 
and set forth non-exclusively the type of evidence which would 
tend to establish nondiscrimination. (A. 7.)

The Court also modified the prior decree to require greater 
regularity in the schools' publicizing of nondiscriminatory poli­
cies and to require the IRS to collect additional information 
with respect to the organization and status of the school.
(A. 8-9 .) The IRS was directed to take all reasonable steps to
determine which, if any, church—related schools in Mississippi 
would come under the definition of Paragraph (1), and with re­
spect to such schools to collect the information required by the



-14-

permanent injunction. (A. 10.) Finally, the Service was ordered
to deny tax exemption unless the showing and information required
by the permanent injunction, as amended, was made within specific
times. (A. 9.) The order was amended on June 2, 1980, to make
clear that it was intended to require that the Service collect
information from, and reconsider the tax-exempt status of, only
those schools which have in the past been determined to be raci-•----- -*---  «
ally discriminatory, or which were established or expanded at or 
about the time the public school districts in which they are loca­
ted or serve were desegregated. (A. 11-13.)

C. The Motion to Intervene

On November 25, 1980, six months after a final order had 
been entered in this case, and several months after implementa­
tion efforts were commenced pursuant to that order, two churches, 
their clergymen, and parents and teachers in the religious school 
operated by the churches, moved to intervene in this action (A. 
14-73). The churches alleged that they operate and maintain the 
Presbyterian Christian School "as an integral part of their re­
ligious mission" for "all persons, regardless of their race, 
whose parents desire their instruction in the Biblical faith o£ 
[the churches] and who abide by the religious and moral princi­
ples of behavior adopted by" the churches (A. 14, 18). The 
motion averred that the school enrolls children who reside in 
public school districts in Mississippi which have been desegrega­
ted or are being desegregated, and that, at present, none of the



-15-

students or teachers at the school is black (A. 18). The pro­
posed intervenors alleged that the order of May 5, 1980, as 
amended, "unduly burdens the right of a wholly religious enter­
prise to conduct its religious ministry in education free from 
government direction, supervision, investigation, and evaluation, 
all in violation of the First Amendment" (A. 25). The applica­
tion to intervene also alleged that the motion was timely because 
no church schools were implicated in the original complaint or 
heard on the motion of the plaintiffs, filed in July 1976, to 
enforce the original (June 30, 1971) decree (A. 26). Appended 
to the motion was an affidavit of applicants' attorney stating 
that he was first contacted by the two churches on July 28, 1980,
and informed that the school had received a questionnaire from

11/the IRS dated June 30, 1980 (A. 72-73).
Also annexed to the motion to intervene was a proposed an­

swer to the complaint in which the applicants challenged the 
status of the plaintiffs to maintain this action and asserted 
that the Internal Revenue Code of 1954 does not require that 
religious schools adopt or publicize a policy of racial nondis­
crimination as a condition of being accorded recognition of tax 
exemption (A. 68); and a proposed response to the July, 1976 
motion of plaintiffs to enforce and modify the original decree

13/ The questionnaire sent to the Presbyterian Christian School 
Ts not part of the record and has not been reprinted by the ap­
pellants. It was apparently dated June 30, 1980 and received by 
the school on July 7, 1980 (see A. 27, 72). The questionnaire 
and accompanying letter from the IRS were probably the same as 
those sent on June 30, 1980 to the First Presbyterian Day School 
of Jackson, Mississippi, which is reprinted as an appendix to the 
Brief for Appellants in No. 80-1913, at 45-48.



-16-

in which applicants alleged that, if the decree were extended to 
include churches and other religious entities, it would violate 

the First Amendment (A. 70).
Plaintiffs—appellees on December 5, 1980 filed a Memorandum 

opposing the attempt to intervene (A. 74-77). We argued that the 
motion was untimely, especially since the same attorney repre­
sented parties who had earlier sought unsuccessfully to intervene 
in the action after the May 5, 1980 decree; that 26 U.S.C. § 7428 
provided an adequate forum to litigate the applicants' claims; 
and that those claims were not ripe for adjudication until the 
IRS took some action with respect to the Presbyterian Christian 
School's entitlement to tax-exempt status pursuant to the May 5 
decree, as amended. The District Court denied the motion to in­
tervene on December 9, 1980 (A. 81) and this appeal followed.

SUMMARY OF ARGUMENT

Contrary to appellants' contentions, this lawsuit has al­
ways involved church-connected, as well as non-sectarian, schools. 
Appellants should have been and must have been on notice, from 
the time this matter was reopened in 1976 and thereafter, that 
it could affect the standards or procedures which the Internal 
Revenue Service would apply in determining the eligibility of 
Mississippi private schools for tax-exempt status. Appellants’ 
failure to seek intervention in this a.ction until after the case 
had proceeded to final judgment thus amply justified denial of 
their motion by the court below on the ground that it was untimely.



-17-

Appellants' rights may be fully protected in a separate 
declaratory judgment action authorized under 26 D.S.C. § 7428. 
Such a suit would focus on the particular facts relating to the 
Presbyterian Christian School and would provide the concrete set­
ting necessary to permit judicial resolution of the First Amend­
ment claims which appellants seek to raise. These claims are 
hypothetical until the Internal Revenue Service, carrying out the 
District Court's Order, makes a determination with respect to the 
Presbyterian Christian School's continuing eligibility for tax- 
exempt status, and are thus not now ripe for resolution through 
intervention in this case. Once the Service has acted and the 
issues are framed, a § 7428 proceeding would provide the most 
expeditious forum for their determination.



-18-

ARGUMENT

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

A. The motion to intervene was not timely.

It is well-established that, in accord with the language of 
Rule 24 of the Federal Rules of Civil Procedure, before granting 
a motion to intervene, the court "must first be satisfied as to 
timeliness." NAACP v. New York, 413 U.S. 345, 365 (1973). See 
also Moten v. Bricklayers, Masons and Plasterers International 
Union, 177 U.S. App. D.C. 77, 81, 543 F.2d 224, 228 (1976). Time­
liness is a flexible concept, to be determined from all the cir­
cumstances of the case. Hodgson v. United Mine Workers, 153 U.S.147
App. D.C. 407, 473 F.2d 118 (1972). As a result, the question
of timeliness is largely committed to the discretion of the dis­
trict court, whose determination will not be overturned on appeal 
unless an abuse of discretion has been shown. NAACP v. New York, 
supra, 413 U.S. at 366. While the point to which the suit has 
progressed is not solely dispositive, it is an appropriate factor 
to be considered. NAACP v. New York, supra, 413 U.S. at 366.
Even more significant is the length of time during which the 
would-be intervenor actually knew or reasonably should have known

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



-19-

of his interest in the case before he petitioned for leave to 
intervene. Stallworth v. Monsanto Co., 558 F.2d 257, 264 (5th 

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

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

1. It is inconceivable that any white, private school in 
Mississippi was unaware of the Green litigation. When the first 
order for a temporary injunction in January, 1970 barred the IRS 
from approving an application for tax exemption unless it deter­
mined that the school was not part of a system of private schools 
"operated on a racially segregated basis as an alternative to 
white students seeking to avoid desegregated public schools," an 
action closely following well-publicized proceedings in federal 
court in Mississippi which invalidated a state tuition grant 
program, it became immediately apparent that any private school 
in the state was potentially subject to being affected by an
order in the Green case.



-20-

Any possible doubt on that score would have had to be dis­
sipated by the IRS press releases of July, 1970 making clear that 
its "statement of position on racially nondiscriminatory admis­
sions policies would be applicable to all private schools, whether 
church related or not." (See Statement, supra, at 7.) Since it 
had not yet been created, the Presbyterian Christian School was 
not sent the letter to which the Commissioner referred in his 
1970 affidavit (see Statement, supra, at 8). But in view of the 
continuing action by the Service in this area (see note 10, 
supra, and accompanying text) it is difficult to believe that 
any private school interested in its tax-exempt status would not 

be aware of the case.
Appellants stress that the initial opinion on the permanent

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

15/
were aware of the Green litigation as early as 1971 but also

15/ Nowhere in their pleadings before the District Court nor in 
their brief in this Court do appellants ever state that they had 
no knowledge of this litigation before May 5, 1980. They focus 
only on the provisions of the May 5, 1980 judgment itself but 
if prescience as to the contents of a yet unwritten ruling were 
the only basis for a finding of untimeliness, there would be lit­
tle finality of judgments in American law. Cf. NAACP v. New York, 
supra.



-21-

were aware that tax exemptions for religious schools could become 
an issue in the case. Yet they chose to remain outside the liti­
gation, after it was reopened in 1976, until a final judgment was 

16/
entered. Even though appellants' reading of the 1971 opinion

17/
is fundamentally in error, therefore, their heavy emphasis on

16/ Had appellants not slept on their rights, by deliberately 
seeking to ignore this litigation so long as no order had been 
entered which they viewed as objectionable, they would have noted 
the discussion of religious schools in the plaintiffs' 1976 mo­
tion for further relief, in the cases cited by plaintiffs in that 
motion, in the correspondence appended to the motion as exhibits, 
and in the IRS Revenue Procedures attached to that document.
(See Appendix D infra.) These indications would have motivated 
a responsible party to intervene on a timely basis.
17/ Appellants propose a tortured interpretation of the words, 
"acts of racial restriction," from the 1971 opinion —  which they 
claim indicate that the District Court did not mean to include 
within the ambit of its decree private sectarian schools, formed 
in the wake of public school desegregation, which limited their 
enrollment on a religious basis and had all-white enrollments.
(No. 80-1913 App. Br. at 14-15.) This construction of the opin­
ion is plainly inconsistent with the District Court's statement, 
in the same part of its 1971 opinion, that the issue it preter- 
mitted "may never arise . . . ," a statement which obviously re­
fers to the expectedly unusual case in which there is a claim 
that racial discrimination is a tenet of religious belief. Cf. 
Newman v. Piggie Park Enterprises, Inc., 256 F. Supp. 941, 944,
945 (D. S.C. 1966), rev'd in part on other grounds, 377 F.2d 433 
(4th Cir. 1967), modified on other grounds and aff'd, 390 U.S.
400 (1968). Appellants' reading of the opinion also contradicts 
the IRS' consistent interpretation of its application to sectar­
ian schools since 1970. See Statement, supra, at 6-8; n.10 and 
accompanying text. It is hardly unreasonable to expect that, if 
the District Court had intended its 1971 decree to bind the IRS 
only with respect to private, nonsectarian schools in Mississippi, 
it would have said so in its order or opinion.

Appellants also imply that they were entitled to ignore the 
Green litigation because the 1971 opinion and decree "did not

[footnote continued on next page]



23-

2. Even assuming that, in 1971, there could have been some 
doubt as to the inclusion of all-white church schools, founded 
after desegregation orders in their locales, within the class of 
schools which would be affected by a suit designed to prohibit 
tax exemption for private schools serving as an alternative to 
desegregated public schools, there could be absolutely no ques­
tion as to such inclusion after the developments in Norwood v. 
Harrison, supra, particularly on the remand in the trial court. 
See Statement, supra, at 8-10. The opinion on remand made it 
absolutely clear that church schools could come within a judicial 
definition of a prima facie racially discriminatory school. As 
noted in the Statement, the opinion of Judge Ready specifically 
dealt with three church schools, including a Presbyterian Day 
School in Cleveland, Mississippi. It is inconceivable that a 
private church school in Mississippi could have been unaware of 
the Norwood opinion. And since that opinion several times re­
ferred to the opinion in Green v. Connally (see 382 F. Supp. at 
929, 932, 934), the close relationship between the two cases in 
defining what constitutes a prima facie racially segregated
school had to be apparent to school administrators, whether or

18/
not they are lawyers.

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

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

[footnote continued on next page]



-2 5-

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

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

20/
self-evident to any interested person, layman or lawyer.

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

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

[footnote continued on next page]



26-

4. The appellants do not explain why they became aware of 
the May 5, 1980 order in this case in time to contact counsel on

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

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

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

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

[footnote continued on next page]



-27-

July 28,1980 (see A. 72), -but were unaware of the case before 
that time. From the papers that are attached to appellants' 
brief, it appears that the Internal Revenue Service did not con­
tact their School until June 30, 1980 (see also A. 27, 72). It 
is a reasonable inference that the IRS, which seemed to have dif­
ficulty in identifying tax-exempt church schools in Mississippi, 
had not reached the School with any inquiry before the May 5, 
1980 order, and it may be that the School was not interested 
in making the IRS aware of its exempt status by moving to inter­
vene in the action until it became clear from the May 5 order 
that the school would be a subject of inquiry. Be that as it 
may, it is abundantly clear, from the court opinions and the IRS 
releases, that no minimally responsible Mississippi school admin­
istrator could have been unaware, before 1976 at the very latest, 
that the Green litigation potentially involved white church 
schools established after desegregation orders in their areas.
The proposed intervenors, if they cared about their tax-exempt 
status at all, had to know that such status could be implicated

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

Internal Revenue Service, Hearing: Proposed Revenue Procedure
on Tax Exempt Private Schools (December 5, 1978) at 9-10 (empha­
sis supplied).



-28-

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

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

Alaniz, 439 U.S. 837 (1978).
In nearly all of the intervention cases upon which appel­

lants seek to rely, one of two circumstances was present: either
the applicants for intervention did not wish to reopen issues 
decided earlier in the litigation, but merely to participate in 
further judicial proceedings (as in this Court's decisions in 
Hodgson v. United Mine Workers of America, 153 U.S. App. D.C.
407, 473 F.2d 118 (D.C. Cir. 1972), and Natural Resources Defense 
Council v. Costle, 186 U.S. App. D.C. 147, 561 F.2d 904 (D.C.
Cir. 1977), or the 8th Circuit's ruling in riddell v. Caldwell,



-29-

546 F.2d 768 (8th Cir. 1976); or the applicants had justifiably 
relied upon the existing parties to represent their interests and 
moved to intervene promptly upon discovering that they did not 
(as in the Supreme Court's ruling in United States v. McDonald, 
432 U.S. 385 (1977), this Court's decision in Smuck v. Hobson,
132 U.S. App. D.C. 312, 408 F.2d 175 (D.C. Cir. 1969), or Legal 
Aid Society of Alameda County v. Dunlop, 618 F.2d 48 (9th Cir. 
1980). Neither factor justifies appellants' delay here:

1. Appellants' proposed pleadings indicated their desire 
to relitigate settled issues, such as plaintiffs' standing and 
the scope of the district court's 1971 decree. Moreover, there 
were no further proceedings scheduled before the district court 
in which appellants sought to participate.

2. Nor could appellants claim any justifiable reliance 
upon the other parties to litigate the First Amendment issues 
which they now seek to have resolved. Appellants recognize that 
these claims have not been adjudicated in this case —  which is 
because they have never been raised formally by any of the liti­
gating parties. Yet, as we have shown earlier in our brief, 
church-connected schools have been considered by the parties and 
by the district court to have been within the purview of the case 
at least since 1970, when IRS Commissioner Alexander informed the 
Court in a written affidavit that the Service was attempting to 
collect the information required by the preliminary injunction 
from church schools. Appellants disdained seasonable interven­
tion in this case at the risk of a later finding of untimeliness,



-30-

which has come to pass.
Finally, two other decisions upon which appellants rely are 

also distinguishable from the instant case. In Johnson v. San 
Francisco Unified School Dist., 500 F.2d 349 (9th Cir. 1974), the 
Court of Appeals would have affirmed the denial of intervention 
based upon untimeliness as not an abuse of discretion; however, 
since it was remanding on the merits for further proceedings, it 
vacated and remanded the intervention holding as well. And in 
Stallworth v. Monsanto Co., 558 F.2d 257 (5th Cir. 1977), the 
claims raised by the intervenors —  the alteration of white em­
ployees' seniority vis-a-vis each other —  could not have been 
anticipated as an issue until after the consent decree in that 
case had been entered, especially since the plaintiffs had op­
posed notification to white employees earlier in the lawsuit. 
Unlike Stallworth, in this case the District Court's 1971 opinion 
clearly put appellants on notice that church schools were in­
cluded within the generic term "private school". The opinion 
reserved constitutional issues for further determination in light 
of individual schools' circumstances. This function is now pro­
vided for in a 26 U.S.C. § 7428 declaratory judgment action, in 
which constitutional claims can be raised, as they were in Prince 
Edward School Foundation v. Commissioner, supra.

Even assuming arguendo that appellants did not know and 
could not have, known of this case's potential impact upon them 
until the May 5, 1980 and June 2, 1980 Orders of the District 
Court, their motion to intervene, filed six months after the last



-31-

order, and almost five months after they received a questionnaire 
from the IRS, as a direct result of the court's orders, was un­

timely.
Unlike the appellants (proposed intervenors) in No. 80-1913, 

who moved to intervene within days after the Court's June 2, 1980 
order, appellants in this case took no action until six months 
later. No explanation whatsoever has been given by appellants 
for this delay. See, e.g., Associated Gen'l Contractors v. Secre­
tary, 77 F.R.D. 31, 36-38 (C.D. Cal. 1977) (dictum). Appellants' 
failure to move earlier to enter the litigation must therefore be 
treated as a deliberate and calculated decision, for surely re­
ceipt of the IRS questionnaire, which they assert violates their 
First Amendment rights, should have prompted immediate action.

Allowing the appellants to intervene an additional six 
months after they unquestionably had knowledge of the exact im­
pact upon their interests of the Green litigation would cause 
additional prejudice to the rights of the plaintiffs and inter­
fere substantially with the orderly process of the District Court. 
During that time period, the Service commenced its implementation 
of the Court's order. Questionnaires identical to the one re­
ceived by appellants were sent to church schools throughout Mis­
sissippi and analysis of the information produced in the re­
sponses by the Service was begun and is continuing at the present 

time.
The additional post-judgment delay in seeking intervention 

distinguishes this case from No. 81-1913 and provides even more 
compelling support for the District Court's conclusion that appel­

lants' motion was untimely.



B. The proposed intervenors1 interests can be fully adjudi­
cated in a separate action under 26 U.S.C.§7428, which 
would develop the particular facts of appellants’ particu­
lar situation without the necessity of disturbing the final 
judgment in this case.

While, as we discussed above, we believe that the motion to 
intervene could properly be denied on the basis of untimeliness 
alone, the denial of the motion in this case was particularly 
appropriate because the School's interests can be protected and 
the claims which it wishes to assert adjudicated in an individual 
action under 26 U.S.C.S7428. It is thus unnecessary to reopen 
the judgment in this long-pending case. Cf. Brumfield v. Dodd, 
supra, 425 F. Supp. at 531 (post-judgment intervention in text­
book aid case unnecessary since school will have opportunity for 
judicial review of administrative determination of ineligibility).

All that the District Court order of May 5, 1980, requires 
in relation to church schools is that the IRS obtain information 
about the organization and status of the school (see Question­
naire attached to App. Br. in No. 80-1913, at 47). Appellants do 
not and could not reasonably contend that the mere furnishing of 
such neutral information would in any way impinge upon their
freedom of reliaion. See United States v. Freedom Church,

227 '
613 F .2d 316, 320 (1st Cir. 1979). Their claimed objection to
the injunction in this case stems from the fact that the District 
Court adopted the view that an all-white school established after 
a desegregation order would be deemed presumptively discrimina­
tory and required to show by objective means that it did not in 
fact discriminate on the basis of race. Appellants assert that

22/ But see No. 80-1913 App. Br. at 38-39 1[ (f) ; 40 «] (j).



-33-

their religious mission precludes the kind of showing suggested 
by the District Court. While the order of the District Court 
suggests some of the types of evidence by which the presumption 
could be overcome, it does not, however, direct that nondiscrim­
ination can be shown only by these means. The order directs the 
IRS to consider "any other similar evidence calculated to show 
that the doors of the private school and all facilities and pro­
grams therein are indeed open to students or teachers of both 
the black and white races upon the same standard of admission or 
employment" (A. 7). Appellants are therefore free to bring be­
fore the IRS any and all evidence which they believe would tend 
to show that the School does not discriminate on the basis
of race, despite the time of the school's foundation and its

23/
all-white enrollment.

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

23/ The District Court's decree thus does not inexorably burden 
the exercise of the School's religious mission even if one
accepts appellants' far-fetched interpretation of what the Dis­
trict Court meant when it identified "active and vigorous recruit­
ment programs to secure black students or teachers," "meaningful 
public advertisements stressing the school's open admissions pol­
icy," and "meaningful communication between the school and black 
groups . . . "  (A. 7 ) as evidence tending to rebut the inference
of discrimination which attaches to "Paragraph 1" schools. See 
No.80-1913 App. Er. at 36-38.



-34-

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

24/
the District Court.

An action under 26 U.S.C. § 7428 will have the advantage 
of focusing on the particular facts relating to this school's 
particular situation. Such a concentration on the facts of an 
individual case is, as the district court initially held in this 
case, desirable when passing on religious claims. See 330 
F. Supp. at 1169. For Establishment and Free Exercise Clause 
claims present delicate issues requiring close judicial scrutiny, 
and careful evaluation of the facts of individual cases. They 
cannot be decided on hypothetical facts, in the abstract. E .g., 
Wheeler v. Barrera, 417 U.S. 402, 426 (1974).

24/ While the merits of appellants’ claims are not before the 
Court in this proceeding, it should be noted that what is at 
issue here is, not the right of the school to conduct its affairs 
and limit its students as it sees fit, but its right to receive 
aid from the government in the form of tax exemptions even if the 
school follows a policy of racial discrimination. See Green v. 
Connally, supra, 330 F. Supp. at 1166; Goldsboro Christian 
Schools, Inc. v. United States, 436 F. Supp. 1314, 1318-19 (E.D. 
N.C. 1977). This distinguishes the case at bar from many deci­
sions cited by appellants, such as Catholic Bishop v. NLRB,
559 F.2d 1112 (7th Cir. 1977), aff’d 449 U.S. 490 (1979). See 
also, EEOC v. Mississippi College, discussed in text infra.

Furthermore, while "a person may not be compelled to choose 
between the exercise of a First Amendment right and participation 
in an otherwise available public program," Thomas v. Review Board, 
49 U.S.L.W. 4341, 4344 (April 6, 1981), even if one assumed that 
appellants' "religious practice is burdened by a governmental 
program [denying exemptions to schools with racially discrimina­
tory policies, this] does not mean that an exemption accommoda­
ting [its] practice must be granted. The state may justify an

[footnote continued on next page]



-35-

Moreover, where (as here) the information requested by the 
government does not directly implicate any religious activity or 
practice of the institution (appellants do not assert that one 
of the tenets of their religion is racial separation), the burden 
that might be imposed on the institution's Free Exercise rights 
is largely hypothetical, and is insufficient to bar the govern­
ment's collection of data. See, e .g., EEOC v. Mississippi Col­
lege, 626 F.2d 477, 486-89 (5th Cir. 1980) (application of Title 
VII to pervasively secular institution affiliated with Baptist 
religious organization did not violate either Establishment or 
Free Exercise Clause).

The right to seek a declaratory judgment under 26 U.S.C.
§ 7428 to review an IRS denial of tax exemption to a church orga­
nization existed before appellants made their motion to intervene 
in this case. Intervention was thus not then, and is not now, 
necessary to enable appellants to assert whatever claims they 
may have that a decision to deny their tax exemption based upon 
the IRS' application of the District Court's decree would violate 
their First Amendment rights.

On the other hand, opening this case now would greatly de­
lay the already long-deferred enforcement of plaintiffs' rights.

[continuation of footnote no. 24]
inroad on religious liberty by showing that it is the least re­
strictive means of achieving some compelling state interest." 
Ibid. Avoiding governmental support for racial discrimination 
is clearly a compelling governmental interest. E.g., Norwood v. 
Harrison, supra.



-36-

The proposed intervenors tried to come into this case only after 
final judgment; they sought, not only to press their own particu­
lar interest, but to open up the whole judgment, including the

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

make a determination as to their status.
Since appellants have a full and complete remedy without 

intervention, while intervention would prejudice the rights of 
the plaintiffs, the motion to intervene was properly denied. The 
existence of other means by which a late intervenor's rights can 
be determined is an important factor, closely related to the con­
cept of practical timeliness, by which the propriety of the de­
nial of a motion to intervene is to be judged. See Hodgson v. 
United Mine Workers, supra, 153 U.S. App. D.C. at 418, 473 F.2d 
at 129-30; Brumfield v. Dodd, supra, 425 F. Supp. at 531. In­
deed, in United States v. Marion County School Dist., 590 F.2d 
146 (5th Cir. 1979), the court considered the relative prejudice

25/ The government moved to dismiss the action after the filing 
of the plaintiffs' motion for further relief (see Statement, 
supra, at 11), on the ground, inter alia, than plaintiffs lacked 
standing. The motion to dismiss was denied May 25, 1977.



-37-

to the existing parties and the would-be intervenor to be a func­
tion of timeliness. In NAACP v. New York, supra, 413 U.S. at 
368, the Supreme Court noted, as a factor supporting the denial 
of late intervention, that proposed interveners were free to at­
tack, in a separate suit, the redistricting plan, rejection of 
which was the main object of their proposed intervention.

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

26/
here, its late motion to intervene was properly denied.

CONCLUSION

The judgment of the District Court should be affirmed.

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



-38-

Respectfully submitted,

WILLIAM L. ROBINSON 
NORMAN J. CHACHKIN 
FRANK R. PARKER 
BEATRICE ROSENBERG 
LEZLI BASKERVILLE

Lawyers* Committee for 
Civil Rights Under Law 

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

Attorneys for Plaintiffs-Appellees

CERTIFICATE OF SERVICE

I hereby certify that, on this ___ day of April, 1981, I
served two copies of the foregoing Brief for Plaintiffs-Appellees 
upon counsel for the other parties to this appeal, by depositing 
same in the United States mail, first-class postage prepaid, 
addressed as follows:

James Edward Ablard, Esq.
Whiteford, Hart, Carmody 

and Wilson 
1838 L Street, N.W.
Washington, D. C. 20036

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

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



APPENDIX A



APPENDIX A

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

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

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

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

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

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

-la-



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

(b) Limitations.

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

-2a-



APPENDIX B



Attachment 1 to 1® (ll)6G-58

News
For Reiea&a: k : 00 PM,ED"? Fri.

July 10, 1970

Internal Hevenye Service

Tsl. (202) WO 4-4021

IRS Announces Position on Private Schools

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

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

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

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

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

# # #
!+:00 PM, EDT
7/ 10/70

Manual Supplement O fficial Use Only



Attachment 2 to M3 (ll)6G-58

News
?*r Sunday

July 19, 1970

m
Internal Hewenn® Sarnie#

T«l. (202) WO 4-4021

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

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

nounced racially nondiscriminatory admissions policies. The schools are 

located in five different southern states.

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

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

Other applications for exempt rulings, pending at the time of the announcement, 

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

said.

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

all private schools that currently hold favorable tax exemption rulings is 

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

IRS district directors within a few weeks.

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

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

minatory admissions policy announced within their respective communities.

The schools are :

Nathanael Green Academy, Inc. 
Siloam, Georgia

The Heritage School, Inc. 
Newnan, Georgia

The Gaffney Day School 
Gaffney, South Carolina

Desoto School, Inc.
Helena, Arkansas

Southeast Education, Inc. 
Dothan, Alabama

Pamlico Community School 
Washington, North Carolina

(More)

Manual Supplement O fficial Use Only



Attachment 2— Cont. to MS (ll)6G-58

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

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

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

ru". Ings of tax exemption would be available where schools announced racially 

nor iscriminatory admissions policies.

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

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

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

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

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

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

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

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

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

the [R3 said that where a school has adopted and publicly announced a racially 

non iscriminatory admissions policy, it will assume, in accord with normal 

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

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

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

the tax exempt status of the school will be challenged.

The IRS also said that, should ar. existing ruling of a private school be 
revoked as the result of such a challenge, persons contributing to the school 
wil" be allowed to deduct contributions made prior to the date of the public 
annc mcement by the IRS of the revocation. This follows the usual IRS rules 
and procedures on contributions.

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

- 2 -

# # #
7/19/70

Manual Supplement O fficial Use Oniy



APPENDIX C





*rr i
•i i

7 rn resp on se  to  the a l le g a t io n s  co n ta in ed  xn the 
*e**dav± t  o£ Rev. John W. Hunter d ated  November 3 , LV/u,
& S S  £  the p l a i n t i f f s ,  c o u c h i n g  a  «  w hite
January  13, S e rv ic e
« £ S 5 S \ S  5  S i  5 e h =  t a Pl n i e S i e »  the Mayor a n i  C h ief 
o f  VQlice o f  Macon, M is s i s s ip p i  and the a t r ia n c ,  S e v . Sunoar. 
A ttached  h ereto  I s  a  memorandua d a t ^ D e « o ^ .  and^the
' ^ r « l  r e v e n u e  A g e n .  W . .  ^  c h i e f  .

t f S S S f  mS o a s S i s - J p t  W h i h  3 .2  and 3-3 r e s p e c t iv e ly ) .

3 no fu r th e r  in q u iry  was msda w ith  r e s p e c t  to ^Saxn ts

b ecau se  i t  was n o t mentioned xn p la_ n t—x

4 B ased  upon the. fo re g o in g , and the fu r th e r  xntormacxon
.  L°  a f f i d a v i t  dated  O ctober 14, 1970, wnxcn

was p rev io u s ly"** subm itt ad  to  t h i s  c o u rt , the a f f i a n t  r e a f f ir m s  the 
was prev iou say  nQ =easotl to  b e l ie v e  the the p o lic y
^ n o n d iL r im in a t io n  adopted and announced by th e  a b o v e -sta te d  
in s t i t u t io n s  was n o t adopted  o r  wxIL n ot b e j i d n x n x s ^

, k a th e r e fo r e , a f f i a n t  h as raarrxrm ed XwS catem ~n a 
?°°on t S t  L d d S n c e  a ssu ran ce  o f  d e d u c t ib i l i ty  o f  conCrtoutxons 
i d e  ~ ^ t h e  a b o v e -sta te d  in s t i tu t io n s ,  should  n o t oe suspended 
b i t  should  b e  approved su b je c t  to  a  thorougn r x e la  exam ination 
* 5 1 h?S_l ~t -ad e  by  r e o r e s e n ta t iv e s  o f  the In cem ax  Revenue 
s S S c l i t  s L f I L / d u r i n g  th e  co u rse  o f  IS  ten th s a s  s t a te d  
in  th e  a f f i d a v i t  o f  O ctober L4> 1 9 /0 .

5 D uring th e  c o u rse  of. th e  in q u ir y _by th e  In te rn a l 
*  _ . _ above in form ation  came to  x ts

^ S o ^ S % S : ; f  a” i r . Che p l a i n r i f f a  | i f f i f h v i -  
w K f S s q d  , u * S= ion a re q u ir in g
co th e  Deer Creel-c E ducationax In s tx tu te  i- e  l a c e „ . < R e v e .  
s e r v ic e  is- co n tin u in g  i t s  xaquxry o t  -h_s m atte r  -ud - t  
d e c is io n  w ith r e sp e c t  to  the continuance Oi tne acvance ^ssuranc 
c f  d e d u c t ib i l i ty  f o r  t h i s  schooL w i l l  depend upon the r e s e t s  
o f  t h i s  in q u iry .

Subsecuent to the dace of the affidavit of October6. Subsequent: co. tne ux
1970 the Internal Revenue.Service, through xts o3 o^*ea» 0 . 
Dist^ct U1 rectors, has mailed letters to approximately o,0C0 
or* vac e schools within the United States which had pravxou^-y 
received favorable rulings of tax exemption. The sT<tl
each school to state whether or not xts policies or a^ss.on^ 
are. discriminatory or nondiscrxmxnatory ar.d -z e - - 
submit evidence showing that the polxcy x » ^  - ~
It is estimaced that there are, in addxtxon, more chan 10,000 
private schools which are covered by group rulings, as trou^. 
m S c  -iven to a church covering all of Che churcn-cwr.ee 
I r S a S  scSIs. Similar information is being obtained as co 
the admissions policies of such schools. The advance^su^.. 
of deduccibilicy provided by chese cavorable^r^-, , 
withdrawn for any school raxlxng co saCxsfy .he .eq.---- an.



chat it adopt and administer in good faith a nondiscrininatory 
admissions policy. The ancire thrust of the policy is to taka 
recognition of charitable status dependant, among other 
circumstances, upon, availability of the educational offering 
to all students without regard to race. This policy will 
be fully and fairly implemented throughout all parts of the 
country.

oC„..y -**•V
S/CSDOtPH W. THROWER 
Commissioner of Internal Revenue

Subscribed and sworn, to
before me this LOch day of December 1970

Notary Public,, District of Columbia
‘̂wnrasslojr April: 14. 197?

I



APPENDIX D



'AV
1 L € o  7

IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA

WILLIAM H. GREEN, at al-, )
)

Plaintiffs, )
) CIVIL ACTION NO.

V. ) 1355-69
) Judge Waddy

JOHN 3. CONNALLI, et al.. }
))Defendants.
>

MOTION FOR AN ORDER SUBSTITUTING 
PARTIES DEFENDANT, TO ENFORCE DECREE 

AND FOR FURTHER DECLARATORY AND INJUNCTIVE REIIEF_

Plaintiffs move the Court, pursuant to Rule 25(d)(i), Fed. 
R.Civ.P., to enter an order substituting William Simon and 
Donald C. Alexander, for the previously named defendants herein. 
Plaintiffs additionally move the Court, pursuant to 28 U.S.C. 
§§2201 and 2202 and Rules 54(c) and 65(d), Fed.R.Civ.P., for 
an order enforcing the prior judgment herein and ror further re­
lief, as specified in the prayer to this motion. In support of 
this motion, plaintiffs show as follows:

1. Plaintiffs, black taxpayers and their minor children 
attending Mississippi public schools, commenced this c^ass action 
by complaint filed May 21, 1969 seeking declaratory and injunc­
tive relief against the Secretary of the Treasury and the Com­
missioner of Internal Revenue with respect to granting tax-exempt 
status to racially discriminatory private schools in Mississippi.

2. By opinion and order en-ered January 12, 1970, the
three-judge Court preliminarily enjoined the Secretary and the 
Commissioner from according tax-exempt status to any Mississippi 
private school that "is . . . a  part of a system of private



0

-  2 -

schools operated on a racially segregated basis as an alterna­
tive to white students seeking to avoid desegregated public 
schools." Green v. Kennedy, 309 F. Supp. 1127, 1140 (D.D.C.
1970), appeal dismissed sub nom. Cannon v. Green, 398 U.S.
956 (1970), appeal from subsequent orders dismissed sub nom.
Coit v. Green, 400 U.S. 986 (1971) .

3. On June 30, 1971, the three-judge Court entered a deci­
sion on the merits and an order; (1) declaring that tax exemptions 
for, and deductions for contributions to, racially discriminatory 
educational organizations are impermissible under §§501 (c) (3) 
and 170(a)-(c) of the Internal Revenue Code of 1954, and (2} 
permanently enjoining the Secretary and the Commissioner to ad­
here to specified procedures designed to ensure that tax-exempt 
status would not be accorded to such racially discriminatory 
educational organizations and that tax-exempt status previously 
accorded such, organizations would be terminated. Green v.
Connally, 330 F. Supp. 1150, 1179-80 (D.D.C.), aff'd sub nom.

1/Coit v. Green, 404 U.S. 997 (1971). With respect to nine 
specific Mississippi private schools which IRS had accorded tax- 
exempt status, the Court declined to grant injunctive relief be­
cause of the sworn assurances of the Commissioner, which the 
Court-received “as a good faith representation that will be 
honored,“ that the IRS would conduct audit examinations of these 
nine schools within IS months of October 14, 1970 and, as to 
such schools, would “take into consideration ail factors raised 
in the present litigation as well as any material matters raised

i/ Subsequent developments in the law of three-judge courts in­
dicate that this Court's nonconstitutional decision and order of June 30, 1971 should have been made and sneered by a single judge. 
See Hagans v . Lavine, 415 U.S. 52S, 543-45 (1974); PhiIbrook v. 
Glodgett, 421 U.S. 707, 712-13 n. 8 (1975),

~ aid*'



'* < '*
 '
S'

' A 
: ~>J

. - : 
. - . C- • :■■■■'•:■ a

i.T,'. ■ .

- 3

in the future." See 330 F. Supp. at 1176 n. 53 and accompany­
ing text; October 14, 1970 Affidavit cf Randolph W. Thrower,
<t 11. The nine schools subject to this commitment were the 
following (Thrower Affidavit, 7):

Central Holmes Academy 
Copiah Educational Foundation 
Deer Creek Education Institution 
Indianola Educational Foundation 
Lula-Rich Educational Foundation 
North Delta Schools 
Noxubee Educational Foundation 
Quitman County Educational Foundation 
Saints Industrial Sr Literary School

4. On June 25, 1973 the Supreme Court decided Norwood v. 
Harrison, 413 O.S* 455 (1973), holding that Mississippi-owned 
textbooks could not constitutionally be loaned no racially dis­
criminatory private schools. On remand from the Supreme Court, 
Chief District Judge Ready established a certification proce­
dure and engaged in a school-by-school examination to determine 
whether each Mississippi private school was a racially discrim­
inatory institution and thereby ineligible fcr state-loaned 
textbooks. Norwood v. Harrison, 382 F. Supp. 921 (M.D, Miss. 
1974).

5. Pursuant to the certification procedure ar.d school-by­
school examination conducted in Norwood, counsel for plamtrfrs 
learned that a number of racially discriminatory private schools 
in Mississippi, including some of the nine schools referred to
in 1 3 above, had been accorded tax-exempt status, or had not 
had their tax exemptions revoked, by IRS. By letters dated 
March 11, 1974 and July 17, 1974 (Exhibits 1 and 2, respectively, 
hereto) counsel for plaintiffs brought these matters to defen­
dants' attention, as did counsel for the Norwood plaintiffs by 
letter dated April 19, 1974 (Exhibit 3 hereto). Plaintiffs' 
counsel identified the following 12 private schools as having



4 -

tax-exempt status notwithstanding the Norwood determination 
that the/ were ineligible for state-loaned textbooks:

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

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

tion, Inc. {County Day School)
Six of these schools axe among the nine schools subject to IRS' 
1370 commitment to audit within 13 months and to re-examine in 
response to future information (see f 3 above). Defendants re­
plied to counsel for plaintiffs herein by pro forma latter 
dated August 16. 1974, stating: "While we cannot reveal spe­
cific actions concerning the individual schools involved, we 
assure you that your information is being considered.” (Ex­
hibit 4 hereto.)

6. During this time plaintiffs' counsel also, by letter 
dared April 15, 1974 (Exhibit 5 hereto), requested a meeting 
with defendants and their representatives for the purpose of 
attempting to work out a mutually agreeable procedure, without 
further formal proceedings herein, for implementing this Court's 
1971 decree- in light of the developments in Norwood. Defendants 
responded affirmatively by letter of May 17, 1974 (Exhibit 6 
hereto), indicating that they were looking into these matters 
and were re-examining their practices in light of Norwood.

7. In June 1974 counsel for plaintiffs herein and counsel 
for the Norwood plaintiffs met with representatives of the Civil
Rights Division of the Department of Justice for the purpose



of recommending appropriate standards to govern tax-exemptions 
and tax-deductibility determinations vis-a-vis private schools.

3. On December 13, 1974- plaintiffs' counsel again met 
with; IHS- and Civil. Rights. Division representatives to request, 
among other things, that defendants promptly- terminate the tax- 
exempt status of the previously-identified Mississippi private 
schools which the Norwood court had judicially determined to be 
ineligible for state-loaned textbooks. Defendants responded, 
inter alia, by stating- that they were devising a new Revenue Pro­
cedure to deal with the problem on a nationwide basis, and that, 
notwithstanding this Court's decree, they did not wish to t3ke 
any action against Mississippi private schools until the new pro­
cedure was finalized. (New regulations were finally issued on 
November IS, 1975, 40 Fed. Reg. 53409.)

9. Between December 1974 and January 1976 plaintiffs re­
ceived no information indicating what action, if any, defendants 
had taken with respect to the Mississippi private schools in 
question. 3y letter dated January 21, 1975 (Exhibit 7 hereto), 
plaintiffs' counsel requested to be informed of defendants' ac­
tion on plaintiffs' numerous prior requests. By letter of Feb­
ruary 6, 1975 (Exhibit 3 hereto), defendants responded, stating 
that one of the subject schools had failed to establish tax-exempt 
status, that one school had ceased operations, that one school 
did not exist according to- defendants' records, and that or.e 
school continued to enjoy tax-exempt status. As to six other 
schools, including some of the nine schools referred to in H 3 
above, defendants stated that such schools had been ’’contacted." 
Moreover, and notwithstanding this Court's decree, defendants 
stated: "The suspension of advance assurance issue is presently
before the National Office of the Service." (Plaintiffs have 
heard nothing further, and have received no additional information,
from defendants.)



' . ' . - 5 - ' '

It). Defendants have-treated "both the letter and the'spirit 
of this Court's 1971 decree with contempt. They have appar­
ently not even lived up to their sworn commitment to this 
Court, to investigate nine specific Mississippi private schools 
(see f 3, supra); and their new regulations are not adequate 
tc comply with the law of this case. Defendants have, in short, 
substituted their will, their (judgment and their preferences 
for the binding judgment of this Court. The need for a specific 
detailed permanent injunction is apparent.

IX. The need for further relief is also apparent. The 
inadequacy of the present decree and the procedures being em­
ployed by IRS is illustrated by defendant's treatment of the 
County Day School (Quitman County educational Foundation, Inc.) 
which has been and continues to be tax exempt. This is one of 
the nine schools subject to defendants' 1970 commitment (If 3, 
supra), and it is one of the 12 schools about which plaintiffs 
have Complained to defendants'over the-past two years., Not­
withstanding the tax-exempt status accorded this school by IRS, 
the Norwood Court determined it to be ineligible for scate- 
loaned textbooks (see 382 F. Supp. at 923-29). The Norwood 
court found (id. at 929):

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

The prior decree of this Court must thus be broadened as it has 
proved inadequate to accomplish the broad purpose of prohibit­
ing tax exemptions to racially discriminatory educational or­
ganizations.



WHEREFORE, for the- foregoing reasons, plaintiffs 
this Court to set this matter for hearing at the Cour

pray
t's early

convenience and, upon, such hearing, to:
(a) Enter' an order substituting William Simon and Donald 

C. Alexander as: defendants he rein-r
(b) Enter a supplemental declarator*/ judgment pursuant to 

23 U.S.C. §§2201 and 2202 that defendants are bound by adversary 
judicial and administrative determinations with respect to the 
racial policies and practices of Mississippi educational organiza 
tions which have or which seek tax-exempt status pursuant to 
§§501(0(3} and 170(a)-(c) of the Internal Revenue Code;

(c) Enter a detailed, permanent decree (with the derails 
to be determined upon the hearing of this motion), modifying 
and superseding the Court's prior decree, enjoining defendants 
from according tax-exempt status to, and from continuing the 
tax-exempt status now enjoyed by, all Mississippi private 
schools or the' organizations which operate -.hem, which:

(1) have been determined in adversary judi­
cial or administrative proceedings to be 
racially discriminatory; or
(2) which have insubstantial minority enroll­
ments, which are located in or serve desegre­
gating public school districts, and which 
either (i) were established or expanded at or 
about the time the public school districts in 
which they are located or which they serve 
were desegregating, or (ii} cannot demonstrate 
that they do not provide racially segregated 
educational opportunities for white children 
avoiding attendance in desegregating public
school systems.



• ***ŵ.- -̂-►•iSrV- >-•,.• ~-r .* fev*‘ v.

•.*r

“• -*«*

•>•' :v>,* <fi. •.'

. • ' 3' -

(d) Enter an order requiring defendants' to 
conduct forthwith a survey of all Mississippi 
private schools, obtaining information similar 
to that required by the certification proce­
dures in Norwood (see 382 F. Supp. at 935-33), 
and. further requiring defendants to make 
quarterly reports to the Court and to plaintiffs 
specifying the steps taken to implement the in­
junctive decree requested herein.
(a) Award plaintiffs their costs of this en­
tire cause, including out-of-pocket expenses 
and reasonable attorneys' fees, pursuant to 
20 U.S.C. §1617;

* ' . '/I

\

SS

(f) Grant plaintiffs such other and further re­
lief as may be just and proper.

Respectfully submitted,

' £

r

FRANK R. PARKER
Jackson Lawyers' -Committee for 

Civil Rights Under Law 
233 North Farish Street 
Jackson, Mississippi 39201

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

Lawyers' Committee for Civil 
Under Law

Suite 320, 733 15th Street, N.W. 
Washington, D.C. 200Q5

Attorneys for Plaintiffs
Dated: July ^3, 1976.

«



i'f i \1

!. a  ’  v  v v .  *-■ c  c  .v  • ;  i v  r  »•; r
J O ;! C i V ’ ’ . it I n V S  l*N t > C i * . A A vV

F A R'l r H" JACKSON, M;SS!SStPP! PHONE ''CM) 5

Maxell 11,- 3.5 74

Mr, Donald Alexander 
Commissloner of Internal Revenue 
n. ", Internal Revenue Service 
Washington, D. C, 20224

Re; Encore s merit of Injunction, Green
330
U. S

F- Supo. 
997. ' C j \ r

150
i

:d .d .c . is*?:
v. Connally, 
affd, 40 4̂

re ar .Alexander:
T am writing to call vour attention to recent developments 

Norwood v, Harrison, 37 L.Ed.2d 723 (1973), on remand, Civil No. 
W c T c P I T M i s s ,  (Ready, J.) , the case holding that the

,o students 
Inese recentState of Mississippi may net loan public ,_s.,ttooks 

attending racially*discriminatory private .schools. 
developments require the Internal Revenue Service to revere ana 
terminate the tax exempt status of private schools in Mississippi 
previous!’/ recognized as exempt, and to disallow deductions ror 
contributions to such schools.

In Norwood the Supreme Court ordered that rtificati
procedure t 
Mississippi

= established to determine the eligibility of 
private schools for state supplied textoooxs,

Drocecurs be subjectrulings under h is •>, i *;.shed byestablished that
judicial review. The standards of eligibility escana 
Supreme Court w e r e  made with full knowledge of the 
established by the court in Green, and indeed are similar tc ■: 
Green standards. Hence it follows that if a school has been 
determined, to be ineligible for texrbcoks uncer Notwocd, i_rien 
application of tlie same standards it should pc inexig-i—>ls -oi
tax benefits under Green.

After Chief U. S. District Judge William C. Keadg 
tlie certification criteria in Norwood on ram,and, a numbe:

' '* * ' apply for certifi

es tabl: 
of

Mississippi private schools failed - a +- -.on
ledunder the non-discriminatory standards -and/or return 

supplied textbooks in their possession. Such action amounts 
a concession that they do net have a non-discriminaucry acirms 
policy and than they would fail to meet certification standar

ate
to

D V IRS butSchools which are still recognized as tax exempt 
which in effect have conceded discrimination in Norwood ai

EXHIBIT 1
-^ol-



Commissioner of'Tnternal Revenue 
Page 2
March 11, 1974 *.

Columbia Academy .{did-not apply for certification)
R. 0. Box 1S9 
Columbia, Ms. 39429
Copiah Educational Foundation, Inc. (returned books)
317 Gallatin Street 
Hazelhurst, Ms. 390 83
Deer Creeic Educational Institute, Inc. (returned books) 
Hollandale, Ms. 38 748
Educational Foundation, Inc., of Clinton (did not apply) 
106 East Cynthia Road 
Clinton, Ms. 39205
Educational Foundation, Inc., of Marshall County (did not 
Holly Springs, 14s. 38635
Education Foundation, Inc., of Lucsdale (did not apply)
?. 0. Box 65 
Lucedale, Ms. 39452
Lula Rich Educational Foundation, Inc. (returned-books) 
(Lula Rich Academy)
P. 0. Box 338 
Lula, Ms. 38644
Accordingly, the eligibility of these institutions to rece 

tax deductible contributions should be immediately suspenaed, a 
their exempt status revoked.

In other instances, certain schools applied for csrtitxcat 
to receive state textbooks, but after objections_were filed by 
counsel for the plaintiffs, in effect conceded discrimination a 
an order was entered by Judge Ready vacating their certificatio 
and ordering them to return their state textbooks. A copy of 
Judge Ready's Order of March 1, 1974 is enclosed. These school
are :

Indianola Educational Foundation, Inc. (presently reccgniz 
305 East Gresham Street as tax exempt)
Indianola, . Ms . 38751
Hillcrest (Baptist) Academy (presently recognized as tax 
Route 1 exempt under the umbrella exe
Senatobia, Ms. tion of the Baptist Church)
West Panola Schools, Inc. (application for fax exempt stat 
Box 713 c u r r e n t l y  pending' before IRS)
Batesville, Ms. 38606



Mr. Donald Ale-Jnder J

Commissioner of Internal Revenue
Page 3 . •• •••-; : • ......
March 11, 19 74' f . . . .

Ready, March, 4, 1974

additional ..
voted, to "

William E.""Cotr, 'Jr."," attorney 
to District Judge William C. 

(copy enclosed). This school is:

.1 iAftari' a'. hearing^pn-oleihtidfe 1 objections 
school.^,currently, .recognised by IR§, as. tax .exempt.,, 
return ’its textbooks, letter from 
for the North Delta School, Inc.,

North Delta School, Inc.?. 0. BOX D
Crenshaw, Ms. 38621 -
Accordingly, the eligibility of these four_schools to 

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

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

Quitman County Educational Foundation, Inc. 
P. 0. Box 56
Marks, Mississippi 33646
This corporation operates the "County Day School" in Marks, 

Mississippi', and was one of the original segregation academies 
in the state, hading, opened'its'doors simultaneously. with the 
desegregation of the Quitman County public schools. Tne County 
Day School was cited as a segregationist academy by the District 
Court in Coffey v. State Educational Finance Ccrom'r.., 296 _F. Supp, 
1339 , 1392 (S. D. Miss. 1969). Its founders have been aligned v/ i - 
and attended meetinas sponsored by, the Citizens Council, a whiti

segregationist organization. All students, faculty
ana beard members are, and have been since

nemhers , 
inception,founder,white, I understand, that forms filed with the IRS omit to indicate 

whether the S'chool has ever formally adopted a written open 
admissions policy (see Question 15(a) of Certification and Background 
Information Form and attachments thereto).

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

As counsel for the plaintiffs in Green, 
the procedures of IRS for ruling on the tax 
private schools in Mississippi appear to be 
more lax than the judicial standards applied 
Court for the Northern District of Mississip

I am concerned that 
exempt status of 
more permissive and 
by the U. 3. Distri 
pi. The evidence in

t

Norwood suggests that schools have been certified by IRS as 
eligible for tax exempt status and tax deductible contributions on

~  l i d -



Mr. Donald Alexander 
Commissioner of Internal' Revenue 
Page - 4 ...
March 11/ 1974 .

the basis of professed open admissions policies when i-n fact 
they have been formed and operate as racially segregated 
institutions designed to provide an alternative to public 
integrated education. These tax exempt schools in effect 
have admitted their true colors when they voluntarily have 
returned their state textbooks and do not contest objections 
to their certification to receive such textbooks.

Given these developments, I request that IRS review its 
certification and auditing procedures and make such changes 
are necessary no tighten its standards. Perhaps a public 
adversary administrative hearing, in which the private school 
the^burden of proof, and with notice permitting public partic 
tion or judicial review of IRS decisions f may be required to 
close this present tax loophole._

as
nas
ipa-

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

Since these matters may involve the continuing jurisdiction 
of the District Court in Green regarding enforcement of its 
decree, I would appreciate a response from you to this additional 
information, indicating what action you have taken with regard to 
each of these identified segregated private schools, and what 
changes in your procedures you have adopted to insure that 
private schools which profess a ncn-discriminatory policy but^ 
which are in fact discriminatory do not receive the tax benefits 
which have been granted, but to which they are not in fact 
entitled under the Green decision.

Than2< you very much for your consideration of my requests
Yours vary truly,

-------

Frank R. Parker

FRP:1jh 
Enclosures
cc; Melvyn R. Leventhal, Esq.

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

Assistant A.ttcrney General, Tax Division,
U.S. Department of Justice 

Staff Director, U.S. Commission on Civil Rights



7

• W J L U A M  S ,  ‘C O R R . . J R .  

GCORCSE C. CAfitSON. JR.* •'

CCRR AND CARLSON-
A T T O R N E Y S  A T  L A W

p. b. sox Asa
SAROlS. NciSStSSIPRt 3 3 3 6 6  

. 3*RO'» (604 > _,4B7.2t2t. ‘
QATESVtU-ir *.CO:> ?« 3 -3 3 U

• Mar «»» V> • 
V i*

*T » 1974
(Dictatad March

f.Mj
Jh!

ii.rii * i. b lA -»  /iw/4

L A T A  C .  U G H T 5 E Y  

3*SC«CTAPY

£

I

I

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

'Re: Norwood vs. Harrison
No. WC 70-53-K

Dear Judge Keady:
The Board of Directors of North Delta School, Inc. 

met this morning and unanimously voted to return to the 
State of Mississippi all State owned textbooks presently in the possession of the .school and children attending the school. Arrangements have been made with the Superin­tendent of Education of Panola County to return the State 
owned books Wednesday, March 6, 1974. A copy of the text­
book Inventory of the return books will be-filed with .the 
clerk of the Court in Oxford and copies mailed to you and 
Mr. Leventhal.

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

Very truly yours,

—r. u

William E. Corr, Jr.
WEC:mtf

cc: Mr. Melvyn Leventhal'/Mr. Bill S1ssel1 - County Superintendent of Education 
Mr. Lawrence Meeks Mr. Otis Jenkins 
Mr. Bill Alla1n

l

I 13d



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

WESTERN DIVISION

DELORES NORWOOD, ET AL, Plaintiffs

V.

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

NO. WC 7Q-53-K

ORDER

It appearing that Indianola Academy, Hillcrest Academy 

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

against whom plaintiffs have filed objections as to eligibility 

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

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

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

or under their control; it is

ORDERED

That the certification of eligibility heretofore granted 

by the Mississippi Textbook Purchasing Board be set aside and 

rescinded and the state—owned textbooks in the possession or 

under the control of the three said schools be, not la^er u.ian 

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

This, 1st day of March, 1974.



o * Y'A i f\\ 

' J ‘\ /  \

\__ jl/jJi
r-— <■ j!
L. ____>

|:

L A W Y E R S ’ C O MMI T T E EFOR CIVIL RIGHTS UNDER LAW

1 3 3  N O R T H  P A R I S H  S T R E E T J A C K S O N ,  M I S S I S S i P R l  3 9 2 0 1 E  ( S O I )  9 4 3 - 0 * 0  0

July 17, 1974

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

Re: Green v. Connally
Dear Mr. Alexander

I am writing to follow up my letter to you of March 11, 
1974, regarding the IRS enforcement of the injunction entered 
in Green v. Connally, and to inform you of subsequent de­
velopments in Norwood v» Harrison^, the Mississ, 
joining state textbook assistance to 
schools.

_ppi case en- 
segregated private

District Judge William C. Ready on July 12, 19/4, issued 
his ruling in Norwood and specifically found that four private 
schools in Mississippi, the Svlva Bay Academy (formerly Sylva- 
rena Academy), Bay Springs, Jasper County, Mississippi, the 
West Tallahatchie Academy, Tutwiler, Tallanatchie County, 
Mississippi, South Haven Mennonite School, Prairie iroint? 
Noxubee County, Macon, Mississippi, and the Quitman County_ 
Educational Foundation (County Day School), Marks, Mississippi, 
were racially segregated private schools with racially discrim­
inatory admissions policies formed to perpetuate white, segre­
gated education. Of these four, the Quitman County Educational 
Foundation currently has tax exempt status. However, the_South 
Haven Mennonite School indicated in its textbook application 
form that it is in the process of being included within the 
umbrella exemption provided the Church of God in Christ Men­
nonite Church (Opinion, Exhibit "3", p. 1).

EXHIBIT 2
- \ s



)

Honorable Donald. C. Alexander-.., .... . ■ . : -
July 17, '■ 19-74. : ‘ ‘ •
Page 2 • •

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

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

cational
iudicial determination that the Quitman County Edu­

cation continues to pursue the goal of white,j’ou
: other schools 
:o receive stats

segregated education, plus the failure cf fc 
to challenge objections to their eligibility 
textbooks Undianoia Academy, a/k/a Indiancla Educational 
Foundation, Inc.; Hillcrest Academy; West Panola School; and 
North Delta School) (Norwood Opinion, p. 28) clearly raises 
"serious doubt concerning the continued qualification of 
[these organisations] to receive deductible contributions," 
which should require IRS to suspend the advance assurance cf de­
ductibility of contributions to these five schools pursuant to 
Rev. Proc. 68-17, Sec. 4.05.

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



!-j. a
,

• Ho no r ab le; ■ Do n ai d- C«:.. Alexander, 
uly. 17 > 19.74'. 
age 3'.

- ef fect^ated''”i'STme;diate-ly 'to •Impl'ement'presently existing - '■ ■ 
policies and to insure the rights of the Green v. Connally 
plaintiff class. In Mississippi, many schools begin their 
school year in August, -and it is important that immediate _ 
action be taken prior to the opening of these schools to^in­
sure that whatever action IRS may ultimately take regarding 
the eligibility of these schools will be effective.

I am enclosing copies of the decision and order recently 
handed down in the Nonfood case.

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

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

Yours very truly, 

■ Frank R. Parker

FRP:eg

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

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

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

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



« ur
A n o e r s o n , Ba n k s , N i c h o l s &  l e v e n t h a l

A tto rn e y s  a t L a w
S 3 8 V« NORTH FAR1SH  STREET 

JACKSON. MlSStBBIRRI 3 9 2 0 2

REUBEN V. ANDERSON 
FRED U  BANKS, JR . 
JO HN A. NICHOLS 
MELVYN R. LEVENTHAL 
NAUSEAS STEWART

April 19, 1974
post arrtce drawer 29a
AREA CODE 601 9-4.0-7301

Mr. Donald Alexander 
Goinmisiiontr of Internal Revenue 
United States Internal Revenue 

Service
Washington, D. G. 20224
B.P! Green v. Conallv & Norwood v. Harrison,

37 r o  m  T & m

Tax exemption for Mississippi 
segregationist academies

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

1. a copy of the certification and background in­
formation form completed by the Academy in_response to Judge 
Ready's order on remand In Norwood v. Harrison. It demon- 
strates that the school is all white both as ̂ uo students and 
faculty, and was formed and enlarged at^critical^moments in 
the history of public school desegregation in̂  Indianola.
This form was filed with the Mississippi Textbook Board and 
the Academy certified as eligible for textbook assistance. 
Thereafter, I filed in the district court, in behalf or plain­
tiffs, a motion to deny textbook assistance. Upon the filing 
of objections the Indianola Academy withdrew Its' request for 
textbook assistance and returned its inventory to state de­
positories.

2. A copy of page 18 of my Norwood brief in the 
Supreme Court. This excerpt provides a capsule history of 
desegregation events in Indianola and the role of the Academ\ 
in frustrating public school desegregation.
Notwithstanding the overwhelming evidence that the Indianola 
Academy is a segregationist institution your agency has de­
termined to approve it for tax-exempt status. This has been

EXHIBIT 3



Mr ̂ D o n a ld  -Alexander- .. - v ; .
' April 19, 1974, V . '

•. • Page 2 -' .
C''-r •• . - ’•

done notwithstanding the clear language of Green establish­
ing a "badge of doubt" for Mississippi academxes.formed in 
the wake of public school desegregation. Under the Green 
order your agency is required to examine the racial composi 
tion of an academy's student body, applicants for admission 
and faculty and administrative staff which information was 
found by the Court to be "material in order for the Service 
to be in an effective position to determine whether the 
school has actually established a policy of nondiscrimina­
tion," Green v. Connally, 300 F. Supp. 1150, 1180. It ap­
pears that your agency has given such statistical informa­
tion little weight and has relied instead upon the mere 
adoption of an open admissions policy and its routine pub­
lication in a local newspaper.
I remind you that the Indianola Academy is but one example 
in a category of schools approved by your agency and is re 
viewed above to illuminate the issues not exhaust the sub­
ject.
I look forward to discussions with.you and representatives 
of the Green plaintiffs.- . •

MRL:msc■ 
Enclosures
cc: J. Harold Flannery, Esquire

J. Stanley Pottinger, Esquire 
Brian K. Landsberg, Esquire 
Frank R. Parker, Esquire

f'P.S. Of course, the Indianola Academy is a member of t..<= 
Mississippi Private School Association and the Academy 
Athletic Conference. Not a single black person is involved 
in any activity or program of these organizations.
In addition, on August 20,, 1970, an article in the local 
newspaper,of Indianola informed us that the Indianoia 
Academy football team "would climax their 1970 football 
schedule in a post season game. . . with the [injfamous 
Prince Edward Academy of Farmville, Virginia." The Academy 
principal was then quoted as follows:

- -



Mr. Donald Alexander
.Page 3

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

f

-



18

rollments of 597 and 426 white students respectively- 
tually the entire white student population of the 
100I district. (Henderson Deposition, Exhibit 9; Chart, 
terdependence of Public School Desegregation and 
rrmation and Growth of Private Academies; Nowell 
jposition, pp. 5-6; Home Deposition, p. 5.) The Amite 
>unty Private School houses grade one in the local 
ormon Church, grades two and three in the Methodist 
d Presbyterian Churches, grades four and five in the 
)ld Baptist Parsonage,” and grades seven through 12 in 
e Baptist Church.

5. lndianola Municipal Separate School District

lndianola Academy, serving grades 1-2 and enrolling 79 
ipils, opened in September, 1965 concurrently with 
tegration of grades 1-4 of the public schools under 
eedom of choice. As additional grades of the public 
hools were desegregated the academy added grades to 
5 curriculum and students to its rolls so that by 
;ptember, 1969, it housed 578 students in grades 1-12.
During the first semester of the 1969-70 school year 

ie public school district enrolled 991 white students, 
owever, in February, 1970, the district was required to 
iplement a terminal plan of pupil assignment pursuant
> Green and Alexander; and at that precise moment all 
hite students and 30 white teachers of the district 
ithdrew to the security of the segregated lndianola 
cademy Accordingly, the lndianola Academy s enroll- 
ient surged from 578 white students in December, 1969
> 1,504 such students by February 9, 1970, (Cain 
eposition, pp. 5. 9; Floyd Deposition, p. 13; Henderson 
eposition, Exhibit 9; Chart, Interdependence of Public 
chool D e s e g r e g a t i o n  and the Growth of Private 
cademics.)

✓

19

6. Grenada Municipal Separate School District

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

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

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

HI.
T H E  S T A T E ’ S  T E X T B O O K  P R O G R A M  

A. The Program Generally

Sections 6634-6659.5 of the Miss. Code of 1942 
(Appendix B, Jurisdictional Statement) provide the 
framework for the selection, purchase and distribution of



.................„ 
....

. . .,.„.
..
. 

...
.

— .jl

•- 4

EXHIBIT "A"-

MISSISSIPPI TEXT300K PURCHASIWG BOARD 
CERTIFICATION AMO BACKGROUND INFORMATION FORM

SAME OF PRIVATE SCHOOL: Indianola Academy

2. ADDRESS (in clude countv) : Highway 82 East, Indianola, Sunflower County,
Ml Si ! SSI up ! 18751

3- NAME AND TITLE OF OFFICIAL
COMPLETING FORM: J .  A, Ely, J r . ,  President, Indianola Educational____________ Foundation, Inc.

4„ GRADES PRESENTLY SERVED BY SCHOOL: 1 -12___________________

5. DATE PRIVATE. SCHOOL OPENED FOR. THE 
FIRST TIME AND GRADES SERVED UPON 
OPENING: September, 1965 Grades 1 & 2

6.
7.

3 -  S 1966
DATE ADDITIONAL GRADES WERE ADDED (if any) : 6,~ 9 1967• iGtn yr. 1963"
ENROLLMENT AND FACULTY 3Y RACE:

Students

11 & 12 1969

Professional
Staff

White

70
Black

0

White
4

Black
0

612 0 32 0

1504 0 86 0
1221 0 62 0

1221 0 62 0

1024 0 51 0

1004 0 59 Q
965 0 55 0

Upon. Opening-

September 1969

February 1970

September 1970

February 1971

September 1971

September 1972

September 1973 
(projected)

'3a, STATE WHETHER STUDENTS ATTENDING SCHOOL ARE IDENTIFIED BY 
RELIGION BY SCHOOL RECORDS: No__________________________

i>. if yes, state the religion catered to by the school: n/a

C„ If yes, state the number of students, by religion, enrolled in 
the school in September 1972: n/a __________________

d,. If yes, 3tate the number of faculty members, by religion,
employed by the school in September 1972: n/a______________

9, IS THE SCHOOL PRESENTLY RECOGNIZED AS EXEMPT FROM FEDERAL 
INCOME TAXES? YES _*____ NO _______

If yes, state the date on which said exemption was approved 
or granted: September 2. 1964 *_______________________ _______

-iai-
p~r<lê&̂sSiwas."’



#.v!
EK
H

■£pt~A;- ..bv"■ ̂  • ;*
UJ. COES-1HE sent® MAINTAIN EDUCATIONAL S T ^ A R D S  ESTABLISH EH 
" • Kr' THE STATE DEPART4E^brr,’DF EDUCATION?

SS?
-• ’ ■’; ?'!- *-v C'SfT *" " ■ .v * . .. ’jic. *'. ? "’ , '• - * “ ' . • _

‘.V-V’' W  ••' *..*•;' . srnnoL?- «0"".- ' ’- —— ■■ '• -.■■■-— " .. — '— "' •-,
_  /  ' !~ P  * ' • V  V • ;.- .< IS yia; state .the.'number, of such scholarships, offered, .during .

^'^!̂ - ^ 0 tLSn^7 T-'si^akA yea^'tpd j. a); ..• whi-te-:students ,-, ,,,.,,,-i-—.— ..,, .

f
; "I
-~r;t-4i" -■ >. _

.- & ■?T•-•■''.'-jii' ~'r<  ̂• f s*r5*s-'» -̂r. -S 
; • ' • f ■ $s

- {.

12. ARE SCHOLARSHIPS AWARDED BY PRIVATE INDIVIDUALS TO STUDENTS 
OF YOUR SaiOOL? YES ____ _ NO'_X---—
If. yeS, state the number of students by race who obtained 
such scholarship assistance during the 1972-73 school year, 
a) black students ____________s whlte students ----

No13. HAS ANY TUITION DUE THE SCHOOL BEEN WAIVED?

14.

If yes. then state the number of students, by race, granted 
such waiver during- the 1972-73 school year: a) white
students n/a . . ...____ - and b) black students --------- -
ARE ANY BLACK STUDENTS ENROLLED AT YOUR SCHOOL MEMBERS OF 
ANY ATHLETIC TEAM(S) SPONSORED 3Y YOUR SCHOOL? --l£--------
If yes, state the number of such students for the 1972-73 
school year "/.a-------

15a. DOES THE SCHOOL HAVE A WRITTEN AFFIRMATIVE POLICY OF ADMITTING 
STUDENTS IRRESPECTIVE OF RACE?-----f.S .............. —------
If yes, attach a copy of that policy and state the date of its 
adoption by the governing board or the school.  ILL--— ------

b. Has the-school publicized this policy in a manner that is
intended-to-and.'has; been reasonably effective in bringing .
■it to'the attention'of persons df-student.age (and their 
families) who are of minority groups, including all nan-
whites? Yes___ . If yes, attach copies of all notices
in all newspapers, brochures, catalogues or printed 
advertisements appearing or prepared at the time tne scnoci 
was first opened and during the past school year.

c. Has any member of the school's governing board, administrators 
or faculty taken any action or made any statement qualxj.y^ g 
or negating the school’s stated policy of open admissions?

Jia___ _ _____ _____ ______________________ _ ’
IS* STATE THE NAMES AND ADDRESSES AND RACE OF THE SCHOOL S:

a) Incorporators;

J .  A. Elv. J r . .  R.F.P., Shaw. Miss. -----

I .:' j Paul L o tt .  J. C. Robertson, Opie R. L i t t l e ,  J r . ,  W. W. Gresham, J r

■ | .1 y MrPhprson. Georae H. L ip e ,  Louis L. Incold, David Rosentha i_,

I
| a l l  o f  Indianola. John R. Early, .then of IndianoU* nnw West P o int
I

Miss. All are members of the white race.----------------
3

- 2 -

—  <ŝ 2 J  *■'



3

ii-.-. Jk ■;:j'.ist* • ••■■ *
ii*v (

•.' Same • * ’ ... • •; .-'' : •
. • r.' *• ..

' 'v--. -Y '• V •
• ■ ■■■ - r-- ■ - •• • ? » . . . . . .  Jlv. >. -V- “->*• • ' .'.fc
’ 1 • —V*v..»r»-v ,V..V V “l >>»;” ̂».-V

cj Board Members:
L i s t  a t t a c h e d

.. ' -‘HA

17. STATE THE NAMES OF INDIVIDUALS, CORPORATIONS OR ORGANIZATIONS 
ViKC (WHICH) HAVE CONTRIBUTED LAND OR BUILDINGS TO THE SCHOOL*

Emily S. Johnson and V. A. Johnson contributed the land.______

Ho buildings were contributed.

■' IS. 'STATE WHETHER ANY INDIVIDUAL, CORPORATION-'OR ORGANIZATION"
LISTED IN ANSWER. TO 16 and' 17 HAS ATTEMPTED TO INFLUENCE THE 
SCHOOL TO MAINTAIN RACIALLY SEGREGATED EDUCATIONAL PROGRAMS, 

No _____________

If yes, state the name of such individual, corporation or 
corporation. ..... ...............................  _ .-

19. STATE WHETHER ANY BOARD MEMBER, OFFICER OR ADMINISTRATOR OF 
THE SCHOOL IS PRESENTLY A MEMBER OF ANY ORGANIZATION ESPOUS­
ING OR ADVOCATING WHITE RACIAL SUPREMACY OR SUPERIORITY.

Ho

If yes. list such individual:



i m  * - -d

the foregoing'' information is. true and accurate to the hest of ̂ Y' j

•affidavit is 4'xeoited^a»'ar<^di^»k 'fdt'Supplying -Mississippi

State-owned textbooks to the above named private school, and -hat 

full and accurate answers are required by order of the United 

States District Court for the Northern District of Mississippi 

dated- July 25, 1973, in civil action No. WC 70-53-K, styled 

Norwood, at al, v. Harrison, et al, on the docket of the court.

This, 10th day o f _______August--------------- •» 1973------ *

U- A. Ely, J r .  \
Title: President, Indianola Educational

Sworn and subscribed to 
before me this /r'ktday197S-' .

Foundation, inc. 
for

Indianola Academy
O f  A jju‘ (Name of School)

Notary Public 

My Commission Expires':

(SEAL)



The governing body of Indianola Academy, at its regular mectin g, 
Tuesday, affirmed the Academy's racially non-discriminatory policy as to 
students and that it admits the students of any race to all the rights, 
privileges, programs and activities generally accorded or made available 
to students accepted at the Academy; that its policy is to make no dis­
crimination on the basis of race in administration of educational, policies, 
application for admission, and athletic and extra- curricular programs.

I certify the above and foregoing to be an actual, correct and literal 
excerpt of the minutes of Xndianola Educiional Foundation, Inc. , of 
its regular September ?» 1971, meeting. *
Witness m y  signature this the 8th day of August, A. D., 1973.

7 RICHARD M. ALLEN, Secretary

I

- A l e J -



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

I
!

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

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

' and gift tax purposes.under the provisions of section 2055, 2106 and 2o2z oi the- uode.I
I
!
!
[
l

f
'

ou are not liable for the taxes imposed under the Federal Insurance Contributions Act (social 
scurity taxes) unless you file a waiver of exemption certificate as provided in such Act. You are 
ot liable for the tax imposed under the Federal Unemployment Fax Act. Inquiries apout .he 
aiver of exemption certificate for social security taxes should be addressed to this office.

This is a determination letter.

Very truly yours,

l. ^ . t7 > W
Jj• G» M&rtin.* Jx• 
District Director

FORM 295-4 !RCV. 9-«l)
3FO » U 4 > 3



' f.aata • u‘1 aft *•* h**1» h . .• AAV 4
hor-r:r nrt.w* V..-

lOlMTU K .4 TJ0 H ! ...... .•►■.' >• -•■ j- • ■••-'

Irviianola. Kducational Foundation, Inc. 

305 5.iat ut*eah«r* St*

Indlanola, Kiaa*

, c .  , , I ,  , , 1  f
, -  _ , i :  ; .• i - . c r 1 l . »  •*,* l i t i n s !  (■ ■ «* ««.*  ' « •  - t  0•'icl't-h- )' wi-nr * * .,’v . e„,s ,t •! t Mte. «*(*■••«» *« ̂ r " '. ii’1 '-11 e*1* .1-0 , on* **"*■•' *t*«n.•>*•.•• • •» "*••••' 1 * ' v ’ _ „ T.y .fated in** . ». octeW"***’'-*
* ^  u  .  „  f t . ,  L h U .  <•( r . e l . ' f  In* ‘ '

„ ~  ~  -..... ....... - - -
ft,* *.•!.«« •*' / rloc* ,l ■”“5 Itdi.ft Director Re*«*‘J*

¥»!•» M* a•«*»•e - •.» •

!M 5 T K U l T I0 N S

?1 ,,s l* 4 M « ’*? F-*?ry s . 'f 'o n  who haa r«<  (•. <r rt.».,a  jy  secured  a »  » . ie « t ;l? , *1 (.>«i nutnur* *,* t *«, , < »! ;.»* *
r** «•*.{.J . r r *  *t y n  :rn*4«te;i ><* im»t «  an id e n tif ic a t io n  number fo r m c'tia r.m  .1 arsv le tu .n . .«*<e**e»t o r  other

‘ Htiv .oar* a f r U c e lH  F * »n  i.ie n ttf . r  a fu -n  mw*thr» < H*mM .nr f ife d . re ** ru le r  a  of rfcr num u-r n( <^*rfa»e«i T h u  i «
rf ; r  e « -*• ?r.. *i,e *•*»« • * vt f  *-<.t r  ♦ ut..«er i»e  « r  n v * r <*»* .««*» or trade n*ree« h a th  c rrj> o «a « irn  o f «n  * m { *ie>i fttynp

r  ?rr*/r ' a»».' tr •» 1. ( : .#  a %*?»*?«♦* • i^ i«< a .4on. f. a i< u «iitra «  <• ani 1 or t»ar*sJr'rp ,j »iui f h -  n « r  -y*n*f J*,#*
r*t»t H*n** ».« o*» *"*»♦.*«•? ,ne iK .u ! i l  . *• aar rh r to r a i i l ic a « io «  AM i«6«r «»asg«e*4 o chr pc. r » o « j  o « a r r ,  Ui< .ituar fit*  m

• f t l u n u n  f . f.:: - o - t  f i r  »  n * »  iJ m n f ic a u s m  aar-tl-er.

•m.R! ! ?!fs n i l  \ I if »\  1»* '•i •! n . t.ii*  fK r M <; P ia fr jc t  H irfc io *  o i latem ai R t w iu c  r i l i i  « i  *n ih t  f r . i r  « i  »*•

fnnnr •• a* »•
1 VHfV■■• F'. ’N r'f h 'I r l'y (*‘ Hv fhnar atIh* p#f on c* thr rrrmtFt rf*r a/trr ih<*

1. i rn . * i . « r  u*i f ^ w J i c a u o f l  mimiiei to  u r  t:tciu>!e<l id  return , ttatem* hr, ,
tie >m -rhtch

iiot ! ; • • • f *• » : u»r. • *. * t»r j n 1 »r*b««4.k j» s* nt t’ ,ie ink A ll •«***f t »  sF m iio *«r r/ f .r « -r t ( le f l .« p. n ife»i j,: t r o .f  *«ti» l.a .ln  >mt •••n in

? r . r e t  , • fre.r < •- : r j -  r . « . » r  i t  r  a. ( » . ;* m  «m l rn te t i »  ft • n -  the tra .)« name tF * nr a .lc fte  i For b ra.ae**  
p . i f o a r r  f o r  f  i -   ̂ 1 l ih t .  lif t -.o a f  .>*n<r, o p e ra te ; a r t i r a v r t n r  hole* .h r  rrad « rtantr wf H »*i*MUiiir« iottn T • .re*" % „ »;*i be cnincrJ «n Ur,a I and “Bear êtîutant" ,0 ften* ̂

M O T T ; -  IF t fe lte d  ttacure ** -u it o* I r r  ot v irr re e . 1 n**ter. oral o» e t r r te r  *gt e em et». * ,{ »  de c ia ra ti-jn  of tn ia t . »r < ther (e*al 
f ' t n i e u t f  f? :ter in  (,fn> I the ft .,, nm   ̂ * fcn*u«retj thereunder. If  a corporari-m  enter ir. Itf»n  1 the rn tin  rate n a--.tr u  
*et forth (• i« i  ch arte r nr t*ltef lej.^1 j,./ 1 ft*» i * f o -  l uy the O e « e n n «  111 ire «u «* g  it Tn the c i r t  f a t i- je t . ihe ti me af 
'h e  tf  • « eatare ^fmold he m ! t  » . «  i*. a n - the name of the tiu a tee  10 hem '  »he c a je  0 / an eata e of • u e re « ie »t , 
in* ..i*ent etc . the n«nte <•< u ie  r » t .< e  , >t he entered in Item 1 ami the not e «.» M .- « . jn im a tra tu t ot oth-* f td iir ia re  m
Item ;  If  »he 'm e  «*-,<■ 1* .nu**i«ii*  U*.-.. :i ihunfd  he shown m a t ta trm t .1 a f t .c - - 'v i  van* 1.>m. lr> a u ri * «e, » at oet
* « »*<o» »/ »K# f»*e»* iiiu u M  ie» a*i. o i« « i  fo a-rut* o f thta fan* and entered  ua Uem *



s t a t e  o f  Mississrrrt
COUNTY OF SUNFLOWER

,  '~n <s 7 a ^  ...Personally appeared before me, a ......................................-■■■■y.......^ .......

In and for said County and State, )£•. of
Enterprise-Tocsin, a newspaper published in salt! City, County and State, who upon

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

said newspaper .....J ..........,  consecutive weeks, as follows:
" No-V !o ...

s a |  n
Day of

...l.....  Day of .....

.....  Day of .....

,.:l...... Day of .....

...... Day of .....

.Va,...... Day of .....

.J y *  Z ..... Vot, .

is.....:.
19...........

1 9 ....................

, 1 9 ....................

, 1 9 ....................

Vol.............  No........ .....

Vol..
voi......

Vol. ......

Vol. .......
)

No..........

No. -------

No.............

, No....
U

Cr
s i

I

Academy affirms racially 

non-discriminatory policy

Signed:
r fnrther certify that I have examined the several copies of the 

Enlerp ^ l T l S  abovert referred to, and find that the said notice has been
published as stated.

■ ; Subscribed and sworn to, before me, this day of 19 .

My Ccavnission Expires July

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

Cost: $............ - ¥
13. 1975

made available to students ac­
cepted at the Academy.

The board also affirmed its 
policy is to make no discri­
mination on the basis of race 
in administration of education 
al policies, application for ad­
mission, and athletic and extra 
curricular programs.



V A- .BOARD- OP -’DIRECTORS ■* ■ ■ ,
FHE [NOIANQLA EDUCAT IONAL FOUNDATION’, INC.

j;" at"Ely,"of•„ -Pres?. / ..Shaw;, Miss. 38773 .
Turner Arant Blaine, Miss.
George Baird Inverness, Miss.
Tom 8arron Woodbine Dr., Indianola, Ms.
Mrs. C. E. Dunlap 1410 Maple, Cleveland, Ms.38732
Mrs. Hugh Gayden Fisher Rt. 2, Box 23, Indianola
Mrs. Leslie Fletcher E. Percy, Indianola
W. W. Gresham, Jr. Gresham Petroleum Co., Indianola
Max Hodges Rt. 2, Box 135, Indianola
John Hough, Jr. 
Louis Ingold ' Seymour Johnson

501 Alexander, Indianola 
210 E. Percy, Indianola 8 Seymour Dr., Indianola

Wayne King ■Inverness, Miss.
George Lipe Rt. 2, Box 55, Indianola
John McPherson Gresham Service Station,.Indianola
N. H. McMath P.O.Box 195, Isold, Ms. 38754
Noel Morgan Box 38, Sunflower, Ms. 38778
T. A. Murtagh Moorhead, Ms. 38751
Henry Paris . ...Lewis Grocer Co., Indianola
Mrs. W. M. Pitts 202 E. Parkway, Indianola
Scott Poindexter Inverness, Ms.
James Robertson Holly Ridge, Miss.
Bobby Shepard 310 Clover Dr., Indianola
Mrs. Guy Robinson- ■ 603 E. Percy, Indianola
Bill Toler Inverness, Miss.

All are members of the white race.
-  3a j -



Dear Mr. Parker*

fn ternat R e v e n u e  S e r v i c e
'wv. .ill Li Li — / > j * >j ■— '' -■ * -1

D*"i r  AU G 1974 I " . t

------  ------- - c p j X jS jP __

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

Under Law
233 North Parish Street
Jackson, Mississippi 39201 ^

“•S

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

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

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

the individual schools involved, va assure, you that your information is 

being considered. Vie appreciate your continued interest in the private 

school area.

Sincerely yours, ^

(Signed) S.3_.__Wolfe >. 
S. 3. Wolfe
Director, Audit Division

EXHIBIT 4

- S i d -

tv
 ' 

* 
>
 

' 
»■ 

I v
y
.-<
? 

l:
rv
'7



April 15, 1974

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

Dear Mr. Alexander:

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

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

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

We would like to meet at your convenience during the period
.April 30 through May 9, 1974* and I shall appreciate hearing from you 
m sufficient time for us to coordinate our arrangements.

EXHIBIT' 5
- 3 & J -



Mr. Donate Alexander 
April 15, 1974 
Parre Two '

Thank you for your consideration.

Very truly yours,

J IIF  :vmt

cc: Honor able J. Stanley Pottingcr 
Honorr.bie Scott P. Crumpton 
Brian K. Landsbory, Esq. 
Mslvyu H. Leventhal, Esq. 
Erariv R. Parker, Esq*

J. Harold Flannery 
Director

' b ' b l -



com m issioner
MAY 171974

Harold Flannery, Director-
•yers' .Committee for Civil Rights 

I Under Law 
■73 3 Fifteenth Street, Suite 520
Washington, D, C. 
|Dear -Ur. Flannery:

20005

concerning the
ti.3

Thank you for your letter of April 15, 1974,
{possible impact, of -tire decision in Rcrwood v. Ilarri:--- .. .
6.S. 455 on the Internal Revenue Service's certification standards 
and auditing procedures relating to tax exemptions for privatef schools. As Mr. Pottinger and I told you in our telephone con­
versation, I met Monday with Assistant Attorneys General Crampton 
and Pottinger to discuss the

Frank Parker's letter of Ma
natters raised by your letter and by 

ch 11, 1974, on this same subject.

The purpose of this letter is to provide written confirmation“ “ . . - - -t • -t . . . - jo * t nwhat r told you. ’irst v;e have already advised our field
office to■look into these matters. The Civil 
the Department of Justice will cooperate with 
Service in such matters wherever appropriate.

Rights Division of 
the Internal Revenue 
We are re-evaluating

jtxie standards for tax exemptions in light of the Norwood decision 
vnd our experience under Rev. Proc. 72-54, 1972-2, C.B. 334.

in that re-evaluation, 
to what changes 

Rights 
views.

na Mr. Pottinger .11 assistiJr. Crampton
land we would be pleased to have your views as 
may be warranted. Appropriate personnel from the Civil 
Division will be in touch with you soon to obtain such

Sincerely yours,

;~vC -j- ■—*s_
Donald C. Alexander

E X H IB IT  6

- 3 ^ -



:al
b - d J

zzo
LA WY E R S '  COMMI T T E E
FOR CIVIL RI GHTS  UNDE R LAW

S O U T H  P A R I S H  S T R E E T  . J A C K S O N .  M I S S I S S I P P I  3 9 2 0 !  • P H O N E  ( S O I )  9 4 3 . 3 4 0 3

January 21, 1976

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

Re: Green v. Connaliv
Dear Mr. /.'hi takar:

On. December 13, 19 74 , we met with you and other officials of 
the Internal Revenue Service 'regarding what we consider 
laxity in IRS enforcement cf the decree n  
Court in the above-styled case. In parti< 
that in proceedings in District Courts in
segregated private schools were being cut off from state aid a:

: we consider to be
.dared by the Dis tr
iar, we were cor.ce
.he South raciallv

assistance (tuition crrants, tt ) O G iC S  f :c.) iuse or :hc
discriminatory admissions policies, while at the
s am.e

We 'soecificalIv­
in MlSS1SSLCD 
Court in Morwoo 
to have d'

vmi
v ,

ntinuing to enjoy Fed*
ibil *• ■*“ *. r - 0 C ccntributi<

rough u ro your a tte
ei ther had been detev* y*’SO Civi1 Mc ■ W'

eral tax benefits (tax 
ons) under IRS rulings.

■_7 n
n -l u r 
ed by— C 7> — V  
U - A

Livate scncols 
the District 
CJ.D. Miss . ) ,7 m i ■*  ̂n mrrimmatcry amissions policies o r __  ______ _ ____

ineligibility for stare textbooks under the Mormoi guidelines by 
returning their textbooks or by failing to reapply for 
list of those-- schools is enclosed.

:hem. A

We would like to know (1) what steos the Internal Revenue
Service has taken, to conform its policicw. am enror
o tne guiceimes and requirements anr.ouncea by the Distric
m  Mo: m o d ,
the advance
terminate tne rax exerr.p 
enclosed attachment?

nd (2) what steps, if any, has IRS 
ssurance cf.deductibiiitv of contra

3. CU 3 Gf the 10
:aken to suspend 
< u. C .lo n s to o r v.o 
iis ced on m e

Ohis matter has dragged on for several years without
final resolution aecut which we have been informec Becausf

.cl
- 3 5 9 '



Meade Whitaker, Esquire 
January 21, 1976 
Page 2

is an urgent natter deserving expedited consideration, I t 
appreciate hearing from you within 20 days of your raceip 
letter „

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

Yours very truly,

Frank R. Parker 
Chief Counsel

FRP:1jh 
Enclosure
bcc: Paul R. Dimond

Larry Newton

vould 
t of this

tion of



■Segregated Private School

'Columbia Ac a do nr/
P. 0. Box 189,
Co 1 umb i a , iris - 39429

Norwood Action . ,
Admitted ineligibility ir. Nor>~cod 
by failing to apply for state 
textbooks under new nan-disarm: nx 
reauirements; returned state taxti

Copiah Educ- Fdtn. , I.
317 Gallatin Stree t
Hazlehurs t, Ms. 390 3 3

Deer Creek-Eci i_io a i o n a
Hallandale, is •. ic. / hO

Inc. Same

Same

Clinton Educ. Fdtn., Inc.
106 E. Cynthia Road 
Clinton, Ms. 39 2.0 5
Marshall County Educ. Fdtn., Inc. 
Holly Springs, Ms. 38635
Educational Foundation, Inc.
P. 0. Box 65 
Lucedale, Ms. 39452
Indianola Educ. Fdtn., Inc.
305 East'Gresham St.
Indianola, Ms. 35751

Same (may be defunct)

S clITtS

Same

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

Lula Rich Educ. Fdtn., Inc. Admi t te d in e 1 i g
?. 0. Box 333 
Lula, Ms, 33544

apply; returned

North Delta School, Inc. Entered no conb
P. 0. Box D textbook eligib
Crenshaw, Ms. 33621 and after evide: 

No twoo d, and re 
textbooks by le

Quitman County Educ. Fdtn., Inc. After challenge
■ P. G . Box 5 5 Norwood, held t
* la rxs , Ms. 3-8 5 4 a di s c r imin a to my
a/k/a County Day School and ordered to 

by opinion and <

■ m r- ms r-,

'1-2 3.
- -. • n

:urnea sea

o n FJ *. *-

3  n l -



Intern.'.'!' ; *vonue 3crvica 
Washington, p.C. 20224•

*4O 1 Mi J I

!

Fee s «?s

Mr. Frank R. Parker
Lawyers' Committee for Civil Rights Under Law 
233 North Parish Street 
Jackson, Mississippi 39201
Dear Mr. Parker:

In reply to your January 21 letter concerning the 
Service's private school program, we are providing the 
following information. As we informed you in our meeting 
on December 13, 1974, the Service has been giving priority 
to a review of the entire private school program. We are 
still working on certain portions of it, but we believe that 
we have already strengthened the program with the publication 
of Revenue Ruling 75-231 on church-related schools and 
Revenue Procedure 75-50 with guidelines and recordkeeping 
requirements for private schools. Copies are enclosed.
For a fuller discussion of our progress, we are also enclosin 
a copy of a recent letter we sent to the U. S. Commission 
on Civil Rights in which we provided updated information on 
our private school program.

We . 
to confo 
Revenue 
comments 
included 
will be 
availabi

are finalizing private school examination guidelines 
rm our audit instructions to the requirements of 
Procedure 75-50. We will, of course, consider any 
or suggestions for'items you believe should be 
in these guidelines. As the examination guidelines 

part of the Internal Revenue Manual, they will be 
e for public inspection when adopted.

You asked for a status report on ten specific Mississipp 
private schools. Columbia Academy failed to establish tax- 
exempt status. Clinton Educational Foundation, Inc., has 
been terminated because it ceased operations. We have deter­
mined that there is no organization called Educational 
Foundation, Inc., of Lucedale; we had such an entry on our

Organization Master File, butExempt
.iry j-OiT uuv

Foundation, Inc., is exempt,
entry for another organization. Marshall County Educational

was an erroneous
•J

E x m r 3
zzd-



Mr, Frank R. Parker

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

Sincerely

MEADE WHITAKER 
Chief Counsel

Enclosures•(3)
Rev. Proc. 75-50
Rev. Rul. 75-231 
Roy. Prnr. 7 S - S f)ev. Proc. /D-D
1/5/76 letter' to U. S. Commission 

on Civil Rights

3 < W



cctian 501
I

of business or pnnctp.il office of

roruntiinuioti. Fee sections y M  >*)
and 1 .5 0 1 ( a ) * !  of the^reguluuons.

r:s C F R

- Pc & Z o ‘rr*r.uncls.
B T r ~ e x l t » n  0 1  }
' ( A h ^  S e c t i o n  i ' 0 ,

^C haritab le  coiUribi'tion-s; church  
opera ted  schoo ls with d iscrtrn jna- 
lory policies. O rganizations, incua*  
in?  ch u rch es , th a t co n d u c t scnuois 
.-•idi a pcficy of refusing  tc  ac ce p t 
children from certa in  redo ! an d  
ethnic groups will n o t recog­
nized s s  tax-exem pt e n a rn ^ s  u ^
d s r  sec tions 1 /0  ^ n d  5QU c a - )
the Code.
Rev. Rul. 75-2311

Advice has been requested whether 
the organizations described below, 
which oti~.cr.visc qualify for mu mption. 
from Feci err.! income tax uncer sec­
tion 501(c)(3) of the internal Keve- 
nuc Code of 1951. arc opermod ex­
clusively for charitable purposes.

Situation 1.x was organized as a separate 
corporate entity under mu ruisp.-e^ 
of an organization qunuiyiruU«l A**''-*fcV* l • f

church for the express P'"'P°‘C cu
operating a school for the children
of the local community m whicn me
church regularly conducts sretatmn
reg io n s  services. The governing body
of the church is a council whose

are selected from the members, arc „ . , n ru
church’s congregation. The

• selected the original members ot A s
board of directors and mnimams dU
control over all aspects ot us op-rat-

S  and operates a school 
program that correspond with
public school program ^ ‘includes 
grades. Although us p.c. r-.m 
x 10-minute religious service at 
start of each school may and .

~ Z * d  ^  T1R.1373, dated May 
22, 1075.
153

devotion of o ther amounts of time to 
religious themes and saujocw, 1 *c 
school complies with State law re­
quirements for public cduca.ton. 
school has a  policy of refusing to 
m-ccpt any children from certain 
racial and  ethnic groups.

Situation 2.
\ n  organization qualifying as a 

church, having x full complement of 
active religious functions, dtrccdy 
sunervbcs and contro.s, as part ot us 
ewe rail operations, Y school. /  is no 
separately incorporated. F’s ° f  
do not differ in any material respect
from those carried on oy :\ m -  • 
ib n  I, including, as a matter of xMoeX 
policy, the exclusion of stmieno from 
certain racial arid ethnic groups.

Situation 3.
Z  an organization qualifying as a 

church, operates a school identical «|
Y  in Situation 2. ^  a.so orgamz- 
controls as a separate corporate entuy 
a school identical to X  m • ~ua ion •
Z assorts t h a t  tlie-policy ouscrvrd oy
die tvvo schools of excluding children 
from certain racial and ethnic group.
. • i \ . .  -Ur* •{•nets c l  v a c  rcii-15 icquircu U> *
cion it embraces- ,

Section 170 of the Code prov.ucs, 
in part, that there shah oc ai.ovm- 
a5 a deduction any char.mnle con-
.m ission, »
(C) ,  payment of whicn is ma-w H '"  
L  taxable year. Section l /0 (c )  pro­
vides, in pertinent part, dial a emu - 
table contribution means a c o . ^ u  
don or gift to or for me use of
Potation, . . o r —  -
fund, or foundation o^ .m i/eu  
operated exclusively for remp •-
s&msnWe, scientific. t e w .  ° r
cadonal purposes, or for me pm<- 
don of cruelty to children or animals.

Section 501 (c)(3 ) of die Code pro­
vides, among other things, tor nc 
exemption from Federal income tax 
of organizations “organized and

Tax Regulations specifics the r:q  nre- 
ments which an o r g e a t :  m 
meet to be “otgamzeu aim o ., m.d

for one more exempt
exclusively’’

P" S  i J O U H ( S ) - « - 0 ( * l  *
the regulations provides m at me t.n n
“charitable" is used »
rc ) t 3) of the Code m its » ■ " * ‘ 7

£$*■«**not to be construed as h-ut.icu >
” , ansus auisncnuion m « » >  * •
A  (3) „f wiser «  o m n p t p u tp -e s
& * m s *  W1 w i s h i n g  o r e s m  

of “charity as devoop d by 
iud icrl decisions. Such section, fur- 
5  “  provides thus such r u n  sssclsssis* 
advancement of education- ,

, :n i /cl 13’' - 1 (ill (a (it) or Section 1-bUl (c.i ^J/ v o  ‘ •
the regulations provincs a m ^
many or secondary sca-.o. si ... * 
regularly enrolled body c: 
attendance at a place w h.rc -..;e -  

-cadonal activities are r-guh. ■) -
ried on may qualify .or .x ,
an educational orgamziuion -
charactcr cnr.tcmplutcu ^  . ^ r ' V
501( c ) ( 3) of me e c u :  i ,  -  -
wise meets the .rccnurca-n.v

SCCtl0n* „ ,. „ ^ 71.2 C.P, 250,Rev. Kul. n - U ' i  - , , (V  ( t
m in-urnreting sccf.cn g
the Code, concludes 
rruion is ssos . P ' ; «  us
charUAbiC ‘ . , -
arc earned o*< » * COntmry
be rcasonab.y *-.a. p.u

.1! ••<-abI’s’ied F-demS pumu 
• •* * r 7. rtf  si ... 71-117,  rtb rig P*'4**poltcv. iv-v >ts...  ̂ f ,

. 55-..lion, at.' L.w. m - • ,
La-er judicial tt.-c.si'.-tu m —
'A-, r-.u ami. I'rwuu’us ? t

P etiur.- 
crimina-

puidK ■ 
ixprer-*.. 

rhcol a-

V11 -... , ,, - .
Civil Rights Act o. } - ■
there

*3
is a •c!l-c. :.ibush.x.

crated cxc’iusivvly for religious, cha
or educational purposes.... . r . 1. T ., r  r>

public policy against t.i 
don in education.^ wn 
private. Rev. x ’-.. 1
l io 'u is ,  t h e  r e :  o i  r . s..

; i f . .having a ran-.u.' 
policy xs to snide:

;ivr• I t ■’ •-* l I
m y ;

to be chan u *j
C O

t Y n  1.5W M  (3h C  “ := ! * “ «
law sense con tem phved  by seem



SaeUan 501

I
j |  l70 .ind 501 (c )(3 )  and. other rcic- 

va«t Federal statutes^ . ■ -••fifi .•' l". • •’
'-■Thir- cducaLUon.tr. programs s- corr- 

Iductcd biy -A* and Y  consist of ^secular 
...' subjects- of- the sa:mr sdqpc‘ and - type! 

ommorrly dealt .with, in .the ,public 
[schools or hi private schools that arc 
not religiously oriented. There is no

•basis for treating separately incorpo­
rated schools that, although church- 
related, tench secular subjects and 
generally comply with. State law re-

« quirerncnts for public education for 
the grades fo r which instruction is 
provided, any differently than private 

^ sch o o ls  that arc not church-affiliated, 
■A ccordingly, in Situation l ,  because 

X  fails to maintain a racially o r 
^Jtthn ically  nondiscrirninntory policy as 
|R .o  students, A' is not operated cxciti- 
^mfivcly for charitable purposes and does 

not, therefore, qualify as a charity 
gflfor Federal income tax deduction and 
Pfcncnipiion purposes under sections 170 

and 501(c)(3 ) of die Code. The dis­
qualification of'A ' will not affect the 

Jbtenipt status of the organization 
qualifying as a church solely as a 

Jesu it of the organization and control 
■pt A', as set forth in Situation 1, prior 
®o the effective date of the disqualifi­
cation.

■ Situation 2 differs from Situation 1 
"only in that Y is not separately incor-

I’aerated, and is directly supervised and 
Controlled within the same legal orga­
nization as the cluirch. A racially or 
ethnically discriminatory policy as to 

adonis is as contrary to Federal 
public policy under these circum­
stances as it is when the educational

I institution is separately incorporated, 
m analysis of the historical develop- 

Tent of this fundam ental expression 
of national policy reaffirms the con­

clusion that the form of the educa­
tional organization is not relevant for 
these purposes. Sea Norwood v. Harn- 
■r, -H3 U.S. 455 (1973), in which 

|he Supreme Court Held tiiat a state 
ni*y not provide free textbooks to a 

private school if th.eir availability 
■vouid have a “significant tendency to

facilitate, reinforce, and support pri- 
.■vote discrftjjTparibnT.; In  that ease idie 
Court made -ha exception far the 
schools that were not separate legal 

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

Situation 3 differs from Situation 1 
and 2 only irr that Z  asserts tiiat a 
tenet of tire religion which it embraces 
requires that the schools maintain a 
racially discriminatory policy as to 
students. It is. well-settled that a reli­
gious basis for an activity will not 
serve to preclude governmental inter­
ference with that activity, if it is 
otherwise clearly contrary to Federal 

’public policy. Thus, for example, the 
Supreme Court in Mormon Church 

United States, 136 U.S. ! (1090), 
upheld the constitutional validity of 
a series of Federal statutes that, among 
oilier things, had abrogated the cor­
porate charter previously granted to 
the members of a specific church by; 
a  special act of die territorial legisla­
ture of Utah and had directed the 
institution of judicial proceedings for 
a  complete winding up of its affairs, 
ail because of its persistent promotion 
and defense of polygamy in direct vio­
lation- of Federal statutory-law.

T iia t those responsible for a given 
course of conduct may sincerely be­
lieve that they have a religious duty 
to act in a certain m anner does not 
alter the situation. The First Amend­
ment, which provides in pan that 
Congress shall make no law prohibit­
ing the free exercise of religion, does

rncrc- religious beliefs and .'.pinions, 
bar governmental .interference, with, 
hu t ft .docs not affect the heal con­
sequences otherwise attending a given 
practice or action that is.not inherent­
ly religious. See !lcy;:n!ds United 
States, S3 U.S. i 45, 166-167 (ifw n ); 
Mitchell u. Pilgrim Uolir.es: Church 
Corporation, 210 F. 2d 879 (7th Clir. 
1954), cert, denied, 347 U.S 1013 
(1954) : U S . v. Craft, 423 F. 2d 329, 
333 (9th Car. 1970’! ; and I.insect' v. 
Millers Falls Co., 4-10 F. 2:1 14 (1st 
Cir. 1971).
• The important distinction between 

religious belief, on the one Stand, and 
the legal . consequences that may 
validly be attached to action induced 
by religious belief, on the outer, is 
well illustrated by one recent litv of 
eases interpreting the Federal drug 
laws. The courts have repeatedly re­
fused to engraft a religious exception 
on any criminal statute outlawing the 
transportation of heroin, marijuana,
and peyote into the United Si. ■.u'S,
notw:itlistanding an apparent jud
rccog ration tiiat a ff.VL'no ’ * nee.«scd
migh t since: e.v M :c V C  t.li: tj  t .. of
such drugs has a nron cr p!ac c r:r-
tain rdirious cere a: o'rues v * *»: -U nre
p rrscri’ocd in both the Koran and
Bitile.. See U.S. v . Sinrat::, *? !!i F.
895 (’5th Cir. 197 l )» and otacr cares
therein cited.

Accordingly, in Situ at:on 3 d-.cr
the separately incorporated scho; i nor 
Z  itself is operated exclusive:;, for 
charitable purports and neither <" afi- 
fics as a charity for Federal in.-nme 
tax deduction and exemption ru :; ,-.rs 
under sections DO and 501(e) (5, of 
the Code.

The conclusions readied in the 
Revenue Ruling would be the same if 
a convention or association of riuuvhes 
were substituted for the . iganizetfons 
qualifying as churches referred to in 
Situations 1, 2, and 3.

26 cm  1.501(c) C) - ; : Ori.mUsti.
an;ur.is.’d end ope: rued /•;» relic:
table, scientific, tc . ' ina  ; , i r  public tee-!';,
literary, or educational purpose , or for

15 0



I ill. Administrative,. Procedural,, and Miscellaneous
cTcS î'cnCQ'ritervN0v,v-153: 'wrsuidcnu Uw?s;norf^»!tfy. as-^.-or.-
jifl̂ fivc ■ksvsnrticr ~?AV '1375)1 /' ^anizMiotjVs«î tf-:ft̂ :h.-’i'cdcraf. in-- 
■ v ’ /  ' ------ Rev. Rui; 71-447, 1971-2-

I
ig fe ttv c  ixSvem acr v

Ij^Sttwide Auinorviy to .. 1 e a c 12 - * ■ 
■nflir;avicraa -.•efer,-CstS3ia,*Qd- ted,.

Pursuant to authority vestec/ir. the 
bauuissimicr of Internal Revenue by* 
t im iW Z ,  26 CFR 1.4112 arid Trees- 
l^ b c p a ru n e n t  O rder No. laO-eT, 
ic nationwide authority to determine 
g |  Intercompany and-intracommsanv 
jjp .fr r prices of foiei'-ru-produced 
rude oil and products refined there-

K , and /
The. acceptance of the.average 

ht rate assessment (A.F.R.A.) as 
intercompany/charge for shipping 

crude oil and

come tax.’
■ C.B. 230. • y. ;

;.';02 .A- ’school/ ihystt'shev,~,-atliriha-- 
lively bach thru it-.-has. adop.tcd- a. 
racially nondiscriminatory policy as 
to students that is made known to the 
tree era l public and that since the
adoption uf that. policy it has operated

IV/Cua
ipeedn-»-

IMjorcign-prcd)
^RLucts j

deJccntcd toHereby the Regional

m x  bona tide Tnanucr in accordance 
therewith.

.03’ internal Revenue Sendee ex­
perience ' with private schools has 
shown a  need for more specific guide­
lines to insure a uniform approach 
to the determination of whether a 
private school has a racially nondis- 
crim im torv policy as to student;.

-.04 This Revenue Procedure does 
not apply to public schools.

. same .meaning, it-.has- in .’section l ■ 0 ■ 
v'i-h')'('l)’.( Ad (iiV of die Code. • ’:
Se c. 4. G u!of.L!nf..s.

.01 Organizational rtijz:*cmcn!i. A 
school must include a statement m its 

"charter,- .fcytows/ o r' otlier"’goverriing 
instrument, or in a resolution of its 
governing l ady, that it uas a raciauy 
nondiscriminatory policy as to students 
and therefore does not uiscrunmate 
against applicants and students on tne 
basis of race, color, and national or 
ethnic origin.

.02 Statement 
school must include a statement re us 
racially noiKhscrnninatory policy as to 
students in a!! its brochures •' nd 
catalogues dealing with student ad­
missions, uiograms, and scholaisiups-

1 Policy. Kv'-ry

A statement substantially sun

niswongr, Southwest Region.
This delegation does, not extend to

,-s pendihg before the T, rated States 
f  Couc(, nor those witrtin the juris- 
S.on ct the Department of Justice.

lay net be rcbcic-

Sec. 2
.01

D'.nxtTroNS.
Rev. RuL 71-4-17 states the t a

the Notice described in subsection ; a) 
of section 4.03, infra, will be accept­
able for this purpose. Further, every 
school must include a reference to its

students means:

This authority
id. /

•Donald C.. Ai.oxAttnr.a,
.^Commissioner.

0 hv the Oir.cc of th;
iber G, <575:.•over

^published in the Psue 
RcePicr for November p|C65)

Federal Reenter 
a.m., and 

of 'he Federal 
7, 1975, 40 F.iv.

the school adir.iti the students of an 
to -ail the rishts. privilege-, proc.raans. an 
activities sv.-ncrr.ilv accorded or mice 
able to students at thit :c:i'“

.school riecs di'Crimtuii 
0/ race’ in adnuiustrauon ef 
policies, acmisMon* pot

as to racially r.or.discriminatorv prvhcvi ;n
other written advertising titat it a:cs

,y fuGC as a means of infomnng ?rospc: t:vc
a. Fr.ci students of its programs. T"ne foil •jv.*-
1 Rvaii* 

the ia.j; refim itees will he accept r.rie:
. . r

on the nasis 
is .-cducaticr.al 

ics. scholar:.!; i;j 
and lean prr<!ram«, and athletic and other school-administered programs.

discrimi­1 iicService consider

CFR CO 1.201: Raiinit and dtUrmina- 
on Uliirs.I  Part I, Station 501; 1.501 (o) {3)-l.)

f t .  Proc. 75-20 1 

PurposeEion 1.
I This Revenue Procedure sets 
s guidelines and recordkeeping^ 

reemirements for detemtining whether 
flfvatc schools that are applying far 
pKogmtion of exemption from Federal 
income tax under section 501 (c)(3 )

I he Internal Revenue Code of 193-t, 
■ arc presently recognized as exempt 

ram tax, have racially nor.cttscruntna- 
^^-y policies as to students.

Pc. :. Background.
.U; A school that docs not have a 

■pally nondiscriminatory policy as 
f a.<« ..low *. TUi-un. aw.* n«- «, ms.

nation on the basis of race to induce 
discrimination an the oasis of coior 
and national or ethnic origin; A policy 
of a school that favors racial minority 
groups with respect to admissions, 
facilities and programs, and financial 
assistance wilt not constitute discrimi­
nation on tire basis of race when the 
purpose and effect is to promote the 
establishment and maintenance of that 
school’s racially nondiscriminatory 
policy as to students.

.03 A  school that selects students 
an the basis of membership in  ̂a re­
ligious. denomination or unit thereof 
will not be deemed to have a dis­
criminatory’ policy if memnersmp *n 
the denomination or 
all

unit is open to 
nondiscriminator/on a raciaiiy 

basis.
.0-4 For purposes of this revenue 

procedure, the term “school has the

The M school atiimts student* o. 
any race, color, and national or cth.mc 
origin.

.03 Publ ic i ty . The. school must make 
its racially nondiscriminatory policy 
known to all segments of the geiwral 
community served by the scucd

I The school must use one of the 
following two methods to satisfy this 
requirement:

(a) The school may publish a 
notice of its rncituly noncis-.r.!.. -—* 
torv policy in a newspaper of gcrmral 
circulation that serves ail racial mg- 
nimts of the community. 1 his publica­
tion must be repeated at least ^emee 
annually during the ported of the 
school's’elicitation for students or. in 
the absence of a solicitation uiogmin. 
during the school's registration period. 
Where more titan cite communit z is 
sewed hv a school, the school mnv 
publish its notice h. those ncw>p.,pers 
• hat arc reasonably likely to be '.can 
bv all racial segments ot^ the c im­
munities that it ser es. The nonce 
must appear in a section of the rmvi-

4 5
U n J -



ft must be captioned in at least 12 
japint bold face type as a notice of 
H iruii'm uiiiiatitry  policy as to students, 
qmd,, its text rmi- t • be printed in at 
-least-- ,14 . pgira .typo, •’ The 
f ltticc  xviil be acceptable:

®  NOTICE -Or
n

follow-ins' ■

■ AS TO STUDENTS
Hie Nf schi-ol admit* stmtrms of race, 
cul-T, Rational and eu in ii origin to u;i the 

jjgrhts, oriviie;;cs, programs, and activities 
^ K cra ily  accorded or made avail.iHe t-. 
gMcicnts at tile school, it d.**s not dij— 
criminate on tlie bans u£ rat-, rnior, na­
tional and ethnic orient in administration

I  [its rduenttimai policies. aiimi'-.ions p«>h- 
F. scholarship anti lo.nr orr-crntio. anti. 
Hetic and other schtxii-admuviMcred urograms.

f
(b) The schooi may use the broad-
;t mediaft to

*
alt

K

!7C its racially 
tondiscnimnatory policy if this use 
askes such fioruiiscrimiifaiory policy 

g M n vn  to all segments of titc  general 
^cttinnmity the school ser.es. if this 

ncttiod is chosen. the schooi must 
itle documentation that the menus 
ivhich tilts policy was comttmni- 

aled to ail segments of titc general 
imunity was reasonably expected 
he effortjvc. In this rase, appro- 

rime documentation would include 
i^ics of the tapes or script used and 

■ B rels  show mg that there was an 
i^mquate number of announcements, 

’tat- they were made during hours 
■Min the announcements were likely 
^Hb<‘ communicated to all segments 

f (lie general community, that they 
of suificietu duration to convey 

message clearly, and that they 
trre broadens; rut radio or televisiciii 
adens hkcly to be listened to by 

tantinl numbers of mcmliers of all 
hi segments of the general cotn- 

untty. Announcements imi.it be made 
ifig tlie period of the school's 
tation for students or, in the 

wen re of a solicitation program, dur- 
he school's registration period, 

t'uummiration of a racially non- 
rimmntory jjoliry .as to students 

y a school to leaders of racial groups 
je sole means of public ity generally 
net be considered effective to 

•ike titc policy known to all segments 
■i-iiie community.

T tt^ o ty T u n  foi.owing paragraphs 
applies:

(a) If for tin* preceding three vents 
the enrollment of. a parochial or ndicr 
chtirclirTciaigd .scimpt consists-of sto- 

-tlciHs. at ionst 75 percent of whom are
members of the sponsoring religious 
denomination or unit, the school may- 
make known its raciaily iiondiscrimi* 
natory policy in witatever newspapers 
or circulars the religious denomina­
tion o r unit utilizes tn the communities 
from which the students are drawn. 
These newspapers and circulars ru.iv 
be those distributed by* a particular 
religious denomination or unit or by 
art association that represents a  num­
ber of religious organizations of the 
same denomination. If, however, the 
school advertises in newspapers of 
general circulation in the community 
or communities from which its stu­
dents are drawn and paragraphs- fb) 
and (c) of this subsection arc am ap­
plicable to it. then it must comply 
with paragraph fa) of subsection ! of 
this section.

(b) If a sciioo! customarily draws 
a substantial percentage of its students 
nationwide or world wide or from a 
large geographic section or sections of 
the United States and follows a 
racially nondiscriminatory policy us to 
students, the publicity requirement 
may be satisfied by complying with 
section 4.02, supra. Such a school may 
demonstrate that it follows a racially 
nondiscriminatory policy within the 
meaning of the  preceding sentence 
either by showing that it currently 
enrolls students of racial minority 
groups in im jningful numbers or, 
when minority students arc not en­
rolled in meaningful numbers, that its 
promotional activities arid recruiting 
efforts in each geographic area were 
reasonably designed to inform students 
of ail racial segments in the general 
communities within the area of the 
availability of the school. Titc ques­
tion whether a school satisfies the 
preceding sentence will be determined 
on the basis of the facts and circum­
stances of each case.—

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

plying with section 4.0?, rrc/.r-, Each
•a school may demon-tram 1dial It
follows a rueinilv nundkirir:: r.ator /
policy within the meaning of >; pre-
ceding sentence hy showing tij.it it
currently enrolls students of id. ...!
rmnortiy groups in meaningful num­
bers. The question whether a sehr-m 
satisfies the preceding sentence will be 
determined on the basis of titc facts 
and circumstances of each case. One 
of the facts and circumstances that the 
Service will consider is whether tL- 
school's promotional activities ar.d re­
cruiting efforts in each area were 
reasonably designed to inform students 
of ail racial segments in the cvnemi 
conttmtimics within the area < f the 
availability of the school. The S; rvicc 
recognizes that the failure by a 
school drawing its students from local 
communities to enroll racial mi;, -s: tty 
group students may not r.eces'.iruv 
indicate the absence of a racially non- 
discriminatory policy as to students 
when there are relatively few ,--r no 
such students in these communities. 
Actual enrollment is, however, a 
meaningful indication of a racially 
noudiscniuin.V.ory policy in a icm-j 
munity in which a public school nr 
schools became sub jo,.t to a clesegi 
tior. order of a federal court other­
wise expressly became obligated t>. 
implement a desegregation plan under 
the terms of any wtit-ten contract or 
other commitment to winch any 
Federal agency was a party.

The Service encourages -chock to 
satisfy cite puhiicitv requirement by 
the methods described in suhmrrcr.
1 at this section, rcgar.i'.c-s cf w:.r* :rr 
a schooi considers itself w.dua sub­
section 2, because it helioses a c 
methods to be tiic most edeeuvr to 
make known a schools Kni.uly r.- n* 
discriminatory policy. In tins w eird  
it is each school’s responsibility to de­
termine whether patagta;--!: ' a ; ,  1>4,
or (c ) of subsection .1 applies to it.
On audit. ;i school mu;st be prepared
to demonstrate that the f.uiurc to
publish its racially no;■:(ii*cr::i;iti.uc ry
poucy in accoruance '•
l of tills section was justified bv tne
application to it of 1 irn'rmph fn.;,
\ o j , or (c) 0 * SUGSCCt!ton 2. Furtlu r,

4 7

• f 3 d - / ■ —



ijc prepared to demorr- 
m m \ i  has" publicly disavowed- 
P J a tc r f ' any 'statements pur- _
w havtr- -beer* -.made- oiymh*/.

MK'r Nos- ce.ibfir u! i'^Ta f that
HRi-.y .to itv. publicity -of a. 

iberutona.cnr.y policy as-; 
.. . to. tfic extent- that Vac ' 
its pnn.bTphl' cthcirdVAveftr 

of such statements.
^ g U t i 's  and Programs. A 
§ j l s* be able to shew that ail 

programs and fatal.ties .ire 
a racially nondisemnina.-

of racial discrimination in employment 
cf Tacukv ar.ti.1 administrative s ta ll. is 
indicative of a racially notufiscvrittma*
• tory'^wiipysasyto s'txittentS;- ;; • 1 '.
. '''.On Failure Jto^'.compty': i'-Tthire.y to- 
comply with- the guidelines Vvili ardi-

• naril.y..rysuit ih-thc proposed rcvocahccq 
of the exctnpc sett us ’’ofTt sch.noryttv

■ acrcrdaTTcc- with 'ih^'prdwtrfttrrt*- -sot-' 
forth in Rev. Proc. 72*4, 1972-L C.LL 
7CG.

TAX

m
W lo lc n h fo  and loan programs.

R rai rule, all scholarship or 
parable benefits procurable 
any given school must be 

d on a racially nondiscr.mina* 
Their availability on tltis 

j H t  be known throughout the- 
^com m unity being served by the 
la ju i  should be referred tc in 
jjjHcity required by tins section 

for that school to be con- 
jet racially nondiscrirninatory as to 
■BConsi.ucnt with section 3.02, 
IpLolarships and loans that are 
| pursuant to nnanciut .issistanc'.
I f: favoring memenrs of one 

I racial mutoriiy croups that - 
igued to. promote, a scncol^s 

llwiondlscrlihinritor.- policy writ 
■ i-rse!v  affect tite school’s cx- 
P R t u s . ' financial assistance pro- 
:S favoring membcis of one or 
nBn.ti groups that do not supuf- 
B ld e ro g a ic  front the school s 
fly ’ r.cndiscriminatory policy 
ajk-. will not adscrsely affect the 
I'M ex- mpt status.
^crriiVicutfon. An individual 
cubed to take official action - on 
g o f  a school that claims to be 
I f "  nondiscrirninatory as to stu- 
3 must certify annually, under 
ittes  of perjury, on an Internal 
I R c  form to be issued, that to 
^of his knowledge and berief tite 
x ih a s  satisfied the applicable rc- 
l^fents of sections 4.01 through 

tiiis Revenue Procedure.
Yl Fee *•*>and Step. The existence 

W racially discriminators- policy 
|aspect to employment of faculty 
administrative staff is indicative

racially discriminatory po.u-y as 
dents. Conversely, the aoser.ee

Sue. 5. A rrucA Tioss for.
CXLI’T STATUS.

.01 Information required to be 
submitted. Every school hhr.tr an ap­
plication for recognition of a tax 
exempt status n u e  mppU tnc Service 
with the following information:

1 Racial composition, as of die 
current academic year and projected 
so far as m.-.v be feasible for the sub­
sequent academic year, of— .

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

stall",
2 Amount of scholarship and loan 

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

.3 A listing of 'incorporate!*, found­
ers-, board members, and', donors- of 
land or buildings, wu.cthcr individuals 
or organizations,

4 A statement whether any of tnc 
organizations describee in suosecnon 
,01-3 of tills section have at the time 
die application is fued an objective cf 
maintaining segregated public or pri­
vate school education anci, it so, a 
statement whether any of the individ­
uals described in subsection .01-3 of 
this section are officers or active mem­
bers of such organizations at tire time 
the application is field.

5 Year of organization.
.02 Limitations.
I Fcr purposes of section 5.01, tnc 

racial composition of the student both., 
faculty, and administrative stall may 
be an estimate based on the best in- 
fot motion readily available to the 
school, without requiring student 
applicants, students, faculty, or ad­
ministrative start to submit intormn- 
tion to the school that the school

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

. must be supplied. ..- ■■
b.'*"'T--3'rhq'-frVformat!pn requtrciT xo: hc> 
■submitted under section. 5.U1 ' should ,
■ not identify’ individual ..students .or 

• tu'emhers- d  T-ftc.-’facvityatid  admiuU- -.. 
,. ;rasi;.e  st-ruT.. •.-. _ ..... m u  \  .

Sec. 5. Public complaints of 
RACIAL nts crimination.

The Service is interested in receiv­
ing ar.v information time an exempt 
urivate school is not operating under a 
raciaily nondiscrirninatory pc'.icy as to 
students, including any judicial or 
administrative rielerrmnnuniis to this 
cifect. Tltis information may be sent 
to the local District Director nf inter­
nal Revenue or to the Commissioner 
of internal Revenue, 111' Constitu­
tion Avenue, N.\'>., Y ashmgtoa, D .d. 
20224, Attention E:EO.

Sec. 7. R«coRD:;F.EPtNG require­
m e n t s .

.01 Specific r'-cords. Except as pro­
vided in section 7.03, each exempt 
r.-r.vnto school must maintain .vr a 
minimum period of three yea.is, on- 
ginning with, the year alter tnc tear 
o f  compilation or acquisition, me 

.fTowing -records .lor the use o-. u.e 
Service on proper request:

! Records indicating the racial 
ocxnuosition of the student boc.y, 
facultv, and administrative stun tor 
each, academic year.

2 Records sufficient to document 
th.at scholarship and cth.er financial 
assistance is awarded on a raciaily 
nondiscrirninatory basis.

3 Copies of all brochures, cata­
logues, and advertising dealing with 
student admissions, programs, and 
scholarships. Schools advertising na­
tionally or in a large geographic seg­
ment or segments of the United Siam* 
need only maintain a record su m .-n t 
to indicate when and in wi.at pi........
lions their advertisements were pl.weu.

4 Copies of all materials used by or 
on behalf of the school to solicit con- 
ti ibut’.ons.

.02 [.imitation.
i For purposes of section

raci.R-R ccmnositioa of die student body

- H d - .

40



nc

B

be an estimate bas.-u on the best m- 
brm.atlon readily available .to the 
|,hot'!, without retpuffug stuUrut- np- 

.piicant$,.jt^dcnts»..fn<t#U.y. .<•? admitvs- 
5-rii{T1' tarswbirtifc; rnf>

p B i e  school.- that the school;otherwise 
^^aoes not require.’ ' ’ro'e.e.ich. acattnvsir: /  

jeSr,aHtJwfcver., a  record ojf ihtK!^etiiovi-..l 
]v(...\vluch-.:facbTl: comjt.ositi.on, as- dgv .. 
bnnir.iid must be maintained. A 

school m ay'not discontinue maintnin- 
■dRae a svstem of rerun's that reflects 
IM f-.C’.r.] composition of students, facility, . 
”  and administrative stntF use*! on No- 
^ ^ e tn b e r  5, 1975, unless.it. substitutes 
§ ■  different system tliat compiles sub- 
^ s ia n tia iiy  the same information, with­

out the advance approval of the in- 
riBfirnal Revenue Service.
P®  2 Tire Service docs not require that 

a school release personally identifiable 
gjftrcords or personal information con* . 
■Bhined therein except in accordance 

wit it the reepuirements of the “ Family 
^E d u ca tio n a l Rights and Fiivacy Act 
■ i  107-1," 20 U.S.C.. ? I232g{ 1974). 
^S im ila rly , the Service docs not require 

j  school to l;eep recoids the mainte- 
H^Piance of which- is 
IW ta tc  or federal law.

prohibited under

P
.03 Excetjtiam. 

lined in section 
Fnde.pcnucn:

i r.e - m
records de-

v maintained for Internal . 
■Revenue.Service used!

A  1 Substantially the same intorma- 
HriCn that each of these iccurds would 

provide has been inciuucd :n n report 
JB<r reports fled in accordance with 
H a w  with an agency or agencies of 
M-'cderal, state, or local government, 
*?nd this infc i mat ion is current within 
| : n .c  >ear, and
P  2 The school maintains copies of 

these reports from which this informn- 
dPicm is rendilv vljtairuii'ie. Records 
Pllescrtbcd in section 7.01 providing 

iKionnatton not inciuucd trv reports 
JBfded with an agency or agencies must 
■ jc maintained by die sdiocl for Serv­

ice use.
jm  .0? Failure to maintain record'.. 
H raiiuve to maintain or to province 
r  upon the proper request tlsc required 
.rec o rd s  and information will create 
H i  presumption that the organization 
P  has failed to comply with these .cuiue- 

i:ncs.

The United St Uex District Court 
for. the District oi Columbia has or­
dered snceiiic' guidelines anti terorU- 
btouirup Aeqidi-enir.iUTi; for ■ hfi.yHSsSppi. 
tjVriyates ichooiu.' ’Cree-rfi'.'/vi • Corstuiltyp 
330. P; Suiip-. I I30, •afTdf sab' nam. 
Coif .y. Green, f 104■■ U.S-. 997 f 1971}.. 
ToVtnd cstcTit. that Thr'-rgcpnmtncnt*. 
,ei .tltfh Cowtt;?. .Order.: vary,from.' titer 
guidelines and recordkeeping require­
ments set fouith in this Revenue Pro­
cedure, the Court's Order is control­
ling tor Mississippi schoois..
Sec. 9. Effective date.

.01 Section 4.02 is not applicable 
until February 4, 1975.

.02 To the extent that the- pub­
licity requirements set forth in sec­
tion -1.03, sai’ra, differ from those set 
forth in Rev. Proc. 72-54, 1972-2 C.B. 
834,. they shall not be effective until 
a school's fust period of solicitation for 
students or, in the absence of a solicita­
tion program, dining the school’s am  
registration period beginning after 
November 5, 1975.

.03 The recordkeeping requirements 
set-forth in section 7, supra, shnil net 
be effective until January 1, 197G_
Sec. 10. Effective on other docu­

ments,
broc. 72-54 is sunerseded.

r, tuiii’uvtvu.

Rev.

Retirement Income Security Pet of 
1974 (Public Law 'JJ -Ifn l, approved 
September 2'f 19*7■ I-, (heremafu r re­
ferred. to. as-“ the A c t " ) •••
Sec. 2-x R.'vgKuaouNo ANO' CEdKk'.i.• 

■ i n f o r m a t i o n

.01 R e v .  Proc. : J2-7, 2572-i'. ( l i t ,
■ T15, • contains procedures relating- to 
'the issuance of'opinion tetters as to the' 
acceptability of the form of master 
and prototype plans designed to in­
clude scif-cmpioycd individuals.

.02 Rev. Proc. 74-39, 1974-2. CM. 
494, was issued to temporarily limit 
the issuance of opinion lette:s until 
guidelines could be developed lor de­
termining whether plans meet die re­
quirements of section 
as amended bv the 
75-33, 1975-39 l.R.T 
the issuance of opii 
respect to those mast 
plans for which .quit 
devcioned. Additional guidciira.s have 
now been developed permitting the 
publication of this Revenue Pro -edu:e 

in which opinion 
' ms

401 of the Code,
Ac:. Rev. i’roc.

1. 17 autl.orircd
lion Ictte.s wuh

o . r* i- *.j-a f ,pj* ^
:!c!ines had been

extending trie area 
letters on rr.astc 
may be issued.
Ot.c. a. Rf! :s and  on.vrort

; s  C.r !i 601.201; Rulings and dtter~.lr.a-
.'.v i utters.• .! i‘to Fart l, Sections ■iOl, 403; 1.401-1,
1,403 ( a ) -1. J
Rev. F r e e .  7 5 - 5 1 1
\

Section 1. Purpose.
.01 This Revenue Procedure pro--' 

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

.02 This revision is made to permit 
die issuance of opinion letters with re­
spect to the acceptability of the form 
of these plans under sections 401 and 
501 fa) of the Internal Revenue Code

.01 Except for the plans de:eribcd 
•in-subsection .02 below, the N..Uon th 
Office at the avrv.ee, upon rmuett, 
will furnish a written ephver. a; to the 
iccc*jtbintv ^or ”iir.*oci of see*.c*22 
401 of the Cede, ns mr.'-nded by ti:e 
Act, and section 50i ( a ) ) of the fur; i 
of any defined contribution master ■ r 
prototype plan d 'dgncd to inch'd: 
self-employed individuals wlto m.’ z 
adopt the plan. St the term at plan 
includes a master trust or cr -cdi.J 
account, a ruling will a!-o be issued 
with respect to the exempt status of
the trust or custexlial account which
fomns part of the n’AS tor Dinn.

,02 Subsection .01 a7.hove do*'S not
permit tlie issuanc;c o t Oj ■ inion icttcr >
arid rulings with re>< t to tiic 'OliO">D *
in' :̂ -
! ( , \ 1 ) a plan »ubn: i 11 c c1 hy a sr  ̂r.c o ■“ *

ing organication oti .or 1than v, tt .'.Cr c r
lire;!cs>ioi\ai r.ijocui.lion A l, , ••vuhla
tr.u meaning of sect . 011 r 0I 'Ui  - 1 ), nn
irsuranci! ro;;i[um\\  or ._ -U l t . “

> a;. « • TIH-1419, d4i«4 No*cms» « r  }0. iOTS. %CStinCIlt CO^^p l̂^y, j

A S ' d

4 9





L /
9 -

Mr. J o h n  A. Buses

th:it the i cervi
the basis oi: tz 
on the basis of color 
o r ig in ►"

o considers discrimination on 
to include, discrimination 

national or r, f* hn i r*w- U i i . 11-

b. Prohibit employment discrimination .
Section 4.07 of Revenue Procedure 75-50 states 

■ that the "existence of a racially diserj-min-..torv 
polic-v with respect to employment of faculty art
administrative staff is m dicative of a racially
discriminatory policy as to students. Convers<_I) , 
the absence of racial discrimination.^ ei.nl o;.pu'- 
c£ faculty and administrative staff is indicative 
of a racially nondiscriminatcry policy as to stutor

c. jT)7 2 ~ P  roe, no It u U-:crrairnati~on in the proy 
’services based on

The underlying discussion 197at page
:l notable

O £ tile
Commission's report outlines save. 
statutory exceptions to the Title lx rule amt 
otherwise generallv prohibits sexual discrimina­
tion in any educational prograntor activity 
receiving Federal 'financial assistance. 
these statutory exceptions were giyen^Ui . 1 miccc 
in the comprehensive Title IX regulations^ recent../ 
issued. In view of the number and breadth ci such 
exceptions and the continuing absence of judicial
pre ween f • c*

nv . .  — — ,that would support a contrary conclusion
the Service continues to believe that sexua 1 dis­
crimination in education has not yet come to be 
incompatible with charitable exemption status as a 
matter of any well-established federal public policy

d. Ronulro multiple publication bv all private 
school s or a nuiuu.se.rirni.r.atorv poll cv

‘ Section 4 of Revenue Procedure 75-50 requires 
that every school "include a statement oi ies 
racially no ud i s c rinin a to r y policy as tc students

_47c/-
___ _ « -n r t  -  - 1



Ir. John .A. Buses

in all. ito brochures .and .catalogues .dealing tlx 
' student 'admission's, programs, and scholarships.” 
Further, each school must make its racially uon- 
discrimivuitory policy knov.Tt to all segments of 
the general community served by the school. With 
certain exceptions, all schools must satisfy this 
requirement by publishing a notice in a nevspape:
or bv broadcastin innotmccmn :s as to 'their
racially noruiiscriminatory policy. Specific 
guidelines arc given for either method, including 
a requirement teat publication be repeated at 
least once annually and the announcements be made 
during the period of the school’s^solicitation_ 
for students or, in the absence of a solicitation 
program, during the school's registration period.
Rocruirc all tnx-cxcmnt private schools to collect 
and-c ro 177- cTa ~ f ft e ton I c a nos r x a a to on see dents
laci.ij.Lv, ace lie-
or'i'aTrjj.Tff.Tr"

i:or ariimssiou, . D1C. ll-
a u.1 re

.With certain limitations and exceptions,
section 7 of Revenue edure 75-50 require:
that schools' maintain y”'for the" use' Of':'the ’ Service" 
upon proper .request, records to indicate- the racia 
composition o f ‘the student body, faculty, and ad­
ministrative staff for each academic year and 
record? sufficient, to document that scholarships 
and other financial assistance axe awarded on a 
racially t r e n d iscriminatory basis.

Recommendation 2

Yoti recommended that we Increase tnc size and, qualify 
our enforcement effort in the private school area-. Specif! 
suggestions included:. /

a . Funand exnmrnitva11 ons to at least 107, of exempt
nriva.t*
select ion ■

- and provide gtiicel mes aor yyjdft 
;ettoo J.;; .

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

- t f y - M



John A. Hu;ot>-

b.

schools exempt'under'’individual rulings or 
■daterminations , of, vhLein at ..'least. 50.7, ’nave net • 
been,'previousJ.y. exami nod.-.- •• Schoui-s- v.-ill . be selected 

.:on the basis .9 if .Information. contained. on our 
"Exempt' Organi.relIon Master File, supplemented 
by complaints received and each key district's 
knowledge of local conditions.
Dove Ion f i c 1 d i 1 s t rue t ; cm,-: defining what should 
be covered 1 r. an ecTauTT-.atsou.

c„

Vie arc. now finalizing private school examination 
guidelines and a private school examination checksheed 
to conform our examination procedures to the require­
ments of Revenue Procedure 75-50. Thus, when the 
guidelines are issued, examiners will have compre­
hensive instructions for reviewing all the key 
factors covered in the-Revenue Procedure.
Require immediate corrective action where a
xr am,-— ------------- ----- ----------—Conauct rot l.ov:-up •examination-: w *, i . * * ’uyv-’s-n | t enr n t w , -w aV'itwv J.
is j.ounc; ana corrective action ia V) Tr>l i •  ̂*■’; Cl *

1! a
When a school is

i. VO P. n i* r-r\ r> n n ti 1
found to be in nonccmpliancc
opportunity to clarify, or
d- practice's' 'in' order to reta

unwillingits tax exemption. If a school is unable or unwiH 
to conform to nondiscrimina.tory requirements, it

evidence and be heard inis enti h 1 0d to presen taccord;:l ;C3 V;'ith regu l.ar
ever, v Ln . sch.oo I has
adminis »- 1*Cit 3* ff\ an I'M —l L r
to nond 1 z ri**W J-ii a •—o ry re
proceed c as expeel.itious

How-
availed itself of all its 

and has not: conformedirhts n '1' n°■ -s>iiU’irarucnLs * Lac rvi r.p
.y as possible to revoke tnc 

school's exempt status. The Service has procedures 
for rccommending a future examination of any exempt 
organization. In our private school examination 
guidelines. \;e v/llL emphasize the need to recommend 
future examinations for private schools where ncu- 
comnl i.anee h.as been found and corrective action has 
b e c n r> r o m used.

*e</ r* r~ »■



' tir. John A. Buggs

. •R-O.c.o nyac iK-i aw % o :V3
You -rhcor^cndocl -that-' -the,- Service ap-p-ly. tlpe.same _ s tagdhrci.s

:.'ahrf. tiro cedurtisY - to  - 'Q htir c h -s p o n s o r  erf ■ n r  i  v Schools- ns axe
^apprfied • to- -ai-1-: ©.the-r; private 'Schdo.l j'~and•ftYatr .re ' priority
Lo re vie 
s choo1s .

a br; cross section of church-sponsored private

Revenue Ruling 75-231 provides that church-related school; 
are subject to the requirement of a racially nor.discriminatory 
policy as to students in order to qualify for exemption from 
Federal iuc 
provides fo

.a t'P V  cl- t ♦ Cur fisca1 year 197G examina11o n p ror..ram
the ex amin at:ion 0f some church-rel ated school s in
1stCut w1t- L\ the effcctiv■n> dates in section 9 of
durc 7 5- JDV- * GenQ ITally, we plan to emphas ize the
elementa V*y and se condary’ • 3chools.

V, e c. o;m:■ e h d a i r o n

You recommended that IRS and HE 
standards, and coordinate private sch 
information-sharing mechanism should

W develop uniform complianc 
ooL reviews and that' an 
be adopted to avoid any

duplication of effort.

•Service do not have identical legislative responsibilities in- 
the .private-;. . a c h p o , ! - i n e c . e s - . s a - r i l y  ddjdrtsvphew 
:ddgt'e'e'vpf '’uniformity; possible* _ .However.j . our staff • members have 
met with - HEW Personnel’''several times 'within the last year. As

As we have previously discussed with you. H
identical 1; 
:03 
p'o

isiative resoonsibiliti;

a result of these nicetings •

We are on the mail ihg list to receive the Inter-
a g e n c y R c do r t and the List of Title VI Assurances
Received that are published by■ HEW's Office for
Civil Rights.
We have obtained information on racial and ethnic 
classifications that will be useful Lo our examiners 
when disseminated in our private school examination 
guidelines*



4 Mr. John A. Butrr r* <r

'M Vv • * p Vs- n\~ i - w - - -n. ~f *' *f A A n t in in ■ c A' K 1: c man ,t n-r v* n n.c l ■•- 5 o •-> ® 11 d  a_ ru- ... -••••• A ■ - -^7y ;...rmTOirrg^-?rYecbm Education^•••-. 7
• .' • ■'•• ■•■•■•■ 77'^ J~~;i sent ;■ to " each. 6 f. our ..regional■ and . t

> district. of ugy reference.\ to0 1 ..,.̂ y.en ,Lpousr.,:
■ ••• be csi.-ocinl.lv' he'lpiu'l ‘in xdcntrlying chur^rrreriatea

schools for inclusion in our examination program.
as in the past,- v:e arc continuing to furnish HEW a monthly
list of private schools that na\ ■> 
Concludin' Remarks

been recognized as tax-exempt.

You may be interested to know that, in addition to our 
contacts with HEW, we have met witn oft~.Ci.als o.n tne ‘-ia
of Agriculture and the n -i)d  .. '-n .L tl. Justice to‘explore the
av^ilaKilitv of private school data of possible valuator audit 
s e l e c t i o n  purposes. -We also plan to incorporate tne Provision, 
of Revenue Ruling 75-231 and Revenue Rrocecurc_/0-0O 1 ^ 0  c, - • , icy i Q  exemnt organization forms, andtraining material., a,jiic„ - t -  . t.rh-S l arpp] icable portions of the Internal Revenue Manual, hhila these W v e r o  not specifically mentioned tn your recof .enc.o..

your recornsicndations. .
kind -v-O r‘” rvy~r> ‘E ■ . ’ • * . ■ '•1. t. a*, t tv 0 ̂
- y • ■ ■ jo- lip; •'

Sincerely,
< / r Aicxcaci
j s / Dcciula t* - <de:

Commissioner
Enclosures (2)





APPENDIX E



Form i
(OctoOer 1976)

t)epaftm#nt of the Treasury nternai Revenue Service

... m  wacrai mmserrmrm
for a Private School Exempt from Federal income Tax

(For Use by Organizations That Do Not File Form 990)

Ullll 14
to Public Inspection

For IRS v 
use ONLY f

For the period beginning , 19 , and ending , 19
■1(a) Name of organization which operates, supervises and/or controls school(s) (P) Employer identification number 

(see instruction F)

Address (number and street)

r City or town, State and ZIP code

5(a) Name of central organization holding group exemption letter covering the schooi(s). (if the same as the organi­
zation in 1(a) above, write “Same” and complete 2(c).) If the organization in 1(a) above holds an individual 
exemption letter, write “ Not Applicable.”

(b) Employer identification number

Address (number and street) (c) Group exemption number (see 
instruction G)

City or town. State and ZiP code

3(a) Name of school (if more than one school, write “ See Attached." and attach list of the names, addresses, ZIP 
codes and employer identification numbers of the schools). If same as the organization in 1(a) above, write 

,  “Same.''

(b) Employer identification number, 
if any

Address (number and street)r
r

City or town, State and ZIP code

Under penalties of perjury, I hereby certify that ! am authorized to take official action on behalf of the above school(s) and that to the best of my knowiedg 
and belief the school(s) has (have) satisfied the applicable requirements of sections 4.01 through 4.05 of Revenue Procedure 75—50 for the period covered by this 
ertification.

r (Signature) (Title or authority of signer) (Date)

Instructions
A. Who Must rile.— Every organization exempt 

I  or claiming to be exempt from Federal income tax 
| under section 501(c)(3) of the Code 3nd operat­

ing, supervising, and/or controlling a private 
school (or schools) must file a certification of ra-

gr-ciai nondiscrimination, if an organization is re- 1 Jcuired to file Form 990. Return of Organization 
I  iExempt from income Tax. either as a separate 
f  return or as part of a group return, the certifica­

tion wiil be made on Form 990 and not on this 
form. The schooi(s) covered by a certification on 

f  this form must be listed as indicated in item 3.
I An authorized official of a central organization 
f  may file one form to certify for the school activities 

of subordinates, that wouid otherwise be required 
to file on an individual basis, on condition that the 
Central organization has sufficient control over the 
schools listed on the form to ensure their continu­
ing adherence to a racially nondiscriminatory 

olicy as to students.
B. When to File.— Although Rev. Proc. 75-50,

r
 1375-2 C.3. 587. requires a certification of 
racial nondiscrimination to be filed annually, the 
first certification wiil cover the period beginning 
November 6, 1975, and ending with the organize- 
i  don's first calendar year or fiscal period beginning 

J after December 31. 1975. File the form oy the 
I j iS th  day of the ‘ifth month following the close of 
■Sthc period.
* u. Where to File.— FUe the form with the Inter­

nal Revenue Service Center. P.O. 3ox 137. Corn- 
well Heights. Philadelphia, Pennsylvania 19020.

r
O. Certification Requirement.— Section A.06 of 
Rev, Proc. 75-50 'squires an individual author­
ized to take official action on behalf of a school 
that claims to be racially nondiscriminatory as to 
students *o certify annually, under penalties of

r
perjury, that to the zest of his/her knowledge and 
aeiief “he school has satisfied the applicable -e- 
qutrements of sections A,01 through A.05 of the 
r Procedure.

Section 4.01 -equires a school to include a 
statement in its charter, bylaws, or other govern­
ing instrument, or in a resolution of its governing 
body, that it has a racially nondiscriminatory 
policy as to students.

Section 4.02 requires a school to include a 
statement of its racially nondiscriminatory policy 
as to students in ail its brochures and catalogues 
dealing with student admissions, programs, and 
scholarships. Further, every school must include 
a reference to its racially nondiscriminatory policy 
in other written advertising that it uses as a 
means of informing prospective students of its 
programs.

Section 4.03 requires a school to make its 
racially nondiscriminatory policy known to all seg­
ments of the general community served by the 
school. Further, a school must be prepared to 
demonstrate that it has publicly disavowed or re­
pudiated any statements purported to have been 
made on its behalf after November 6, 1975. that 
are contrary to its publicity of a racially nondis- 
criminatorv policy as to students, to the extent 
that the school or its principal officials were aware 
of such statements.

Section 4.04 requires a school to be able to 
show that all of its programs and facilities are 
operated in a racially nondiscriminatory manner.

Section 4.05 requires that, as a general rule, 
ail scholarships or other comparable benefits pro­
curable for use at any given school must be 
offered on a racially nondiscriminatory basis. How­
ever, a financial assistance program favoring mem­
bers of one or more racial/ethnic groups will not 
adversely affect exempt status if its operation 
does not significantly derogate from the main­
tenance of a racially nondiscriminatory policy as 
to students.

E. Definition of Terms.— The farm “ racially 
nondiscriminatory policy as to students" means 
the school admits the students of any race to ail 
the rights, privileges, programs, and activities gen­
erally accorded or made available to students at

US. GOVERNMENT PRINTING OFFICE: IBS— O -575- t  34

that school and that the school does not discrimi­
nate on the basis of race in administration of its 
educational policies, admissions policies, scholar­
ship and loan programs, and other school-admin­
istered programs.

The Service considers discrimination on the 
basis of race to include discrimination on the 
basis of color and national or ethnic origin.

The term '‘school”  means an educational or­
ganization which normally maintains a regular fac­
ulty and curriculum and normally has a regularly 
enrolled body of pupils or students in attendance 
at the place where its educational activities are 
regularly carried on. The term includes primary, 
secondary, preparatory, or high schools, and col­
leges and universities, whether operated as a 
separate legal entity or as an activity of a church 
or other organization described in section 501 
(c)(3) of the Code. The term also includes pre­
schools and any other organization that is a 
school as defined in section 170(b)(l)(A)(ii) of 
the Code.

A central organization is an organization 
which has one or more subordinates under its 
general supervision or control. A subordinate is 
a chapter, local, post, or other unit of a central 
organization. A central organization may also 
be a subordinate, an example would be a state 
organization which has subordinate units and is 
itself affiliated with a national organization.

r. Employer Identification Number.— The em­
ployer identification number (E!N) Is a nine-digit 
number issued by the Service to identify organiza­
tions subject to various provisions of the tax law.

G. Group Exemption Number.— The group 
exemption number (GEN) is 3 four-digit num­
ber issued to a centra! organization (see instruc­
tion E above) by the Service to identify a central 
organization that has received a ruling from the 
Service recognizing on a group oasis the exemp­
tion from Federal income tax of the central organi­
zation and Its covered subordinates.

575-184-1