Bob Jones University v. Simon

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1974 United States Supreme Court case

Bob Jones University v. Simon, 416 U.S. 725 (1974), is a decision made by the Supreme Court of the United States holding that Bob Jones University , which had its 501(c)(3) status revoked by the Internal Revenue Service for practicing "racially discriminatory admissions policies" towards African Americans , could not sue for an injunction to prevent losing its tax-exempt status. The question of Bob Jones University's tax-exempt status was ultimately resolved in _Bob Jones University v. United States _, in which the court ruled that the First Amendment did not protect discriminatory organizations from losing tax-exempt status.

Background

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Bob Jones University is devoted to the teaching of fundamentalist religious beliefs, one of which is that God intended that people of different races live separately and not intermarry.

When the university was founded in 1927, it denied admission to black students. The school began allowing unmarried blacks to enroll in 1975, but it forbade interracial dating or marriage.

Until 1970, the Internal Revenue Service (IRS) granted tax-exempt status to all private schools, regardless of their admissions policies.

Section 501(c)(3) of the Internal Revenue Code of 1954 lists organizations that qualify for tax-exempt status and includes those which are charitable, religious, or for educational purposes. But a rise in the prevalence of Christian private schools in the 1960s and the Civil Rights Act of 1964 led the IRS to re-evaluate its policy.

The IRS announced in 1970 that private schools with racially discriminatory admissions policies would no longer receive tax exemptions.

The IRS then notified Bob Jones University of its intention to revoke the university's tax-exempt status because of the university's racially discriminatory admissions policy.

As a result, the university would be subject to taxation and its donors would not be able to claim their gifts to the school as charitable deductions.

Bob Jones University filed suit to block the IRS from revoking its tax-exempt status, alleging "irreparable injury in the form of substantial federal income tax liability." In 1971, the United States District Court for the District of South Carolina granted a preliminary injunction, but in 1973 the United States Court of Appeals for the Fourth Circuit reversed that decision. The Court of Appeals relied on the Anti-Injunction Act , which states that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court." A party cannot stop the government from collecting taxes. Instead, in order to protect the Government's need to assess and collect taxes efficiently, the proper procedure is for the party to pay the disputed tax and then file an action for refund.

The Supreme Court granted a petition for certiorari to determine whether the Anti-Injunction Act barred Bob Jones University's suit to enjoin the IRS from revoking its tax-exempt status.

Before the Supreme Court

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The case of Bob Jones University v. Simon was presided over by Chief Justice Warren Burger and Associate Justices William O. Douglas , William J. Brennan, Jr. , Potter Stewart , Byron R. White , Thurgood Marshall , Harry A. Blackmun , Lewis F. Powell, Jr. , and William H. Rehnquist .

Arguing on behalf of Bob Jones University was John D. "J.D." Todd Jr., a lawyer from Greenville, South Carolina , who served on the South Carolina Bar Board of Governors. The United States Treasury was represented by Assistant Attorney General Scott P. Crampton, with Solicitor General Robert Bork accompanying on the brief.

Todd argued that Bob Jones University had met all the requirements of 501(c)(3) as set forth by Congress but had its 501(c)(3) status revoked by the IRS nonetheless. Inclusion on the list of tax-exempt organizations was essential to receive donations from foundations and individuals, and Bob Jones argued that removal from this list constituted irreparable harm to the university. Todd claimed that "the lower court held that the [IRS] Commissioner exceeded the statutory authority given him, that he has authority to promulgate regulations but not to change law, and that that's a matter for Congress to decide, and we of course contend that that's absolutely correct." He also argued that Bob Jones University was not seeking an injunction on the collection of taxes resulting from the loss of tax-exempt status, but rather sought only an injunction on the removal of the university from the IRS list of registered 501(c)(3)s. This argument suggested that the case "involved taxes only very remotely" and was therefore not covered by the Anti-Injunction Act , which would bar Federal Courts from preventing the collection of any taxes by the IRS. Lastly, Todd contended that revocation of tax-exempt status by the IRS was an attempt to regulate the admissions policies of private universities, and not an effort motivated by protecting tax revenue.

On behalf of the Treasury, Crampton argued that Bob Jones would owe $1.25 million in income taxes and saw their actions as "taxpayers trying to stop the assessment of tax."

Supreme Court decision

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US Supreme Court Justice Lewis Powell - Wrote the opinion of this case

Bob Jones University v. Simon was decided May 15, 1974 in an 8–1 decision with majority opinion written by Lewis F. Powell, Jr. , in which Justice Burger, Brennan, Stewart, White,

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