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THESE COURT RULINGS LED TO DELIBERATIONS BY THE SERVICE,
THE TREASURY DEPARTMENT, AND THE DEPARTMENT OF JUSTICE AS TO
WHETHER PRIVATE SEGREGATED SCHOOLS WOULD BE ENTITLED TO TAX
EXEMPTION AND WHETHER CONTRIBUTIONS TO THESE SCHOOLS WOULD BE
DEDUCTIBLE. AS AN INTERIM MEASURE WHILE ASSESSING THE EFFECT OF
COURT DECISIONS, THE SERVICE IN 1965 SUSPENDED ISSUING RULINGS TO THE
INCREASING NUMBER OF PRIVATE SCHOOLS SEEKING EXEMPTION FROM

FEDERAL INCOME TAX. AFTER CONSIDERABLE REVIEW, THE SERVICE ANNOUNCED
IN 1967 THAT TAX EXEMPTION WOULD BE DENIED AND CONTRIBUTIONS
WOULD NOT BE DEDUCTIBLE TO RACIALLY SEGREGATED PRIVATE SCHOOLS
WHOSE OPERATION WITH STATE AND LOCAL GOVERNMENT AID WAS
UNCONSTITUTIONAL OR IN VIOLATION OF THE LAWS OF THE UNITED STATES."
HOWEVER, RACIALLY DISCRIMINATORY SCHOOLS THAT OPERATED WITHOUT
STATE SUPPORT OR AID WOULD CONTINUE TO BE EXEMPT FROM FEDERAL
INCOME TAX.

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IN 1969, THE SERVICE WAS SUED BY THE PARENTS OF BLACK CHILDREN
IN THE STATE OF MISSISSIPPI. THEIR ARGUMENT WAS THAT THE AVAILABILITY

OF TAX EXEMPTION AND DEDUCTIBLE CONTRIBUTIONS TO A PRIVATE RACIALLY
DISCRIMINATORY SCHOOL AMOUNTED TO UNCONSTITUTIONAL GOVERNMENT
ACTION. THEY ASSERTED THAT THESE SCHOOLS FAILED TO QUALIFY FOR
EXEMPTION BECAUSE THEIR PRACTICES VIOLATED CLEAR FEDERAL PUBLIC

IRS NEWS RELEASE DATED AUGUST 2, 1967

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POLICY AGAINST RACIAL DISCRIMINATION.

A THREE-JUDGE FEDERAL COURT

IN THE DISTRICT OF COLUMBIA ON JANUARY 12, 1970, ORDERED THE
SERVICE IN A PRELIMINARY INJUNCTION NOT TO RECOGNIZE TAX EXEMPT

STATUS OR ALLOW CHARITABLE CONTRIBUTIONS TO RACIALLY DISCRIMINATORY

PRIVATE SCHOOLS IN MISSISSIPPI.4 ON JUNE 26, 1970, THE COURT ENTERED

A SUPPLEMENTAL ORDER REQUIRING THE SERVICE TO SUSPEND ADVANCE ASSURANCE OF DEDUCTIBILITY OF CONTRIBUTIONS TO SEGREGATED SCHOOLS

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IN JULY 1970, THE SERVICE ANNOUNCED THAT IT COULD NO LONGER
LEGALLY JUSTIFY ALLOWING TAX EXEMPTIONS TO PRIVATE SCHOOLS THAT
RACIALLY DISCRIMINATE NOR TREAT CONTRIBUTIONS TO SUCH SCHOOLS AS
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TAX DEDUCTIBLE. TO QUALIFY FOR SUCH BENEFITS, ALL PRIVATE
SCHOOLS WERE REQUIRED TO ADOPT AND PUBLICLY ANNOUNCE A POLICY

THE THEN COMMISSIONER OF THE

OF RACIAL NON-DISCRIMINATION.
INTERNAL REVENUE SERVICE INDICATED THAT THE LEGAL ASPECTS OF THIS
ISSUE HAD BEEN DISCUSSED AND STUDIED IN GREAT DEPTH WITHIN BOTH
THE TREASURY DEPARTMENT AND THE DEPARTMENT OF JUSTICE AND THAT BOTH
DEPARTMENTS WERE IN ACCORD WITH THE POSITION.' 7 THE WHITE HOUSE

ALSO ISSUED A PRESS RELEASE ENDORSING THIS POSITION.

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GREEN V. KENNEDY, 300 F. SUPP. 1127 (D.D.C. 1970) [PRELIMINARY INJUNCTION, APPEAL DISMISSED SUB NOM. CANNON V. GREEN, 398 U.S. 956 (1970), APPEAL FROM SUBSEQUENT ORDERS DISMISSED SUB NOM. COIT V. GREEN, 400 H.S. 986 (1971).

GREEN V. KENNEDY, 26 AFTR 2D 70-5416 (N.N.C.) [REVISED PRELIMINARY INJUNCTION]; GREEN V. CONNALLY, 330 F. Supp. 1150 (D.n.C.) [PERMANENT INJUNCTION, AFF D SUB NOM. COIT V. GREEN, 404 .S. 907 (1971).

IRS NEWS RELEASES JULY 10 AND 19, 1970

TESTIMONY REFORE THE SELECT COMMITTEE FOR FOUAL EDUCATIONAL
OPPORTUNITY ON AUGUST 12, 1970

CONCLUDING THAT RACIALLY DISCRIMINATORY PRIVATE SCHOOLS WERE

NOT ELIGIBLE FOR TAX BENEFITS AVAILABLE TO CHARITIES, THE THREE-JUDGE
COURT IN GREEN ENTERED THE PERMANENT INJUNCTION IN JUNE OF 1971. A
CHALLENGE ON THE MERITS OF THE ORDER WAS MADE BY PARENTS SUPPORTING
SCHOOLS WITH EXCLUSIVELY WHITE ENROLLMENTS. ON AN APPEAL BY THE
WHITE PARENTS, THE INITED STATES SUPREME COURT AFFIRMED PER

CURIAM THE LOWER COURT.&

IN 1970, THE SERVICE EXAMINED PRIVATE SCHOOLS IN MISSISSIPPI AND, APPLYING SIMILAR PROCEDURES SURVEYED 15,000 SCHOOLS NATIONWIDE. THESE ACTIONS RESULTED IN REVOCATION OF THE TAX EXEMPT STATUS OF OVER 100 SCHOOLS THAT WOULD NOT ADOPT AND PUBLICIZE A RACIALLY NONDISCRIMINATORY ADMISSIONS POLICY. INCLUDED AMONG THE SCHOOLS THAT REFUSED TO ADOPT SUCH A POLICY WAS ROB JONES UNIVERSITY. IT SHOULD BE NOTED THAT THE SERVICE GAVE EVERY PRIVATE SCHOOL WITH A RACIALLY DISCRIMINATORY POLICY AN OPPORTUNITY TO CHANGE THAT POLICY BEFORE IT TOOK ACTION.

SINCE 1970, THE SERVICE HAS TAKEN A NUMBER OF ADDITIONAL STEPS TO IMPLEMENT THE RACIAL NONDISCRIMINATION REQUIREMENT. 1971, IRS PUBLISHED A RULING EXPLAINING THE NONDISCRIMINATORY

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REQUIREMENT,
AND, IN 1972, THE SERVICE PUBLISHED A PROCEDURE THAT
ESTABLISHED GUIDELINES FOR PUBLICIZING A SCHOOL'S RACIALLY NON-

DISCRIMINATORY POLICY.10

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COIT V. GREEN, 404 11.S. 007 (1971).

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THE SUPREME COURT IN

ROB JONES UNIVERSITY V. SIMON, 416 U.S. 725, 740, FN. 11, STATED

THAT THE GREEN AFFIRMANCE

CASE INVOLVING A TRULY ADVERSARY CONTROVERSY.

LACKS THE PRECEDENTIAL WEIGHT OF A

REV. Pu. 71-447, 1971-2 C.B. 230

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REV. PROC. 72-54, 1072-C.R. 834

FOLLOWING ITS INITIAL NATIONWIDE SURVEY OF TAX EXEMPT SCHOOLS,
THE SERVICE DURING 1973 THROUGH 1975 HAD AN EXAMINATION COVERAGE
WHICH RANGED FROM 2% TO 4%. DURING THIS PERIOD, AN EXAMINATION
OF GOLDSBORO CHRISTIAN SCHOOLS WAS CONDUCTED BECAUSE OF ITS CLAIM
FOR REFUND OF CERTAIN EMPLOYMENT TAXES. THIS EXAMINATION RESULTED
IN THE LITIGATION WHICH BECAME THE COMPANION CASE TO BOB JONES.

EXPERIENCE WITH THESE EXAMINATIONS INDICATED TO THE SERVICE

THAT SPECIFIC GUIDELINES WERE NEEDED TO ENSURE UNIFORM ENFORCEMENT
NATIONWIDE AND THE SERVICE PROCEEDED TO DEVELOP THESE. THE UNITED
STATES COMMISSION ON CIVIL RIGHTS, THE CIVIL RIGHTS DIVISION
OF THE JUSTICE DEPARTMENT, AND SEVERAL MEMBERS OF CONGRESS ALSO
EXPRESSED THE NEED FOR SPECIFIC EXAMINATION GUIDELINES.

IN DECEMBER 1975, REVENUE PROCEDURE 75-50 WAS PUBLISHED11

CLARIFYING IRS GUIDELINES FOR TAX EXEMPT SCHOOLS AND ESTABLISHING
RECORDKEEPING REQUIREMENTS. RECOGNIZING THE SENSITIVITY ASSOCIATED
WITH THIS PARTICULAR ISSUE, THE SERVICE TOOK THE UNUSUAL STEP OF
PUBLISHING THE PROCEDURE IN PROPOSED FORM TO AFFORD THE PUBLIC,
EDUCATIONAL INSTITUTIONS, AND OTHER INTERESTED PARTIES THE OPPORTUNITY
TO COMMENT. THE FINAL VERSION OF THE PROCEDURE REQUIRED ALL TAX
EXEMPT PRIVATE SCHOOLS TO ADOPT FORMALLY A RACIALLY
NONDISCRIMINATORY POLICY, TO REFER TO THE POLICY IN ALL BROCHURES
AND CATALOGUES, AND GENERALLY TO PUBLISH NOTICE OF THIS POLICY
ANNUALLY IN A NEWSPAPER OR BY USE OF THE BROADCAST MEDIA.

DETAILED

11 REV. PROC. 75-50, 1975-2 C.B. 587

EXAMINATION GUIDELINES WERE ALSO ISSUED DURING THIS PERIOD.

ALSO IN 1975, THE SERVICE PUBLISHED A REVENUE RULING CLARIFYING
AND EXPLAINING ITS POSITION THAT ORGANIZATIONS, INCLUDING CHURCHES,
WHICH ESTABLISH PRIVATE SCHOOLS WITH A POLICY OF REFUSING TO
ACCEPT CERTAIN RACIAL AND ETHNIC GROUPS WILL NOT BE RECOGNIZED

AS TAX-EXEMPT CHARITIES UNDER SECTION 501(c)(3) OF THE CODE. 12
REVENUE PROCEDURE 75-50, HOWEVER, MADE IT CLEAR THAT A SCHOOL
WHICH ENROLLS STUDENTS BASED ON RELIGIOUS AFFILIATION WILL NOT
BE DEEMED TO HAVE A DISCRIMINATORY POLICY IF THE RELIGION IS
OPEN TO ALL ON A RACIALLY NONDISCRIMINATORY BASIS.

IN 1976, THE PLAINTIFFS IN THE GREEN CASE REOPENED THAT SUIT,
ASSERTING THAT THE SERVICE WAS NOT COMPLYING WITH THE COURT'S
CONTINUING INJUNCTION THAT RACIALLY DISCRIMINATORY MISSISIPPI
PRIVATE SCHOOLS BE DENIED TAX EXEMPTION AND REQUESTING FURTHER
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INJUNCTIVE RELIEF. IN ADDITION, A COMPANION SUIT WAS FILED,
NOW ENTITLED WRIGHT V. REGAN, ASSERTING THAT THE SERVICE'S
ENFORCEMENT OF THE NONDISCRIMINATION REQUIREMENT ON A NATIONWIDE
BASIS WAS INEFFECTIVE.

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REV. RUL. 75-231, 1975-1 C.B. 158. SEE ALSO TIR 1379 (5/27/75) STATING THAT THE DE MINIMIS RULE WILL BE FOLLOWED IN ADMINISTERING REV. Rul. 75-231.

GREEN V. SIMON, CIV. NO. 1355-69(N.P.C)

WRIGHT V. SIMON, CIV. NO. 76-1426 (D.D.C.). IN WRIGHT V.
BLUMENTHAL, 480 F. SUPP. 790 (D.D.C. 1979), THE COURT DISMISSED
PLAINTIFFS COMPLAINT PRIMARILY FOR LACK OF STANDING.

THE DECISION

WAS REVERSED IN WRIGHT V. REGAN, 81-2 .S.T.C. #9504 (n.C. CIR. 1980).
THE SOLICITOR GENERAL HAS FILED A PETITION FOR CERTIORARI WITH
THE SUPREME COURT TO REVIEW THIS DECISION.

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