vehicle to obtain a definitive Supreme Court opinion res the First Amendment issues and determining whether the 1 courts were correct in holding that the Code prohibited exemptions for discriminatory schools.

October 13, 1981: Pressure Mounts on Administration

After the Supreme Court agreed to review Bob Jo Goldsboro, on October 13, 1981, increased pressure was p the Administration. On October 30, 1981, Representative Lott (R., Miss.) wrote to President Reagan, Attorney Gene Smith, Solicitor General Lee, Secretary Regan and IRS Commissioner Egger stating that the Government's position Jones Goldsboro was "both legally and politically indef and asking the Government to change its position before t Supreme Court. While Treasury, Justice and IRS officials formulated their responses to Representative Lott, the fo events occurred.

Commissioner Egger advised Secretary Regan on D 8, 1981 against changing the Government's position, argui "the Supreme Court should be allowed to decide the issue. also asked for a meeting with Regan.

Treasury General Counsel Peter J. Wallison brief Secretary Regan on December 15, 1981 and December 17, 1981 possible meeting or telephone call with Representative Lot Wallison advised Regan to support Commissioner Egger's pos on the basic tax exemption issue, writing that the nondiscrimination rule "has been the position of the Servi since 1970 and has many times been upheld by the courts. December 17, 1981 Wallison advised Regan that "it is the consensus at the Service and at Treasury that the issue sh considered at the White House" before the Government's Bob brief was filed at the Supreme Court. Wallison noted that preparing a briefing memorandum for Regan to raise the Bob issue with Jim Baker or Ed Meese. Wallison advised Regan avoid mentioning to Representative Lott that the White Hous be involved, in order to preserve President Reagan's "posit non-involvement in this matter, whichever way it goes.".

Within the Justice Department, discussions were h which career officials and recent political appointees deba whether the Government should change its position before th Supreme Court. Excerpts from President Reagan's campaign platform, and ideas from A.G. Smith's policy position criti judicial activism, were tools used by political appointees to change the Government's position. Also, Associate Deput Bruce Fein characterized the IRS-Justice position as giving courts a "roving commission" to override statutory mandates changing judicial notions of public policy.

the President's policy" and enclosing a copy of t Log of Selected House Mail. The Presidential Log recorded Lott's letter to President Reagan urging intervene" in the Bob Jones case, and noted Presi handwritten comment, "I think we should." Lott h that the President's comment might be ambiguous.

On December 22, 1981 Treasury General C advised Secretary Regan and Deputy Secretary McNa entire issue to the White House, before the Bob J filed on December 31, 1981. Wallison reviewed th concluded, at that time, that it was possible tha Bob Jones might not lead to an expansion of the I in social engineering, since it was possible that be read only as approving the IRS racial nondiscr policy. Wallison reviewed the politics of a chan Administration's position, reasoning that some that "the Service's position is neither frivolou implementation of the social policies of the IRS concluding that a policy change could be interpre that would be politically troublesome.

ev

December 31, 1981 January 8, 1982: The Week The Made change the Governme

Subsequent documents do not reveal pre final decision was made to confess Government OFF and reverse the IRS nondiscrimination policy. Pr press releases and court documents that would be decision was made probably began on December 31, several high level Justice officials continued to the decision until it was announced on January 8, Documents during this period, reveal the following

Olson memorandum includes statements by several ongressmen, during the 1979-1980 Ashbrook-Dornan rider debates, acknowledging that the IRS has "more authority to strip away the tax-exempt status of s that practice racial discrimination."

anuary 5, 1982 Treasury Assistant Secretary for Ann Dore McLaughlin advised Deputy Treasury mar on a "press strategy" to announce the change of ition on the Bob Jones case at 4:00 p.m. on Friday, 2, so that initial stories would reflect Treasury's the decision. No mention was made of the ATT and ses made that afternoon, but Deputy Secretary Ivised to keep separate any discussion of the

ince case.

January 8, 1982, Deputy Treasury Secretary McNamar lered Commissioner Egger to "take the necessary se the previous decisions of the IRS in denying tus" to the two schools before the Supreme Court. 1 his understanding that this required formal applicable revenue rulings, and a refund of their

January 8, 1982 the Justice Department filed a the Supreme Court-confessing error urging the Bob Jones

Goldsboro case as moot. Justice Court that Treasury had begun the process of exemptions and issuing tax refunds for the two also had "commenced the process necessary to revoke pertinent Revenue Rulings that were relied upon" to ols tax exempt status under the Code.

January 28, 1982. Congressman Conable has intro companion bill.

Treasury announced on January 18, 1981 would not act on any applications for tax exempt response to the January 8 policy shift, until Co on the President's bill. Specifically excluded statement were the two schools whose cases were Supreme Court.