Berkley Center

In Bob Jones University v. United States, the Supreme Court considered the constitutionality of the Internal Revenue Service (IRS) denying tax exemptions to religious institutions that practiced racial discrimination. Generally, the IRS provides a tax exemption to institutions organized exclusively for religious or charitable purposes. In 1971, the IRS created a policy denying such tax exemptions to institutions that practice racial discrimination. In this case, both Bob Jones University and another institution, Goldsboro Christian Schools, had racially discriminatory admissions policies, which the schools claimed were based on sincerely held religious beliefs. The IRS denied both schools their tax exemptions because of their racially discriminatory policies. The schools appealed that decision on the grounds that the denial violated their First Amendment right to freely exercise their religion, and also violated the Establishment Clause by preferring religions that do not include racially discriminatory tenets over those that do. The Court concluded that the IRS acted properly in denying the schools their tax exemption. First, the government may place limits on the free exercise of religion if such limits are designed to further a substantial government interest. The Court found that the government’s interest in ending racial discrimination was substantial and outweighed any burden the denial of the tax exemption created. Second, the Court held that the IRS policy was based on a neutral, secular purpose and was not designed to prefer one religion over another. Thus, the policy did not violate the Free Exercise Clause or the Establishment Clause.