Law School Case Brief
Bob Jones Univ. v. United States - 461 U.S. 574, 103 S. Ct. 2017 (1983)
It is a well-established canon of statutory construction that a court should go beyond the literal language of a statute if reliance on that language would defeat the plain purpose of the statute. The general words used in a clause, taken by themselves, and literally construed, without regard to the object in view, might seem to sanction a claim, but this mode of expounding a statute has never been adopted by any enlightened tribunal, because it is evident that in many cases it would defeat the object which the Legislature intended to accomplish. It is well settled that, in interpreting a statute, the court will not look merely to a particular clause in which general words may be used, but will take in connection with it the whole statute and the objects and policy of the law.
The Internal Revenue Service (IRS) denied or revoked tax-exempt status under 26 U.S.C.S. § 501(c)(3) to petitioners Bob Jones University ("Bob Jones" and Goldsboro Christian Schools, Inc. ("Goldsboro"), (collectively, "Schools"), two nonprofit private schools, pursuant to an IRS ruling that interpreted 26 U.S.C.S. §§ 170 and § 501(c)(3) as prohibiting tax-exempt status for private schools having a racially discriminatory policy. The admissions policies of the Schools that caused the IRS to deny or revoke their tax-exempt status were carried out on the basis of religious beliefs. The Schools later brought suit in different federal district courts seeking refunds of taxes paid to the IRS. In the Bob Jones action, district court ordered the IRS to pay an income tax refund, holding that the revocation of the tax-exempt status exceeded the delegated powers of the IRS, was improper under IRS rulings and procedures, and violated Bob Jones' rights under the First Amendment's religion clauses. The court of appeals reversed and remanded, holding that the IRS acted within its statutory authority in revoking the tax-exempt status, and that the revocation did not violate the First Amendment. In the Goldsboro action, the district court entered summary judgment for the IRS, rejecting Goldsboro's claim to tax-exempt status under § 501(c)(3) and also its claim that the denial of such status violated the Religion Clauses of the First Amendment. The court of appeals affirmed. The Schools were granted writs of certiorari.
Was the IRS correct when it disallowed the tax-exempt status under § 501(c)(3) for the racially discriminatory policies enforced by Bob Jones and Goldsboro?
The Supreme Court of the United States affirmed the lower courts decisions. The Court ruled that the Schools racially discriminatory admissions policies violated clearly declared federal policy and must be denied tax benefits flowing from qualification under § 501(c)(3). Entitlement to tax exemption depended on meeting certain common-law standards of charity. An institution seeking tax exempt status must serve a public purpose and not be contrary to established public policy. To warrant exemption under § 501(c)(3), an institution must fall within a category specified in that section and must demonstrably serve and be in harmony with the public interest. The institution's purpose must not be so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred.
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