Bob Jones Univ. v. United States

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 81-3 Argued: October 12, 1982 --- Decided: May 24, 1983 [*]
CHIEF JUSTICE BURGER delivered the opinion of the Court.

We granted certiorari to decide whether petitioners, nonprofit private schools that prescribe and enforce racially discriminatory admissions standards on the basis of religious doctrine, qualify as tax-exempt organizations under § 501(c)(3) of the Internal Revenue Code of 1954.

I

A

Until 1970, the Internal Revenue Service granted tax-exempt status to private schools, without regard to their racial admissions policies, under § 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3), [n1] and granted charitable [p578] deductions for contributions to such schools under § 170 of the Code, 26 U.S.C. § 170. [n2]

On January 12, 1970, a three-judge District Court for the District of Columbia issued a preliminary injunction prohibiting the IRS from according tax-exempt status to private schools in Mississippi that discriminated as to admissions on the basis of race. Green v. Kennedy, 309 F.Supp. 1127, appeal dism'd sub nom. Cannon v. Green, 398 U.S. 956 (1970). Thereafter, in July, 1970, the IRS concluded that it could "no longer legally justify allowing tax-exempt status [under § 501(c)(3)] to private schools which practice racial discrimination." IRS News Release, July 7, 1970, reprinted in App. in No. 81-3, p. A235. At the same time, the IRS announced that it could not "treat gifts to such schools as charitable deductions for income tax purposes [under § 170]." Ibid. By letter dated November 30, 1970, the IRS formally notified private schools, including those involved in this litigation, of this change in policy, "applicable to all private schools in the United States at all levels of education." See id. at A232.

On June 30, 1971, the three-judge District Court issued its opinion on the merits of the Mississippi challenge. Green v. Connally, 330 F.Supp. 1150, summarily aff'd sub nom. Coit v. Green, 404 U.S. 997 (1971). That court approved the IRS's amended construction of the Tax Code. The court also held that racially discriminatory private schools were not entitled to exemption under § 501(c)(3) and that donors were not entitled to deductions for contributions to such schools under § 170. The court permanently enjoined the Commissioner of [p579] Internal Revenue from approving tax-exempt status for any school in Mississippi that did not publicly maintain a policy of nondiscrimination.

The revised policy on discrimination was formalized in Revenue Ruling 71-447, 1971-2 Cum.Bull. 230:

Both the courts and the Internal Revenue Service have long recognized that the statutory requirement of being "organized and operated exclusively for religious, charitable, . . . or educational purposes" was intended to express the basic common law concept [of "charity"]. . . . All charitable trusts, educational or otherwise, are subject to the requirement that the purpose of the trust may not be illegal or contrary to public policy.

Based on the "national policy to discourage racial discrimination in education," the IRS ruled that

a [private] school not having a racially nondiscriminatory policy as to students is not 'charitable' within the common law concepts reflected in sections 170 and 501(c)(3) of the Code.

Id. at 231. [n3]

The application of the IRS construction of these provisions to petitioners, two private schools with racially discriminatory admissions policies, is now before us.

B

No. 81-3, Bob Jones University v. United States
Bob Jones University is a nonprofit corporation located in Greenville, S.C. [n4] Its purpose is "to conduct an institution [p580] of learning . . giving special emphasis to the Christian religion and the ethics revealed in the Holy Scriptures." Certificate of Incorporation, Bob Jones University, Inc., of Greenville, S.C. reprinted in App. in No. 81-3, p. A119. The corporation operates a school with an enrollment of approximately 5,000 students, from kindergarten through college and graduate school. Bob Jones University is not affiliated with any religious denomination, but is dedicated to the teaching and propagation of its fundamentalist Christian religious beliefs. It is both a religious and educational institution. Its teachers are required to be devout Christians, and all courses at the University are taught according to the Bible. Entering students are screened as to their religious beliefs, and their public and private conduct is strictly regulated by standards promulgated by University authorities.

The sponsors of the University genuinely believe that the Bible forbids interracial dating and marriage. To effectuate these views, Negroes were completely excluded until 1971. From 1971 to May, 1975, the University accepted no applications from unmarried Negroes, [n5] but did accept applications from Negroes married within their race.

Following the decision of the United States Court of Appeals for the Fourth Circuit in McCrary v. Runyon, 515 F.2d 1082 (1975), aff'd, 427 U.S. 160 (1976), prohibiting racial exclusion from private schools, the University revised its policy. Since May 29, 1975, the University has permitted unmarried Negroes to enroll; but a disciplinary rule prohibits interracial dating and marriage. That rule reads:

There is to be no interracial dating.

1. Students who are partners in an interracial marriage will be expelled. [p581]

2. Students who are members of or affiliated with any group or organization which holds as one of its goals or advocates interracial marriage will be expelled.

3. Students who date outside of their own race will be expelled.

4. Students who espouse, promote, or encourage others to violate the University's dating rules and regulations will be expelled.

App. in No. 81-3, p. A197. The University continues to deny admission to applicants engaged in an interracial marriage or known to advocate interracial marriage or dating. Id. at A277.

Until 1970, the IRS extended tax-exempt status to Bob Jones University under § 501(c)(3). By the letter of November 30, 1970, that followed the injunction issued in Green v. Kennedy, 309 F.Supp. 1127 (DC 1970), the IRS formally notified the University of the change in IRS policy, and announced its intention to challenge the tax-exempt status of private schools practicing racial discrimination in their admissions policies.

After failing to obtain an assurance of tax exemption through administrative means, the University instituted an action in 1971 seeking to enjoin the IRS from revoking the school's tax-exempt status. That suit culminated in Bob Jones University v. Simon, 416 U.S. 725 (1974), in which this Court held that the Anti-Injunction Act of the Internal Revenue Code, 26 U.S.C. § 7421(a), prohibited the University from obtaining judicial review by way of injunctive action before the assessment or collection of any tax.

Thereafter, on April 16, 1975, the IRS notified the University of the proposed revocation of its tax-exempt status. On January 19, 1976, the IRS officially revoked the University's tax-exempt status, effective as of December 1, 1970, the day after the University was formally notified of the change in IRS policy. The University subsequently filed returns under the Federal Unemployment Tax Act for the period from December 1, 1970, to December 31, 1975, and paid a tax [p582] totalling $21 on one employee for the calendar year of 1975. After its request for a refund was denied, the University instituted the present action, seeking to recover the $21 it had paid to the IRS. The Government counterclaimed for unpaid federal unemployment taxes for the taxable years 1971 through 1975, in the amount of $489,675.59, plus interest.

The United States District Court for the District of South Carolina held that revocation of the University's tax-exempt status exceeded the delegated powers of the IRS, was improper under the IRS rulings and procedures, and violated the University's rights under the Religion Clauses of the First Amendment. 468 F.Supp. 890, 907 (1978). The court accordingly ordered the IRS to pay the University the $21 refund it claimed and rejected the IRS's counterclaim.

The Court of Appeals for the Fourth Circuit, in a divided opinion, reversed. 639 F.2d 147 (1980). Citing Green v. Connally, 330 F.Supp. 1150 (DC 1971), with approval, the Court of Appeals concluded that § 501(c)(3) must be read against the background of charitable trust law. To be eligible for an exemption under that section, an institution must be "charitable" in the common law sense, and therefore must not be contrary to public policy. In the court's view, Bob Jones University did not meet this requirement, since its

racial policies violated the clearly defined public policy, rooted in our Constitution, condemning racial discrimination and, more specifically, the government policy against subsidizing racial discrimination in education, public or private.

639 F.2d at 151. The court held that the IRS acted within its statutory authority in revoking the University's tax-exempt status. Finally, the Court of Appeals rejected petitioner's arguments that the revocation of the tax exemption violated the Free Exercise and Establishment Clauses of the First Amendment. The case was remanded to the District Court with instructions to dismiss the University's claim for a refund and to reinstate the IRS's counterclaim. [p583]

C

No. 81-1, Goldsboro Christian Schools, Inc. v. United States
Goldsboro Christian Schools is a nonprofit corporation located in Goldsboro, N.C. Like Bob Jones University, it was established

to conduct an institution or institutions of learning . . . giving special emphasis to the Christian religion and the ethics revealed in the Holy scriptures.

Articles of Incorporation ¶ 3(a); see Complaint ¶ 6, reprinted in App. in No. 81-1, pp. 5-6. The school offers classes from kindergarten through high school, and, since at least 1969, has satisfied the State of North Carolina's requirements for secular education in private schools. The school requires its high school students to take Bible-related courses, and begins each class with prayer.

Since its incorporation in 1963, Goldsboro Christian Schools has maintained a racially discriminatory admissions policy based upon its interpretation of the Bible. [n6] Goldsboro has for the most part accepted only Caucasians. On occasion, however, the school has accepted children from racially mixed marriages in which one of the parents is Caucasian.

Goldsboro never received a determination by the IRS that it was an organization entitled to tax exemption under § 501(c)(3). Upon audit of Goldsboro's records for the years 1969 through 1972, the IRS determined that Goldsboro was not an organization described in § 501(c)(3), and therefore was required to pay taxes under the Federal Insurance Contribution Act and the Federal Unemployment Tax Act. [p584]

Goldsboro paid the IRS $3,459.93 in withholding, social security, and unemployment taxes with respect to one employee for the years 1969 through 1972. Thereafter, Goldsboro filed a suit seeking refund of that payment, claiming that the school had been improperly denied § 501(c)(3) exempt status. [n7] The IRS counterclaimed for $160,073.96 in unpaid social security and unemployment taxes for the years 1969 through 1972, including interest and penalties. [n8]

The District Court for the Eastern District of North Carolina decided the action on cross-motions for summary judgment. 436 F.Supp. 1314 (1977). In addressing the motions for summary judgment, the court assumed that Goldsboro's racially discriminatory admissions policy was based upon a sincerely held religious belief. The court nevertheless rejected Goldsboro's claim to tax-exempt status under § 501(c) (3), finding that

private schools maintaining racially discriminatory admissions policies violate clearly declared federal policy, and therefore must be denied the federal tax benefits flowing from qualification under Section 501(c)(3).

Id. at 1318. The court also rejected Goldsboro's arguments that denial of tax-exempt status violated the Free Exercise and Establishment Clauses of the First Amendment. Accordingly, the court entered summary judgment for the IRS on its counterclaim.

The Court of Appeals for the Fourth Circuit affirmed, 644 F.2d 879 (1981) (per curiam). That court found an "identity for present purposes" between the Goldsboro case and the Bob Jones University case, which had been decided shortly [p585] before by another panel of that court, and affirmed for the reasons set forth in Bob Jones University.

We granted certiorari in both cases, 454 U.S. 892 (1981), [n9] and we affirm in each.

II

A

In Revenue Ruling 71-447, the IRS formalized the policy, first announced in 1970, that § 170 and § 501(c)(3) embrace the common law "charity" concept. Under that view, to qualify for a tax exemption pursuant to § 501(c)(3), an institution must show, first, that it falls within one of the eight categories expressly set forth in that section, and second, that its activity is not contrary to settled public policy.

Section 501(c)(3) provides that "[c]orporations . . . organized and operated exclusively for religious, charitable . . . or educational purposes" are entitled to tax exemption. Petitioners argue that the plain language of the statute guarantees them tax-exempt status. They emphasize the absence of any language in the statute expressly requiring all exempt organizations to be "charitable" in the common law sense, and they contend that the disjunctive "or" separating the categories in § 501(c)(3) precludes such a reading. Instead, they argue that, if an institution falls within one or more of [p586] the specified categories it is automatically entitled to exemption, without regard to whether it also qualifies as "charitable." The Court of Appeals rejected that contention and concluded that petitioners' interpretation of the statute "tears section 501(c)(3) from its roots." 639 F.2d at 151.

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 the clause . . . , taken by themselves, and literally construed, without regard to the object in view, would seem to sanction the claim of the plaintiff. 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. And 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. . . .

Brown v. Duchesne, 19 How. 183, 194 (1857) (emphasis added).

Section 501(c)(3) therefore must be.analyzed and construed within the framework of the Internal Revenue Code and against the background of the congressional purposes. Such an examination reveals unmistakable evidence that, underlying all relevant parts of the Code, is the intent that entitlement to tax exemption depends on meeting certain common law standards of charity -- namely, that an institution seeking tax-exempt status must serve a public purpose and not be contrary to established public policy.

This "charitable" concept appears explicitly in § 170 of the Code. That section contains a list of organizations virtually identical to that contained in § 501(c)(3). It is apparent that Congress intended that list to have the same meaning in both [p587] sections. [n10] In § 170, Congress used the list of organizations in defining the term "charitable contributions." On its face, therefore, § 170 reveals that Congress' intention was to provide tax benefits to organizations serving charitable purposes. [n11] The form of § 170 simply makes plain what common sense and history tell us: in enacting both § 170 and [p588] § 501(c)(3), Congress sought to provide tax benefits to charitable organizations, to encourage the development of private institutions that serve a useful public purpose or supplement or take the place of public institutions of the same kind.

Tax exemptions for certain institutions thought beneficial to the social order of the country as a whole, or to a particular community, are deeply rooted in our history, as in that of England. The origins of such exemptions lie in the special privileges that have long been extended to charitable trusts. [n12]

More than a century ago, this Court announced the caveat that is critical in this case:

[I]t has now become an established principle of American law that courts of chancery will sustain and protect . . . a gift . . . to public charitable uses, provided the same is consistent with local laws and public policy. . . .

Perin v. Carey, 24 How. 465, 501 (1861) (emphasis added). Soon after that, in 1877, the Court commented:

A charitable use, where neither law nor public policy forbids, may be applied to almost any thing that tends to promote the well-doing and well-being of social man.

Ould v. Washington Hospital for Foundlings, 95 U.S. 303, 311 (emphasis added). [p589]

See also e.g., Jackson v. Phillips, 96 Mass. 539, 556 (1867). In 1891, in a restatement of the English law of charity [n13] which has long been recognized as a leading authority in this country, Lord MacNaghten stated:

"Charity," in its legal sense, comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads.

Commissioners v. Pemsel, [1891] A. C. 531, 583 (emphasis added). See, e.g., 4 A. Scott, Law of Trusts § 368, pp. 2853-2854 (3d ed.1967) (hereinafter Scott). These statements clearly reveal the legal background against which Congress enacted the first charitable exemption statute in 1894: [n14] charities were to be given preferential treatment because they provide a benefit to society.

What little floor debate occurred on the charitable exemption provision of the 1894 Act and similar sections of later statutes leaves no doubt that Congress deemed the specified organizations entitled to tax benefits because they served desirable public purposes. See, e.g., 26 Cong.Rec. 585-586 [p590] (1894); id. at 1727. In floor debate on a similar provision in 1917, for example, Senator Hollis articulated the rationale:

For every dollar that a man contributes for these public charities, educational, scientific, or otherwise, the public gets 100 per cent.

55 Cong.Rec. 6728. See also e.g., 44 Cong.Rec. 4150 (1909); 50 Cong.Rec. 1305-1306 (1913). In 1924, this Court restated the common understanding of the charitable exemption provision:

Evidently, the exemption is made in recognition of the benefit which the public derives from corporate activities of the class named, and is intended to aid them when not conducted for private gain.

Trinidad v. Sagrada Orden, 263 U.S. 578, 581. [n15]

In enacting the Revenue Act of 1938, ch. 289, 52 Stat. 447, Congress expressly reconfirmed this view with respect to the charitable deduction provision:

The exemption from taxation of money or property devoted to charitable and other purposes is based upon the theory that the Government is compensated for the loss of revenue by its relief from financial burdens which would otherwise have to be met by appropriations from other public funds, and by the benefits resulting from the promotion of the general welfare.

H.R.Rep. No. 1860, 75th Cong., 3d Sess., 19 (1938). [n16] [p591]

A corollary to the public benefit principle is the requirement, long recognized in the law of trusts, that the purpose of a charitable trust may not be illegal or violate established public policy. In 1861, this Court stated that a public charitable use must be "consistent with local laws and public policy," Perin v. Carey, 24 How. at 501. Modern commentators and courts have echoed that view. See, e.g., Restatement (Second) of Trusts § 377, Comment c (1959); 4 Scott § 377, and cases cited therein; Bogert § 378, at 191-192. [n17]

When the Government grants exemptions or allows deductions all taxpayers are affected; the very fact of the exemption or deduction for the donor means that other taxpayers can be said to be indirect and vicarious "donors." Charitable exemptions are justified on the basis that the exempt entity confers a public benefit -- a benefit which the society or the community may not itself choose or be able to provide, or which supplements and advances the work of public institutions already supported by tax revenues. [n18] History buttresses [p592] logic to make clear that, 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. [n19] 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.

B

We are bound to approach these questions with full awareness that determinations of public benefit and public policy are sensitive matters with serious implications for the institutions affected; a declaration that a given institution is not "charitable" should be made only where there can be no doubt that the activity involved is contrary to a fundamental public policy. But there can no longer be any doubt that racial discrimination in education violates deeply and widely accepted views of elementary justice. Prior to 1954, public education in many places still was conducted under the pall of [p593] Plessy v. Ferguson, 163 U.S. 537"]163 U.S. 537 (1896); racial segregation in primary and secondary education prevailed in many parts of the country. See, e.g., Segregation and the Fourteenth Amendment in the States (B. Reams & P. Wilson eds.1975). [n20] This Court's decision in 163 U.S. 537 (1896); racial segregation in primary and secondary education prevailed in many parts of the country. See, e.g., Segregation and the Fourteenth Amendment in the States (B. Reams & P. Wilson eds.1975). [n20] This Court's decision in Brown v. Board of Education, 347 U.S. 483 (1954), signalled an end to that era. Over the past quarter of a century, every pronouncement of this Court and myriad Acts of Congress and Executive Orders attest a firm national policy to prohibit racial segregation and discrimination in public education.

An unbroken line of cases following Brown v. Board of Education establishes beyond doubt this Court's view that racial discrimination in education violates a most fundamental national public policy, as well as rights of individuals.

The right of a student not to be segregated on racial grounds in schools . . . is indeed so fundamental and pervasive that it is embraced in the concept of due process of law.

Cooper v. Aaron, 358 U.S. 1, 19 (1958). In Norwood v. Harrison, 413 U.S. 455, 468-469 (1973), we dealt with a nonpublic institution:

[A] private school -- even one that discriminates -- fulfills an important educational function; however, . . . [that] legitimate educational function cannot be isolated from [p594] discriminatory practices. . . . [D]iscriminatory treatment exerts a pervasive influence on the entire educational process.

(Emphasis added.) See also Runyon v. McCrary, 427 U.S. 160 (1976); Griffin v. County School Board, 377 U.S. 218 (1964).

Congress, in Titles IV and VI of the Civil Rights Act of 1964, Pub.L. 88-352, 78 Stat. 241, 42 U.S.C. §§ 2000c 2000c-6, 2000d, clearly expressed its agreement that racial discrimination in education violates a fundamental public policy. Other sections of that Act, and numerous enactments since then, testify to the public policy against racial discrimination. See, e.g., the Voting Rights Act of 1965, Pub.L. 89-110, 79 Stat. 437, 42 U.S.C. § 1973 et seq. (1976 ed. and Supp. V); Title VIII of the Civil Rights Act of 1968, Pub.L. 90-284, 82 Stat. 81, 42 U.S.C. § 3601 et seq. (1976 ed. and Supp. V); the Emergency School Aid Act of 1972, Pub.L. 92-318, 86 Stat. 354 (repealed effective Sept. 30, 1979; replaced by similar provisions in the Emergency School Aid Act of 1978, Pub.L. 95-561, 92 Stat. 2252, 20 U.S.C. §§ 3191-3207 (1976 ed., Supp. V)).

The Executive Branch has consistently placed its support behind eradication of racial discrimination. Several years before this Court's decision in Brown v. Board of Education, supra, President Truman issued Executive Orders prohibiting racial discrimination in federal employment decisions, Exec.Order No. 9980, 3 CFR 720 (1943-1948 Comp.), and in classifications for the Selective Service, Exec.Order No. 9988, 3 CFR 726, 729 (1943-1948 Comp.). In 1957, President Eisenhower employed military forces to ensure compliance with federal standards in school desegregation programs. Exec.Order No. 10730, 3 CFR 389 (1954-1958 Comp.). And in 1962, President Kennedy announced:

[T]he granting of Federal assistance for . . . housing and related facilities from which Americans are excluded because of their race, color, creed, or national origin is unfair, unjust, and inconsistent with the public policy of [p595] the United States as manifested in its Constitution and laws.

Exec.Order No. 11063, 3 CFR 652 (1959-1963 Comp.). These are but a few of numerous Executive Orders over the past three decades demonstrating the commitment of the Executive Branch to the fundamental policy of eliminating racial discrimination. See, e.g., Exec.Order No. 11197, 3 CFR 278 (1964-1965 Comp.); Exec.Order No. 11478, 3 CFR 803 (1966-1970 Comp.); Exec.Order No. 11764, 3 CFR 849 (1971-1975 Comp.); Exec.Order No. 12250, 3 CFR 298 (1981).

Few social or political issues in our history have been more vigorously debated and more extensively ventilated than the issue of racial discrimination, particularly in education. Given the stress and anguish of the history of efforts to escape from the shackles of the "separate but equal" doctrine of Plessy v. Ferguson, 163 U.S. 537"]163 U.S. 537 (1896), it cannot be said that educational institutions that, for whatever reasons, practice racial discrimination, are institutions exercising "beneficial and stabilizing influences in community life," 163 U.S. 537 (1896), it cannot be said that educational institutions that, for whatever reasons, practice racial discrimination, are institutions exercising "beneficial and stabilizing influences in community life," Walz v. Tax Comm'n, 397 U.S. 664, 673 (1970), or should be encouraged by having all taxpayers share in their support by way of special tax status.

There can thus be no question that the interpretation of § 170 and § 501(c)(3) announced by the IRS in 1970 was correct. That it may be seen as belated does not undermine its soundness. It would be wholly incompatible with the concepts underlying tax exemption to grant the benefit of tax-exempt status to racially discriminatory educational entities, which "exer[t] a pervasive influence on the entire educational process." Norwood v. Harrison, supra, at 469. Whatever may be the rationale for such private schools' policies, and however sincere the rationale may be, racial discrimination in education is contrary to public policy. Racially discriminatory educational institutions cannot be viewed as conferring a public benefit within the "charitable" concept discussed earlier, [p596] or within the congressional intent underlying § 170 and § 501(c)(3). [n21]

C

Petitioners contend that, regardless of whether the IRS properly concluded that racially discriminatory private schools violate public policy, only Congress can alter the scope of § 170 and § 501(c)(3). Petitioners accordingly argue that the IRS overstepped its lawful bounds in issuing its 1970 and 1971 rulings.

Yet ever since the inception of the Tax Code, Congress has seen fit to vest in those administering the tax laws very broad authority to interpret those laws. In an area as complex as the tax system, the agency Congress vests with administrative responsibility must be able to exercise its authority to meet changing conditions and new problems. Indeed, as early as 1918, Congress expressly authorized the Commissioner "to make all needful rules and regulations for the enforcement" of the tax laws. Revenue Act of 1918, ch. 18, § 1309, 40 Stat. 1143. The same provision, so essential to efficient and fair administration of the tax laws, has appeared in Tax Codes ever since, see 26 U.S.C. § 7805(a); and this Court has long recognized the primary authority of the IRS and its predecessors in construing the Internal Revenue Code, see, e.g., Commissioner v. Portland Cement Co. of Utah, 450 U.S. 156, 169 (1981); United States v. Correll, 389 U.S. 299, 306-307 (1967); Boske v. Comingore, 177 U.S. 459, 469-470 (1900).

Congress, the source of IRS authority, can modify IRS rulings it considers improper; and courts exercise review over IRS actions. In the first instance, however, the responsibility [p597] for construing the Code falls to the IRS. Since Congress cannot be expected to anticipate every conceivable problem that can arise or to carry out day-to-day oversight, it relies on the administrators and on the courts to implement the legislative will. Administrators, like judges, are under oath to do so.

In § 170 and § 501(c)(3), Congress has identified categories of traditionally exempt institutions and has specified certain additional requirements for tax exemption. Yet the need for continuing interpretation of those statutes is unavoidable. For more than 60 years, the IRS and its predecessors have constantly been called upon to interpret these and comparable provisions, and in doing so have referred consistently to principles of charitable trust law. In Treas.Regs. 45, Art. 517(1) (1921), for example, the IRS's predecessor denied charitable exemptions on the basis of proscribed political activity before the Congress itself added such conduct as a disqualifying element. In other instances, the IRS has denied charitable exemptions to otherwise qualified entities because they served too limited a class of people, and thus did not provide a truly "public" benefit under the common law test. See, e.g., Crellin v. Commissioner, 46 B. T. A. 1152, 1155-1156 (1942); James Sprunt Benevolent Trust v. Commissioner, 20 B. T. A.19, 24-25 (1930). See also Treas.Reg. § 1.501(c)(3)(d)(1)(ii) (1959). Some years before the issuance of the rulings challenged in these cases, the IRS also ruled that contributions to community recreational facilities would not be deductible, and that the facilities themselves would not be entitled to tax-exempt status, unless those facilities were open to all on a racially nondiscriminatory basis. See Rev.Rul. 67-325, 1967-2 Cum.Bull. 113. These rulings reflect the Commissioner's continuing duty to interpret and apply the Internal Revenue Code. See also Textile Mills Securities Corp. v. Commissioner, 314 U.S. 326, 337-338 (1941).

Guided, of course, by the Code, the IRS has the responsibility, in the first instance, to determine whether a particular [p598] entity is "charitable" for purposes of § 170 and § 501(c)(3). [n22] This in turn may necessitate later determinations of whether given activities so violate public policy that the entities involved cannot be deemed to provide a public benefit worthy of "charitable" status. We emphasize, however, that these sensitive determinations should be made only where there is no doubt that the organization's activities violate fundamental public policy.

On the record before us, there can be no doubt as to the national policy. In 1970, when the IRS first issued the ruling challenged here, the position of all three branches of the Federal Government was unmistakably clear. The correctness of the Commissioner's conclusion that a racially discriminatory private school "is not ‘charitable' within the common law concepts reflected in . . . the Code," Rev.Rul. 71-447, 1971-2 Cum.Bull., at 231, is wholly consistent with what Congress, the Executive, and the courts had repeatedly declared before 1970. Indeed, it would be anomalous for the Executive, Legislative, and Judicial Branches to reach conclusions that add up to a firm public policy on racial discrimination, and at the same time have the IRS blissfully ignore what all three branches of the Federal Government had declared. [n23] Clearly an educational institution engaging in [p599] practices affirmatively at odds with this declared position of the whole Government cannot be seen as exercising a "beneficial and stabilizing influenc[e] in community life," Walz v. Tax Comm'n, 397 U.S. at 673, and is not "charitable," within the meaning of § 170 and § 501(c)(3). We therefore hold that the IRS did not exceed its authority when it announced its interpretation of § 170 and § 501(c)(3) in 1970 and 1971. [n24]

D

The actions of Congress since 1970 leave no doubt that the IRS reached the correct conclusion in exercising its authority. It is, of course, not unknown for independent agencies or the Executive Branch to misconstrue the intent of a statute; Congress can and often does correct such misconceptions, if the courts have not done so. Yet, for a dozen years, Congress has been made aware -- acutely aware -- of the IRS rulings of 1970 and 1971. As we noted earlier, few issues have been the subject of more vigorous and widespread debate and discussion in and out of Congress than those related to racial segregation in education. Sincere adherents advocating contrary views have ventilated the subject for well over three decades. Failure of Congress to modify the IRS rulings of 1970 and 1971, of which Congress was, by its own studies and by public discourse, constantly reminded, and Congress' awareness of the denial of tax-exempt status for racially discriminatory schools when enacting other and related legislation make out an unusually strong case of legislative acquiescence in and ratification by implication of the 1970 and 1971 rulings. [p600]

Ordinarily, and quite appropriately, courts are slow to attribute significance to the failure of Congress to act on particular legislation. See, e.g., Aaron v. SEC, 446 U.S. 680, 694, n. 11 (1980). We have observed that "unsuccessful attempts at legislation are not the best of guides to legislative intent," Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 382, n. 11 (1969). Here, however, we do not have an ordinary claim of legislative acquiescence. Only one month after the IRS announced its position in 1970, Congress held its first hearings on this precise issue. Equal Educational Opportunity: Hearings before the Senate Select Committee on Equal Educational Opportunity, 91st Cong., 2d Sess., 1991 (1970). Exhaustive hearings have been held on the issue at various times since then. These include hearings in February. 1982, after we granted review in this case. Administration's Change in Federal Policy Regarding the Tax Status of Racially Discriminatory Private Schools: Hearing before the House Committee on Ways and Means, 97th Cong., 2d Sess. (1982).

Nonaction by Congress is not often a useful guide, but the nonaction here is significant. During the past 12 years. there have been no fewer than 13 bills introduced to overturn the IRS interpretation of § 501(c)(3). [n25] Not one of these bills has emerged from any committee, although Congress has enacted numerous other amendments to § 501 during this same period, including an amendment to § 501(c)(3) itself. Tax Reform Act of 1976, Pub.L. 94-455, § 1313(a), 90 Stat. 1730. It is hardly conceivable that Congress -- and in this setting, any Member of Congress -- was not abundantly [p601] aware of what was going on. In view of its prolonged and acute awareness of so important an issue, Congress' failure to act on the bills proposed on this subject provides added support for concluding that Congress acquiesced in the IRS rulings of 1970 and 1971. See, e.g., Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 379-382 (1982); Haig v. Agee, 453 U.S. 280, 300-301 (1981); Herman & MacLean v. Huddleston, 459 U.S. 375, 384-386 (1983); United States v. Rutherford, 442 U.S. 544, 554, n. 10 (1979).

The evidence of congressional approval of the policy embodied in Revenue Ruling 71-447 goes well beyond the failure of Congress to act on legislative proposals. Congress affirmatively manifested its acquiescence in the IRS policy when it enacted the present § 501(i) of the Code, Act of Oct. 20, 1976, Pub.L. 94-568, 90 Stat. 2697. That provision denies tax-exempt status to social clubs whose charters or policy statements provide for "discrimination against any person on the basis of race, color, or religion." [n26] Both the House and Senate Committee Reports on that bill articulated the national policy against granting tax exemptions to racially discriminatory private clubs. S.Rep. No. 94-1318, p. 8 (1976); H.R.Rep. No. 94-1353, p. 8 (1976).

Even more significant is the fact that both Reports focus on this Court's affirmance of Green v. Connally, 330 F.Supp. 1150 (DC 1971), as having established that "discrimination on account of race is inconsistent with an educational institution's tax-exempt status." S.Rep. No. 94-1318, supra, at 7-8, and n. 5; H.R.Rep. No. 94-1353, supra at 7-8, and n. 5 (emphasis added). These references in congressional Committee Reports on an enactment denying tax exemptions to racially discriminatory private social clubs cannot be read [p602] other than as indicating approval of the standards applied to racially discriminatory private schools by the IRS subsequent to 1970, and specifically of Revenue Ruling 71-447. [n27]

III

Petitioners contend that, even if the Commissioner's policy is valid as to nonreligious private schools, that policy cannot constitutionally be applied to schools that engage in racial discrimination on the basis of sincerely held religious beliefs. [n28] [p603] As to such schools, it is argued that the IRS construction of § 170 and § 501(c)(3) violates their free exercise rights under the Religion Clauses of the First Amendment. This contention presents claims not heretofore considered by this Court in precisely this context.

This Court has long held the Free Exercise Clause of the First Amendment to be an absolute prohibition against governmental regulation of religious beliefs, Wisconsin v. Yoder, 406 U.S. 205, 219 (1972); Sherbert v. Verner, 374 U.S. 398, 402 (1963); Cantwell v. Connecticut, 310 U.S. 296, 303 (1940). As interpreted by this Court, moreover, the Free Exercise Clause provides substantial protection for lawful conduct grounded in religious belief, see Wisconsin v. Yoder, supra, at 220; Thomas v. Review Board of Indiana Employment Security Div., 450 U.S. 707 (1981); Sherbert v. Verner, supra, at 402-403. However,

[n]ot all burdens on religion are unconstitutional. . . . The state may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest.

United States v. Lee, 455 U.S. 252, 257-258 (1982). See, e.g., McDaniel v. Paty, 435 U.S. 618, 628, and n. 8 (1978); Wisconsin v. Yoder, supra, at 215; Gillette v. United States, 401 U.S. 437 (1971).

On occasion, this Court has found certain governmental interests so compelling as to allow even regulations prohibiting religiously based conduct. In Prince v. Massachusetts, 321 U.S. 158 (1944), for example, the Court held that neutrally cast child labor laws prohibiting sale of printed materials on public streets could be applied to prohibit children from dispensing religious literature. The Court found no constitutional infirmity in "excluding [Jehovah's Witness children] from doing there what no other children may do." Id. at 171. See also Reynolds v. United States, 98 U.S. 145 (1879); United States v. Lee, supra; Gillette v. United States, supra. Denial of tax benefits will inevitably have a substantial [p604] impact on the operation of private religious schools, but will not prevent those schools from observing their religious tenets.

The governmental interest at stake here is compelling. As discussed in Part II-B, supra, the Government has a fundamental, overriding interest in eradicating racial discrimination in education [n29] -- discrimination that prevailed, with official approval, for the first 165 years of this Nation's constitutional history. That governmental interest substantially outweighs whatever burden denial of tax benefits places on petitioners' exercise of their religious beliefs. The interests asserted by petitioners cannot be accommodated with that compelling governmental interest, see United States v. Lee, supra, at 259-260; and no "less restrictive means," see Thomas v. Review Board of Indiana Employment Security Div., supra, at 718, are available to achieve the governmental interest. [n30] [p605]

IV

The remaining issue is whether the IRS properly applied its policy to these petitioners. Petitioner Goldsboro Christian Schools admits that it "maintain[s] racially discriminatory policies," Brief for Petitioner in No. 81-1, p. 10, but seeks to justify those policies on grounds we have fully discussed. The IRS properly denied tax-exempt status to Goldsboro Christian Schools.

Petitioner Bob Jones University, however, contends that it is not racially discriminatory. It emphasizes that it now allows all races to enroll, subject only to its restrictions on the conduct of all students, including its prohibitions of association between men and women of different races, and of interracial marriage. [n31] Although a ban on intermarriage or interracial dating applies to all races, decisions of this Court firmly establish that discrimination on the basis of racial affiliation and association is a form of racial discrimination, see, e.g., Loving v. Virginia, 388 U.S. 1 (1967); McLaughlin v. Florida, 379 U.S. 184 (1964); Tillman v. Wheaton-Haven Recreation Assn., 410 U.S. 431 (1973). We therefore find that the IRS properly applied Revenue Ruling 71-447 to Bob Jones University. [n32]

The judgments of the Court of Appeals are, accordingly,

Affirmed. [p606]

* Together with No. 81-1, Goldsboro Christian Schools, Inc. v. United States, also on certiorari to the same court.

1. Section 501(c)(3) lists the following organizations, which, pursuant to § 501(a), are exempt from taxation unless denied tax exemptions under other specified sections of the Code:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation . . . and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.

(Emphasis added.)

2. Section 170(a) allows deductions for certain "charitable contributions." Section 170(c)(2)(B) includes within the definition of "charitable contribution" a contribution or gift to or for the use of a corporation "organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. . . ."

3. Revenue Ruling 71-447, 1971-2 Cum.Bull. 230, defined "racially nondiscriminatory policy as to students" as meaning that

the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school, and that the school does not discriminate on the basis of race in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

4. Bob Jones University was founded in Florida in 1927. It moved to Greenville, S.C., in 1940, and has been incorporated as an eleemosynary institution in South Carolina since 1952.

5. Beginning in 1973, Bob Jones University instituted an exception to this rule, allowing applications from unmarried Negroes who had been members of the University staff for four years or more.

6. According to the interpretation espoused by Goldsboro, race is determined by descendance from one of Noah's three sons -- Ham, Shem, and Japheth. Based on this interpretation, Orientals and Negroes are Hamitic, Hebrews are Shemitic, and Caucasians are Japhethitic. Cultural or biological mixing of the races is regarded as a violation of God's command. App. in No. 81-1, pp. 40-41.

7. Goldsboro also asserted that it was not obliged to pay taxes on lodging furnished to its teachers. It does not ask this Court to review the rejection of that claim.

8. By stipulation, the IRS agreed to abate its assessment for 1969 and most of 1970 to reflect the fact that the IRS did not begin enforcing its policy of denying tax-exempt status to racially discriminatory private schools until November 30, 1970. As a result, the amount of the counterclaim was reduced to $116,190.99. Id. at 104, 110.

9. After the Court granted certiorari, the Government filed a motion to dismiss, informing the Court that the Department of the Treasury intended to revoke Revenue Ruling 71-447 and other pertinent rulings and to recognize § 501(c)(3) exemptions for petitioners. The Government suggested that these actions were therefore moot. Before this Court ruled on that motion, however, the United States Court of Appeals for the District of Columbia Circuit enjoined the Government from granting § 501(c)(3) tax-exempt status to any school that discriminates on the basis of race. Wright v. Regan, No. 80-1124 (Feb. 18, 1982) (per curiam order). Thereafter, the Government informed the Court that it would not revoke the Revenue Rulings, and withdrew its request that the actions be dismissed as moot. The Government continues to assert that the IRS lacked authority to promulgate Revenue Ruling 71-447, and does not defend that aspect of the rulings below.

10. The predecessor of § 170 originally was enacted in 1917, as part of the War Revenue Act of 1917, ch. 63, § 1201(2), 40 Stat. 330, whereas the predecessor of 501(c)(3) dates back to the income tax law of 1894, Act of Aug. 27, 1894, ch. 349, 28 Stat. 509, see n. 14, infra. There are minor differences between the lists of organizations in the two sections, see generally Liles & Blum, Development of the Federal Tax Treatment of Charities, 39 Law & Contemp. Prob. 6, 24-25 (No. 4, 1975) (hereinafter Liles & Blum). Nevertheless, the two sections are closely related; both seek to achieve the same basic goal of encouraging the development of certain organizations through the grant of tax benefits. The language of the two sections is in most respects identical, and the Commissioner and the courts consistently have applied many of the same standards in interpreting those sections. See 5 J. Mertens, Law of Federal Income Taxation § 31.12 (1980); 6 id. §§ 34.01-34.13 (1975); B. Bittker & L. Stone, Federal Income Taxation 220-222 (5th ed.1980). To the extent that § 170 "aids in ascertaining the meaning" of § 501(c)(3), therefore, it is "entitled to great weight," United States v. Stewart, 311 U.S. 60, 64-65 (1940). See Harris v. Commissioner, 340 U.S. 106, 107 (1950).

11. The dissent suggests that the Court "quite adeptly avoids the statute it is construing," post at 612, and "seeks refuge . . . by turning to § 170," post at 613. This assertion dissolves when one sees that § 501(c)(3) and § 170 are construed together, as they must be. The dissent acknowledges that the two sections are "mirror" provisions; surely there can be no doubt that the Court properly looks to § 170 to determine the meaning of § 501(c)(3). It is also suggested that § 170 is "at best of little usefulness in finding the meaning of § 501(c)(3)," since "§ 170(c) simply tracks the requirements set forth in § 501(c)(3)," post at 614. That reading loses sight of the fact that § 170(c) defines the term "charitable contribution." The plain language of § 170 reveals that Congress' objective was to employ tax exemptions and deductions to promote certain charitable purposes. While the eight categories of institutions specified in the statute are indeed presumptively charitable in nature, the IRS properly considered principles of charitable trust law in determining whether the institutions in question may truly be considered "charitable" for purposes of entitlement to the tax benefits conferred by § 170 and § 501(c)(3).

12. The form and history of the charitable exemption and deduction sections of the various income tax Acts reveal that Congress was guided by the common law of charitable trusts. See Simon, The Tax-Exempt Status of Racially Discriminatory Religious Schools, 36 Tax L.Rev. 477, 485-489 (1981) (hereinafter Simon). Congress acknowledged as much in 1969. The House Report on the Tax Reform Act of 1969, Pub.L. 91-172, 83 Stat. 487, stated that the § 501(c)(3) exemption was available only to institutions that served "the specified charitable purposes," H.R.Rep. No. 91-413, pt. 1, p. 35 (1969), and described "charitable" as "a term that has been used in the law of trusts for hundreds of years." Id. at 43. We need not consider whether Congress intended to incorporate into the Internal Revenue Code any aspects of charitable trust law other than the requirements of public benefit and a valid public purpose.

13. The draftsmen of the 1894 income tax law, which included the first charitable exemption provision, relied heavily on English concepts of taxation, and the list of exempt organizations appears to have been patterned upon English income tax statutes. See 26 Cong.Rec. 584-588, 6612-6615 (1894)

14. Act of Aug. 27, 1894, ch. 349, § 32, 28 Stat. 556-557. The income tax system contained in the 1894 Act was declared unconstitutional, Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895), for reasons unrelated to the charitable exemption provision. The terms of that exemption were, in substance, included in the corporate income tax contained in the Payne-Aldrich Tariff Act of 1909, ch. 6, § 38, 36 Stat. 112. A similar exemption has been included in every income tax Act since the adoption of the Sixteenth Amendment, beginning with the Revenue Act of 1913, ch. 16, § II(G), 38 Stat. 172. See generally Reiling, Federal Taxation: What Is a Charitable Organization?, 44 A.B.A.J. 525 (1958); Liles & Blum.

15. That same year, the Bureau of Internal Revenue expressed a similar view of the charitable deduction section of the estate tax contained in the Revenue Act of 1918, ch. 18, § 403(a)(3), 40 Stat. 1098. The Solicitor of Internal Revenue looked to the common law of charitable trusts in construing that provision, and noted that "generally bequests for the benefit and advantage of the general public are valid as charities." Sol.Op. 159, III-1 Cum.Bull. 480, 482 (1924).

16. The common law requirement of public benefit is universally recognized by commentators on the law of trusts. For example, the Bogerts state:

In return for the favorable treatment accorded charitable gifts which imply some disadvantage to the community, the courts must find in the trust which is to be deemed "charitable" some real advantages to the public which more than offset the disadvantages arising out of special privileges accorded charitable trusts.

G. Bogert & G. Bogert, Law of Trusts and Trustees § 361, p. 3 (rev.2d ed.1977) (hereinafter Bogert). For other statements of this principle, see, e.g., 4 Scott § 348, at 2770; Restatement (Second) of Trusts § 368, Comment (1959); E. Fisch, D. Freed, & E. Schachter, Charities and Charitable Foundations § 256 (1974)

17. Cf. Tank Truck Rentals, Inc. v. Commissioner, 356 U.S. 30, 35 (1958), in which this Court referred to "the presumption against congressional intent to encourage violation of declared public policy" in upholding the Commissioner's disallowance of deductions claimed by a trucking company for fines it paid for violations of state maximum weight laws.

18. The dissent acknowledges that "Congress intended . . . to offer a tax benefit to organizations . . . providing a public benefit," post at 614-615, but suggests that Congress itself fully defined what organizations provide a public benefit, through the list of eight categories of exempt organizations contained in § 170 and § 501(c)(3). Under that view, any nonprofit organization that falls within one of the specified categories is automatically entitled to the tax benefits, provided it does not engage in expressly prohibited lobbying or political activities. Post at 617. The dissent thus would have us conclude, for example, that any nonprofit organization that does not engage in prohibited lobbying activities is entitled to tax exemption as an "educational" institution if it is organized for the "‘instruction or training of the individual for the purpose of improving or developing his capabilities,'" 26 CFR § 1.501(c)(3) - 1(d)(3) (1982). See post at 623. As Judge Leventhal noted in Green v. Connally, 330 F.Supp. 1150, 1160 (DC), summarily aff'd sub nom. Coit v. Green, 404 U.S. 997 (1971), Fagin's school for educating English boys in the art of picking pockets would be an "educational" institution under that definition. Similarly, a band of former military personnel might well set up a school for intensive training of subversives for guerrilla warfare and terrorism in other countries; in the abstract, that "school" would qualify as an "educational" institution. Surely Congress had no thought of affording such an unthinking, wooden meaning to § 170 and § 501(c)(3) as to provide tax benefits to "educational" organizations that do not serve a public, charitable purpose.

19. The Court's reading of § 501(c)(3) does not render meaningless Congress' action in specifying the eight categories of presumptively exempt organizations, as petitioners suggest. See Brief for Petitioner in No. 811, pp. 18-24. To be entitled to tax-exempt status under § 501(c)(3), an organization must first fall within one of the categories specified by Congress, and in addition must serve a valid charitable purpose.

20. In 1894, when the first charitable exemption provision was enacted, racially segregated educational institutions would not have been regarded as against public policy. Yet contemporary standards must be considered in determining whether given activities provide a public benefit and are entitled to the charitable tax exemption. In Walz v. Tax Comm'r, 397 U.S. 664, 673 (1970), we observed:

Qualification for tax exemption is not perpetual or immutable; some tax-exempt groups lose that status when their activities take them outside the classification and new entities can come into being and qualify for exemption.

Charitable trust law also makes clear that the definition of "charity" depends upon contemporary standards. See, e.g., Restatement (Second) of Trusts § 374, Comment a (1959); Bogert § 369, at 65-67; 4 Scott § 368, at 2855-2856.

21. In view of our conclusion that racially discriminatory private schools violate fundamental public policy and cannot be deemed to confer a benefit on the public, we need not decide whether an organization providing a public benefit and otherwise meeting the requirements of § 501(c)(3) could nevertheless be denied tax-exempt status if certain of its activities violated a law or public policy.

22. In the present case, the IRS issued its rulings denying exemptions to racially discriminatory schools only after a three-judge District Court had issued a preliminary injunction. See supra at 578-579.

23. JUSTICE POWELL misreads the Court's opinion when he suggests that the Court implies that

the Internal Revenue Service is invested with authority to decide which public policies are sufficiently "fundamental" to require denial of tax exemptions,

post at 611. The Court's opinion does not warrant that interpretation. JUSTICE POWELL concedes that,

if any national policy is sufficiently fundamental to constitute such an overriding limitation on the availability of tax-exempt status under § 501(c)(3), it is the policy against racial discrimination in education.

Post at 607. Since that policy is sufficiently clear to warrant JUSTICE POWELL's concession and for him to support our finding of longstanding congressional acquiescence, it should be apparent that his concerns about the Court's opinion are unfounded.

24. Many of the amici curiae, including amicus Wiilliam T. Coleman, Jr. (appointed by the Court), argue that denial of tax-exempt status to racially discriminatory schools is independently required by the equal protection component of the Fifth Amendment. In light of our resolution of this litigation, we do not reach that issue. See, e.g., United States v. Clark, 445 U.S. 23, 27 (190); NLRB v. Catholic Bishop of Chicago, 440 U.S. 490, 504 (1979).

25. H.R. 1096, 97th Cong., 1st Sess. (1981); H.R. 802, 97th Cong., 1st Sess. (1981); H.R. 498, 97th Cong., 1st Sess. (1981); H.R. 332, 97th Cong., 1st Sess. (1981); H.R. 95, 97th Cong., 1st Sess. (1981); S. 995, 96th Cong., 1st Sess. (1979); H.R.1905, 96th Cong., 1st Sess. (1979); H.R. 96, 96th Cong., 1st Sess. (1979); H.R. 3225, 94th Cong., 1st Sess. (1975); H.R. 1394, 93d Cong., 1st Sess. (1973); H.R. 5350, 92d Cong., 1st Sess. (1971); H.R. 2352, 92d Cong., 1st Sess. (1971); H.R. 68, 92d Cong., 1st Sess. (1971).

26. Prior to the introduction of this legislation, a three-judge District Court had held that segregated social clubs were entitled to tax exemptions. McGlotten v. Connally, 338 F.Supp. 448 (DC 1972). Section 501(i) was enacted primarily in response to that decision. See S.Rep. No. 94-1318, pp. 7-8 (1976); H.R.Rep. No. 94-1353, p. 8 (1976).

27. Reliance is placed on scattered statements in floor debate by Congressmen critical of the IRS's adoption of Revenue Ruling 71-447. See, e.g., Brief for Petitioner in No. 81-1, pp. 27-28. Those views did not prevail. That several Congressmen, expressing their individual views, argued that the IRS had no authority to take the action in question is hardly a balance for the overwhelming evidence of congressional awareness of and acquiescence in the IRS rulings of 1970 and 1971. Petitioners also argue that the Ashbrook and Dornan Amendments to the Treasury, Postal Service, and General Government Appropriations Act of 1980, Pub.L. 96-74, §§ 103, 614, 615, 93 Stat. 559, 562, 576-577, reflect congressional opposition to the IRS policy formalized in Revenue Ruling 71-447. Those amendments, however, are directly concerned only with limiting more aggressive enforcement procedures proposed by the IRS in 1978 and 1979 and preventing the adoption of more stringent substantive standards. The Ashbrook Amendment, § 103 of the Act, applies only to procedures, guidelines, or measures adopted after August 22, 1978, and thus in no way affects the status of Revenue Ruling 71-447. In fact, both Congressman Dornan and Congressman Ashbrook explicitly stated that their amendments would have no effect on prior IRS policy, including Revenue Ruling 71-447, see 125 Cong.Rec. 18815 (1979) (Cong. Dornan: "[M]y amendment will not affect existing IRS rules which IRS has used to revoke tax exemptions of white segregated academies under Revenue Ruling 71-447. . . ."); id. at 18446 (Cong. Ashbrook: "My amendment very clearly indicates on its face that all the regulations in existence as of August 22, 1978, would not be touched"). These amendments therefore do not indicate congressional rejection of Revenue Ruling 71-447 and the standards contained therein.

28. The District Court found, on the basis of a full evidentiary record, that the challenged practices of petitioner Bob Jones University were based on a genuine belief that the Bible forbids interracial dating and marriage. 468 F.Supp. at 894. We assume, as did the District Court, that the same is true with respect to petitioner Goldsboro Christian Schools. See 436 F.Supp. at 1317.

29. We deal here only with religious schools -- not with churches or other purely religious institutions; here, the governmental interest is in denying public support to racial discrimination in education. As noted earlier, racially discriminatory schools "exer[t] a pervasive influence on the entire educational process," outweighing any public benefit that they might otherwise provide, Norwood v. Harrison, 413 U.S. 455, 469 (1973). See generally Simon, 495-496.

30. Bob Jones University also contends that denial of tax exemption violates the Establishment Clause by preferring religions whose tenets do not require racial discrimination over those which believe racial intermixing is forbidden. It is well settled that neither a state nor the Federal Government may pass laws which "prefer one religion over another," Everson v. Board of Education, 330 U.S. 1, 15 (1947), but "[i]t is equally true" that a regulation does not violate the Establishment Clause merely because it "happens to coincide or harmonize with the tenets of some or all religions." McGowan v. Maryland, 366 U.S. 420, 442 (1961). See Harris v. McRae, 448 U.S. 297, 319-320 (1980). The IRS policy at issue here is founded on a "neutral, secular basis," Gillette v. United States, 401 U.S. 437, 452 (1971), and does not violate the Establishment Clause. See generally U.S. Comm'n on Civil Rights, Discriminatory Religious Schools and Tax Exempt Status 10-17 (1982). In addition, as the Court of Appeals noted,

the uniform application of the rule to all religiously operated schools avoids the necessity for a potentially entangling inquiry into whether a racially restrictive practice is the result of sincere religious belief.

639 F.2d 147, 155 (CA4 1980) (emphasis in original). Cf. NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979). But see generally Note, 90 Yale L.J. 350 (1980).

31. This argument would, in any event, apply only to the final eight months of the five tax years at issue in this case. Prior to May, 1975, Bob Jones University's admissions policy was racially discriminatory on its face, since the University excluded unmarried Negro students while admitting unmarried Caucasians.

32. Bob Jones University also argues that the IRS policy should not apply to it, because it is entitled to exemption under § 501(c)(3) as a "religious" organization, rather than as an "educational" institution. The record in this case leaves no doubt, however, that Bob Jones University is both an educational institution and a religious institution. As discussed previously, the IRS policy properly extends to all private schools, including religious schools. See n. 29, supra. The IRS policy thus was properly applied to Bob Jones University.
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