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Editor: Paul L. Caron
Pepperdine University School of Law

Friday, February 10, 2017

Brunson & Herzig:  Treasury Department Should Create Blacklist Of What Constitutes Prohibited Discrimination By Religious Organizations

Samuel D. Brunson (Loyola-Chicago) & David Herzig (Valparaiso), A Diachronic Approach to Bob Jones: Religious Tax Exemptions after Obergefell, 92 Ind. L.J. ___ (2016):

In Bob Jones v. U.S., the Supreme Court held that an entity may lose its tax exemption if it violates a fundamental public policy, even where religious beliefs demand that violation. In that case, the Court held that racial discrimination violated fundamental public policy. Could the determination to exclude same-sex individuals from marriage or attending a college also be considered a violation of fundamental public policy? There is uncertainty in the answer. In the recent Obergefell v. Hodges case that legalized same-sex marriage, the Court asserted that LGBT individuals are entitled to “equal dignity in the eyes of the law.” Constitutional law scholars, such as Lawrence Tribe, are advocating that faith groups might lose their status, citing that this decision is the dawning of a new era of constitutional doctrine in which fundamental public policy will have a more broad application.

Regardless of whether Obergefell marks a shift in fundamental public policy, that shift will happen at some point. The problem is, under the current diachronic fundamental public policy regime, tax-exempt organizations have no way to know, ex ante, what will violate a fundamental public policy. We believe that the purpose of the fundamental public policy requirement is to discourage bad behavior in advance, rather than merely punish it after it occurs. As a result, we believe that the government should clearly delineate a manner for determining what constitutes a fundamental public policy. We suggest three safe harbor regimes that would allow religiously-affiliated tax-exempt organizations to know what kinds of discrimination are incompatible with tax exemption. Tying the definition of fundamental public policy to strict scrutiny, to the Civil Rights Act, or to equal protection allow a tax-exempt entity to ensure compliance, ex post. In the end, though, we believe that the flexibility attendant to equal protection, mixed with the nimbleness that the Treasury Department would enjoy in crafting a blacklist of prohibited discrimination, would provide the best and most effective safe harbor regime.

http://taxprof.typepad.com/taxprof_blog/2017/02/brunson-herzigtreasury-department-should-create-blacklist-of-what-constitutes-prohibited-discriminat.html

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Comments

Somebody hasn't been paying attention. This is not something Treasury should ever do -- witness the IRS and social welfare targeting.

Posted by: TheTurk | Feb 10, 2017 6:47:35 AM

I don't know what the authors mean by "the nimbleness that the Treasury Department would enjoy in crafting a blacklist of prohibited discrimination," but I sure don't like the sound of it.

Posted by: Nathan | Feb 10, 2017 4:23:09 PM

Could this not also apply to religious organizations breaking immigration law by aiding and abetting unvetted foreigners?

Posted by: KaD | Feb 11, 2017 7:36:25 AM