Brunson: Churches And Religiously-Affiliated Schools That Oppose Same-Sex Marriage Will Not Lose Their Tax Exemption After Obergefell

Following up on my previous posts:

• Will Supreme Court's Same-Sex Marriage Decision Cost BYU Its Tax Exemption?
• Will Christian Colleges (And Law Schools) Lose Their Tax Exemption After Obergefell?

Sam Brunson (Loyola-Chicago), Tax Exemption, Post-Obergefell:

There’s been a lot of Sturm und Drang recently over what will happen to the tax exemptions of churches and religiously-affiliated schools that oppose same-sex marriage. The specter of loss of exemption has been bandied about. ...

[C]could the church or BYU lose its tax exemption as a result of their policies on homosexuality? Yes. ... Just because the government could, though, doesn’t mean that it’s likely. And, based on historical and current practice, revoking the church’s exemption is virtually impossible, and revoking BYU’s is tremendously unlikely. 

Sam Brunson (Loyola-Chicago), The Church Will Not Lose Its Tax-Exempt Status:

Do I seriously have to say this? Again? Look, Obergefell does not mark the end of churches’ tax-exempt status. It’s just not going to happen. ...

Quick summary of the argument that Obergefell will inexorably lead to the loss of tax-exempt status by churches that oppose same-sex marriage: an entity that violates an established public policy does not qualify as tax-exempt. That’s established law. People who worry about churches’ loss of exemption allege that Obergefell sets the stage for same-sex marriage to be an established public policy, and thus, churches that oppose it, or won’t perform it, will not qualify as tax-exempt.

I already explained why that’s wrong (Constitution plus actual history with the provision), but I thought I’d give some evidence of how the IRS has used the public policy doctrine up until now.

In WestlawNext, I searched the “IRS Private Letter Ruling” database. ... The search pulled up 88 private letter rulings. The earliest was from 1978, and the most recent from 2015.

I then went through the rulings to see if they actually dealt with putative tax-exempt organizations that either were not granted tax-exempt status in the first instance, or that lost their tax-exempt status, as a result of violating public policy. That narrowed my list to just nine private letter rulings. You can see a spreadsheet listing all 88 rulings, and the nine responsive rulings (plus a little more information) here. ...

So there you have it: every applicant for tax-exempt status from the last 37 years that has had its application denied on public policy grounds. It just doesn’t happen, unless you’re a racially-discriminatory private school, or you engage in behavior that is illegal or that is considered really, really icky.

And no entity since 1978 has lost its exemption for violating public policy, much less any church. (In fact, there’s only one church in this list of 9 entities, and I suspect that’s the FLDS church which, had it been better-advised, would have not bothered applying, and just acted exempt.) Which is to say, the church will not lose its tax-exempt status.

Peter J. Reilly (Forbes), Will IRS Force Gay Marriage On Conservative Churches?:

Keith Edwards post titled Gay marriage ruling, liberal activists, plus the IRS equals big trouble for ‘corporate’ Churches in American Thinker really intrigued me.  His legal analysis is a little confused, but the issue he raises of whether religious organizations might have their exempt status challenged due to resistance to gay marriage is an interesting question.  ...

Professor Samuel Brunson of Loyola University writes a lot about church state issues  Professor Brunson does not see much merit in Keith Edwards’s post. ...

Professor Edward Zelinsky of Yeshiva University often writes about the tension between the establishment and  free exercise clauses of the First Amendment. He thinks that this decision will at least get some activists charged up to take on the exempt status of churches that will not recognize same-sex marriage. ...

My own view is that tax policy should be the Switzerland of the culture war and that the IRS should be allowed to focus on collecting taxes.  Of course I have a hard time understanding the wedding cake lawsuit also.  When it comes to who might perform same-sex weddings, I figure that if God had wanted Southern Baptist preachers to perform same-sex weddings, she wouldn’t have given us Unitarian Universalism and that we really don’t want the tax collector to have a dog in that fight.

Steve Williams, Should Christian Law Schools Get Accredited if They Discriminate Against LGBTs?:

An Ontario appeals court recently ruled that a Christian law school cannot win accreditation because its code of conduct discriminates against LGBTs among other intrusive clauses. Is it right to deny religious law schools accreditation, and if so can this tell us anything else about how far we should give ground to religious entities in secular life? ...

While the legal landscape might be slightly different, the case speaks to the push for religious privilege to discriminate, and it also says why ultimately this push cannot be squared against other civil rights. The University’s desire to be exempt from civil rights laws puts the Law Society in a very difficult position: how can it give accreditation to an institution that by the nature of its admissions policy says it will discriminate? Now, as a private entity the university can choose whom it admits, but as soon as it intrudes on secular life, and indeed secular law, and particularly when those practicing law must be held to high secular standards, that is when the game changes and the institution should be subject to the same laws governing other universities and businesses.

This argument translates just as soundly for the U.S.: it is not controversial in the least to say that churches should be able to affirm whomever they want, and to discriminate if they so choose. However, when churches become entities like universities and in turn take public money, or when they take massive tax breaks from federal coffers, that becomes a very different proposition altogether. They are then introducing their beliefs into the public sphere and asking for special rights to ignore secular civil rights laws. That becomes massively problematic. The same with businesses like Sweet Cakes, the Oregon bakery that has been fined for refusing to serve gay couples and has been told it should really stop saying it intends to do so again if it wishes to escape further fines.

(Hat Tip: Francine Lipman.)