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Pepperdine University School of Law

Sunday, July 12, 2015

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

White House Same Sex MarriageFollowing up on my previous posts:

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.)

https://taxprof.typepad.com/taxprof_blog/2015/07/brunson-churches-and-religiously-affiliated-schools-that-oppose-same-sex-marriage-will-not-lose-thei.html

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Comments

Yes. ... Just because the government could, though, doesn’t mean that it’s likely.

You are making the assumption, which historically is false for the last 6 years, that the Federal government and especially the IRS are within the Constitution. We have case after case where the IRS conspired with the Democrats to target their political enemies. They have been caught repeatedly and have suffered no consequences. Christians are the enemies of the Democrats, and will be targeted. The decision itself says they can. Insurance companies are now telling churches that they will lose their liability insurance if they do not perform gay marriages.

Not that I am a Christian of any flavor. I am, however, somewhat of a historian. Especially with the King -v- Burwell decision making textual law irrelevant; lawfare preparatory to actual persecution is locked in.

Posted by: Subotai Bahadur | Jul 12, 2015 1:19:46 PM

Homosexual activists are ramping up attacks against churches, just they did going back to Christian-conscious Anita Bryant, Boy Scouts, and business owners. This will embolden the IRS to flout the Constitution... more, and chip away at the wall protecting the church from the state.

Here’s an example of how they immediately launched that next step on tax exemptions for churches:

Does your church ban gay marriage? Then it should start paying taxes.

“…it is entirely right and proper for the state to say to a church that if you want to thumb your nose at a fundamental right which is held by all Americans, then we are not going to privilege you with tax-free status. We’ll let you practice your bigotry, at least within the confines of your own church. But we’re not about to reward you for doing so.

That’s a pretty disgusting description of Christians, who have donated so much to others, sent missions to needy people throughout the world, and uphold religious and moral values.

The anti-Christian movement is based upon destroying those who won’t join, it is evil, has no moral base, and should be condemned for its methods and goals. Churches may be all that’s left to save this nation.

Posted by: Woody | Jul 12, 2015 8:33:16 PM

It is my hope that people on both sides of this debate will approach it with kindness and compassion as priorities. It is possible to be a “homosexual activist” and still care that people of faith are respected and given a voice in public debates. It is also possible to be an Evangelical Christian and care that gay people should have the same civil rights as straight people. Orthodoxy (what we believe) is distinct from orthopraxy (what we practice).

I do not believe that educational institutions should benefit from public funding while they exclude part of the taxpaying public on the basis of LGBT status. I do believe that faith has value. In the Canadian context, I am disappointed that Trinity Western University has not been able to reconcile acceptance of LGBT people with its other points of faith. TWU’s Community Covenant requires signatories to agree to cultivate, “virtues, such as love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control, compassion, humility, forgiveness, peacemaking, mercy and justice”.

In a profession that is often vilified as ruthless and lacking in moral fiber, it would be revolutionary for a Canadian law school to require students to adhere to these values at least for the duration of their legal education. But for the same institution to take funds from the public purse while excluding LGBT people from access to the legal profession – that is something I cannot accept as just.

Posted by: Saul Templeton | Jul 14, 2015 11:28:12 PM