Sunday, November 1, 2020
John B. Parker (J.D. 2020, Emory), Comment, Paving a Path between the Campus and the Chapel: A Revised Section 501(c)(3) Standard for Determining Tax Exemptions, 69 Emory L.J. 321 (2019):
Section 501(c)(3) of the Internal Revenue Code grants an exemption from federal income taxes to organizations that are formed for religious purposes. While religious tax exemptions are a deep-rooted principle long embodied in U.S. tax law, issues can arise when a tax-exempt institution engages in discrimination which conflicts with national public policy. The most famous example of this is the case of Bob Jones University v. United States, in which the Supreme Court revoked the tax-exempt status of a religious university for its racially discriminatory policies. The Court found that, because the government had expressed a unified opposition to race discrimination in education for a number of years, an institution that engaged in such discrimination conflicted with national public policy, such that it should not receive tax-exempt status. Now, in the wake of the Supreme Court ruling on the constitutionality of same-sex marriage in Obergefell v. Hodges, advocates for both religious freedom and LGBT rights are questioning whether this “public policy doctrine” could now apply to discrimination based on marital status, or even sexual orientation in general. However, legal scholars have shown that such an application of the doctrine may be problematic when implemented outside of race discrimination.
Although the public policy doctrine’s application is limited, the Supreme Court still correctly observed in Bob Jones that discrimination of a minority group in education harms the overall educational process. This Comment argues that Section 501(c)(3) should be amended to require an institution filing for tax-exempt status to designate the “primary purpose” for which it is claiming an exemption. That primary purpose will then have priority over any secondary qualifying purpose for tax-exempt purposes. This would allow primarily “religious” institutions, such as churches and synagogues, to adhere to their religious beliefs regarding marriage and sexuality while retaining their exemption. Primarily “educational” institutions, however, would be unable to retain policies and practices that stifle discussion of homosexual identity and the ethics of same-sex marriage, as these practices do not further the purpose of an “educational” institution to provide a “full and fair exposition” of issues.