Obergefell and BYU’s Tax Exemption

On April 28, the Supreme Court heard arguments in Obergefell v. Hodges, which challenged both the constitutionality of state bans on same-sex marriage and of states’ nonrecognition of same-sex marriages performed in other states.

By the end of June, the Justices will have decided and we’ll know the constitutional status of same-sex marriage bans in the United States. But that doesn’t mean all questions will be resolved; in fact, an exchange between Chief Justice Roberts, Justice Alito, and Solicitor General Verrilli piqued the interest of a lot of people, especially those invested in religious educational institutions. 

During the course of oral arguments, Chief Justice Roberts said to General Verrilli:[fn1]

We have a concession from your friend that clergy will not be required to perform same-sex marriage, but there are going to be harder questions. Would a religious school that has married housing be required to afford such housing to same-sex couples?

A little later, Justice Alito followed up with this:

Well, in the Bob Jones case, the Court held that a college was not entitled to tax-exempt status if it opposed interracial marriage or interracial dating. So would the same apply to a university or a college if it opposed same-sex marriage?

General Verrilli responded,

You know, I—I don’t think I can answer that question without knowing more specifics, but it’s certainly going to be an issue. I—I don’t deny that. I don’t deny that, Justice Alito. It is—it is going to be an issue.

So is General Verrilli right? At least some corners of the media seem to think he is, that a ruling in favor of same-sex marriage will mark the end of religious schools’ tax exemption, if not of religious schools as we know them.[fn2]

Is that right?

I mean, it’s not inconceivable, though it’s virtually impossible in the short term, unlikely in the middle term, and maybe unlikely, period. To understand why, though, we need to briefly look at the Supreme Court’s decision in Bob Jones, and the context of that decision.

The super-short version: Bob Jones University is a fundamentalist Christian university. It was also racist: prior to 1971, it didn’t admit African-American students. Between 1971 and 1975 (at least), it admitted African-Americans who were single or who were married to other African-Americans, but the school’s sponsors believed that the Bible forbade interracial dating; as a result, it didn’t admit students in interracial relationships, and it expelled students who entered into such relationships or who advocated interracial marriage.

The IRS revoked the school’s tax exemption, and the Supreme Court upheld the revocation, notwithstanding the school’s sincere religious beliefs. The reason? It’s a little technical, but, boiled down, it’s this: qualifying as tax-exempt[fn3] derives from the common law of charities. Under the common law, an entity that violated the law or a fundamental public policy didn’t qualify as charitable. And racial discrimination by schools violated a fundamental public policy. Therefore, racist schools did not qualify as tax-exempt.

So that’s what Justice Alito invoked, and what the Solicitor General believed would be an issue.

And he may be right. But it’s worth digging into the context of the Bob Jones decision—and its subsequence use—a little bit before we come to that conclusion.

Brown v. Board of Education, which ended seperate-but-equal and effectively desegregated schools, was decided in 1954. Not every white family was happy that their kids would attend school with black kids, though, and a number of racially-discriminatory private grade schools popped up, effectively allowing white parents to avoid desegregation.

About ten years later, in 1965, the IRS paused its approval of tax exemptions for racially-discriminatory private schools as it tried to figure out whether it had authority to deny their applications or not. Two years later, it concluded that it could deny tax exemptions to discriminatory schools that had sufficient ties to the state, but that it didn’t have the legal authority to deny exemptions to truly private schools.

A group of African-American parents in Mississippi sued to prevent the IRS from granting tax-exemption to racially-discriminatory schools and, in 1970, a Mississippi district court issued a preliminary injunction. A year later, the IRS adopted court’s injunction (which legally only applied in part of Mississippi) as a nationwide standard. It took a couple iterations, but the IRS and the courts ultimately said that the effort of desegregation demonstrated that integrating schools was a fundamental public policy, and that policy was being thwarted by discriminatory private schools.

True, the Bob Jones decision expanded the scope beyond the world of public grade schools, but it followed pretty directly from the earlier IRS and court decisions—it involved education and racial discrimination.

Would that same logic carry over to schools that discriminate against students in same-sex relationships? There’s no compelling reason it couldn’t. But there are enough differences that I suspect it’s not as likely as some seem to believe.

I mean, there’s a real—and a long—history in the United States of discrimination against the LGBT community. And even if it isn’t now, I suspect that, in the near future, discrimination against gays and lesbians will violate a fundamental public policy.

But discrimination against the LGBT community didn’t play out in the form of separate schools, and people haven’t used discriminatory schools to somehow recreate a segregated educational experience. That is, schools aren’t a historic locus of discrimination here in the same way they were against African-Americans.

Moreover, until now, revocation for the violation of a fundamental public policy has been almost entirely limited to racial discrimination.[fn4]

And there’s more: the IRS’s Exempt Organizations group is on its heels after the Tea Party-gate brouhaha from a couple years ago. I suspect it’s in no mood to pick a fight, and I suspect it won’t be in the mood expand the scope of its public policy requirements in the near future.

Of course, I could be wrong, and if I am, BYU’s current policy on homosexuality looks pretty untenable, at least in light of Bob Jones. From BYU’s Honor Code:

Homosexual behavior is inappropriate and violates the Honor Code. Homosexual behavior includes not only sexual relations between members of the same sex, but all forms of physical intimacy that give expression to homosexual feelings.

So how worried should[fn5] BYU (and other conservative religious schools) be? My gut feeling: not very. At least, not yet. While the Solicitor General is theoretically right, the historical roots of Bob Jones don’t line up squarely with conservative religious schools’ policies on same-sex marriage.

Still, it will be interesting to see this play out over the next couple decades.

Bonus Question: Will the Church Lose Its Exemption If It Refuses To Perform Same-Sex Marriages?


I mean, in 1975, the IRS issued a revenue ruling in which it claimed the authority to revoke a racially-discriminatory church’s tax exemption. But it has never tried to do so, and it never will. And even if it did try, I suspect it would face steep, steep constitutional hurdles.

Update: A friend pointed out that I oversimplified my characterization of Rev. Rul. 75-231, in the process providing an explanation that is not entirely accurate. And he’s right. Specifically, the IRS is dealing with discriminatory religious schools in the ruling. And in Situation 2, it talked about a religious school that wasn’t separately incorporated from its parent church (that is, it was using the parent’s exemption). The IRS viewed the school’s discriminatory policy as violating public policy, but because it wasn’t incorporated separately, it had no exemption to revoke. So the IRS would revoke the parent church’s exemption.

The policy-violating behavior, though, happened at the school, not the church, level. The IRS has never, to my knowledge, threatened or tried to revoke a church’s tax exemption as a result of the church’s racially-discriminatory behavior.

[fn1] While I’m going to abridge the exchange, it happens between pages 36 and 38 of the transcript.

[fn2] See, e.g., here, here, here, and here, among other places.

[fn3] (at least under section 501(c)(3); it’s neither here nor there, but I argue that other types of tax exemption are different)

[fn4] Interestingly enough, the one exception of which I’m aware has a Mormon connection: a couple years ago, the IRS denied an exemption for Principle Voices of Polygamy, a group that intended to education Americans about polygamy. The IRS denied the exemption because polygamy, it said, violates a fundamental public policy.

[fn5] Note that this should is meant descriptively, not normatively. Moreover, any concern assumes that BYU maintains its current policy. Which it may well—I don’t have any inside administrative knowledge—but there’s not compelling reason to believe that its policy won’t change again.


  1. “I mean, it’s not inconceivable, though it’s virtually impossible in the short term, unlikely in the middle term, and maybe unlikely, period” – I believe conservatives said the same thing about homosexual marriage in 1996, and that turned rather quickly, didn’t it?

  2. symphonyofdissent says:

    I think this analysis is pretty fair, but given the cultural shift in gay marriage it is frightening how quickly such a change might come in the context of sexual orientation. The current administration is certainly willing to argue that any discrimination on the basis of sexual orientation violates public policy.

    I’m also not sure how the history of segregation is relevant here. Whether schools have been segregated seems irrelevant to the public policy questions.

    I agree that such a shift is not likely now, but it is terrifying that such a change is completely dependent on public opinion and that there do not seem to be constitutional protections in light of Bob Jones and Smith. Then again, maybe it is time for Bob Jones and Smith to be reconsidered and this might provide the platform for that reconsideration to happen.

  3. I think it’s hard to underestimate how much the IRS’ Exempt Orgs group has been cowed by the tea party rulings. I don’t think they’re used to being in the spotlight quite that way.

  4. I agree with Thor and Symphony of dissent here. At this point, any appeal to, oh-that-would-just-never-happen is pretty weak. Yes it wouldn’t happen right, right now, but that’s not the point. It was interesting that when Ross Douthat proposed this question in his NYTimes article, he either couldn’t get a straight answer from people on the liberal wing, or they just accepted the natural consequences (not hiring military chaplains that will perform SSMs, pulling tax exempt status from religious colleges, etc.). It’s the perfect type of question that I think fleshes out the issues involved and forces some soul searching on the liberal wing of Mormonism, so it’s a pity that the issue immediately got buried by the posting above. I for one for would be very interested in seeing honest answers to Ross’ bullet points by liberal Mormons: http://douthat.blogs.nytimes.com/2015/03/30/questions-for-indianas-critics/?_r=0

  5. I for one would be very interested in seeing what you mean by the “liberal wing of Mormonism”. I didn’t know we had wings.

  6. As for my personal responses to the bullet points:

    1) No. I don’t think so, but would evaluate on a case-by-case basis.

    2) No. Yes.

    3) No. No. Yes. Yes. No.

    4.) Yes. No. No. Not sure. No. No.

    5) No, but the state should not recognize non-civil marriages, period. Yes.

    6) No.

    7) No. No.

    There you go.

  7. In the celestial kingdom, I think we can have wings, but unless you (and your opposite-gender spouse) attain the highest degree, they won’t actually work.

  8. Clark Goble says:

    Even if it’s not tied to tax status such things could be heavily pressured by the many other types of federal funding of universities that could be tied to social requirements.

  9. Clark, that may well be true. But I’m not an other-social-requirements kind of guy; I’m a tax kind of guy. So I’m going to write the tax post.

    thor, symphonyofdissent, and Kant66, like I said, anything is possible. But possible and likely aren’t synonymous, and, at least in the near- and mid-term, schools (religious and otherwise) are unlikely to lose their exemptions as a result of discriminating against same-sex couples. Like Steve pointed out, the IRS EO is back on its heels—it will not be aggressively pursuing anything in the near future.

    Also, there’s no real basis for asserting or believing that this move will happen. Sure, in retrospect, Douthat managed to pull conservative views that were derided then vindicated. But that doesn’t tell us much, without knowing how many conservative views that were derided didn’t happen. It’s easy, in retrospect and with the ability to choose which predictions to choose, to say that their predictive track record was good; I suspect, though, that their predictions were as likely to be wrong as they were to be right.

  10. AlexTheYounger says:

    Well, it seems BYU (and any other tax-exempt organization) has a very simple step they can take so they can continue their discrimination against legally married LGBT couples … Just withdraw their tax-exempt status and pay whatever additional taxes would result. It doesn’t seem that complicated.

  11. ChristianKimball says:

    I think this is pretty fair (so far as I know, not having made this a topic of study) . . . so far as it goes. However, as you are clear to say, this is about U.S. Federal income tax. In fact there are many jurisdictions, many taxes and many other regulations, all with their own history and constitutional limits (or not). In a more general way, my sense is that churches will be mostly safe most of the time most places, but that schools will be subject to numerous challenges and restrictions and requirements. And that’s how it should be (“should” in the normative sense). Schools operate very close to the borders of public/private, and there will always be tension at that border.

  12. The biggest difference between SSM and inter-racial marriages is the quantity and size of the churches (and schools) that currently oppose SSM. In order to take action about BYU, the IRS would need to do the same with loads of catholic and evangelical schools. No way that’s happening in the present environment. So long as other religions (and their schools) hold the same line as BYU, the cougs will be safe.

    That said, I expect presurre to come much sooner from other schools – on both for academic and athletic grounds. Stanford and Wyoming (at least its players) were boycotting BYU football in the 1960s – many years before the Bob Jones case. TV deals aren’t the only reason why BYU needs to get into a major conference now or risk missing the boat forever.

  13. Mark B. says:

    I am reassured by your arguments, just as the British were reassured by Chamberlain’s upon his return from Munich in September 1938.

  14. btw Sam, I love these posts. Keep the tax issues discussion rolling!

  15. Mark, comparing gay marriage advocates to Nazis is incredibly classy. You are hereby given a chance to retract and clarify your comment.

  16. BHodges says:

    tax law, yo.

  17. Although it does not relate directly to the issue of same-sex marriage, Wilt Chamberlain’s 1938 trip to Munich was a watershed moment in sexual politics generally.

  18. This gets to the heart of the matter, I think: tax exempt status.

    While some conservatives and gnashing their teeth over being forced to gay-marry in the temple (pfffft) I think the final showdown will eventually happen in tax courts. And it could go either way. I could see either way being the right answer. One thing I do know: being denied tax exempt status isn’t persecution and isn’t and attack on religious freedom. But YMMV.

  19. The Other Clark says:

    Nevil Chamberlain =/= Wilt Chamberlain

  20. Being denied tax exempt status may not be persecution, but it would still be massively unfair and a handicap to churches, schools and other religious organizations that accomplish a lot of good for society but feel they can’t toe the line on this issue.

  21. I am curious at the extent to which the conservative arguments here, and the parade of horribles variety advanced by Douthat, relies to some extent on the notion that gay marriage has been foisted upon us suddenly, with little warning. In reviewing the history of this, I think that gay marriage has percolated up slowly through very gradual changes in the many arrangements of society that touch on marriage. Andrew Sullivan’s cover story advocating gay marriage was published in 1989, almost 25 years ago, and the early argument for it was based on traditionally conservative principles. The Baehr case in Hawaii came out two years later. Various decisions has worked their way through the courts and through state legislatures over the many years since. If changes to the tax exempt status of religious institutions are to occur, I expect they would happen in the same gradual manner, and once the relevant stakeholders have essentially already bought into the result through natural changes in the related arrangements.

  22. Unfair is in the eye of the beholder, especially re tax law. I personally think the rule that grants tax deductions for mortgage interest are unfair, but YMMV. Legally, being denied tax exempt status is unfair if it’s against the rules. If the rules change, then the application should change. Really I wouldn’t mind a whole re-thinking of our “tax exempt organization” designation in the first place. A lot of them are BS anyway: PACs, NFL, NCAA, athlete’s charitable organizations that just so happen to hire all of their family members, etc. And I really wouldn’t mind if they created a new tax bracket for religions. Again, YMMV.

  23. Jonathan says:

    In my opinion, BYU and the Church generally have much bigger problems looming. Though the U.S. has robust protections for religious exercise, a (usually quite prudent) exception is made “to promote the health, safety, and general welfare” (Wisconsin v. Yoder, Cantwell v. Connecticut). The Church endorses this exception in it’s recently published document “Religious Freedom and Fairness”.

    LGBT advocates argue that religious organizations cause (at least in part) the suicides of LGBT people because they teach that homosexual acts are a sin. For example, the Family Acceptance Project, in addition to making a number of excellent suggestions for parents of LGBT children, indicates that any practice short of endorsing homosexual acts promotes suicide: anything less implicitly constitutes rejection of the LGBT individual.


    1- Given that homosexual acts and homosexual identity are inseparable, and,

    2- Given that calling homosexual acts sinful dramatically increase the suicide of LGBT people;

    3- Therefore, a religious doctrine calling homosexual acts sinful causes suicides, consequently,

    4- Constitutes a threat to public health and safety, and can be prohibited by the State.

    Mere neutrality regarding homosexual acts is insufficient: positive endorsement is required to avoid increased risk of suicide. Not only can the State legally prohibit the doctrine that homosexual acts are sinful, but can legally require positive endorsement of such acts. Anything less threatens public health and safety by causing suicides.

    For reference, I’ve included a link to the LDS version of the Family Acceptance Project’s document “Supportive Families,Healthy Children: Helping Latter-day Saint Families with Lesbian, Gay, Bisexual & Transgender Children”


    Though they fumble the statistics (the overestimate the rate of LGBT suicides by misinterpreting the odds ratio), and could have included a better control group, their conclusions have been widely accepted.

    I’m not saying I agree with them, but the legal case seems straightforward.

  24. Mark B. says:

    Your response, Steve, is so silly that it doesn’t deserve a response. But I’ll give you one anyway. My reference to Chamberlain had nothing to do with Nazis–but with his mistaken optimism.

  25. Wow. I leave for a couple hours to hear the Emerson String Quartet and comments explode. It’s late here, but a couple quick responses:

    Mark B, I’m not tremendously interested in coy innuendo. If you think I’m Pollyanna-ing in my analysis or prediction, how about you construct a scenario where I’m wrong. One thing, though: construct that scenario using actual historic IRS behavior and policy, not the fever dreams of conspiracy theorists. And Tea Party-gate doesn’t get you there. Even if you accept as true each and every one of Darrell Issa’s accusations as true, it’s not analogous—there’s a substantive difference between delaying the approval of applications for exemption and revoking exemptions that already exist.

    Kristine A, that’s absolutely right. Loss of exemption isn’t per se persecution; it’s merely the recognition that a tax-exempt entity doesn’t meet the exemption requirements. Although, interestingly enough, a friend and I published a piece today in which we argue that he NFL shouldn’t be permitted to just give up its tax exemption on its own accord without any cost.

    Which leads me to Christian: that’s definitely right that state and local exemptions may be equally important, if not more so, than the federal exemption, especially for universities that have large footprints and valuable property tax-exempt real estate. But I don’t know a lot about the specifics of state property tax exemptions; I have no idea if any states have a requirement equivalent to the public policy requirement of federal tax law.

  26. Oh, and Jonathan, interesting idea. The health, safety, and general welfare rules don’t have any purchase in determining whether an entity should be tax exempt. And though I’m a little outside of my strike zone on broad constitutional issues, I suspect that the idea of suicide resulting from religious opposition to homosexuality would be too attenuated to make a convincing constitutional argument. That is, I doubt the constitutionalization of same-sex marriage will impact schools in any meaningful (legal—public perception is a totally different animal) way, and I’m sure it won’t affect churches (again, as a legal matter, in the United States).

  27. Kristine & Sam,

    We can agree in principle that one’s tax exempt status does not indicate persecution. But, we shouldn’t pretend that the participants in this scenario would be dispassionate. If the time ever comes (granted, a big if) when churches like our church or schools like BYU lose their tax exempt status over something like same sex marriages, it will likely be done out of a desire to punish and isolate those institutions. For a member of those groups, it would be difficult to think of it as anything other than persecution and a rejection of their values.

  28. Mark B. says:

    If you think my comment was intended as some sort of “coy innuendo,” then you’ve misunderstood me as badly as Steve did. All I meant was that Neville Chamberlain believed that he had succeeded in achieving “peace for our time,” but that, as Churchill said in his gracious
    remarks upon Chamberlain’s death, he was “contradicted by events.” And I have no reason to believe, based upon the history of this issue over the past decade, that your statements will not also be contradicted by events. Unless, of course, the Supreme Court decides that a bar on same-sex marriage does not violate the Constitution.

    As for a scenario, here’s one: parents who do not want their children to be taught that same sex relationships are the moral equivalent of heterosexual marriage establish private schools (barring persons in same-sex relationships from employment) and seek tax exempt status for them. Denied such status by the IRS, they bring suit. The courts, following the decision in Obergefell, uphold the denial. The IRS then extends that ruling to all educational institutions which discriminate against same-sex couples, just as it extended the Mississippi decision to all racially discriminatory schools.

  29. Oh, Mark, I understood you perfectly. The “coy innuendo” I referred to was in implying—without any evidence or argumentation—that the IRS would revoke schools’ tax exemption.

    And I love that in your scenario, you rework the facts underlying Green v. Kennedy. Which is fine and good, except that it’s not a realistic scenario. Yes, in 1970, a group of African-American parents sued and got an injunction against the IRS. But in 2015, they would have failed.

    Not on the merits, of course—the failure would have been purely jurisdictional: neither they, nor your hypothetical class, would have standing to bring your suit. The Green case relies on taxpayer standing, at least implicitly, to grant standing to the group of parents. The taxpayer standing doctrine has changed significantly in the intervening nearly half century—it now requires actual expenditure by the government; tax expenditure doesn’t count.

    So no standing for plaintiffs, no suit to enjoin the IRS, no judicial pressure for the IRS to expand the injunction. No, if you’re going to try to provide a realistic scenario, it has to be one where (a) the IRS takes the lead in deciding to revoke the exemptions of schools that discriminate on the basis of sexuality, or (b) Congress somehow makes that explicit in the Code.

  30. And ABM, churches will not lose their federal tax exemption over their exclusion of any group of people. Full stop. Any assertion that they will is pure fantasy.

  31. Parents who don’t want their children to be taught that same-sex relationships are the moral equivalent of heterosexual marriage … could teach them that at home, while allowing the schools to teach things like Chemistry and Calculus and French and World Geography, etc.

    I see the real problem as being the actual living space at the universities…

  32. Mark B. says:

    Thanks for the update on taxpayer standing doctrine. I guess I’ll have to treat blog comments like legal memoranda from now on and do the necessary research to avoid being “gotcha-ed.”

  33. I hope you are right Sam

  34. Geoff - A says:

    As a non American I thought the conference talks opposing ssm would end when it became law in Utah. Are they campaigning in this legal case?

    I see it as social progress, and therefore comparable to racism. We dont get any talks in support of racism any more, so its just a question of time. How the church responds is a question of the politics of the leadership.

  35. I’m not sure which is more pathetic, Mark B. comparing the gay marriage movement to Nazis, or his subsequent denial of doing so. If you’re going to compare your opponents to Nazis, at least have the courage to stand by the comparison!

    Let me show you how it’s done: Mark B. hates homosexuals. You know who else hated homosexuals and ordered them rounded up and killed? (/Godwin)

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