450 U.S. 944 (1981)

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U.S. Supreme Court


67 L.Ed.2d 376 450 U.S. 944

No. 80-484

Supreme Court of the United States

February 23, 1981

On petition for writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.

The petition for a writ of certiorari is denied.

Justice REHNQUIST, with whom Justice STEWART and Justice POWELL join, dissenting.

The initial question presented by this petition is whether the Internal Revenue Service is entitled to deny tax-exempt status to a private school which discriminates in its admissions policy. If so, the additional question posed is what steps a private school must take in order to establish that its admissions policy is in fact nondiscriminatory.

Petitioner, Prince Edward School Foundation, was formed as a nonprofit private school foundation to operate elementary and secondary schools in Prince Edward County, Va. The principal purpose for petitioner's establishment was to ensure a segregated education for the white children who attended petitioner's schools. Griffin v. School Board of Prince Edward-

Page 450 U.S. 944, 945

County, 377 U.S. 218, 223, 231 S., 84 S.Ct. 1226, 1229, 1233, 12 L.Ed.2d 256 ( 1964). Presently, petitioner's sole activity is the operation of one private school, Prince Edward Academy.

From 1959 until 1970, petitioner was considered by the Service as a tax-exempt organization within the terms of 501(c)(3) of the Internal Revenue Code of 1954, 26 U.S.C. 501(c)(3). Section 501(a) of the Code exempts from the federal income taxes organizations described in 501(c)( 3), and this latter provision includes corporations or foundations " organized and operated exclusively for religious, charitable, scientific , . . . literary, or educational purposes. . . ."

In 1970, the Service announced that it would no longer recognize the tax-exempt status of any private school unless the school adopted and administered a nondiscriminatory admissions policy. This new position was announced during the course of litigation in Green v. Connally, 330 F.Supp. 1150 (DC 1971), in which the Service's prior policy was being challenged. A three-judge panel in Green thereafter ruled that a private school is not entitled to acquire or retain exempt status under 501(c)(3) unless it has a racially nondiscriminatory admissions policy. Although 501(c)(3) does not, by its express terms, impose such a limitation on the right to tax-exempt status, the Green court reasoned that such a limitation was mandated by both public policy and the common-law definition of " charitable." 1

To effectuate its new policy regarding tax exemptions for private schools, the Service issued Revenue Procedure 72-54 (currently Rev.Proc. 75-50, 1975-2 Cum.Bull. 587), which requires a private school seeking tax- exempt status to publicize its nondiscriminatory admissions policy to all segments [450 U.S. 944, 946]

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