I A Until 1970, the Internal Revenue Service granted tax-exempt status to private schools, without regard to their racial admissions policies, under § 501(c)(3) of the Internal Revenue Code, 26 U. Since May 29, 1975, the University has permitted unmarried Negroes to enroll; but a disciplinary rule prohibits interracial dating and marriage. Students who are partners in an interracial marriage will be expelled. Students who are members of or affiliated with any group or organization which holds as one of its goals or advocates interracial marriage will be expelled. Students who date outside of their own race will be expelled. Students who espouse, promote, or encourage others to violate the University's dating rules and regulations will be expelled. The Government counterclaimed for unpaid federal unemployment taxes for the taxable years 1971 through 1975, in the amount of 9,675.59, plus interest. The Court of Appeals for the Fourth Circuit, in a divided opinion, reversed. In the court's view, Bob Jones University did not meet this requirement, since its racial policies violated the clearly defined public policy, rooted in our Constitution, condemning racial discrimination and, more specifically, the government policy against subsidizing racial discrimination in education, public or private. The court held that the IRS acted within its statutory authority in revoking the University's tax-exempt status. Several years before this Court's decision in President Truman issued Executive Orders prohibiting racial discrimination in federal employment decisions, Exec. 9980, 3 CFR 720 (1943-1948 Comp.), and in classifications for the Selective Service, Exec. Yet, for a dozen years, Congress has been made aware -- acutely aware -- of the IRS rulings of 19. Congress affirmatively manifested its acquiescence in the IRS policy when it enacted the present § 501(i) of the Code, Act of Oct. Although a ban on intermarriage or interracial dating applies to all races, decisions of this Court firmly establish that discrimination on the basis of racial affiliation and association is a form of racial discrimination, also on certiorari to the same court. and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office. Beginning in 1973, Bob Jones University instituted an exception to this rule, allowing applications from unmarried Negroes who had been members of the University staff for four years or more. Goldsboro also asserted that it was not obliged to pay taxes on lodging furnished to its teachers. The United States District Court for the District of South Carolina held that revocation of the University's tax-exempt status exceeded the delegated powers of the IRS, was improper under the IRS rulings and procedures, and violated the University's rights under the Religion Clauses of the First Amendment. Finally, the Court of Appeals rejected petitioner's arguments that the revocation of the tax exemption violated the Free Exercise and Establishment Clauses of the First Amendment. The school offers classes from kindergarten through high school, and, since at least 1969, has satisfied the State of North Carolina's requirements for secular education in private schools. As we noted earlier, few issues have been the subject of more vigorous and widespread debate and discussion in and out of Congress than those related to racial segregation in education. Here, however, we do not have an ordinary claim of legislative acquiescence. It is hardly conceivable that Congress -- and in this setting, any Member of Congress -- was not abundantly [p601] aware of what was going on. Section 501(c)(3) lists the following organizations, which, pursuant to § 501(a), are exempt from taxation unless denied tax exemptions under other specified sections of the Code: Corporations, and any community chest, fund, or foundation, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation . (Emphasis added.) Section 170(a) allows deductions for certain "charitable contributions." Section 170(c)(2)(B) includes within the definition of "charitable contribution" a contribution or gift to or for the use of a corporation "organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. According to the interpretation espoused by Goldsboro, race is determined by descendance from one of Noah's three sons -- Ham, Shem, and Japheth. It does not ask this Court to review the rejection of that claim.
More than a century ago, this Court announced the caveat that is critical in this case: [I]t has now become an established principle of American law that courts of chancery will sustain and protect .
And the actions of Congress since 1970 leave no doubt that the IRS reached the correct conclusion in exercising its authority. Petitioners' asserted interests cannot be accommodated with that compelling governmental interest, and no less restrictive means are available to achieve the governmental interest. Goldsboro admits that it maintains racially discriminatory policies, and, contrary to Bob Jones University's contention that it is not racially discriminatory, discrimination on the basis of racial affiliation and association is a form of racial discrimination. J., Opinion of the Court CHIEF JUSTICE BURGER delivered the opinion of the Court. To effectuate these views, Negroes were completely excluded until 1971. The University subsequently filed returns under the Federal Unemployment Tax Act for the period from December 1, 1970, to December 31, 1975, and paid a tax [p582] totalling on one employee for the calendar year of 1975. 1150 (DC 1971), with approval, the Court of Appeals concluded that § 501(c)(3) must be read against the background of charitable trust law. For more than 60 years, the IRS and its predecessors have constantly been called upon to interpret these and comparable provisions, and in doing so have referred consistently to principles of charitable trust law. The correctness of the Commissioner's conclusion that a racially discriminatory private school "is not ‘charitable' within the common law concepts reflected in . D The actions of Congress since 1970 leave no doubt that the IRS reached the correct conclusion in exercising its authority. Petitioner Bob Jones University, however, contends that it is not racially discriminatory. 230, defined "racially nondiscriminatory policy as to students" as meaning that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school, and that the school does not discriminate on the basis of race in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. The Solicitor of Internal Revenue looked to the common law of charitable trusts in construing that provision, and noted that "generally bequests for the benefit and advantage of the general public are valid as charities." Sol.
We granted certiorari to decide whether petitioners, nonprofit private schools that prescribe and enforce racially discriminatory admissions standards on the basis of religious doctrine, qualify as tax-exempt organizations under § 501(c)(3) of the Internal Revenue Code of 1954. § 501(c)(3), On January 12, 1970, a three-judge District Court for the District of Columbia issued a preliminary injunction prohibiting the IRS from according tax-exempt status to private schools in Mississippi that discriminated as to admissions on the basis of race. From 1971 to May, 1975, the University accepted no applications from unmarried Negroes, 427 U. 160 (1976), prohibiting racial exclusion from private schools, the University revised its policy. After its request for a refund was denied, the University instituted the present action, seeking to recover the it had paid to the IRS. The court accordingly ordered the IRS to pay the University the refund it claimed and rejected the IRS's counterclaim. To be eligible for an exemption under that section, an institution must be "charitable" in the common law sense, and therefore must not be contrary to public policy. The Executive Branch has consistently placed its support behind eradication of racial discrimination. In 1957, President Eisenhower employed military forces to ensure compliance with federal standards in school desegregation programs. It is, of course, not unknown for independent agencies or the Executive Branch to misconstrue the intent of a statute; Congress can and often does correct such misconceptions, if the courts have not done so. The evidence of congressional approval of the policy embodied in Revenue Ruling 71-447 goes well beyond the failure of Congress to act on legislative proposals. It emphasizes that it now allows all races to enroll, subject only to its restrictions on the conduct of all students, including its prohibitions of association between men and women of different races, and of interracial marriage. Bob Jones University was founded in Florida in 1927. C., in 1940, and has been incorporated as an eleemosynary institution in South Carolina since 1952. That same year, the Bureau of Internal Revenue expressed a similar view of the charitable deduction section of the estate tax contained in the Revenue Act of 1918, ch.
Given the stress and anguish of the history of efforts to escape from the shackles of the "separate but equal" doctrine of 163 U. That it may be seen as belated does not undermine its soundness. Under that view, any nonprofit organization that falls within one of the specified categories is automatically entitled to the tax benefits, provided it does not engage in expressly prohibited lobbying or political activities. The dissent thus would have us conclude, for example, that any nonprofit organization that does not engage in prohibited lobbying activities is entitled to tax exemption as an "educational" institution if it is organized for the "‘instruction or training of the individual for the purpose of improving or developing his capabilities,'" 26 CFR § 1.501(c)(3) - 1(d)(3) (1982). Similarly, a band of former military personnel might well set up a school for intensive training of subversives for guerrilla warfare and terrorism in other countries; in the abstract, that "school" would qualify as an "educational" institution. To be entitled to tax-exempt status under § 501(c)(3), an organization must first fall within one of the categories specified by Congress, and in addition must serve a valid charitable purpose. This has been characteristic of the peoples from numerous lands who have built our country. To the extent that the Court states that Congress, in furtherance of this policy, could deny tax-exempt status to educational institutions that promote racial discrimination, I readily agree. no part of the net earnings of which inures to the benefit of any private shareholder or individual; and . In fact, there are few examples which better illustrate Congress' effort to define and redefine the requirements of a legislative Act. With the ratification of the Sixteenth Amendment, Congress again turned its attention to an individual income tax with the Tariff Act of 1913. The Revenue Act of 1918 added an exemption for corporations or associations organized "for the prevention of cruelty to children or animals." Ch. Museums, zoos, planetariums, symphony orchestras, and other similar organizations. But even if the circumstances were different, the latter-day wisdom of the IRS has no basis in § 501(c)(3). These bills and related hearings indicate little more than that a vigorous debate has existed in Congress concerning the new IRS position. T he amendments were passed to limit certain enforcement procedures proposed by the IRS in 19 for determining whether a school operated in a racially nondiscriminatory fashion. I have no disagreement with the Court's finding that there is a strong national policy in this country opposed to racial discrimination.
Few social or political issues in our history have been more vigorously debated and more extensively ventilated than the issue of racial discrimination, particularly in education. There can thus be no question that the interpretation of § 170 and § 501(c)(3) announced by the IRS in 1970 was correct. providing a public benefit," at 614-615, but suggests that Congress itself fully defined what organizations provide a public benefit, through the list of eight categories of exempt organizations contained in § 170 and § 501(c)(3). 997 (1971), Fagin's school for educating English boys in the art of picking pockets would be an "educational" institution under that definition. A distinctive feature of America's tradition has been respect for diversity. The Court points out that there is a strong national policy in this country against racial discrimination. which is not disqualified for tax exemption under section 501(c) (3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office. Making a more fruitful inquiry, the Court next turns to the legislative history of § 501(c)(3) and finds that Congress intended [p615] in that statute to offer a tax benefit to organizations that Congress believed were providing a public benefit. But then the Court leaps to the conclusion that this history is proof Congress intended that an organization seeking § 501(c)(3) status "must fall within a category specified in that section what organizations are serving a public purpose and providing a public benefit within the meaning of § 501(c)(3), and has clearly set forth in § 501(c)(3) the characteristics of such organizations. In subsequent Acts, Congress continued to broaden the list of exempt purposes. The Revenue Act of 1921 expanded the groups to which the exemption applied to include "any community chest, fund, or foundation" and added "literary" endeavors to the list of exempt purposes. (ii) An organization, such as a primary or secondary school, a college, or a professional or trade school, which has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled body of students in attendance at a place where the educational activities are regularly carried on. The circumstances under which this change in interpretation was made suggest that it is entitled to very little deference. So long as the Congress has not acted to set forth a national policy respecting denial of tax exemptions to private schools, it is improper for the IRS or any other branch of the Federal Government to seek denial of tax-exempt status. Where in addition to these circumstances Congress has shown time and time again that it is ready to enact positive legislation to change the Tax Code when it desires, this Court has no business finding that Congress has adopted the new IRS position by failing to enact legislation to reverse it.