Same-Sex Marriage Decision & the Exempt Status of Religious Organizations
This is not the first time that the tax-exempt status of religious organizations has been perceived to conflict with constitutional rights. In the 1970s, the IRS determined that many religious organizations were no longer eligible for tax-exempt status because they violated the constitutional rights of minorities by prohibiting interracial dating and marriage. The IRS’s position was that these practices, regardless of the robust religious and educational activities of the organizations, were so at odds with public policy that they disqualified the organizations from tax-exempt status.
Bob Jones University was one such organization, and its case challenging the IRS’s actions reached the U.S. Supreme Court. In its decision in 1982, the Court sided with the IRS. The Court determined that the IRS’s actions did not violate the school’s rights under the First Amendment to freely exercise its religion, because the school’s rights were outweighed by the government’s interest in eradicating racial discrimination. The government’s interest, the court said, “is indeed so fundamental and pervasive that it is embraced in the concepts of due process law.”1 Accordingly, the government’s interest “substantially outweighs whatever burden denial of tax benefits places on [Bob Jones University’s] exercise of their religious beliefs.”2
Now that same-sex marriage is likewise protected under the Due Process Clause of the Fourteenth Amendment, we are left to wonder how the U.S. Supreme Court will resolve this new conflict. Will it again decide that the government’s interest in eradicating discrimination against constitutionally protected groups outweighs whatever burden denial of tax-exempt status places on religious organizations’ exercise of their religious beliefs? Or will it defuse the conflict by deciding that some difference between homosexuality and race makes the government’s interest weigh less or the religious organizations’ interests weigh more?
In its same-sex marriage decision, the U.S. Supreme Court stated the following regarding the decision’s effect on religious organizations: “The First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths, and to their own deep aspirations to continue the family structure they have long revered.”3 Yet it is unclear whether “proper protection” means that religious organizations will not lose tax accommodations like federal tax-exempt status. Furthermore, in dissent Chief Justice Roberts wrote as follows: “The majority graciously suggests that religious believers may continue to ‘advocate’ and ‘teach’ their views of marriage. The First Amendment guarantees, however, the freedom to ‘exercise’ religion. Ominously, that is not a word the majority uses.”4
In light of the questions raised by the U.S. Supreme Court’s decision, our concern is that the IRS may have reason to believe that revoking the tax-exempt status of certain religious organizations, such as religious colleges and universities that prohibit same-sex relationships, may be permissible (as it was with Bob Jones University). There are undoubtedly many at the IRS who believe that religious organizations should not qualify for tax-exempt status and would be eager to revoke their exemptions.
In an effort to restrain the IRS, 14 state attorneys general recently wrote a letter to Senate Majority Leader Mitch McConnell and House Speaker John Boehner urging “Congress to take steps to prevent the IRS from choosing this course.” We are also hopeful there will be a legislative solution to this matter. If not, it seems inevitable that momentum will build at the IRS in favor of inserting itself into this matter similar to the way it did in the 1970s.
1Bob Jones University v. United States, 461 U.S. 574, 593 (1983).
2Id. at 604
3Obergefell v. Hodges, No. 14-556, slip. op. at 27 (2015)
4Id. at 28 (Roberts, C.J., dissenting).