The Color of Law A Forgotten History of How Our Government Segregated America by Richard Rothstein (z-lib.org).epub

I
THE IRS has always had an obligation to withhold tax favoritism from
discriminatory organizations, but it almost never acted to do so. Its
regulations specifically authorize charitable deductions for organizations that
“eliminate prejudice and discrimination” and “defend human and civil rights
secured by law.” The IRS leadership recognized this in 1967 when the
agency exercised its authority to withhold the tax exemption of a
recreational facility that excluded African Americans. Yet until 1970, sixteen
years after Brown v. Board of Education, the IRS granted tax exemptions to
private whites-only academies that had been established throughout the
South to evade the ruling. It rejected the exemptions only in response to a
court injunction won by civil rights groups.
In 1976, the IRS denied the tax exemption of Bob Jones University
because the school would not allow interracial dating by its students. The
university mounted a court challenge to the IRS action, and when the case
reached the Supreme Court the Reagan administration refused to defend the
agency. So the Supreme Court appointed an outside lawyer, William T.
Coleman, Jr., to make the argument that the government itself should have
presented. Coleman’s brief asserted: “Indeed, if [the charitable organization
provision of the IRS code] were construed to permit tax exemptions for
racially discriminatory schools, the provision would be unconstitutional
under the Fifth Amendment. The Government has an affirmative
constitutional duty to steer clear of providing significant aid to such
schools.”
In its widely noticed 1983 decision, the Court upheld the IRS decision
and concluded that “an institution seeking tax-exempt status must serve a
public purpose and not be contrary to established public policy.” It did not
adopt Coleman’s constitutional argument to make its case, but neither did the
Court reject it. In his opinion, Chief Justice Warren Burger wrote that many
of those who submitted briefs in the case, including Coleman, “argue that
denial of tax-exempt status to racially discriminatory schools is
independently required by the equal protection component of the Fifth
Amendment. In light of our resolution of this litigation, we do not reach that