IRS Adopts Non-Discrimination Policy for Private Schools After Court Order Targeting Segregation Academies

Following a 1969 Mississippi-based lawsuit against the IRS in which federal courts issue a preliminary injunction denying tax exemption to private schools that are segregated by race, the IRS adopts a non-discrimination policy applying to private schools on July 10, 1970. The policy, though it takes eight years to be fully implemented, represents a turning point in federal enforcement against segregation academies that have proliferated throughout the South since Brown v. Board of Education.

In May 1969, a group of black parents in Holmes County, Mississippi, sued the Treasury Department to stop three segregation academies from obtaining tax-exempt status. Historian Randall Balmer, studying the origins of conservative Christians’ rise in the United States, points to this lawsuit as a turning point. The resulting court order forces the IRS to reverse its 1967 policy that had allowed tax deductions for contributions to any segregated academy.

Under the new policy, the IRS is tasked with determining whether private schools engage in racial discrimination, and those found to discriminate lose their tax-exempt status under IRC 501(c)(3). The largest institution targeted under this ruling is fundamentalist Christian college Bob Jones University, which completely excluded black applicants until 1971. From 1971 until 1975, Bob Jones admitted black students only if they were married. After 1975, the university began admitting unmarried black applicants but continued to deny “admission to applicants engaged in an interracial marriage or known to advocate interracial marriage or dating” and imposed a disciplinary rule prohibiting interracial dating.

On November 30, 1970, the IRS informs Bob Jones University that it is planning to revoke the university’s tax exempt status. Bob Jones University loses its tax exemption in 1976 for its policy prohibiting interracial dating. The university challenges the revocation, leading to litigation that continues throughout the 1970s.

The IRS policy creates immediate backlash from conservative Christians who view the enforcement as government intrusion into religious institutions. Many of the segregation academies targeted under the ruling are church-sponsored, catching the attention of evangelical Christian leaders. The enforcement struggle throughout the 1970s sets the stage for the political mobilization that creates the Religious Right.

However, the IRS struggles to implement enforcement throughout the 1970s. The difficulty of determining which schools engage in discrimination based on their racial composition versus their stated policies creates administrative challenges that segregation academies exploit. The gap between policy adoption (1970) and systematic enforcement (1978) allows the segregation academy movement to continue expanding while developing more sophisticated justifications for their existence, increasingly framing racial separation as a matter of religious conviction and parental rights rather than explicit segregationist ideology.