User:Mhhn12/sandbox

((User sandbox))

Impact/Reception
Following the trial, the Internal Revenue Service clarified its anti-discrimination guidelines for public and church-operated private schools. In order to gain tax-exempt status, public schools were required to publicize their non-discrimination policies for selecting students and employees. Student loans and scholarships were to be allotted on a non-discriminatory basis. School must not only fulfill the requirements, but also report the racial composition of their student body and staff as well as how loans and scholarships were distributed. In order for a church-operated private school to qualify as charitable, it must have exclusive nondiscriminatory policies. Church-operated private schools, granted they are protected by the First Amendment, cannot abstain from Federal public policies against racial discrimination. On April 19, 1975, the IRS revoked Bob Jones University's tax-exempt status. Subsequently, the University paid the Federal Unemployment Tax Act (FUTA) tax of $21 on one of its employees in order to nullify the Anti-Injunction Act. After being denied a refund, the University proceeded to sue the IRS for revoking its tax-exempt status. The United States government filed for a counterclaim of $498,675.59 for unpaid federal unemployment taxes for the years 1971 to 1975. At the time, the school had already begun changing its admission policy by extending admission to unmarried blacks. However, interracial dating and marriage remained strictly prohibited at the University. The IRS refused to reinstate the University’s tax-exempt status, arguing that the dating policies violated its nondiscriminatory requirements. The US District Court for the District of South Carolina ordered the IRS to restore the University’s tax-exempt status on the grounds that the IRS policies violated the Free Exercise and Establishment Clause. In 1980, the Court of Appeals for the Fourth Circuit, in a split decision, determined that the dating policy, even if founded on religious conviction, violated its nondiscriminatory public policy. The request for a refund was dismissed and the government’s counterclaim was reinstated. Bob Jones University proceeded to appeal the decision and the Supreme Court would determine the verdict in Bob Jones University v. United States