The Panic Over Churches’ Tax-Exempt Status in a Gay-Married World

A new worry in conservative circles has slowly gathered steam since the Supreme Court heard arguments in Obergefell v. Hodges, on whether the Constitution requires states to issue marriage licenses to and recognize the out-of-state marriages of same-sex couples. During oral arguments, Justice Samuel Alito asked Solicitor General Donald Verrilli whether the tax-exempt status of religious colleges and universities who opposed same-sex marriage would be in jeopardy should the Court hold for the plaintiffs. Verrilli hedged, saying he’d have to know more details to answer the question, but conceded that that it would “be an an issue.” That was enough for conservatives to start raising alarm bells about the Internal Revenue Service (which they already hate) yanking the tax exemption of religious organizations and churches who oppose same-sex marriage.

Travis Weber, director of the Family Research Council’s Center for Religious Liberty, told Fox News’ Shannon Bream that “he believed Verrilli’s logic would eventually extend to churches and just about ‘anyone holding a traditional view of marriage.'”

The American Family Association’s One News Now claimed that “Christian colleges and universities would be forced to decide between compromising their biblical beliefs and surviving financially,” and that churches and other institutions could be forced to shutter as well, because losing the tax exemption would spell financial ruin.

“Religious non-profits, Plan Now for Tax-Exemption Battles,” warned The Federalist.

This anxiety is not new. Last year, as the lower courts were striking down states’ bans on same-sex marriage (in the cases that ultimately went up to the Supreme Court), I wrote about a similar argument conservatives were making, raising fears that churches would lose their tax-exempt status if they refused to perform same-sex marriage ceremonies. As I noted then, the religious right was galvanized in the 1970s by the IRS’s revocation of the tax-exempt status of Bob Jones University over its policy banning interracial dating. That revocation–upheld by the Supreme Court–was a result of an IRS rule that permits the agency to deny or revoke a non-profit’s tax-exempt status if it violates a fundamental public policy (in that case, public policy against race discrimination).

The Bob Jones case is an essential part of the conservative movement’s institutional memory of what they consider to be government overreach, particularly by the IRS, and undue government interference with religious affairs and religious freedom. As historian Randall Balmer has documented, Bob Jones University’s loss of its tax-exemption mobilized the religious right more than abortion.

At last month’s arguments, Alito raised the Bob Jones case specifically:


JUSTICE ALITO: Well, in the Bob Jones case, the Court held that a college was not entitled to tax-exempt status if it opposed interracial marriage or interracial dating. So would the same apply to a university or a college if it opposed same-sex marriage?

GENERAL VERRILLI: You know, I don’t think I can answer that question without knowing more specifics, but it’s certainly going to be an issue. I don’t deny that, Justice Alito. It is going to be an issue.

I reached out to two legal experts–one an expert on tax-exempt organizations, the other an expert on constitutional law–for insight into what kind of issue a ruling in the plaintiffs’ favor would really pose.

Richard Schmalbeck, a tax expert at Duke Law School, said the principle in Bob Jones has “not been applied broadly,” noting, for example, that it hasn’t been extended to deprive all-women’s colleges of their tax-exempt status. Caroline Mala Corbin, a professor at the University of Miami Law School, reiterated what she told me last year: that if the IRS and the courts had not applied the Bob Jones principle to revoke the tax exempt status of organizations that discriminated based on gender, it seemed unlikely that they would extend this principle to sexual orientation discrimination. What’s more, she said, federal law bans race discrimination, demonstrating a broad consensus to protect as fundamental public policy. Given that discrimination based on sexual orientation has not been banned by any federal law, we are far from such a consensus on sexual orientation discrimination. And even though federal law bans discrimination based on gender, the Bob Jones principle has never been extended to tax-exempt organizations that discriminate based on gender.

Think about it this way: there are religious denominations that ban women’s ordination, and still have tax-exempt status.

Schmalbeck pointed out that how the Supreme Court’s ruling in the marriage cases would impact the tax-exempt status of organizations that oppose same-sex marriage would depend on the specifics and the breadth of the holding. If, for example, the Court ruled that “states cannot withhold the benefits of marriage on grounds of sexual orientation,” that would “not necessarily reach religious institutions exercising their rights to worship . . . and believe in the things that their doctrines hold. The Court could even drop a footnote saying that they weren’t deciding that case, and that no such inference should be drawn,” he said. But if the Court were to adopt “a more aggressive version of the idea that discrimination on the basis of sexual orientation is fundamentally abhorrent,” that could possibly “support a subsequent finding that a church that refuses the sacrament of marriage to a same-sex couple is violating public policy.” However, he said he thought such an outcome unlikely.

It’s worth thinking about this in the context of the way the IRS’s interaction with tax-exempt organizations, particularly religious ones, has functioned in practice. There hasn’t been another Bob Jones–not because religious organizations don’t refuse to serve or recognize religious beliefs inconsistent with their own, but because the IRS has given them wide latitude to do so. Every day religious organizations likely refuse to serve members of the public who do not adhere to their religious beliefs. As Justice Elena Kagan noted in the oral arguments, rabbis are free to refuse to marry couples if one member of the couple is not Jewish. That refusal is protected by the First Amendment, even though the couple, too, has religious freedom rights.

What did Verrilli mean when he said, “it is going to be an issue”? Perhaps he meant opponents of same-sex marriage would make it an issue. Not that the actual loss of tax-exempt status would be an issue.


  •' Jim Reed says:

    As society evolves, it will sometimes be in conflict with religions based on ancient holy scriptures. It is probably best to resolve these one at a time as they come up, because what is the alternative? A supreme court case to decide once and for all if the holy scriptures are actually from God?

  •' westernwynde says:

    Any organization that takes money from the public – in this case, in the form of tax breaks – should have to serve the whole public. Otherwise, those tax breaks – which cost the public plenty – should promptly disappear. Period. I know, I know, what planet do I live on?

  • I thought conservatives believed gov should get out of helping churches help people? Let the wealthy people who want to help others, give to churches, they can use it as a tax write-off and they can tell the churches where they would like their donations to be used. Oh but wait, that’s means they will feel that giving money is being forced on them, even if they can use it as a tax write-off/credit, they will actually have to give more money then they do now to covert he cost of the loss of the loop-hole that give churches the tax exempt status in the first place, in turn, they may have to look at wasted spending of the church, creating a special regulation process to hold the church accountable. Oh dear, no tax exempt means they have to spend more of their own money to support churches to make sure they are spending the private funds on what they want them to. Oh dear.

  •' Jeffrey Samuels says:

    Definitely a thorny issue. I can certainly see that a church being exempt from performing marriages, but what about Catholic Schools and Colleges or even Hobby Lobby businesses? If two people are married, would a business providing marriage benefits like spousal insurance be able to say yes to John and Mary, but no to Bill and Richard without violating the law?

  •' JPeckJr says:

    The solution, I believe, is separate the legal act of marriage from the religious act of marriage. That is, have a two-part system in which a couple is married under the law by a secular marriage commissioner in a completely secular ceremony. Then, if they wish, they can have a blessing of their marriage by a religious authority, or all their family and friends. Clergy would no longer be authorized under the law to solemnize a marriage. Even now, a couple whose marriage is solemnized by a secular officiant — a judge for example — is completely and fully legally married. A religious ceremony is not required to be married under the law. Removing clergy as agents of the state would allow clergy to conduct religious ceremonies within the standards of their religion without even the suggestion they are acting on behalf of the law. Some state ought to pioneer this method. That some churches do not consider civil marriages “real” is immaterial, as the couple would then be married in the church too.

  •' JPeckJr says:

    On the tax-exempt issue, our entire system of tax-exemptions needs to be re-examined and revised, but it will not happen if it threatens the tax-exempt status of certain kinds of political fundraising organizations. Religious organizations have a special recognition under the Constitution that universities, museums, hospitals, neighborhood associations, and the like do not have, even if they claim to be religiously motivated or guided. By definition, a university is not a church, nor is a business.

  •' Frank says:

    Just because it hasn’t been an issue doesn’t mean it couldn’t be an issue. Wake up Christians!

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  •' MarkS2002 says:

    The right wing is always vocal about not helping the poor. Perhaps it is time for the faith community to practice what they preach.

  •' Geoff, God of Biscuits says:

    *Just because it hasn’t been an issue doesn’t mean it couldn’t be an issue.*

    Mmm, totally. Have you also heard about the Mine Shaft Gap?

  •' Frank says:

    Yup not relevant. Once again just because no one yet has tried to apply a rule more broadly doesn’t mean they won’t in the future.

  •' Geoff, God of Biscuits says:

    I guess that’s some sort of principle: Something could always happen differently than it happens now.

  •' Judith Maxfield says:

    I pretty much agree with you. I believe we’d be better off for it.
    I know in Europe you do get married first before in a legal and secular manner. I wonder though if you actually can get married twice, the second being in the religion of your choice or membership. I’m now curious if it can only be a blessing. Is there anyone on RD who knows the answer for sure? Its also true, or has been changed, that in some countries everyone must pay a tax for the support of churches, but maybe can designate which one. I don’t know if it includes synagogues. I may be wrong on the details, but some time ago it was always true in Germany. Maybe now its changed. Don’t know about the predominately Catholic countries.

  • Historically, many nonprofit colleges have not allowed interracial dating or women, for example, and as far as I know their nonprofit status was never at risk. What became an issue to the point discrimination went underground are government contracts. That would have been the most logical question to ask. (And the answer is that a lot of nonprofit religions have lots of government contracts, and where it’s unconstitutional to discriminate is still shaking down in many courts.)

  • I hope not. If the 14th amendment is interpreted as intended, and same sex marriages are legal, discriminatory practices by businesses should be illegal, and Bill and Richard should sue them — since lack of insurance can definitely cause material harm. That still leaves open the question of a “religious business” and if it’s an oxymoron. After all, law doesn’t consist just of “laws” passed, but of common practices which became common law — and religion and business have been pretty separate in this usage till SCOTUS started happily creating its own common law.

  • For example, I could try to pass a law against anti-Muslim hate speech. That makes it an “issue”. Whether that led to actual laws which were then enforced and found legitimate by the courts would be very, very improbable. As would Christians losing their exempt status for failing to perform same sex marriages. After all, many rabbis refuse to marry members of their congregation to non-Jews, and have for many years — and their places of worship didn’t lose their tax exempt status.

  • I agree with you. Many people I know married someone else of the same sex in a church or synagogue, though it wasn’t civilly recognized. I also knew mixed sex couples who only did the religious, not the civil, marriage as a protest because they thought it was wrong to enjoy a privilege other citizens couldn’t.

  •' seashell says:

    I’m not sure if educational entities would lose their non-profit status for racial discrimination, but the Supreme Court ruled in a 1983 consolidated decision, Bob Jones University v. United States (No. 81-3), that they can lose their tax exemptions and could not “treat gifts to such schools as charitable deductions for income tax purposes”. BJU did not allow interracial dating and Goldsboro Christian Schools admitted only white students.

    However, as Sarah noted, the IRS has never extended its BJU policy towards gender cases and its unlikely to do so with sexual orientation. Even worse is that Pres. Obama has extended an executive order first started under Bush II that gives religious organizations the freedom to hire people with public tax dollars based on the potential employee’s religious beliefs. Pres. Obama did later amend the order to prohibit discrimination of LGBT people.

    This is another one of those moral panics that the right likes to inflame when they’re on the losing side of an issue.

  • Thank you for the information. Totally agree with your conclusion.

  •' Frank says:

    Well it’s become clear that the activists working on this cause not only seek to change the law but to marginalize and minimize Christianity and their beliefs. They know it is these beliefs that stand in their way the most.

    My original statement stands.

  •' Rmj says:

    We already have that system, except, largely for convenience (so you don’t have to do it twice), states in varying degrees authorize clergy to conduct marriages.

    But it is not required that clergy conduct marriages. Some churches will not countenance mixed races marriages (small, independent churches, mostly, I don’t know of a mainline denomination that would take that stance), and while the UCC has recognized same sex “unions” (because the law wouldn’t all it a “marriage”) for almost half a century, I doubt the Roman Catholic church will do that anytime soon, whatever the Supreme Court decides the state of the law is.

    That only means no RC priest is going to “bless” a same sex marriage; not without getting in trouble with his bishop. It doesn’t mean the law will require the RC priest to conduct the wedding, anymore than the Civil Rights Act (which recognizes “religion” as a protected class) requires clergy to perform “mixed faith” marriages, if they or their denomination object to same (another shrinking group, but still in existence).

    The concern, IOW, is misplaced, and doesn’t need a sledgehammer to fix. It’s already fixed. No Court is going to order a Church to perform a marriage: period. Any more than it is going to tell a Church who can, or even who must, be a member of that Church, or who must be clergy in that church.

    This is all much ado about nothing.

  •' Rmj says:

    No, But that’s the problem with the Hobby Lobby decision.

    The Court is going to be crafting exceptions to that stupid ruling until Doomsday; or until they reverse it, whichever comes first.

  •' seashell says:

    Wait for it…. Calling herself the ambassador for the plaintiffs, “God and His Son, Jesus Christ,” a Nebraska woman filed a lawsuit in District Court on May 5th against all homosexuals on Earth. In the petition, filed as Driskell v. Homosexuals, she asks “that U.S. District Judge John M. Gerrard decide once and for all whether homosexuality is or isn’t a sin”.

  •' Fired, Aren't I says:

    Please don’t feed the troll. “Frank” has to change his username and open new disqus accounts every couple weeks because he gets banned for saying the same BS over and over again, trying to goad people into responding.

    He’s also for some reason searching for a 20 year old piece of hot tail in a dating profile he set up last year or so. Bizarre.

  •' Fired, Aren't I says:

    Please don’t feed the troll. “Frank” has to change his username and open
    new disqus accounts every couple weeks because he gets banned for
    saying the same BS over and over again, trying to goad people into

    He’s also for some reason searching for a 20 year old piece of hot tail in a dating profile he set up last year or so- Bizarre.

  •' Liya says:

    Seashell, may I ask you to enlighten me on that Goldsboro case, and how it ended? I read about BJU and their fight ( so called ‘christian’ ,disgusting moral stance, yeeck). I found a few PDFs but being a non native English speaker, afraid I might not get it right.

  •' seashell says:

    Hi, Liya. Actually, both cases were combined when the Supreme Court heard them as they each consisted of racially discriminatory policies. In the Goldsboro case, the school allowed only white students and some Asians and one Hindu (go figure!). The school based their discrimination on Biblical grounds saying: ”We believe that God in his plan and purpose and wisdom separated men into various nations and races and that those races should be preserved…”

    The Supreme Court ruled that both schools could lose their tax exemptions because of their racially discriminatory policies and that when it came to racial discrimination, the schools were not protected by the first amendment.

    If you understand most of this, I’d say you’re doing a lot better that many native English speakers! Kudos.

  •' Liya says:

    thank you dearly, that clarifies it.

    “if you understand most of this, I’d say you’re doing a lot better that many native English speakers!”
    judging by the state of public affairs and quality of American TV that isn’t something to really brag about 🙂

  •' seashell says:

    judging by the state of public affairs and quality of American TV that isn’t something to really brag about 🙂

    Had to laugh out loud. A sense of humor is important when discussing both subjects. Still, I do think my original thought was correct. Welcome to crazy!

  •' Stogumber says:

    Any observer knows that laws are applied differently for privileged groups and for hated groups. Privileged groups, like women or Jews, are of course exempt from IRS prosecution. But you bet that liberals would go after a hated group like Evangelicals just at the moment when they see a real legal opportunity. Ms Posner’s inference “See, it isn’t done against X, so it will not be done against Y” is infantile.

  •' Stogumber says:

    There has already been a church who was ordered by a court to offer their resort for a same sex marriage festivity. I admit that there is a difference, still, but it’s not so big, and the next generation of liberals will see no reason why the ritual cannot be claimed, too, when the resort has too be delivered.
    If, as was declared in “Bob Jones”, religious freedom can be overridden by everything the courts deem more important, then the liberals will construct more and more important things which can be used to override religious freedom. Christianity will survive, notwithstanding – within family homes and with unpaid lay preachers, as in Soviet Russia

  •' Craptacular says:

    “Privileged groups, like women…” – Stogumber

    privilege – a special right, advantage, or immunity granted or available only to a particular person or group of people

    Just out of curiosity, what “special right, advantage, or immunity” do women have?

    Perhaps you are referring to the fact that women gained the privilege of voting about 100 years ago? Or maybe you are referring to overturning the coverture laws in the mid-1800’s as some sort of privilege? (You know, when a woman got married she lost the right, or should I say privilege, to own property or collect a salary, in fact, pretty much all autonomy.) So please, give us a quick rundown on why you consider women a privileged group here in the US.

  •' Craptacular says:

    “…religious freedom can be overridden by everything the courts deem more important…” – Stogumber

    You mean, like the rights of non-believers? If you feel your “religious freedom” must include curtailing other peoples’ rights, then absolutely, the courts will deem other people more important than your self-perceived right to ignore the parts of reality you disagree with.

  •' fiona64 says:

    And of course you have citations to back all of this up.

    Oh, wait. You don’t?

    Could that possibly be because it’s a steaming pile of dung? Why, yes, it could …

  •' fiona64 says:

    There has already been a church who was ordered by a court to offer their resort for a same sex marriage festivity.

    A resort that they offered as a rental to the public, which made it a public accommodation and subject to those laws. The park area was NOT part of the church.

  •' fiona64 says:

    The religious ceremony doesn’t “count,” if you will … your actual marriage date is the day of the civil ceremony.

  •' Judith Maxfield says:

    I did understand that as I wrote. I assume you are talking about marriage ceremonies outside of the U. S. Now I don’t think I was clear. I know the civil one is the legal one and the only one necessary in many or all European countries. I guess I was curious if in some European countries there were still situations whereby a couple could get married in a religious ceremony as a state” legal” marriage, especially if the Catholic Church was basically in charge.

  •' fiona64 says:

    Not that I’m aware of.

  •' Michael Parido says:

    “We have never held that an individual’s religious beliefs excuse him from compliance with an otherwise valid law prohibiting conduct that the State is free to regulate. On the contrary, the record of more than a century of our free exercise jurisprudence contradicts that proposition. When followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes which are binding on others in that activity.” – Justice Antonin Scalia, Employment Division v. Smith 1983

  •' Michael Parido says:


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