They are Coming for Your Tax-Exempt Status … or Not.

In the wake of Obergefell, the Internet was a dangerous place to be as a tax lawyer.   Oh, a nickel for all the posts that lamented the loss of tax-exempt status for churches that didn’t perform same sex marriages forthwith!  Of course, I was sure to correct them all right away, because you know, nothing on the internet can be wrong, right?

There’s been a lot of coverage by the news media on this issue as we’ve had some more time to discuss the issues, as discussed previously here at the Nonprofit Tax Prof Blog.   Here’s the latest in the coverage from the Baltimore Sun, which discusses the tax exempt status of religiously-affiliated universities.   The article hedges on the issue of tax-exempt status, but I think both sides of the tax argument can find some common ground in the discussion found there.  Under a Bob Jones University analysis, I’m not sure that we are there yet – there being that discrimination on the basis of sexual orientation is so fundamentally against public policy as to cause loss of tax-exempt status.  While Obergefell certain makes it a stronger case,  I think we will need to see more from the other branches of government before we get to that level.  That being said, I agree with the Sun article in the thought that even if we aren’t there now, I think we may be within my lifetime.

I do think that it is important to point out that Bob Jones University specifically talked about racial discrimination in education as being the fundamental public policy at issue and that the case involved the tax-exempt status of a university, not a church.    Note that this article only talks about colleges and universities – the question of the tax-exempt status of churches is much more complicated.   I don’t believe there there is a case that we know of that where a church lost its tax-exempt status on the basis of religious discrimination.   Can any of my Tax Prof or Nonprofit Prof Blog colleagues think of any example?

EWW