Domestic Taxes

Colleges opposed to gay marriage fear IRS retribution

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The IRS says it has no plans to target the tax exemption of colleges that oppose same-sex marriage, but supporters of those institutions fear it could be a temporary reprieve.

John Koskinen, the IRS commissioner, made it clear at a Senate hearing late last month that his agency wouldn’t release any new rules going after religious colleges’ tax exemption during his last two-and-a-half years in office.

Conservatives had grown increasingly worried about that proposition after the Obama administration’s solicitor general said that the tax exemption of educational institutions that oppose same-sex marriage could be an issue during Supreme Court arguments this year.

{mosads}“At this time, there is no basis for us to revisit tax-exempt status on that ground,” Koskinen told Sen. Mike Lee (R-Utah) at a Senate Judiciary subcommittee hearing. “It is our view right now in terms of the overall lay of the land that there’s no basis for us at this point to make any different change in our review policies, our exam policies.”

But while Koskinen said that nothing further will happen on the matter while he’s in office, he also made it clear that the IRS could impose new rules in the future if directed by the courts or Congress.

Public opinion over same-sex marriage has shifted quickly over the last dozen years or so, from states approving new bans on the practice during George W. Bush’s administration to the Supreme Court legalizing same-sex marriage in June.

“We can’t predict over the next years what’s going to happen in terms of decisions that’ll be made about public policy,” Koskinen said. “But those aren’t decisions that we’re going to make.”

That’s part of the concern for conservatives like Lee, whose alma mater, Brigham Young University, bans same-sex sexual relations.

Lee, who has introduced legislation that would bar any agency from targeting institutions for their religious views, said he appreciated that Koskinen said he wouldn’t go after any tax exemptions.

But Lee added that “it worries me and it should worry every American that the IRS does not absolutely disavow the power to target religious institutions based on their religious beliefs.”

The flap started during April’s Supreme Court arguments over same-sex marriage, when Justice Samuel Alito asked the solicitor general, Donald Verrilli, whether colleges that opposed same-sex marriage could lose their tax exemption.

Alito noted that the court ruled more than three decades ago that Bob Jones University in South Carolina wasn’t eligible for a tax exemption because it didn’t allow interracial marriage or dating.

“It’s certainly going to be an issue,” Verrilli said.

Even before Koskinen’s comments last month, legal scholars didn’t expect religious colleges’ tax exemption to be at risk in the near future. But analysts are divided over whether there’s reason for more long-term concerns from the schools.

Most private and public colleges have a tax exemption as educational institutions – which, among other things, allows donations to schools to be tax exempt. Because of the exemption, schools must comply with a host of federal and state laws and regulations. The IRS closely follows the contributions given to colleges.

Without the exemption, higher education backers say, colleges would face a tougher time both educating their students and paying their faculty and staff.

But Marcus Owens, a former senior IRS official, said the concern from the religious colleges was at best premature.

Owens, now a partner at Loeb and Loeb, argued that both the judicial and legislative branch had been weighing in against racial discrimination for decades when the Supreme Court ruled against Bob Jones in 1983.

The case law and legislative history concerning same-sex marriage is not nearly that settled, Owens added. Plus, he said the IRS would likely need to see both Congress and the courts take aim at the tax exemption before acting.

“Right now, there’s no basis for those concerns,” Owens said.

“I think that’s just another way of saying the GOP doesn’t like the decision,” he added, referring to the Supreme Court ruling. “This whole debate has lost perspective.”

John Colombo, a law professor at the University of Illinois, added that the IRS had no grounds without further legislative or legal action to expand the Bob Jones ruling to target schools’ tax exemption.

“Is it theoretically possible?” Colombo said. “Sure – it’s theoretically possible for us to send a manned mission to Jupiter, too.”

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