NEWS STORY: Tax court overrules IRS on museum at Bob Jones University

c. 1996 Religion News Service WASHINGTON (RNS)-The U.S. Tax Court, overruling the Internal Revenue Service, has granted tax-exempt status to an art museum on the campus of Bob Jones University, even though the university itself cannot have such status because of its racial policies. The non-denominational Christian liberal-arts institution in Greenville, S.C., prohibits students from […]

c. 1996 Religion News Service

WASHINGTON (RNS)-The U.S. Tax Court, overruling the Internal Revenue Service, has granted tax-exempt status to an art museum on the campus of Bob Jones University, even though the university itself cannot have such status because of its racial policies.

The non-denominational Christian liberal-arts institution in Greenville, S.C., prohibits students from engaging in interracial marriage or dating. The Supreme Court in 1983 declared that the restrictions were contrary to public policy and thus disqualified the university for the privileged tax-exempt status for religious, charitable or educational groups.


Organizations holding such classification under section 501(c)(3) of the Internal Revenue Code do not pay federal income taxes. More important, contributions they receive are deductible on the tax returns of the donors.

In response to the Supreme Court decision against the university, school supporters formed the Bob Jones University Museum and Gallery Inc. in 1992. It took over operation of the campus museum owned and previously run by the university. It asked the IRS for tax-exempt status. The IRS refused on grounds-among others-that the new group has the purpose of funneling tax-deductible donations to the university.

The group successfully petitioned the U.S. Tax Court to overrule the IRS and grant it tax-exemption under section 501(c)(3). In granting the exemption, Judge Maurice Foley declared, “There is no doubt that petitioner is a bona fide museum that furthers educational purposes. … We hold that petitioner’s operation does not result in an impermissible private benefit to the university and that petitioner’s net earnings do not inure to the university.”

His 16-page opinion carefully examined the Bob Jones University Museum and Gallery and the IRS complaints that it is too close to the university.

It functions under a board of directors headed by the son and grandson of university founder Bob Jones, but there also are three outside members of the board. It leases the museum building from the university but at below-market rates. It displays art works that are all owned by the university, but it pays nothing for the loan. Its revenue comes entirely from donations and sales in a gift shop and will be used exclusively to operate the museum and acquire additional works. The museum is open to the public free of charge, attracting about 20,000 visitors a year, 80 percent of them not connected with the university.

The museum’s holdings are almost exclusively works of religious art from the 13th through 19th century.

Said Foley: “Unlike the university, petitioner (the museum) does not prohibit interracial dating or marriage.


MJP END ROPER

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