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An official designation by the IRS that reduces or completely eliminates an organization’s obligations to pay taxes to the government. This status is intended to help charitable, religious, and other not-for-profit organizations, and in theory the IRS is legally required to deny tax-exempt status to “discriminatory organizations.” However, the IRS made an exception for organizations that promoted housing segregation and discrimination against African Americans, and virtually always preserved these organizations’ tax-exempt status during the 20th century.
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Tax-exempt status Term Timeline in The Color of Law
The timeline below shows where the term Tax-exempt status appears in The Color of Law. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 7: IRS Support and Compliant Regulators
Rothstein notes that the IRS contributed to the segregation of American cities by selectively “grant[ing] tax-exempt status to churches, hospitals, universities, neighborhood associations, and other groups” and supporting discriminatory banks and...
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...v. Board of Education. In an important 1983 case, the Supreme Court examined whether giving “tax-exempt status to racially discriminatory schools” violated the Fifth Amendment. The Court ultimately decided the case...
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...and funded the eviction of black families from their neighborhoods. And all these organizations remained tax-exempt.
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Epilogue
...promoted “exclusionary zoning laws” that led to white flight. It has supported builders, lenders, and tax-exempt organizations in their successful discrimination against African American people. It has encouraged white mob violence...
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