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All courses in the curriculum were taught from the biblical perspective, and all teachers were required to be devout Christians as determined by university leaders.

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The University paid $21 in unemployment taxes for one employee for tax year 1975 and then filed for a refund in the United States District Court for the District of South Carolina.

The Government counterclaimed for unpaid federal unemployment taxes for the taxable years 1971 through 1975, in the amount of $489,675.59, plus interest. Blackmun, John Paul Stevens, and Sandra Day O'Connor.

Supreme Court ruled (8–1) on May 24, 1983, that nonprofit private universities that prescribe and enforce racially discriminatory admission standards on the basis of religious doctrine do not qualify as tax-exempt organizations under Section 501(c)(3) of the U. However, in July 1970 the IRS announced that it could no longer justify extending tax exemptions to private colleges and universities that practiced racial discrimination ( racism).

Institutions of higher education in the United States, whether public or private, are generally exempt from most forms of taxation, on the ground that they provide an essential public service. Until 1970 the Internal Revenue Service (IRS) granted tax-exempt status to all private institutions independent of their racial admissions policies and permitted charitable deductions for contributions to such institutions under Section 170 of the IRC.

The Fourth Circuit held that because Bob Jones University could not be considered charitable, contributions to it were not deductible under IRC provisions, and the IRS acted legally and appropriately in revoking the tax exemption.

The court added that extending the university’s tax-exempt status would have been tantamount to subsidizing racial discrimination with public tax money.

The District Court ruled December 26, 1978 that the IRS had violated the University's First Amendment rights, and ordered the IRS to refund the University the of taxes that it had paid. The Court, speaking through Burger, read a "common law" public interest requirement into the statute governing tax-exempt charitable status, and cited Congress' refusal to intervene as proof that they approved of the IRS's construction of the statute. which substantially outweighs whatever burden denial of tax benefits places on [the University's] exercise of their religious beliefs." The Court made clear, however, that its holding dealt "only with religious schools—not with churches or other purely religious institutions." Lewis F.

The United States Court of Appeals of the Fourth Circuit ruled that the case be sent back to the District Court. United States was decided May 24, 1983 in an 8-1 decision with majority opinion written by Warren E. The Court applied a strict scrutiny analysis and found that the "Government has a fundamental, overriding interest in eradicating racial discrimination in education . Powell wrote a separate concurring opinion, emphasizing the importance of Congressional approval for administrative policy changes. Rehnquist was the sole dissenter, arguing that the literal terms of the governing statute could not be read to exclude Bob Jones from charitable status.

The case has been cited in many decisions that followed as well as by commentators, due to the significance of the precedent established in this case.

The ban on interracial dating was lifted in 2000 after Dr.

Bob Jones III, following a media uproar prompted by the visit of presidential candidate George W.

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