Same-sex marriage: Will conservative religious colleges lose tax-exempt status?

After last week's landmark Supreme Court ruling, the tax-exempt status of conservative religious institutions whose policies don't extend housing and other benefits to same-sex couples could be in question.

In his dissent to last week’s epoch-changing decision that declared same-sex marriage a fundamental right, Chief Justice John Roberts worried about the implications of the majority’s rationale for religious colleges and other institutions.

“Hard questions arise when people of faith exercise religion in ways that may be seen to conflict with the new right to same-sex marriage – when, for example, a religious college provides married student housing only to opposite-sex married couples, or a religious adoption agency declines to place children with same-sex married couples,” the chief justice wrote. “There is little doubt that these and similar questions will soon be before this Court.” 

One of these questions, many legal scholars and others say, may revolve around the tax-exempt status of conservative religious institutions whose policies conflict with the nation’s new public policy on marriage. If those choose to maintain a traditional view of marriage, and refuse to extend housing or other benefits to same-sex married couples, among other issues, the IRS could possibly strip them of this long-held economic benefit.

It is another concern for many religious conservatives as the nitty gritty effects of a profoundly altered social landscape begin to unfold in the short and long terms. And as a new moral consensus begins to emerge within American cultural institutions, from the workplace to the public sphere, many conservatives fear they will become pariahs, and objects of discrimination themselves.

“I don’t think that a number of these religious schools can reasonably hope to adhere to principles that are clearly in violation of public policy, a la Bob Jones,” says Michael Olivas, law professor and director of the Institute for Higher Education Law & Governance at the University of Houston.

In 1982, the Supreme Court upheld the IRS after the tax collection agency stripped Bob Jones University, an evangelical institution in South Carolina, of its tax-exempt status, since the school infamously banned romantic interracial relationships on campus.

“It would be wholly incompatible with the concepts underlying tax exemption to grant tax-exempt status to racially discriminatory private educational entities,” the high court said. “Whatever may be the rationale for such private schools' policies, racial discrimination in education is contrary to public policy.”

That nationwide public policy was to end segregation, especially in the South. And after Friday, same sex marriage, too, is a national public policy. 

Already this week, some conservative officials have taken steps they say would allow government clerks and judges to express their freedom of conscience, and opt out of participating in same-sex marriages for religious reasons. On Sunday, Texas Attorney General Ken Paxton said he would support the religious freedom of such magistrates, saying he believed they were protected by existing laws, and he hoped that the constitutional values of freedom of religion and same-sex marriage could “peaceably coexist.”

Some legal experts, however, say that the Bob Jones case – as well as the Supreme Court’s Loving v. Virginia decision in 1967, which outlawed bans on interracial marriages – portends a contentious coexistence.

Religious schools that discriminate against LGBT students “would have to defend their behavior in court,” Professor Olivas says, “and I think it would be very hard for them to give an explanation if they allowed married student housing for traditional marriages of a man and a woman while they wouldn’t allow the same for same-sex couples, when it is now legal in every jurisdiction in the country.”

But others say fears about the IRS revoking the tax-exempt status of religious institutions are overblown.

“In terms of punishing religious institutions for discriminatory conduct, the IRS has done this exactly one time,” says Robert Tuttle, professor of law and religion at George Washington University in D.C. “And the IRS has never even made a move to revoke the tax exemptions of an institution because of its attitude toward gender equality,” he says, noting that the Bob Jones case came at the tail end of the federal government’s “full-bore, 100 mile an hour effort” to end segregation. 

And in the case of same-sex marriage, there are signs that each side might find it more in their interest to eventually cooperate and reach compromises – just as there are already in place in certain states around the country.

Court cases also are likely to be few and far between, at least at first, since the new right to marry does not necessarily give lesbian, gay, bisexual, and transgender people full protections under the law. Only 22 states – none from the South – have some kind of civil rights laws covering sexual orientation – the first requirement to bring a discrimination claim.

And of these states, most already exempt religions institutions from these laws, either in the statute itself or through a “religious freedom restoration act.” The federal government does not have LGBT protections on the books, scholars note.

“You can be married on Saturday, post your pictures on Instagram on Sunday and fired from your job on Monday,” said Rep. David Cicilline, (D) of Rhode Island and one of six openly gay House members. He and Sen. Jeff Merkley, (D) of Oregon, have introduced federal legislation to ban discrimination against LGBT people in employment, housing, and financial matters.  

At the same time, however, legislators in Tennessee are introducing legislation to “protect” churches and ministers who refuse to perform same-sex weddings – though most legal scholars say this is already an established First Amendment privilege.

Many scholars are pointing to the example of Utah earlier this year, in which conservative Mormon leaders met with LGBT advocates to forge a compromise, adding sexual orientation and gender identity to the state's existing civil rights protections. The Utah state legislature, with super majorities of Republicans in both its House and Senate, voted overwhelming to adopt the measure, known as the “Utah Compromise.”

“I think a lot of people were pleased by what Utah was able to accomplish,” says Tuttle. “And I think conservative states will want to be able to show businesses that they are making some effort to protect LGBT folks. I think that would be an attractive model.”

Even so, others are skeptical that religious conservatives, especially in the South, will be willing to make such a compromise.

“To be sure, it’s going to take a while for the state and local and federal protections to be extended – all of which in part turned on prohibitions on same-sex marriage,” says Olivas at the University of Houston. “But I think that over time, they will accrete and they will grow and develop, and I think that schools still resisting acceptance at the very least are going to have to question what is principle and what is bigotry.”