Bob Jones University to regain nonprofit status

Nathaniel Cary | The Greenville (S.C.) News

GREENVILLE, S.C. — Bob Jones University says it will regain its federal tax-exempt status on March 1, more than three decades after the IRS stripped its nonprofit ranking following a landmark U.S. Supreme Court ruling.

The issue in the court case was the university’s refusal to allow interracial dating or marriage among students, staff or faculty of the university, a rule it has since abandoned.

The conservative Christian university dropped its interracial dating ban in a nationally televised interview with past president Bob Jones III on CNN in 2000. In 2008, past president Stephen Jones, great-grandson of evangelist and university founder Bob Jones, apologized for the school’s past racial discrimination.

But the university didn’t seek to reinstate its tax-exempt status until 2014 after Steve Pettit took over as the fifth president in the school’s 90-year history.

“Organizing as a tax-exempt entity is something BJU has needed to do for quite some time,” Pettit said.

In his first meeting with the university’s cabinet, Pettit said he believed it was appropriate for the school to seek its tax-exempt status because the it no longer believes the positions it once held about race.

Pettit called the university’s racist policies a social issue that was not biblical.

“The Bible is very clear,” Pettit said as he announced the change to the university Wednesday night. “We are made of one blood.”

Bob Jones University lost its tax exemption after a 13-year battle with the IRS over whether the university’s policies against interracial dating precluded it as a non-taxable religious educational institution. The university didn’t admit any black students until 1971, 17 years after Brown v. Board of Education. It then wouldn’t admit any students who were in a mixed-race marriage and created rules to prohibit students from interracial dating.

The case rose to the Supreme Court, which ruled in 1983 that the IRS could revoke the university’s tax-exempt status because the government’s interest in eradicating racial discrimination from education overrode the university’s First Amendment right to religious free speech.

The case has been cited many times through the years. Most recently, it arose in an exchange before the Supreme Court in the Obergefell v. Hodges decision, which legalized gay marriage. After that decision, the IRS commissioner said the agency would not target the tax-exempt status of religious institutions that oppose gay marriage.

It has taken 2½ years for the university to accomplish the reorganization because it used a complicated plan to split its organization into two entities, with the university falling under the umbrella of its elementary school’s existing non-profit status to achieve its own, according to university statements and organization documents filed with the South Carolina Secretary of State and the IRS.

That existing nonprofit was called Bob Jones Elementary School, Inc. until last May, when it was renamed BJU, Inc.

The restructuring came after “consultation with legal counsel and accountants with many years of experience in assisting tax exempt organizations—as well as input from members of the BJU community and our congressional delegation,” Pettit said.

The change didn’t require IRS approval because its elementary school was already a nonprofit, though the university had formal correspondence and conversations with the IRS, said Randy Page, BJU spokesman.

The university is now listed as a 501(c)(3) nonprofit on the IRS website, said Michael Dobzinski, IRS spokesman.

The change also moves Bob Jones from a for-profit college to a nonprofit classification with the U.S. Department of Education, “which is frequently perceived more favorably by the public,” Page said.

That change could prove important as the U.S. Department of Education has targeted for-profit colleges with added oversight in recent years and fined several for-profit networks of colleges under the Obama administration, which resulted in colleges like Corinthian College and ITT Technical Institute closing down.