Feeling Threatened by the IRS

Proposed racial guidelines stir the private schools

Representative Barry Goldwater Jr. called it "an outrage." South Carolina's Senator Strom Thurmond said, "There is not a shred of authority for such an action." But Clarence Mitchell, chairman of The Leadership Council on Civil Rights called it "wonderful," and compared it to the Lord's work.

The object of the hearings held last week in Washington's ornate Departmental Auditorium was a well-intentioned, but possibly disruptive plan by the Internal Revenue Service to promote integration in the nation's 20,000 private elementary and secondary schools. Such schools qualify for exemptions from federal taxes as nonprofit institutions. But since 1970, federal courts have canceled the exemptions of more than 100 schools, many of them Southern "white flight" academies. Last August the IRS proposed a new racial test of its own for those schools that have grown rapidly or been created following desegregation. The service said that a school could maintain its tax exemption if it had enough minority students and suggested that an appropriate guideline would be one-fifth of the minority percentage in the community. For example, if 25% of the schoolchildren living within a district's boundaries belonged to minorities, then a private school located in that district would need at least 5% minority students to qualify as tax exempt. If a school failed to meet that standard, then it would have to demonstrate such good-faith efforts as recruiting and offering scholarships to minorities.

The majority of the nation's private schools are religious schools, some of which limit enrollment on the basis of belief; as a result, religious organizations were particularly worried about the plan. But so were many secular private schools, which were sure to perish if their tax exemptions were withdrawn. More than 120,000 letters, most expressing vitriolic opposition to the plan, descended on the IRS after the proposal was announced.

Shaken by the uproar, the service invited more than 200 speakers to four ten-hour public meetings last week. To standing ovations from the 300-member audience, critics flailed the IRS for taking so broad-gauged an action without the authority of new legislation, and for so broadly threatening religious schools. Ironically, even huge and integrated school systems like that run by the Roman Catholic Church, whose minority students nationwide average 16% enrollment, feared that their tax exemptions might nevertheless be endangered as a result of statistical quirks. As U.S. Catholic Conference Spokesman William Wonderly pointed out, "The IRS is mixing apples and oranges, because parochial schools are not arranged on public district boundaries."

To the IRS, which already requires tax-exempt schools to advertise their absence of racial discrimination, the new plan had seemed a logical next step. In Louisiana and Mississippi, courts have halted state aid to discriminatory schools but have left their federal tax exemptions intact; the new procedure would allow the IRS to lift those exemptions. Says IRS Commissioner Jerome Kurtz: "Existing procedures have permitted some schools to obtain tax-exempt status by having 'paper policies' of nondiscrimination, while in fact continuing to operate in a racially discriminatory manner." U.S. Civil Rights Commission Chairman Arthur Flemming supported Kurtz at last week's hearings, calling the IRS plan "a necessary and long overdue step forward."

Still, the odds are that the IRS will modify its plan, a move that would win support from such Senate liberals as Edmund Muskie, Thomas Eagleton and John Chafee--all of whom have urged the service to give more thought to the needs of "innocent private and parochial institutions." Said Commissioner Kurtz: "This is a question we are very concerned about and will be examining closely." Although he gave no hint of the IRS's response, Kurtz made it plain to the chorus urging him to revise his plan that he had got the message.

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