Tax Type
General Provisions
Description
Exempt status of schools having a racially discriminatory policy
Topic
Exemptions
Date Issued
04-15-1982
EMERGENCY REGULATION
EFFECTIVE DATE: April 15, 1972
EXPIRATION DATE: Upon adoption of permanent regulations, or upon the finding, that an emergency no longer exists or April 14, 1983, whichever is the earliest.
SUPERSEDES: All previous documents and any oral directives in conflict herewith.
REFERENCES: §§ 58-151.03(c), 58-151.013(d)(1), Code of Virginia
AUTHORITY: §§ 58-48.6, 9-6.14:6, Code of Virginia
SCOPE: Applicable to all taxpayers subject to Virginia income tax.
PURPOSE: This emergency regulation sets forth the standard which the Virginia Department of Taxation has applied since January 1, 1972 and will continue to apply to determine the tax exempt status of schools Having a racially discriminatory policy and the deductibility of contributions to such schools.
BACKGROUND: Until recently the Internal Revenue Service and the Virginia Department of Taxation applied the same standard in determining whether a school having a racially discriminatory policy qualified as a charitable institution exempt from income tax. This standard was set forth in I.R.S. Revenue Ruling 71-447, 1971-2, C.B. 230 and Revenue Procedure 75-50, 1975-2, C.B. 587.
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- On January 8, 1982 the U. S. Treasury announced that it was suspending enforcement of Revenue Pauline 71-447 and Revenue Procedure 75-50 in requests for exempt status made by schools having, a racially discriminatory policy. However, Virginia continues to enforce the standard set forth in revenue Ruling 71-447 and Revenue Procedure 75-50, until such time as they may be revoked. This emergency regulation incorporates that standard and the Procedures which will be used by the Department of Taxation to enforce the standard.
§ 58-151.01(a) of the Code of Virginia provides. "Any term used in this chapter shall have the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, unless a different meaning is clearly required."
The Commissioner has determined that certain terms used in §§ 58-151.03(c) and 58-151.013(c)(1) clearly require meanings different from those in the laws 9 regulations 9 rulings and procedures of the United States as applied by the Internal Revenue Service after January 8, 1932.
The Commissioner has also determined that an emergency exists because the Internal Revenue service nay issue exemption letters at any time to schools having a racially discriminatory policy. The fact that a school may be exempt from federal income tax may mislead it and its contributors to assume that similar tax treatment will be printed under Virginia law. Accordingly this emergency regulation is issued pursuant to the emergency Procedures prescribed by the Administrative Process Act and shall he effective until a permanent regulation on this subject is adopted, until the Commissioner finds that the emergency no longer exists, or until April 14, 1983, whichever is the earliest. The apartment of Taxation will receive, consider, and respond to petitions by any interested person at any time for the reconsideration or revision of this emergency regulation.
- On January 8, 1982 the U. S. Treasury announced that it was suspending enforcement of Revenue Pauline 71-447 and Revenue Procedure 75-50 in requests for exempt status made by schools having, a racially discriminatory policy. However, Virginia continues to enforce the standard set forth in revenue Ruling 71-447 and Revenue Procedure 75-50, until such time as they may be revoked. This emergency regulation incorporates that standard and the Procedures which will be used by the Department of Taxation to enforce the standard.
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In addition, the term "the amount allowable for itemized deductions for federal income tax purposes,'9 as used in § 58-151.013(d)(1) shall not include the amount of contributions to schools having a racially discriminatory policy even though such amount may have been deducted and allowed for federal income tax purposes.
A school has a racially discriminatory policy if it fails or refuses to admit the students of any race to all the rights, privileges, programs and activities generally accorded or made available to students at that school or if the school discriminates on the basis of race in the administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. The term "racially discriminatory Policy" shall not include an admissions policy at a school, or a program of religious training or worship of a school, that is limited, or grants preferences or priorities, to members of a particular religious organization or belief, provided that no such policy, program, preference or priority is based upon race or upon a belief that requires discrimination on the basis of race.
If the Commissioner, upon hearing, determines that a school has a racially discriminatory policy such school shall not be exempt from Virginia income tax and, in addition, no contributions to such school shall be allowed as a deduction in computing Virginia taxable income. The Commissioner may, in his discretion, allow the deduction of contributions to such school which were made prior to the date of determination that the school has a racially discriminatory policy, or such other date he may determine to be equitable.
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/s/ Charles S. Robb
Charles S. Robb
Governor
Adopted this 15th day of April, 1982
/s/ W. H. Forst
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner