Could the Supreme Court’s Same-Sex Ruling Impact Schools’ Tax Status?

August 26, 2015 | By: Miranda Marquit

supreme court same sex ruling and schoolsOne of the issues dominating tax and politics in recent years is same-sex marriage. For the last couple of years, issues related to same-sex marriage have been before the U.S. Supreme Court. Among the most significant changes in recent years was when the Supreme Court struck down the part of the Defense of Marriage Act that prevented federal agencies from recognizing same-sex marriages, even if states approved of these unions. That ruling changed the way that many same-sex married couples could file their taxes (and created interesting tax situations in states that recognized civil unions, which still aren’t seen as a marriage by the federal government).

Now, though, religious schools are worrying over the latest case before the Supreme Court. According to the New York Times, they are concerned that there is a chance that a ruling in favor of same-sex marriage could result in the loss of tax-exempt status.

What Happens if Gay Marriage is Deemed a Constitutional Right?

Different cases before the Supreme Court in recent years have looked at various aspects of laws related to same-sex marriage. However, the ruling expected from the land’s highest court later this month could be the most sweeping ruling yet. The Supreme Court might decide that gay marriage is a constitutional right, and that could change the way religious schools can behave toward those in same-sex relationships.

The concerns about the potential ruling stemmed from a Supreme Court case from the early 1980s. In this case, the Court ruled that a religious school banning interracial marriage could see its tax-exempt status revoked. The reasoning was that there is a “fundamental national public policy” that accepts that interracial marriage is a constitutional right. Even though there were cases preventing discrimination against interracial marriage before this case, many religious institutions still cited faith and observation as a reason for banning interracial relationships.

One of the reasons that religious institutions (including private high schools and religious colleges) are concerned has to do with the fact that many of the same arguments made against interracial marriage in the mid to late 20th century are similar to the current religious discussions about gay marriage. Indeed, parallels between the fight over interracial marriage and the debate over gay marriage have been drawn in arguments in various courtrooms.

If the Supreme Court decides that gay marriage is a constitutional right, that could potentially result in religious schools accepting gay relationships to avoid losing tax-exempt status. Some are even worried that they would also have to provide married student housing for gay couples, just as they offer it for heterosexual couples.

For now, reports the New York Times, some scholars don’t think the IRS would move against religious schools immediately. Instead, it might take a few more years, and broader acceptance of same-sex relationships in society, before the IRS began reviewing the tax-exempt status of various religious schools based on their recognition of gay marriage.