in the name of the law by Jonathan A. Ruybalid
Defining Tax Exemption
A recent court ruling highlights the unique nature of tax-exempt status that so many member camps and conference centers enjoy. The case titled Donna Buettner-Hartsoe v.
Baltimore Lutheran High School Association (“Buettner”), involved a claim of sexual harass- ment by three former students at a private school. The claim was made under Title IX for the bad conduct. There was good reason for the students to pursue a Title IX claim. Title IX regulations provide for additional and enhanced procedures for schools and pro- tections for those asserting claims as victims.
Title IX applies in this context if the school
receives federal financial assistance. Baltimore Lutheran High School did not take federal financial aid or receive any funds from the fed- eral government. Despite this fact, the federal district court judge ruled that the school was subject to Title IX nondiscrimination require- ments as the IRS’ recognition and granting of 501(c)(3) status to the school was a government subsidy and fell within the meaning of “federal financial assistance.” This was a dangerous ruling if nonprofit
religious ministries were going to start finding themselves subject to federal rules that were previously tied to when you receive funding from the government. The school appealed. On appeal, the Fourth Circuit Court of
Tax exemption is the withholding of
a tax burden, rather than the affirmative grant of funds.
Appeals ruled that the district court was wrong and that the school’s 501(c)(3) status alone does not constitute federal financial assistance. Te court looked at the plain meaning of words such as “receive” and identi- fied that it means to “take” or “accept’ or “come into possession.” Also, “financial” means “monetary receipts and expenditures.” So, the school was not receiving funds or monetary transfers from the federal government. Te court also identi-
fied that “tax exemption” is not a transfer of public monies to an organiza- tion, so it is not identical
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www.ccca.org September/October 2024
Photo courtesy of Spring Canyon
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