After paying a portion of the federal unemployment taxes for a certain taxable year, the University filed a refund action in Federal District Court, and the Government counterclaimed for unpaid taxes for that and other taxable years. 81-1, petitioner Goldsboro Christian Schools maintains a racially discriminatory admissions policy based upon its interpretation of the Bible, accepting for the most part only Caucasian students.
Holding that the IRS exceeded its powers in revoking the University's tax-exempt status and violated the University's rights under the Religion Clauses of the First Amendment, the District Court ordered the IRS to refund the taxes paid and rejected the counterclaim. The IRS determined that Goldsboro was not an organization described in 501(c)(3) and hence was required to pay federal social security and unemployment taxes.
As such, the university was an unaccredited one for most of its history, in effect conferring degrees that might as well have come from a diploma mill.
It was founded by Methodist evangelist Bob Jones, Sr.For years, Bob Jones University was a routine campaign stop for conservative Republicans visiting South Carolina.Ronald Reagan, Dan Quayle, Pat Buchanan and Robert J. Bob Jones, Sr., the founder of BJU, was fearful of obtaining academic accreditation for the school.From 1927 to 1933, Bob Jones College was located in Bay County Florida. In 1975, the University Board of Trustees authorized a change in policy to admit black students, but also expanded rules against interracial dating and marriage.However, during the depression, students could not afford to attend college a long distance from home, so in 1933 BJU moved to Cleveland, Tennessee. In 1976, the Internal Revenue Service revoked the university's tax exemption retroactively to December 1, 1970 on grounds that it was practicing racial discrimination.