Fourth Circuit Decides Tax Exemption Doesn't Subject Schools to Title IX

The Fourth Circuit recently ruled that non-profit schools that do not receive federal money are not subject to the provisions of Title IX. The case started in Maryland, when a female student sued a private school, alleging that it allowed her to be sexually harassed and bullied. The school's defense included an argument that, because it did not receive any federal funds, it did not meet the threshhold requirement of “receiving federal funds” and thus was not subject to Title IX. The district court followed the reasoning of several other courts in deciding that the school's tax exemption was a benefit that subjected it to Title IX.

The Court of Appeals overturned that ruling, examining the text and history of the statute. It determined that the financial assistance that the statute contemplated was limited to affirmative forms, such as a neighboring statute's list of “grant, loan, or contract.” It noted U.S. Supreme Court precedent that included indirect assistance, such as financial aid paid to students. The Court recognized that tax exemption is a benefit, but that tax benefits are not “Federal financial assistance.”

This ruling applies to schools in North Carolina, South Carolina, Maryland, Virginia, and West Virginia. There are still some states, notably California and Arizona, where courts have applied Title IX to private schools based simply on their tax exempt status. The trend, however, seems to be moving away from that interpretation.