Schedule E (Form 990 or 990-EZ) 2018
Page 4
satisfies the preceding sentence will be determined on the basis
of the facts and circumstances of each case.
c. If a school customarily draws its students from local
communities and follows a racially nondiscriminatory policy as
to students, the publicity requirement may be satisfied by
complying with section 4.02, earlier. Such a school may
demonstrate that it follows a racially nondiscriminatory policy
within the meaning of the preceding sentence by showing that it
currently enrolls students of racial minority groups in meaningful
numbers. The question whether a school satisfies the preceding
sentence will be determined on the basis of the facts and
circumstances of each case. One of the facts and
circumstances that the IRS will consider is whether the school’s
promotional activities and recruiting efforts in each area were
reasonably designed to inform students of all racial segments in
the general communities within the area of the availability of the
school. The IRS recognizes that the failure by a school drawing
its students from local communities to enroll racial minority
group students may not necessarily indicate the absence of a
racially nondiscriminatory policy as to students when there are
relatively few or no such students in these communities. Actual
enrollment is, however, a meaningful indication of a racially
nondiscriminatory policy in a community in which a public
school or schools became subject to a desegregation order of a
federal court or otherwise expressly became obligated to
implement a desegregation plan under the terms of any written
contract or other commitment to which any federal agency was
a party.
The IRS encourages schools to satisfy the publicity
requirement by the methods described in subsection 1, section
4.03, regardless of whether a school considers itself within
subsection 2, because it believes these methods to be the most
effective to make known a school’s racially nondiscriminatory
policy. It’s each school’s responsibility to determine whether
paragraph (a), (b), or (c), subsection 2, applies to it. On audit, a
school must be prepared to demonstrate that the failure to
publish its racially nondiscriminatory policy in accordance with
subsection 1, section 4.03, was justified by the application to it
of paragraph (a), (b), or (c), subsection 2. Further, a school must
be prepared to demonstrate that it has publicly disavowed or
repudiated any statements purported to have been made on its
behalf (after November 6, 1975) that are contrary to its publicity
of a racially nondiscriminatory policy as to students, to the
extent that the school or its principal official were aware of such
statements.
4.04 Facilities and programs. A school must be able to show
that all of its programs and facilities are operated in a racially
nondiscriminatory manner.
4.05 Scholarship and loan programs. As a general rule, all
scholarship or other comparable benefits available for use at
any school must be offered on a racially nondiscriminatory
basis. Their availability on this basis must be known throughout
the general community being served by the school and should
be referred to in the publicity required by this section in order for
that school to be considered racially nondiscriminatory as to
students. Scholarships and loans that are made pursuant to
financial assistance programs favoring members of one or more
racial minority groups that are designed to promote a school’s
racially nondiscriminatory policy won’t adversely affect the
school’s exempt status.
Financial assistance programs favoring members of one or
more racial groups that don’t significantly derogate from the
school’s racially nondiscriminatory policy similarly won’t
adversely affect the school’s exempt status.
4.06 Certification. An individual authorized to take official
action on behalf of a school that claims to be racially
nondiscriminatory as to students is required to certify annually,
under penalties of perjury, that to the best of his or her
knowledge and belief the school has satisfied the applicable
requirements of sections 4.01 through 4.05, Rev. Proc. 75-50.
This certification is line 7, Schedule E.
4.07 Faculty and staff. The existence of a racially
discriminatory policy for employment of faculty and
administrative staff is indicative of a racially discriminatory
policy as to students. On the other hand, the absence of racial
discrimination in employment of faculty and administrative staff
is indicative of a racially nondiscriminatory policy as to students.
7.01 Specific records. Except as provided in section 7.03, each
exempt private school must maintain for a minimum period of 3
years, beginning with the year after the year of compilation or
acquisition, the following records for the use of the IRS on
proper request.
1. Records indicating the racial composition of the student
body, faculty, and administrative staff for each academic year.
2. Records sufficient to document that scholarship and other
financial assistance is awarded on a racially nondiscriminatory
basis.
3. Copies of all brochures, catalogues, and advertising
dealing with student admissions, programs, and scholarships.
Schools advertising nationally or in a large geographic segment
or segments of the United States need only maintain a record
sufficient to indicate when and in which publications their
advertisements were placed.
4. Copies of all materials used by or on behalf of the school to
solicit contributions.
7.02 Limitation.
1. For purposes of section 7.01, the racial composition of the
student body, faculty, and administrative staff may be an
estimate based on the best information readily available to the
school, without requiring student applicants, students, faculty,
or administrative staff to submit information to the school that
the school otherwise doesn’t require. For each academic year,
however, a record of the method by which racial composition is
determined must be maintained.
2. The IRS doesn’t require that a school release personally
identifiable records or personal information contained therein
except in accordance with the requirements of the Family
Educational Rights and Privacy Act of 1974, 20 U.S.C. section
1232(g) (1974). Similarly, the IRS doesn’t require a school to
keep records the maintenance of which is prohibited under state
or federal law.
7.03 Exceptions. The records described in section 7.01 need
not be independently maintained for IRS use if:
1. Substantially the same information that each of these
records would provide has been included in a report or reports
filed in accordance with law with an agency or agencies of
federal, state, or local government, and this information is
current within 1 year; and
2. The school maintains copies of these reports from which
this information is readily obtainable. Records described in
section 7.01 providing information not included in reports filed
with an agency or agencies must be maintained by the school
for IRS use.
7.04 Failure to maintain records. Failure to maintain or to
produce upon the proper request the required records and
information will create a presumption that the organization has
failed to comply with these guidelines.
Part II. Supplemental Information
Use Part II to provide the narrative explanations required, if
applicable, to supplement responses to Part I, lines 3, 4d, 5h,
6b, and 7. Part II may also be used to supplement other
responses to questions on Schedule E (Form 990 or 990-EZ). In
Part II, identify the specific line number that each response
supports, in the order in which those lines appear on Schedule
E (Form 990 or 990-EZ). Part II can be duplicated if more space
is needed.
