TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, November 17, 2005

Tobin on Politics and Religion – Bad Bed Fellows?

Tobin_1We have extensively blogged (here, here, here, here, and here) the IRS's threatened revocation of the tax exemption of All Saints Episcopal Church because of an anti-war sermon delivered the Sunday before the 2004 Presidential election.  The posts engendered an extensive debate on the TaxProf Discussion Group, and Donald Tobin (Ohio State) has graciously agreed to write an essay for the broader tax community on TaxProf Blog.  The essay is entitled Politics and Religion -- Bad Bed Fellows?.  Here is a taste:

Several Section 501(c)(3) organizations have received letters recently from the IRS questioning whether the organizations violated their (c)(3) status by intervening in a political campaign. Such intervention is prohibited by 501(c)(3) and can cause an organization to lose its tax-exempt status. Some have argued that the IRS should not be involved in analyzing the content of the speech of these organizations. Others claim that the IRS is engaged in a political attack. It is impossible for me to know whether in fact the IRS is engaged in a political attack, but organizations intervening in political campaigns are off base if they believe that they are not required to follow the requirements of 501(c)(3)....

All Saints Church in Pasadena has recently received an inquiry letter from the IRS due to a sermon at the church the Sunday before the 2004 Presidential election. The sermon was critical of Bush administration policies. According to All Saints Church’s counsel, the IRS claims that criticism of Bush amounted to political intervention. The counsel asserts that the IRS claimed that even though the Pastor did not explicitly endorse Kerry, the comments indicated an implicit endorsement.

In response, the Church objects to the IRS raising the issue. The Church argues that the case “implicates First Amendment principles of religious freedom and freedom of speech” and “threatens the core values which the congregation of the Church holds dear.” Others have argued that the IRS has no business meddling in the religious activities of the Church. Still others are concerned with selective prosecution by the IRS; they argue that the Bishop of the Diocese of Colorado Springs used far more forceful language to urge parishioners to vote for Bush.

To date, the best information available on how to draw the line between intervention in a political campaign and general policy discourse comes from a Technical Advice Memorandum 8936002 (TAM) issued by the IRS. The TAM involved ads by an organization promoting world peace run during the Reagan/Mondale presidential campaign....

The IRS clearly needs to do a better job in explaining why some of these organizations are being audited and others are not to provide guidance to other organizations. But when 501(c)(3)s take actions that are clearly designed to influence elections -- as did the Catholic Bishop's letter and the All Saints Pastor’s sermon -- they should not be surprised when the IRS comes calling. It may be that in attempting to police abuse in this area the IRS has created an unworkable standard that is over inclusive. But in my view, at the moment, it is the (c)(3)s that are pushing the envelope, not the IRS.

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