TaxProf Blog

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

Saturday, August 26, 2006

WSJ: The Taxman Goes to Church

Interesting article in the Wall Street Journal:  The Taxman Goes to Church: Why Is the IRS in the Business of Reading Sermons?:

The new crackdown, which the IRS calls the Political Activity Compliance Initiative, has so far put some 15,000 nonprofits--mostly churches--on notice that preaching politics puts them at risk of audits, fines or, in some cases, the loss of tax-exempt status. The IRS has also announced it will no longer wait for complaints to come in, but will instead take action "to prevent violations." It will be reviewing the content of sermons, it says, as well as the financial books of religious organizations. The free exercise of religion could now come with a hefty bill....

North Carolina Republican Rep. Walter Jones wants to get the IRS out of the business of policing religious speech. His proposed legislation to do just that has been stalled for six years, but he hopes that the federal agency's latest initiative--and the experience of Mr. Regas in Pasadena and thousands like him on both sides of the political spectrum--will break the political logjam. He told us that he considers efforts to control what is said from the pulpit to be "antidemocratic." Amen to that.

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It's not antidemocratic, and it's not an attempt to control what is said from the pulpit. It is merely an effort to enforce the restriction against partisan political activity that is applied to *every* nonprofit corporation, religious and nonreligious alike, *as a condition of receiving preferential 501(c)(3) tax treatment,* namely, the tax-deductability of donations. Like every other nonprofit, a church is free to try to influence partisan electoral outcomes to its heart's content, but not on the public dime. If it does so, donations to the church will no longer be tax-deductible. In this respect, the church is in exactly the same posture as any other nonprofit that wishes to influence partisan elections.

The really interesting question is not whether the condition is constitutional as applied to churches -- it surely is -- but instead whether Rep. Jones's bill would violate the First Amendment by giving religious entities preferences in *partisan expression* that are not offered to analogous, secular nonprofit corporations.

Posted by: Marty Lederman | Aug 26, 2006 7:57:43 AM

One sentence in particular captured my attention: [The IRS] will be reviewing the content of sermons, it says, as well as the financial books of religious organizations.

When and where did the IRS say that?

Posted by: Claude | Aug 26, 2006 8:26:22 AM