Tobin: Don't Play Poker with All Saints Church

Donald Tobin (Ohio State) has published Don't Play Poker with All Saints Church:

All Saints Church in Pasadena, California is in the headlines again in its dispute with the IRS on whether it improperly intervened in a political campaign in opposition to a candidate for public office. The IRS concluded the All Saints Church improperly intervened in the election, but the IRS determined that it would not proceed further with the examination of All Saints. In short, All Saints called the IRS's hand, and the IRS folded.

Here is what happened.

A retired pastor of All Saints Church gave a sermon about what Jesus would say to Bush and Kerry. The Pastor criticized the war in Iraq, Bush's policies dealing with poverty, and Bush's position on abortion or a woman's right to choose. The IRS concluded that this was implicit intervention and that All Saints had gone over the line.

In most cases such as this, Churches say they are sorry and that they won't do it again, and the IRS is satisfied. But in this case, All Saints Church hired one of the best lawyers in the field, Mark Owens with Caplin and Drysdale, and decided to take on the issue. All Saints argued both that the provision prohibiting churches from intervening in elections was unconstitutional and that, even if it was constitutional, All Saints had not violated the provision.

Then the case got interesting. All Saints indicated that it would not respond to the IRS's summons in this case (copy available on All Saints web site). The decision not to comply with the summons is a means of contesting the case because, as I explained here, the IRS, through the Justice Department, must then go to court to seek enforcement of the summons.

It appears that the IRS and/or the Justice Department decided not to try to enforce the summons and instead issued a letter to the taxpayer saying that the taxpayer violated the provision but that the IRS was not going to take further action. A big win for All Saints, but I can clearly understand why All Saints is not happy. It has been warned that the IRS views its activities as a violation of (c)(3) status and not to do it again, when All Saints has said that it would do it again and that it does not think that its actions violated the statute. Since there is now no controversy, All Saints cannot contest the IRS's determination in court.

Why would the IRS and the Department of Justice do this? If they believe that All Saints violated the provision, why not take it to court? Probably because they think that All Saints violated the provision, but are worried that they would lose the case if it went to court. The All Saints case is a very close call, and there are not many published cases on this topic. I am sure that the Department of Justice would prefer to choose its test cases more carefully. So this is likely a "prosecutorial discretion" decision by Justice and nothing more.

All Saints, however, did not stop there. Like a good poker player who has just won a big hand, All Saints is pushing back. Marcus Owens, All Saints Church's lawyer, claims that e-mails he received as part of a Freedom of Information Act request show that there may have been improper contacts between the Department of Justice and the IRS regarding the case. All Saints claims that it "is very concerned that the close coordination undertaken by the IRS allowed partisan political concerns to direct the course of the All Saints examination."

It is impossible to rule anything out, but the evidence that All Saints points to does not even come close to making its case. Because All Saints has made all the documents public, we have the ability to really see the nuts and bolts of the case. ...

While I think All Saints played its hand almost flawlessly in this controversy, I think it has overplayed its hand with regard to the alleged political intervention by the Justice Department. There is simply no evidence that the Justice Department attempted to influence this case for political reasons. But thanks to All Saints Church's decision to make all documents public, you can decide for yourself.