Churches deserve clarity on tax rules

December 29, 2005|By MELISSA ROGERS

May ministers preach on the great issues of the day during election season and keep their churches' tax-exempt status? Yes.

But in the wake of recent media reports about an Internal Revenue Service investigation of All Saints Church in Pasadena, Calif., the IRS should give congregations more specific guidance about how to avoid its scrutiny and demonstrate that it enforces its rules uniformly.

Churches and other religious organizations, as well all other groups that are tax-exempt under Section 501(c)(3) of the tax code, may not directly or indirectly participate or intervene in any political campaign for or against candidates for elective public office.

In their individual capacities, religious leaders may endorse or oppose candidates. But the IRS has long said that it is impermissible for ministers to endorse or oppose candidates at church functions or in church publications. Because of the context in which these statements occur, they are attributable to the organization and thus forbidden by the rules. A minister, therefore, cannot make an explicit statement of endorsement or opposition to a candidate from the pulpit.

Also prohibited are implicit candidate endorsements by houses of worship, including issue discussions that amount to statements of endorsement or opposition. But the IRS has given churches minimal guidance on this particular point.

While the IRS has published a user-friendly tax guide for churches, it merely says that "religious leaders cannot make partisan comments" in church publications or at church functions. And IRS press releases issued last year shed only a sliver of light on the issue by noting that "even activities that encourage people to vote for or against a particular candidate on the basis of nonpartisan criteria violate the political campaign prohibition."

IRS technical materials provide more specific information, but even this information is inadequate in certain respects. Moreover, many congregations don't have access to an attorney or tax expert.

Further complicating matters is a June tax inquiry letter the IRS sent to All Saints Church. The part of the letter that explains the specific causes for IRS concern focuses mostly on the issues discussed in an October 2004 sermon given at All Saints.

It notes that the sermon "delivered a searing indictment of the Bush administration's policies in Iraq, criticism of the drive to develop more nuclear weapons, and described tax cuts as inimical to the values of Jesus." Regardless of the analysis the IRS uses, this letter and related media reports have many ministers worried that they cannot discuss important issues during election season.

The IRS should clarify this point. With the help of outside experts, it should draft clear, user-friendly guidance for congregations and disseminate it widely.

Efforts in this area must balance two important interests:

The government's interest in ensuring that only charitable activities, not partisan campaign activities, are treated as tax-exempt.

The right of religious organizations to speak to public issues. Public issues are often also theological issues. The archetypal example is the issue of racial equality that the Rev. Martin Luther King Jr. so eloquently addressed.

In its guidance, the IRS should identify legal safe harbors. For example, if ministers refrain from mentioning the candidates or otherwise connecting issue discussions to an election, they should rest assured that their churches will not face IRS scrutiny. This will help avoid chilling congregations' expression and minimize the need for IRS intervention.

The IRS also must demonstrate that the new "fast track" procedures it used during 2004 didn't result in variable enforcement of its rules. It has said there is no uneven enforcement, pointing to a February 2005 Treasury Department report finding no partisan bias in its procedures.

Of some 20 churches the IRS is scrutinizing for alleged 2004 election activities, only All Saints has publicly announced that it is being investigated, so the public cannot make an independent evaluation. While the IRS is right to refuse to name specific churches, it must explain how it decides to target some houses of worship and not others and how it achieves uniform enforcement of its rules nationwide.

While better guidance is needed from the IRS, Congress should continue to reject attempts to change federal law to allow churches to endorse or oppose political candidates. If enacted, changes like these would flout the purpose behind this tax-exempt status and allow houses of worship to become campaign precincts. Prohibiting candidate endorsements by houses of worship is a delicate task, but it's better to preserve the current prohibition than to open this Pandora's box.

Tax exemptions and deductions should not be given for electioneering activities, but churches and other 501(c)(3) organizations ought to be able to address public issues without losing their tax-exempt status. It's time for the IRS to become more transparent about how it's policing this particular line.

Melissa Rogers is a visiting professor of religion and public policy at Wake Forest University Divinity School. Her e-mail is

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