By David Middlebrook and Robert W. Rucker
In the recent election cycle there have been several situations where churches or church leaders have become involved in political activity that has led to calls for revocation of the churches’ tax exempt status. The United Church of Christ, the denomination of presidential candidate Barrack Obama, is reportedly under investigation by the Internal Revenue Service (IRS) for allowing him to address its members.
There have also been calls for investigation of Sen. Obama’s home church and former pastor for making partisan comments from the pulpit. Since the 1950s, nonprofits, including churches, have been prohibited from being engaged in conduct that amounts to endorsement or opposition to a political candidate. Since then the IRS has continued to interpret and develop rules for ways that churches can and cannot be involved in political activity, the most basic distinction allowing for advocacy on social issues, but not for a particular candidate.
Lately, many churches have begun to question why it is that a church cannot exercise its right of free speech without being penalized. It has been reported that a number of churches are considering violating the current law against church political advocacy by delivering political speech from the pulpit in hopes that the IRS will seek to revoke their tax exempt recognition. The point of such an exercise, currently scheduled for Sunday, September 28, 2008, would be to go to court and seek to overturn the law restricting church political activity.
Tax exemption revoked
In 1999 the United States District Court for the District of Columbia ruled that the IRS had the authority to revoke a particular church’s tax exemption based upon political activity and that the law prohibiting such conduct was not unconstitutional. In that case, the Branch Ministries church helped sponsor a full page advertisement in the Washington Times and USA Today, four days before the 1992 presidential election, in which voters were encouraged not to vote for then-presidential candidate Bill Clinton because his stated positions on various certain social issues were alleged to be nonbiblical.
The church argued that the revocation amounted to illegal selective prosecution and cited 65 prior examples where various well-known political candidates had campaigned from the pulpits of various churches or synagogues and that none of these organizations had their tax exemption revoked. The court said these examples did not apply because there was a substantial difference between candidates giving speeches from a church’s pulpit (or passing a collection plate for the candidate as was the case in one example) and a church that pays for an advertisement critical of a candidate in a newspaper. It did not really show how those two types of conduct were “substantially dissimilar.” They just are. The church also argued that revocation of tax exempt status for political activity was a violation of the First Amendment Free Exercise of Religion.
No substantial burden?
The court rejected this argument saying that there was no substantial burden to the church’s free exercise of religion. The church tried to argue that it was burdened because by losing its tax exempt status it would now have difficulty in getting donations from people and now had potential tax liability that it did not have before.
The court disagreed. It said that there was no connection between loss of tax exemption and not being able to freely exercise their religion. It justified that reasoning by stating that the government had a compelling interest to maintain the integrity of the tax system and “in not subsidizing partisan political activity.” It went on to say that the government needed to be able to guarantee “ … [t]hat the wall separating church and state remains high and firm.”
Meanwhile, while the left hand of the government is careful to make sure that churches receiving tax exempt status do not engage in political activity, the right hand of the government continues to “subsidize partisan political activity” in varying degrees. Social welfare organizations, unions and trade associations, which are usually Section 501(a) nonprofit organizations, may, according to long-established IRS interpretation, participate in “limited” political campaign activity so long as they are primarily engaged in their exempt functions.
These organizations can advocate for issues and even candidates if done in certain ways and if they segregate their funding from nonprofit activities. Why is it acceptable for these entities to be able to be involved in politics without jeopardizing their tax exemptions? Why can’t churches have that limited political activity in the same manner? The only apparent difference would be that churches are involved in religion.
The Free Exercise Clause to the Constitution says that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” In other words, the law should be applied in a neutral fashion, in a way that does not promote religion and that does not restrict or prohibit it. The current flat-out prohibition on political expression is an unreasonable restriction.
Many inequitable outcomes
In a similar way, many years ago when the IRS learned of a violation of nonprofit law by an organization, it really had only two choices as to how to respond, either ignore the violation completely or revoke the organization’s tax exemption. This black and white approach to compliance led to many inequitable outcomes. New legislation was enacted and the concept of “intermediate sanctions” was born.
The IRS could now assess fines and penalties to suit the circumstances of the violation. It could remedy the violation yet allow the nonprofit to continue operations. Would it be so hard to find some kind of intermediate approach to church political activity?
For the moment, complacency is the prevailing approach in the church world. Privately, we get calls on a recurring basis from pastors that feel a heartfelt duty as Christian leaders to comment upon the political scene and are looking for ways to do that. Perhaps if a few churches engage in peaceful civil disobedience and purposely challenge this law, a new examination of the public policy considerations for restricting church political activity will begin. Obviously, the inherent risk will be that all of these churches will lose their tax exempt status and nothing will change. Church leaders should decide where they stand on this important issue. The law changed in 1954 and it could change again.
David Middlebrook is a partner, Robert W. Rucker is an attorney, with Anthony and Middlebrook P.C., in Irving, TX, which specializes in the practice of nonprofit law. [churchlawgroup.com]
