By Frank Sommerville
From the founding of our country until 1953, churches and their ministers enjoyed complete freedom to address social, moral, Biblical and political issues. Churches have enjoyed exemptions from federal income tax in every income tax law enacted since 1861 without any restrictions on the political activities of the church. But in 1954 all that changed.
As part of the Internal Revenue Code of 1954, then Senator Lyndon B. Johnson added a new condition to the tax exemption for all nonprofit organizations: no political activity. This amendment to the Code prohibited all nonprofits from doing anything that would support or hinder a candidate for elective office. (For purposes of this article, I will use the prior sentence as the definition of “political activity.”) This amendment was added at the last minute without any discussion or hearings.
Since 1954, the Internal Revenue Service has struggled with enforcing this provision. The courts only report a single case where a church lost its tax exemption due to political activity. Yet many professionals have advised churches to avoid any activity that could be interpreted as prohibited political activity. After the 2004 elections, the IRS attempted to open exams of several churches and other nonprofit organizations that allegedly engaged in political activity. When those organizations strongly resisted any attempts to examine their alleged political activity, the IRS quietly closed their inquiries rather than engage in a very public fight over those activities.
Evaluating with Scripture
In recent years, ministers and their churches believe that political issues and candidates for elected office need to evaluated in light of scriptural truth and historical church teachings. However, if the minister offered such a biblical evaluation to his church, the church could lose its tax exempt status.
Some ministers claim that this amounts to government censorship of the Gospel.
In 2008 the Alliance Defense Fund started the Pulpit Initiative to encourage pastors to speak freely from their pulpit about social, moral, Biblical and political issues. The Pulpit Initiative ministers received training regarding the application of the political activity restriction in their church and their rights of free speech under the First Amendment to the Constitution.
The Alliance Defense Fund believes that the restriction on political activity is unconstitutional because it violates the free speech clause of the First Amendment of the United States Constitution. On a Sunday chosen in October, the ministers will address social, moral, biblical and political issues as part of their sermons. They record those sermons to preserve their “free speech.” The Pulpit Initiative highlights the issue of whether the political activity restriction is constitutional.
The IRS has remained silent despite the fact that the Alliance Defense Fund heavily publicizes the number of churches that have chosen to participate in the Pulpit Initiative. Though the IRS started the examination of one church that was part of the Pulpit Initiative, it quietly closed the file without explanation.
Basis for selection
In general, the IRS will not select a church for examination simply because the church asked to be examined. The IRS will not select the church for examination simply because the apparent violation of the law is blatant and flagrant. The IRS will select nonprofit organizations for examination solely on its internal, secret criteria. No amount of publicity by the Alliance Defense Fund will cause the IRS to openly challenge the Pulpit Initiative.
The IRS has an additional problem. In 2009 a United States District Court in Minnesota ruled that the IRS was violating the Church Audit Act when it changed its internal procedures in approving the opening of church examinations. The Church Audit Act, codified at section 7611 of the Internal Revenue Code, requires that all church examinations be approved by the Regional Commissioner of Internal Revenue Service. When the IRS reorganized in 1998, it eliminated the position of Regional Commissioner.
At that time, the IRS selected the Chief of Examinations, Exempt Organizations Division, as its official to approve church examinations. Living Word Christian Center, Minneapolis, MN, challenged the IRS saying that the Chief of Examinations was not a high enough IRS official to approve the examination. United States District Court agreed with the church and dismissed the attempted examination.
Since that court decision, IRS has not opened a single church examination. Later in 2009, the IRS proposed new regulations authorizing the Commissioner of Exempt Organizations to approve church examinations. However, many criticized the proposed regulation because it was still not a high enough official. The Regional Commissioner was one organizational level below the Commissioner of Internal Revenue.
The Commissioner of Exempt Organizations is four organizational levels below the Commissioner of Internal Revenue. Until final regulations are effective, the initiation of any church examination can be challenged unless it was approved by the Commissioner of Internal Revenue. To date, he has declined to approve any church examinations.
Frank Sommerville, JD, CPA is a shareholder with the law firm of Weycer, Kaplan, Pulaski & Zuber, P.C., Arlington, TX. www.wkpz.com