[1] According to news reports, the Internal Revenue Service has threatened All Saints Episcopal Church (Pasadena, CA) with revocation of its tax-exempt status under 26 U.S.C. section 501(c)(3) because of a sermon preached by the church’s former rector, Rev. George F. Regas, on October 31, 2004, just before the Bush-Kerry presidential election.
[2] Rev. Regas’ sermon was an imaginary political debate between Jesus, George Bush and John Kerry. In the sermon, Regas suggested that Jesus would criticize the Bush administration’s doctrine of pre-emptive war, and castigated both politicians for treating Americans’ lives as more precious than Iraqis, among other issues. Regas also claimed that Jesus would challenge both candidates about why they did not mention the poor in their campaign. He urged people to vote their “deepest values,” giving his own views about abortion, and indicating that “the faith of Jesus has come to be known as pro-rich, pro-war, and pro-American…”
[3] All Saints Church has refused to acknowledge wrongdoing as demanded by the IRS as a condition of the end to their investigation. Like any church or other nonprofit organization under section 501(c)(3), All Saints is required to comply with a number of that law’s restrictions as a condition of retaining its tax-exempt status, including that law’s political campaign ban. That ban forbids 501(c)(3) organizations directly or indirectly to “participate in, or intervene in. . . . any political campaign on behalf of (or in opposition to) any candidate for public office.” It extends to candidates for any public office at any level, and to oral as well as written statements if they are “on behalf of or in opposition to” a candidate.
[4] The church’s current rector, J. Edwin Bacon, and Rev. Regas both contend that Regas did not tell the congregation whom they should vote for, and Rev. Regas prefaced his remarks by saying, “[g]ood people of profound faith will be for either George Bush or John Kerry for reasons deeply rooted in their faith. I want you to hear me on this.” Both rectors claim that the congregation has never endorsed particular candidates, even though they have urged congregants to vote, sign political petitions and participate actively in public life. The legal question that the courts may have to consider if the IRS proceeds to withdraw the church’s tax-exempt status is whether disparaging the policies of candidates for office constitutes “opposition to” a candidate if the church even-handedly criticizes both major party candidates in an election, as Regas arguably did, though some of his comments were specifically directed at administration policies.
[5] The origin of the political campaign ban is itself mired in politics. Then-Senator Lyndon Baines Johnson tacked this amendment onto the Internal Revenue Code during a floor debate in 1954, without the benefit of any hearings or testimony from affected groups. According to his personal papers, he was fed up with nonprofit groups that used “Red-baiting” tactics in attempts to defeat him and other liberal candidates. Although there is no evidence that Sen. Johnson thought about the application of the bill to churches, as 501(c)(3) entities, congregations are included in the proscription. And, unlike the ban on lobbying by 501(c)(3) organizations, the political campaign ban contains no “safe harbor” for “insubstantial” amounts of campaign involvement by congregations.
[6] Though there are only a couple of court cases involving IRS revocation of tax-exempt status to churches on this ground, the constitutional challenges to the political campaign ban have met with little sympathy by the courts. In Christian Echoes Nat’l Ministry, Inc. v. United States, the Tenth Circuit Court of Appeals held that revocation of that ministry’s tax exemption was not a violation of the Free Exercise of religion because tax exemption is not a right but a privilege. In a more recent case involving a single congregation, Branch Ministries Inc., the District Court for the District of Columbia held that the political campaign ban did not impose a “substantial burden’ on the exercise of religion, a threshold requirement in any Free Exercise case. That court noted that Branch Ministries (the Church at Pierce Creek) did not claim that its religion mandated that the church participate as a congregation in political campaigns.
[7] The District of Columbia court pointed out that 501(C)(3) ministries had legal alternatives if they felt led to participate politically. In addition to giving up their tax-exempt status, Branch Ministries could form another organization, a “related civic organization” under 501(c)(4), which can create a political action committee (PAC) and raise funds for political campaign activity just like other PACs. (The ministry, however, could not use congregants’ donated funds for which it received a tax exemption to fund the related organization’s PAC.) Or, churches could leave the political work up to individual members or even pastors and staff members so long as they were clearly not speaking on behalf of the congregation as a whole.
[8] Since the All Saints case came to light, the IRS has confirmed that it is still investigating about twenty (20) churches and forty (40) other nonprofit organizations of the original hundred that were alleged to have been political involved in the 2004 presidential elections. The IRS has acknowledged possibly mismanaging cases but has denied any political targeting in its investigations. The All Saints case is not the first claim of selective prosecution for violation of the IRS political campaign ban. For example, the Church at Pierce Creek, which claimed that it was charged for its conservative politicking, produced many examples of politicians who delivered campaign speeches from church pulpits without sanction, from Jesse Jackson to Bill Clinton and Rudolph Giuliani. However, the court suggested that for a church to make this claim stick, the Church at Pierce Creek would have to prove that the targeted church was “similarly situated” to churches allegedly violating the law, that is, that it was engaged in the same kind of prohibited activity, such as campaign advertising, as the other churches that were left alone.
[9] Congressional and academic proposals to modify the political campaign ban in section 501(c)(3) are themselves mired in conflict. In October, 2002, the House of Representatives rejected a proposal to remove campaign restrictions for all nonprofit entities, including churches. More recently, Reps. Phillip Crane (IL) and Charles Rangel (NY) have proposed that churches could spend up to 5% of their gross income on political campaign activities, a variation on proposals that 501(c)(3) organizations should be able to spend an “insubstantial” amount of their funds on political campaigns. Others have suggested moving the regulation of congregational political activity under the Federal Elections Commission campaign disclosure rules, which would allow them to engage in political campaign activity unless they explicitly endorsed or opposed a candidate (e.g., “vote for President Bush.”) which would subject them to contribution and expenditure disclosure rules.
SOURCES:
Patricia Ward Biederman and Jason Felch, Church: Anti-war Sermon imperils tax status, Los Angeles Times, November 7, 2005.
Jason Felch and Patricia Ward Biederman, Conservatives Also Irked by IRS Probe of Churches, Los Angeles Times, November 8, 2005.
Sermon of Rev. Regas, posted on the All Saints Episcopal Church website (http://www.allsaints-pas.org/all_saints_church.htm)
26 U.S.C. 501(c)(3)
Christian Echoes Nat’l Ministry, Inc. v. United States, 470 F.2d 849 (10th Cir. 1973)
Branch Ministries Inc. 40 F. Supp.3d 15 (D.D.C. 1999)
Benjamin S. DeLeon, Note, Rendering a Taxing New Tide on IRC S. 501(C)(3): The Constitutional Implications of H.R. 2357 and Alternatives for Increased Political Freedom in Houses of Worship, 23 Rev. Litig. 691 (2004)
Joseph S. Klapach, Thou Shalt Not Politic: A Principled Approach to Section 501(C)(3)’s Prohibition of Political Campaign Activity, 84 Cornell L. Rev. 504 (1999)
Deborah J. Zimmerman, Branch Ministries, Inc. v. Rossotti: First Amendment Considerations to Loss of Tax Exemption, 30 N. Ky. L. Rev. 249 (2003).
Marie Failinger is a Professor of Law at Mitchell Hamline School of Law, St. Paul, MN. She is a lifelong Lutheran, and earned her B.A. and J.D. at Valparaiso University and her LL.M. at Yale Law School. She was the long-time editor of the Journal of Law and Religion, and has co-edited Lutheran Theology and Secular Law: The Work of the Modern State and On Secular Governance: Lutheran Perspectives on Contemporary Legal Issues with Rev. Ronald Duty, along with other articles on Lutheran theology and secular law.