Charities, Churches and Politics

United States Treasury Building, Washington D.C.
DISCLAIMER:  The views and comments expressed in this paper are solely those of the author and do not represent the official position of the Internal Revenue Service.  This paper is for general educational and discussion purposes only and does not constitute legal advice.  This views and ideas expressed are not intended as, and may not be relied upon as tax or legal advice by any person. 


In recent weeks there have been several expressions of concern over what churches and pastors may say about the upcoming presidential race without running afoul of the rules prohibiting charitable and religious organizations from engaging in “political activity” and thereby risking the loss of their exempt status under the provisions of section 501(c)(3) of the Internal Revenue Code.  Such a loss would also result in the loss of the deduction for contributions made by individuals to the church under the provisions of section 170.

In 2007 the Internal Revenue Service issued a comprehensive Revenue Ruling which sets out the legal principles governing this area and providing twenty one examples or situations to serve as guidance in determining when an organization is running afoul of the prohibition.  In that ruling the IRS states:

Whether an organization is participating or intervening, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office depends upon all of the facts and circumstances of each case.

For the full text of this ruling follow this link: Rev Rul 2007-41 .  Situations 5, 9 and 21 deal specifically with the activities of churches and priests or ministers of the gospel and whether they violate the political activity ban.   But, all of the situations offer some insight into what constitutes political advocacy as opposed to allowable activities such as voter education or issue advocacy.  And, they offer insight as to when permitted  issue advocacy becomes  unpermitted political campaign intervention.

I offer a copy of the discussion concerning this issue from the IRS website:IRS Website Churches and Political Activities.

Charities, Churches and Politics

The ban on political campaign activity by charities and churches was created by Congress more than a half century ago. The Internal Revenue Service administers the tax laws written by Congress and has enforcement authority over tax-exempt organizations. Here is some background information on the political campaign activity ban and the latest IRS enforcement statistics regarding its administration of this congressional ban.

In 1954, Congress approved an amendment by Sen. Lyndon Johnson to prohibit 501(c)(3) organizations, which includes charities and churches, from engaging in any political campaign activity. To the extent Congress has revisited the ban over the years; it has in fact strengthened the ban. The most recent change came in 1987 when Congress amended the language to clarify that the prohibition also applies to statements opposing candidates.

Currently, the law prohibits political campaign activity by charities and churches by defining a 501(c)(3) organization as one “which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

The IRS has published Revenue Ruling 2007-41 , which outlines how churches, and all 501(c)(3) organizations, can stay within the law regarding the ban on political activity. Also, the ban by Congress is on political campaign activity regarding a candidate; churches and other 501(c)(3) organizations can engage in a limited amount of lobbying (including ballot measures) and advocate for or against issues that are in the political arena. The IRS also has provided guidance regarding the difference between advocating for a candidate and advocating for legislation. See political and lobbying activities. see  Political and Lobbying Activities.

Each election cycle, the IRS reminds 501(c)(3) exempt organizations to be aware of the ban on political campaign activity. The IRS published its most recent reminder in a public news release which you can read here.

The division within the IRS responsible for overseeing churches and charities is the Tax Exempt and Government Entities Division. TEGE has created a Web page entitled Charities, Churches, and Educational Organizations – Political Campaign Intervention. It is dedicated to the IRS most recent activities related to 501(c)(3) and political activity.

A leading case on the issue of free speech and political expression is Branch Ministries v. Rossotti, 211 F.3d 137.  In that case, the court upheld the constitutionality of the ban on political activity. The court rejected the plaintiff church’s allegations that it was being selectively prosecuted because of its conservative views and that its First Amendment right to free speech was being infringed.

The court wrote: “The government has a compelling interest in maintaining the integrity of the tax system and in not subsidizing partisan political activity, and Section 501(c)(3) is the least restrictive means of accomplishing that purpose.”

The Branch Ministries Case.see Full Opinion Text at Branch Ministries v. Rossotti.

I am reproducing the section of the opinion giving the factual background of the case:

Branch Ministries, Inc. operates the Church at Pierce Creek (“Church”), a Christian church located in Binghamton, New York. In 1983, the Church requested and received a letter from the IRS recognizing its tax-exempt status. On October 30, 1992, four days before the presidential election, the Church placed full-page advertisements in USA Today and the Washington Times. Each bore the headline “Christians Beware” and asserted that then-Governor Clinton’s positions concerning abortion, homosexuality, and the distribution of condoms to teenagers in schools violated Biblical precepts. The following appeared at the bottom of each advertisement:

This advertisement was co-sponsored by the Church at Pierce Creek, Daniel J. Little, Senior Pastor, and by churches and concerned Christians nationwide. Tax-deductible donations for this advertisement gladly accepted. Make donations to: The Church at Pierce Creek. [mailing address].

The advertisements did not go unnoticed. They produced hundreds of contributions to the Church from across the country and were mentioned in a New York Times article and an Anthony Lewis column which stated that the sponsors of the advertisement had almost certainly violated the Internal Revenue Code. Peter Applebome, Religious Right Intensifies Campaign for Bush, N.Y. Times, Oct. 31, 1992, at A1; Anthony Lewis, Tax Exempt Politics?, N.Y. Times, Dec. 1, 1992, at A15.

The advertisements also came to the attention of the Regional Commissioner of the IRS, who notified the Church on November 20, 1992 that he had authorized a church tax inquiry based on “a reasonable belief … that you may not be tax-exempt or that you may be liable for tax” due to political activities and expenditures. Letter from Cornelius J. Coleman, IRS Regional Commissioner, to The Church at Pierce Creek (Nov. 20, 1992), reprinted in App. at Tab 5, Ex. F. The Church denied that it had engaged in any prohibited political activity and declined to provide the IRS with certain information the Service had requested. On February 11, 1993, the IRS informed the Church that it was beginning a church tax examination. Following two unproductive meetings between the parties, the IRS revoked the Church’s section 501(c)(3) tax-exempt status on January 19, 1995, citing the newspaper advertisements as prohibited intervention in a political campaign

Branch Ministries sued the government alleging that… the IRS had no authority to revoke its tax exemption, that the revocation … violated its right to free speech and to freely exercise its religion under the First Amendment and the Religious Freedom Restoration Act of 1993, 42 U.S.C. § 2000bb (“RFRA”), and that the IRS engaged in selective prosecution in violation of the Equal Protection Clause of the Fifth Amendment.

The United States District Court held for the government and granted what is called “summary judgment” which means there it found there to be no issues of material fact and that the Government was entitled to win as a matter of law.

I will not discuss the Court’s reasoning is detail but the opinion described above comes from the United States Court of Appeals for the DC Circuit which affirmed (upheld) the District Court and rejected every one of the Church’s arguments.

It is hope this recitation is helpful.  The best thing to do is to consult your lawyer if you plan to preach or make statements that may in any way be construed as advocating for or against a particular candidate.  Another possibility is to seek a determination in the form of a ruling from the IRS National Office as to whether the sermon or statement violates the political advocacy prohibition.   The latter tack could be very expensive as IRS now charges a hefty fee for such rulings.



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