Is the IRS on Holiday with God?

In 2008, a religious-oriented group known as the Alliance Defense Fund promoted a politically motivated initiative to assert a pastor’s right to speak freely from the pulpit about political candidates and issues without fear of losing tax-exempt status. The “Pulpit Initiative” appears to be a direct challenge to the government’s position on Internal Revenue Code, Section 501(c)(3), which provides that religious leaders can’t make partisan comments in official organization publications and at official church functions and remain tax exempt.

According to tax lawyers knowledgeable about the Pulpit Initiative, it started with thirty three (33) churches in twenty two (22) different states. In 2009, that number increased to eighty four (84) churches, and this past year (2010) the number was up again (100 pastors). Proponents of the initiative maintain participating pastors spoke from the pulpit about political candidates running for office and current government officials in a purported effort to remind their congregations that the Bible speaks to such issues as picking national leaders and the morality espoused by those who would seek to lead us.

Three years into the “Pulpit Initiative” IRS tax attorneys and other observers are curious why the IRS has not been more aggressive in challenging these questionable practices. Many tax lawyers believe the government’s inaction signals confusion over how to best address the issue. These same tax attorneys note that since passage of the 1954 Johnson amendment to the federal tax code, the IRS has provided increasingly vague guidance on the law. Further, while the agency has periodically initiated audits and investigations into the practices, the agency has seemingly sought to purposely avoid raising the First Amendment issue with the Courts.

Tax lawyers point to the case of Pastor Gus Booth who was the subject of an IRS audit in 2008. Pastor Booth, one of the original Pulpit Initiative participants, reportedly sent the IRS copies of two sermons in which he spoke about issues pertaining to a primary election (May 2008) and a general election (Sept 2008). After an eleven (11) month audit the IRS decided to drop the case. Tax attorneys suggest the agency’s decision implies it has no interest in challenging activists Pastors pushing the constitutional envelop and does not want this area of the law clarified by the Courts.

While many tax lawyers believe the IRS is staying clear of challenges involving churches, at least for the time being, the agency’s position on other tax-exempt groups following the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission, has been much more aggressive. The IRS and private tax attorneys across the country have noted a spike in spending by these other exempt groups to fund political messages, using corporate money. And as such, the IRS has launch and campaign to force these groups to make full donor disclosures or lose exempt status.

If you have a non-profit, tax-exempt organization and questions about how to remain tax-exempt, tax lawyers suggest you seek out professional help. This is a burgeoning area of the law and without the advice and guidance of a competent tax attorney your chances of successfully wading through the vagaries and confusion are fairly remote.

 

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