The Common Good
February 2007

The Taxman Cometh

by Dan Nejfelt | February 2007

Is the IRS unfairly targeting churches?

In the 2006 election, 26 members of Congress lost their seats on Capitol Hill. Now, months after the last vote has been counted, nearly as many churches wait to hear whether they will lose their tax-exempt status for engaging in partisan political activity during the campaign.

Whenever the IRS receives an allegation that a church has violated the rules governing political participation, it is obligated to investigate. Complaints can be registered by private citizens or by advocacy groups, such as Americans United for Separation of Church and State, which leveled charges against four churches during the 2006 campaign. Churches can even tattle on each other, in theory.

A year ago, the IRS issued Fact Sheet 2006-17, which was intended to clarify the agency’s prohibitions of partisan intervention in elections by 501(c)(3) organizations, a category of nonprofits under which most churches fall. The very issuance of the clarification speaks to the ambiguity of the rules. While some details are clear, such as the rule against officially endorsing candidates, other aspects are subjective and vague. The overall prohibition of political intervention encompasses “any and all activities that favor or oppose one or more candidates for public office.”

To help churches understand what they may and may not do, the IRS Web site contains 20 hypothetical examples of political participation, some of which would be considered legal, some of which would not. The anecdotes are detailed, but a list of do’s and don’ts they’re not.

The discretion allowed to federal investigators under the rules is troubling. Citing several investigations from the 2004 election, the government watchdog group OMB Watch states that the IRS has a track record of “blurring the lines between partisan interference and legitimate issue advocacy.”

THE STILL-UNRESOLVED audit of Pasadena, California’s All Saints Episcopal Church following an anti-war, anti-poverty sermon by Rev. George F. Regas on the eve of the 2004 election illustrates why oversight groups and Christians ought to be uncomfortable with the interpretive leeway the rules leave IRS investigators. The sermon, which is available online, expresses Regas’ scripture-rooted views of what Jesus might say if he debated President Bush and Sen. Kerry.

Regas’ Jesus unequivocally condemns America’s response to terrorism and global poverty without telling the audience how to vote—he mentions that deep faith could move voters toward either candidate. The IRS, however, apparently thought the sermon crossed the line separating speech about public policy from partisan comments. Except for its warning against endorsing candidates, the fact sheet issued last February offers no clarification for clergy who want to ensure that the content of their speech does not constitute political intervention.

Supreme Court Justice Potter Stewart once remarked about obscenity, “I know it when I see it.” Is that the standard by which the government evaluates whether churches’ political activity violates IRS regulations and costs them their tax-exempt status (or, more often, a monetary fine)? The fact sheet issued a year ago provides no firm answer.

Under this murky regulatory regime, churches that seek to offer prophetic witness about political issues have the difficult task of being virtual mind-readers as they seek to avoid IRS sanctions while still speaking out about the issues in accordance with their reading of the gospel.

Although the lack of clarity in these IRS regulations concerning churches’ political activity opens the door to abuse, it is important to note that they are not often misused. And we must not assume that government investigation only serves the purpose of silencing politically liberal (or conservative) churches—even when we see suspicious examples such as the investigation of All Saints. As a large number of churches openly support politicians who embrace war, turn their backs on the poor, and enable polluters to vandalize God’s creation, it is easy for those who take the opposite stances to say that these churches are blatantly promoting their favored candidates. But unless we want the IRS to be able to use such a vaguely defined standard to silence churches that are standing up for peace, the poor, and the environment, we must demand clear rules, transparent investigation, and nonpartisan enforcement.

Dan Nejfelt is a Washington, D.C.-based writer and former editorial student intern at Sojourners.

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