Churches and other religious organizations jeopardize their tax-
exempt status when they or their leaders cross the line into
political activity prohibited by federal law and Internal Revenue
Service regulations, tax attorneys say.
The IRS is investigating the United Church of Christ over a
speech presidential candidate Barack Obama gave last June at the
denomination's national meeting. Obama is a UCC member.
The issue resurfaced recently amid controversy about certain
remarks made by the Rev. Jeremiah Wright, the retired pastor of
Trinity United Church of Christ in Chicago, Obama's home church.
In a Feb. 25 letter to the denomination, the IRS said "a
reasonable belief exists" that the UCC has engaged in political
activities that could jeopardize its tax-exempt status as a church.
The letter also claimed that Obama volunteers staffed tables outside
of the meeting venue to promote the senator's campaign.
UCC leaders have denied wrongdoing, noting that Obama was
addressing his own church family to discuss his personal faith. A
UCC official announced before the speech that it was not a campaign
event, and that electioneering would not be tolerated inside the
A church that took out newspaper ads criticizing President Bill
Clinton in 1992 lost its federal tax exemption.
However, the Alliance Defense Fund, a national conservative legal
organization, is pushing for churches to defy the IRS and speak out
on election-related issues in September.
Tulsa tax attorney Phil Haney, who represents several churches
and religious organizations, said that initiative may provide an
interesting test case.
"I've seen some rumblings of that," he said. "I suppose the
tension here is between tax legislation and constitutional issues."
He said another consideration may center on regulation of the
behavior of groups that have been granted tax-exempt status, while
some believe that behavior is permitted by the U.S. Constitution.
Haney said churches are virtually the only charities that do not
have to go to the IRS for a tax-exempt designation.
He said that "Section 508" churches can function as such without
an IRS determination letter, which gives the federal agency no
designation to revoke. He also said donations to such churches are
generally deductible if the church provides receipts, behaves like a
church, and meets certain other IRS requirements.
"There are some interesting issues there," Haney said.
Oklahoma IRS spokesman David Stell said churches may not
participate in a political campaign for or against a candidate,
including publishing or distributing statements.
"A candidate may be invited to speak to members of the church or
religious organization, as long as an equal opportunity is provided
to other candidates seeking the same office, the church or religious
organization explicitly indicates it is not supporting or opposing
any candidate, and no fundraising occurs," Stell said.
Religious groups may also distribute voter guides, he said, as
long as they are not biased in favor of or against a candidate.
Churches and related groups may also advocate for or against
issues and, to a limited extent, ballot questions or legislation, he
"Churches and religious organizations may conduct educational
meetings, prepare and distribute educational materials, or otherwise
consider public policy issues in an education manner," Stell said. …