IRS Investigates 60 Tax-Exempt Groups

IRS investigates allegations of churches, religious groups violating tax-exemption statuses.
( [email protected] ) Nov 01, 2004 05:08 PM EST

Four days before the election, the IRS announced that it is investigating 60 tax-exempt groups, including charities and churches, for a possible violation of the federal tax code.

“Because of heightened concerns about improper political activities during the election season, the IRS created a committee of career civil servants who are experts in the tax-exempt area to review the allegations,” said the IRS.

The groups “represent a broad cross-section of the tax-exempt community and a wide range of viewpoints,” said the IRS. The names of the organizations and details of the investigation were not disclosed.

Around a third of the selected groups under investigation are churches, said the IRS. The 60 groups were chosen from an original pool of 100 organizations that were reported to the IRS during the course of the year.

According to the IRS, tax-exempt organizations, under section 501(c)(3), “cannot endorse any candidates, make donations to their campaigns, engage in fund raising, distribute statements, or become involved in any other activities that may be beneficial or detrimental to any particular candidate.”

IRS Commissioner Mark W. Everson stated, "Our obligation is to enforce the law, which prohibits all charities from engaging in political activities.”

However, while charities are not allowed to engage in political activities, religious groups such as churches may so long as they do promote or demote any particular candidate.

“A pastor can reveal personal beliefs and opinions to the congregation so long as the church corporate body does not expressly endorse a candidate,” according to Mathew Staver, General Counsel of Liberty Counsel.

No church has ever lost its tax-exempt status since lobbying restriction was added in 1934 and the political endorsement/opposition prohibition was added in 1954. But even under the IRS lobbying restrictions for tax-exempt groups, churches and organizations “may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.” The IRS considers lobbying as any activity influencing legislation.

The “organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status,” read a section entitled “Political and Lobbying Activities” from the IRS Web site, adapted from an IRS Publication, “Tax Guide for Churches and Religious Organizations.”

In addition, activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not constitute prohibited political campaign activity if conducted in a non-partisan manner, added the IRS.

Staver said he was pleased to see that pastors are speaking out on public issues. They "have finally thrown off their muzzles and replaced them with megaphones," he stated.

He added, “It is far more likely to be struck by lightening twice than for churches to lose their tax-exempt status over political issues.”

“This is the most important Presidential election this generation has seen. The next President may potentially appoint several Supreme Court Justices," concluded Staver.

"Traditional marriage and the brutality of abortion hangs in the balance. With so many issues before the Court such as what constitutes marriage and when does life begin, there has never been a better time for the spiritual leaders of America to become actively engaged in the political process."