PASTORS,  AVOID "TAX EXEMPTION TERROR" <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
DURING POLITCAL CAMPAIGNS

 
By: Michael K. Whitehead, Attorney **
 
            Are you suffering from "tax-exemption terror?"
            This phobia makes cultural cripples of many well-meaning pastors and church leaders who have developed an irrational fear of losing their church's tax-exempt status. They are afraid to praise or criticize public officials or political candidates, even from a biblical-moral perspective; for fear that "someone" might file a complaint with the IRS.[1]

Some people seem to fear that church-state separation constitutionally prohibits people of faith from bringing their religious convictions into the polling place, let alone the pulpit.   Such a phobia can paralyze church leaders and prevent them from helping their members to apply their Bible-based convictions when exercising their rights and duties of citizenship.
            This fear is irrational because no church has ever lost its tax exemption because of a pastor's biblical criticism of policies or politicians during a public worship service. [2]

Still, many Christians shrink in terror from "politics" in order to protect their "tax exemption."
            Historic Baptists such as John Leland would be appalled at this modern surrender of religious freedom of speech. These Baptist fore-fathers  were willing to be jailed or to be hanged before they were willing to be licensed or muzzled by Caesar, who had no authority over when, where or what they could preach.  In 1920, Baptist statesman George Truett, pastor of First Baptist Dallas,  went to the steps of the United States Capitol and demanded that Caesar keep his millstone off the church's neck. [3]

            For some Christians, tax exemption may have become a modern millstone. Is it possible Baptists have allowed the principle of church-state separation to be so mangled by modern secularists that the distorted doctrine is now used to intimidate the church into silence about biblical positions on public policy issues? Have Baptists surrendered their religious liberty birthright in exchange for a bowl of tax-exemption pottage? [4]

            Part of the reason for the paranoia is an ambiguous statute. Section 501(c) (3) of the Internal Revenue Code has two rules, which regulate political activity by churches and exempt organizations.[5]

            The first rule permits some lobbying, or "influencing legislation" by a church body, so long as it is "no substantial part of the activities" of the entity. The code does not define "influencing legislation" or "substantial part."   [6]
            The second rule prohibits a church or tax-exempt organization from "participat[ing] in or interven[ing] in [including the publishing and distributing of statements] any political campaign on behalf of any candidate for public office." The code does not define "participate" or "intervene."
 
            What is the speed limit?
            "Just tell me what I can and can't do. Tell me the speed limit, and I'll obey it," you say. Unlike speed limits, the tax code is not always clear.
            Come to think of it, speed limits are not always clear. A driver on an interstate highway may be going 65 miles per hour toward an unfamiliar city. Leaving the rural area and entering the suburbs, he has not seen a speed sign in a while, but he knows the limit must change to 55 mph somewhere near the city. He is in a hurry, but he feels uncomfortable not knowing if 65 mph is safe or risky.
            Some people handle such daily dilemmas by going 40 mph, the legal minimum on the freeway. Others will weigh the circumstances and make a judgment about what is safe or risky until they see a clear signpost. Living with ambiguous tax laws requires similar judgment.
 
            Preventive Law
            Practicing such preventive law is prudent, but pastors and teachers will seek to balance their duties under an ambiguous law with their religious duty and constitutional right to preach prophetically to culture and government.
            When balancing the risks, consider the fact that the Internal Revenue Service has never gone to court to enforce revocation of the tax-exempt status of a church because a pastor went too far in the pulpit in praising or rebuking a political candidate or in stirring up public pressure about some legislation.  [7] 
This is not to say churches should ignore the law just because the IRS has not enforced it. A driver should not drive as fast as he pleases just because he sees no police officer.
            The fact that the IRS has judicially never enforced this section against a church, however, is relevant to reducing the fear churches have of this issue. It may show the IRS realizes the code is ambiguous, and strict enforcement would conflict with constitutional protections of religious liberty. Therefore, church members should feel more comfortable in making judgments about such activity with greater latitude than the letter of the law seems to give.
            The IRS always could change its policy and start enforcing the letter of the law against churches. If that happens, churches will doubtless ask the Supreme Court to hear many of these cases in order to define the rights and duties of churches and members.
            Until then, it is prudent to "drive with care" but without paranoia. Pastors don't have to be tax lawyers to make practical daily judgments about complying with the law while still obeying Christ's command to be "salt" and "light." Like the driver on an interstate, pastors and churches can make some informed judgments about the level of risk with which they feel comfortable.
 
[See PART II for continuation of this article.]
 
**  Mike Whitehead has practiced law in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Kansas City, MO since 1975 and represents numerous non-profit religious organizations, including the Missouri Baptist Convention.  Mike formerly served as  General Counsel for the Ethics and Religious Liberty Commission (formerly Christian Life Commission) in Washington, DC.   He was Business Vice President and interim President for Midwestern Seminary, and was associate professor for church-state law.   He has served on national boards for Christian Legal Society and Alliance Defense Fund, and has been involved in religious liberty cases before the U.S. Supreme Court.  © Copyright, Michael K. Whitehead, 1992, 2004, 2006.    1100 Main, Ste 2600, Kansas City, MO.  mikewhitehead@hotmail.com
 
 

[1]  In the summer of 2004, a  group calling itself the "Mainstream Coalition" announced  a plan to send volunteers to "visit" worship services of area churches to watch for violations of tax laws, and to report violations to the IRS.  Critics claim that Mainstream is, in fact, a group of "religious left" activists, sending its "spies" only to conservative evangelical churches.  See editorial, Pathway, Aug. 5, 2004.  http://www.mbcpathway.com/-1999993231/-1999961744/-1999696281.htm

[2]  In 2000, for the first time, a court did revoke a church's tax exemption because of political endorsement in a newspaper ad.   Branch Ministries v. IRS, 341 U.S. App. D.C. 166;211 F.3d 137 (2000),  It did not involve statements within a regular worship service.  See final footnote at the end of Part II of this Article,  for the unique facts in this case.

[3] "Christ's religion needs no prop of any kind from any worldly source, and to the degree that it is thus supported it is a millstone hanged about its neck." May 16, 1920.

[4]   "Because some churches define their religious missions as including obligations to speak out on and attempt to influence public affairs, we hold to do so is part of their constitutionally protected religious liberty. The state may not deny or limit that right. Neither may it require that a church give up its right to 'free exercise' of religion under the First Amendment to be eligible to gain a statutory privilege [e.g. tax exemption]." Dr. James Wood, Baptist Joint Committee on Public Affairs, hearings before House Ways and Means Committee on H.R. 13500 (1976).

[5]  Proponents of the restrictions say the issue is not whether churches may preach about laws or candidates, but whether such churches may retain their exemption from income tax on gift revenue, permitting donors to deduct contributions. Otherwise, all political campaigns would use churches or other nonprofits to support their candidates. They also note a (c)(3) entity could create a (c)(4) entity, like a subsidiary or affiliate, to engage in lobbying and endorsement while retaining exemption but without the deductibility for the funds used by the (c)(4) affiliate

[6]  Some cases, commentators and the Treasury Department provide a guideline saying expenditures for lobbying of five percent of less of the organization's budget are not substantial. Lynn Buzzard, Minister's Legal Desk Reference, Chapter IV-3: Page 16, FN 83. Excellent pamphlet is available by writing Lynn Buzzard, P.O. Box 158, Buies Creek, NC 27506.

[7]  Swaggart Ministries issued a press release December 27, 1991, stating the IRS has complained in an audit because the pastor had endorsed Pat Robertson for president from the pulpit and in a church magazine prior to the 1988 election campaign. JSM announced it had compromised the audit complaint by agreeing not to do it again. Some commentators said this was the first case in which the IRS had enforced the political activity rules against a church. But the JSM press release is not binding legal precedent. This was a compromise settlement, not a decision by the IRS or by a court that Swaggart's comments violated 501(c)(3).