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

 
By Michael K. Whitehead, Attorney.**
 
In Part I, we examined principles of law that pastors could simply apply in order to avoid "tax exemption" terror during a political campaign year.   We used the analogy of driving down "Tax Exemption Trafficway" where there are no clear posted speed limits.   Driving in this "culture" has some inherent risks, but there are principles to help pastors "drive" with safety.   
 
After reviewing these principles, consider the following examples and our estimates of the relative risks of violation of the tax code, using our analogy of "miles per hour" speed on the interstate.
 
What Can You Do In An Election Year?
 
1.      Pastor Doe tells his neighbor, "I am voting for Smith." Speed: 40 to 45 mph. Safe. The IRS and the Federal Election Commission laws apply to organizational activity, not individual citizen activity. Individual Christians, even when employed as pastors or staff members, may exercise their freedoms of speech and association to talk and work together as private citizens on matters of mutual concern, including issues and candidates.
2.      Pastor Doe says from the pulpit, "The church does not officially endorse candidates, but I am voting for Smith because I believe his position on X is biblical." Speed: 45 to 50 mph. Low risk. Lawyer Alan P. Dye recommends "a clergyman should not make a regular practice of endorsing candidates from the pulpit, lest his personal position be attributed to his church…" [1] If a pastor decides to endorse a person, it is better not to use the microphone and podium paid for by the church, or the time of the regular official worship service, or to use other church financial resources to accomplish the endorsement, lest the charge be made that, in spite of the church disclaimer, the endorsement was "sponsored" by and approved by the church.  [2]
3.      The church adopts a resolution at a business meeting, which the pastor reads Sunday morning: "Our church body endorses Smith. His position on X issue is consistent with what we believe is biblical, and we are giving $1000 to his campaign." Speed: 100 mph. Extreme risk. You have just blown the doors off Smokey's patrol car, and his is thinking, "No more Mr. Nice Guy." Call it careless or call it courageous, but you cannot call this preventive law.
4.      The church sponsors a nonpartisan voter registration drive and spends church funds to promote it, to pay registration workers and to mail registration forms. Speed: 53 to 55 mph. Low risk. Nonpartisan efforts are safe.    Official church action attempting to register supporters of one candidate or party would be very risky. 
5.      Pastor Doe invites Smith, the incumbent congressman, and all other candidates to speak in the pulpit on Citizenship Sunday a month before the election. Speed: 53 to 55 mph. Low risk. Pastor Doe might want to make some disclaimer that "the church is not endorsing" candidates.  [3]
6.      Pastor Doe invites only Smith and has him read the Bible and lead the morning prayer.  Speed: 60 to 65 mph. Moderate risk, even with a disclaimer.
7.      Pastor Doe takes an offering Wednesday night to raise money to give to the election campaign of Smith. Speed: 75 to 80 mph. High risk.
8.      Church funds are used to prepare, print and mail "voter scorecards, "listing the leading candidates and their voting records on various restrictions on abortion. No editorial comment is made. Speed: 55 to 60 mph. Moderate risk. Some commentators feel safer if the guide covers more than one general subject. (See Faucher case, footnote 4, however, and the referenced article from the LA Times, July 18, 2006.)
9.      The voter scorecard bears the statement: "First Baptist is Pro-life." Speed: 60 mph. Moderate risk. IRS may criticize the voter guide as "biased" under IRC 501 (c)(3). Recent action by the Supreme court seems to indicate interest groups may advocate their position on an issue, such as "pro-life," on voter guides, so long as they do not expressly advocate voting for a certain candidate.  [4]
10.   A Sunday School teacher during class criticizes the mayor for supporting a homosexual rights ordinance. The mayor's opponent is opposed to "gay rights." Speed: 50 mph. Low risk. Statements by individual lay Sunday School teachers are not normally considered "official" actions or positions of the body.
11.   The church gives its private mailing list to the Whig party, which mails campaign materials about its candidates to all church members. Speed: 99 mph. Risk: High. See number 3 above. Church gifts of mailing lists or other  "in-kind" contributions are as bad as gifts of cash.  A church could rent such lists to partisan groups, at a fair market rates, to reduce the speed greatly. [5]    
12.  The church boys a full page ad in USA Today that says, "A vote for Bobby Williams is a sin against God." Speed: Welcome to the Indy 500! Risk: Are you kidding?  You are obviously no longer worried about "risk" at this speed. The "no endorsement" rules apply to negative endorsements as well as positive. [6]
 
Churches may want to evaluate their situations and develop a policy about what actions church members are comfortable with in this area. Some churches will choose to "drive slowly."  Others will be comfortable "diving a little faster."
Churches may want to get the advice of a private attorney who knows all the facts of the proposed actions and current tax laws, as well as federal and state campaign laws, to help draw the church's policy more precisely. In addition to considering what the law permits, pastors will want to be sensitive to the attitudes of church members about avoiding any appearance of partisan political activity.
Knowing the truth about these laws should set churches free from the fear caused by tax-exemption terror.
 
Resources: 
American Center for Law and Justice:   http://www.aclj.org/resources/politicalspeech/index.asp
 
IRS:  http://www.irs.gov/charities/charitable/article/0,,id=120703,00.html
http://www.irs.gov/newsroom/article/0,,id=122887,00.html
 
Ethics and Religious Liberty Commission:  http://www.ivotevalues.com/templates/cusivotevalues/details.asp?id=27131&PID=139563
 
**  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,  2006.    Whitehead Law Firm, LLC, 1100 Main, Ste 2600, Kansas City, MO 64105.  mikewhitehead@hotmail.com   Permission granted for not-for-sale copies in exact form including copyright. Other uses require written permission.
 

[1]  In 1993, Jerry Falwell's Old Time Gospel Hour, Inc., reached a compromise settlement agreement with the IRS in an audit based on alleged political activities in 1986 and 1987. IRS determined that, in 1986 and 1987, the tax-exempt arm had used personnel and assets to raise funds for a political action committee arm, called "I Love America Crusade, Inc.," which was involved in a political candidate campaign. The IRS revoked OTGH, Inc.'s income tax exemption for the two years, and the ministry organization paid $50,000 in back taxes. IRS did not disallow deductibility of the charitable contributions by donors during the two-year period. This compromise settlement is not a binding legal precedent which affects other cases, but it does show IRS's position.

[2] "Political Activity by Clergymen," memorandum by Alan P. Dye, esquire, Washington, D.C., in Winning the New Civil War by Robert P. Dugan, Jr. (Portland, Ore., Multnomah, 1991) p. 195

[3]  Rev. Rule. 74-574, involving appearances by candidates on TV stations operated by religious groups; Rev. Rule. 66-256, 1966-2 C.B. 210

[4]  Faucher v. Federal Election Commission, 743 F. Supp. 64 (1991). See 2 U.S.C. Section 441 (b); Rev. Rule. 78-248 and 80-282. In Faucher, the Supreme Court declined to review a lower court ruling in favor of a pro-life scorecard under Federal Election Commission statute. Tax exemption was not at issue here, but a similar rule may be applied by courts, permitting "issue advocacy," even single issues.   In 2006, the IRS has increased scrutiny on some non-profits using voter scorecards.  See:  http://www.latimes.com/news/politics/la-me-irs18jul18,1,7450455.story?coll=la-headlines-politics&ctrack=1&cset=true <http://www.latimes.com/news/politics/la-me-irs18jul18,1,7450455.story?coll=la-headlines-politics&amp;ctrack=1&amp;cset=true>  

[5]  In 2004, Republican campaign leaders urged church members to send church directories to the campaign office for mailing.  Many church leaders, including Dr. Richard Land, criticized this tactic as unethical if not illegal.  See "Land 'appalled' by Bush campaign strategy for churches, " Baptist Press, Jul 2, 2004   Bush campaign leaders correctly noted that peer to peer contact was not illegal.  Where the directories were freely distributed to members for their use, the lists are no longer private.  Church members who give their copy of the church directory to a campaign are not violating the tax law.

[6]  Four days before the 1992 Presidential elections, Pierce Creek Church, New York, placed a full page ad in USA Today declaring " a vote for Bill Clinton is a sin against God."    The IRS revoked its advance letter recognizing exemption.  However, since churches are automatically exempt under the Internal Revenue Code, even without a letter ruling, donations were still tax deductible at Pierce Creek.   Branch Ministries v. IRS, 341 U.S. App. D.C. 166;211 F.3d 137;2000 U.S. App. LEXIS 9867;2000-1 U.S. Tax Cas. (CCH) P50,459;85 A.F.T.R.2d (RIA) 1767  The court of appeals stated: "Because of the unique treatment churches receive under the Internal Revenue Code, the impact of the revocation is likely to be more symbolic than substantial. As the IRS confirmed at oral argument, if the Church does not intervene in future political campaigns, it may hold itself out as a 501(c)(3) organization and receive all the benefits of that status. All that will have been lost, in that event, is the advance assurance of deductibility in the event a donor should be audited."