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5. What political activities are prohibited under the Internal Revenue Code?
6. Must religious organizations restrict their discussion of issues during election campaign periods?
7. When would an issue discussion violate the political campaign intervention prohibition?
8. Are religious organizations permitted to engage in lobbying activities?
9. Are religious organizations permitted to participate in referenda, constitutional amendments and similar ballot initiatives?
10. What are the consequences if a religious organization engages in excessive lobbying?
11. Does the political campaign intervention prohibition apply to the political activities of clergy and other religious leaders?
12. When are the political activities of clergy or other religious leaders attributed to their religious organizations?
13. Who is considered a candidate?
14. What rules apply with respect to candidates for non-elective office?
15. May candidates appear in pulpits during worship services?
16. What if the candidate appears in a noncandidate capacity?
17. What if the candidate is a member of the clergy?

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5. What political activities are prohibited under the Internal Revenue Code?

Religious organizations, as well as all other organizations exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code, are prohibited from participating or intervening, directly or indirectly, in a political campaign on behalf of or in opposition to any candidate for elective public office.4 This prohibition encompasses a wide array of activities. It precludes direct political campaign intervention, including the making of statements, whether oral, written or in an electronic medium; supporting or opposing any candidate, political party or political action committee (“PAC”); creating a PAC;5 rating candidates;6 and providing or soliciting financial support (including loans7 or loan guarantees) or in-kind support for any candidate, political party or PAC. It also precludes indirect political campaign intervention of a sort that reflects bias for or against any candidate, political party or PAC, such as distributing biased voter education materials or conducting a biased candidate forum or voter registration drive.

6. Must religious organizations restrict their discussion of issues during election campaign periods?

No. The political campaign intervention prohibition does not restrict discussions of issues that are not linked to support for or opposition to candidates. Religious organizations need not restrict or alter their discussion of issues during election campaign periods. The fact that candidates may align themselves on one side or another of an issue does not restrict the ability of religious organizations to engage in discussions of that issue.8 That said, a religious organization may nonetheless violate the political campaign intervention prohibition if it communicates preferences for or against particular candidates as part of its issue discussions.

7. When would an issue discussion violate the political campaign intervention prohibition?

The IRS has advised that for an issue discussion to violate the political campaign intervention prohibition, it must contain some reasonably overt indication of support for or opposition to a particular candidate.9 A communication is particularly at risk of violating the political campaign intervention prohibition if it makes reference to candidates or voting in a specific upcoming election. The IRS has identified the following factors as relevant when determining whether an advocacy communication constitutes political campaign intervention: (a) whether the communication identifies one or more candidates for a public office; (b) whether the communication expresses approval or disapproval of one or more candidates’ positions and/or actions; (c) whether the communication is delivered close in time to an election; (d) whether the statement makes reference to voting or an election; (e) whether the issue addressed in the communication has been raised as an issue distinguishing candidates for a given office; (f) whether the communication is part of an ongoing series of communications on the same issue that are independent of the timing of any election; and (g) whether the timing of the communication and identification of the candidate are related to a non-electoral event, such as a scheduled vote on specific legislation by an officeholder who also happens to be a candidate for public office.10

8. Are religious organizations permitted to engage in lobbying activities?

Yes. The political campaign intervention prohibition does not extend to the lobbying activities of religious organizations. The lobbying activities of all 501(c)(3) organizations are limited under the Internal Revenue Code. A religious organization would jeopardize its tax-exempt status only if its lobbying activities (as measured by time, effort, expenditures and other relevant factors) constitute more than an “insubstantial” part of its total activities during a particular year.11 Lobbying includes both direct lobbying (directly contacting legislators, whether federal, state or local) and grassroots lobbying (asking members of the public to contact legislators or to support or oppose particular legislation.)12 Neither the Code nor the IRS regulations define what “insubstantial” means in terms of any specific percentage, although a few older court cases suggest that insubstantial lobbying would be something between 5 and 15 percent of the organization’s total activities.13 Churches and certain affiliated religious organizations are ineligible to take advantage of the lobbying election that is available under section 501(h) of the Code.14 Section 501(h) provides that other section 501(c)(3) organizations may opt into a system of fixed permissible lobbying expenditures in lieu of the general insubstantial lobbying limitation described above. The amount of permissible lobbying expenditures is linked to the amount of an organization’s expenditures for exempt purposes. Larger organizations are able to make higher lobbying expenditures, subject to an overall $1 million limit.

9. Are religious organizations permitted to participate in referenda, constitutional amendments and similar ballot initiatives?

Yes. Referenda, constitutional amendments and similar ballot initiatives are classified as lobbying activities for purposes of the Internal Revenue Code.15 As such, they are subject to the insubstantial lobbying limitation, not the political campaign intervention prohibition.

10. What are the consequences if a religious organization engages in excessive lobbying?

If a religious organization’s lobbying activities constitute more than an insubstantial part of its total activities, the organization’s section 501(c)(3) tax-exempt status may be revoked, which means that its income for the year would become subject to income tax.16

11. Does the political campaign intervention prohibition apply to the political activities of clergy and other religious leaders?

The Internal Revenue Code prohibition against political campaign intervention applies to religious organizations as tax-exempt organizations and to the actions of clergy or other religious leaders acting as representatives of their religious organizations. The prohibition does not apply to the political activities of clergy or other religious leaders undertaken in their individual capacities.17 Thus, clergy or other religious leaders, in their individual capacities and outside the context of any religious organization-sponsored function or publication, may endorse or oppose candidates and otherwise participate in election campaigns. When engaging in personal political activity, however, clergy and religious leaders should take steps to ensure that their actions are not imputed to their religious organizations.18

12. When are the political activities of clergy or other religious leaders attributed to their religious organizations?

The political activities of clergy or other religious leaders are attributed to their religious organizations when they are undertaken during worship services or other organization-sponsored functions, or in official organization publications.19 Political activity also will be attributed to the religious organization if a member of the clergy or other religious leader indicates that he or she is acting on behalf of his or her religious organization or if the organization’s funds, facilities or other assets are used to support the political activity.

13. Who is considered a candidate?

A candidate is an individual who offers himself or herself, or is proposed by others, as a contestant for an elective public office, whether federal, state or local.20 The point at which an individual becomes a candidate must be determined on the basis of all the relevant facts and circumstances. An individual who has formally announced his or her intention to seek election is obviously a candidate, but an individual may be considered a candidate even before any formal announcement of candidacy is made, if actions are taken by the individual or by others to further the goal of candidacy.21 Merely being a prominent political figure does not, by itself, make one a candidate.22

14. What rules apply with respect to candidates for non-elective office?

Section 501(c)(3) does not prohibit political campaign intervention with respect to candidates for appointive political office.23 If, however, an appointment (e.g., Supreme Court justice) is made by or must be confirmed by a legislative body, activity in support for or in opposition to the appointment would be classified as lobbying, which is subject to the insubstantial lobbying limitation.24

15. May candidates appear in pulpits during worship services?

It depends. All relevant facts and circumstances must be evaluated to determine whether a candidate’s appearance in a pulpit during worship services (or at other activities sponsored by a religious organization) violates the political campaign intervention prohibition.25 If the clergy member endorses the candidate or takes up a collection for the candidate’s benefit, if the clergy member invites only one candidate for a particular office to address the congregation or if there are other demonstrations of approval for the candidate or his campaign for office, the religious organization will violate the political campaign intervention prohibition. If, on the other hand, all candidates for a particular office are given equal opportunity to address the congregation, no collections are taken for any candidate and there are no demonstrations of approval or disapproval of any candidate, the religious organization will not violate the political campaign intervention prohibition.26 For example, the IRS has indicated that it is permissible for a church to invite all candidates for a particular office to address its congregation, one each on successive Sundays, as part of its regular worship services, provided that each candidate is given an equal opportunity to address and field questions on a wide variety of questions from the congregation, and the introduction of each candidate includes no editorial comment or indication of approval or disapproval.27

16. What if the candidate appears in a noncandidate capacity?

It is not uncommon for candidates who are public figures (including incumbent office holders, sports figures, celebrities, etc.) or who possess particular expertise independent of their candidacies to appear at events sponsored by religious organizations (e.g., groundbreakings, commemorative celebrations, annual conventions or other meetings). Provided that the candidate has not been invited to showcase his or her candidacy, such appearances generally do not violate the political campaign intervention prohibition.28 When a candidate is invited to appear not as a candidate but in his or her individual capacity, it is not necessary to provide equal access to competing candidates. However, in advertising the event and in introducing the candidate, no mention should be made of his or her candidacy or the impending election. The candidate must speak as an individual and not as a candidate. No campaigning or fundraising may take place in connection with the event, and a nonpartisan atmosphere should be maintained.29 A candidate who is a public figure may attend worship services and be acknowledged by the clergy member on the same basis as any other visiting dignitary, without mention of his or her campaign or candidacy.30

17. What if the candidate is a member of the clergy?

The same rules would apply. If the candidate/clergy member participates in a worship service in his or her capacity as a candidate, competing candidates must be given equal opportunity to address the congregation, no collections may be taken for the candidate and no other demonstrations of approval or disapproval for any candidate may take place. If the candidate/clergy member appears at a worship service in his or her capacity as a clergy member, it is not necessary to provide equal access to competing candidates for the particular office. In advertising the event and in introducing the clergy member, no mention should be made of his or her candidacy or the impending election. No campaigning or fundraising should take place in connection with the clergy member’s appearance.

FOOTNOTES

4 Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii); Rev. Rul. 2007-41, 2007-25 I.R.B. 1421 (June 18, 2007).

5 Treas. Reg. §1.527-6(g); Election Year Issues at 365, 473-474. Although a religious organization may not itself create a PAC, it may create a related, separately incorporated section 501(c)(4) organization that may establish a PAC. See Branch Ministriesat 143; Election Year Issues at 477-478.

6See: Rev. Rul. 67-71 C.B. 125 [rating candidates for school board]. Even nonpartisan rating of candidates as “approved,” “not approved” or “approved as highly qualified” on the basis of experience, professional ability and character constitutes prohibited political activity, even though in certain cases all candidates were rated as “qualified.” See G.C.M. 39441 (Sept. 27, 1985); Association of the Bar of the City of New York v. Commissioner, 858 F.2d 876 (2d Cir. 1988), cert. denied, 490 U.S. 1030 (1989).

7 See T.A.M. 9812001 (Aug. 21, 1996), where the IRS concluded that a loan to a political organization constituted a political contribution even though market rate interest was charged and the loan was repaid; Election Year Issues at 384.

8Election Year Issues at 344-346.

9Id.

10Rev. Rul. 2007-41 at 1424.

11 Pub. 1828 at 5-6.

12 Treas. Reg. § 1.501(c)(3)-1(c)(3)(ii).

13See Haswell v. U.S., 500 F.2d 1133 (Ct. Cl. 1974) (16-20 percent of budget spent on lobbying was too much); Murray Seasongood v. Comm’r, 227 F.2d 907 (6th Cir. 1955) (less than 5 percent of time and effort spent on lobbying was within acceptable limits).

14 I.R.C. §§ 501(h)(5); 4911(f)(2). Churches and certain affiliated religious organizations requested that they be made ineligible for the section 501(h) lobbying election.

15 Treas. Reg. § 1.501(c)(3)-1(c)(3)(ii).

16 Pub. 1828 at 6. Under section 4912(c)(2)(B) of the Code, the 5 percent excise tax imposed on the excess lobbying expenditures of section 501(c)(3) organizations does not apply to churches and certain affiliated religious organizations.

17 Rev. Rul. 2007-41 at 1422; Pub. 1828 at 7; Election Year Issues at 363.

18 Rev. Rul. 2007-41 at 1422; Pub. 1828 at 7; Election Year Issues at 364.

19Id.

20 Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii); Rev. Rul. 2007-41 at 1421.

21Election Year Issues at 342; T.A.M. 9130008 (April 16, 1991).

22Election Year Issues at 342.

23Election Year Issues at 339; Notice 88-76, 1988-2 C.B. 392. Under certain circumstances, religious organizations may incur tax liability under section 527 of the Code for expenditures to support or oppose nonelective candidates.

24See G.C.M. 39694 (Jan. 21, 1988).

25Rev. Rul. 2007-41 at 1424; Pub. 1828 at 8-9; Election Year Issues at 380-382.

26 Rev. Rul. 2007-41 at 1423; Pub. 1828 at 8.

27Id.at 9 (Example 1, left-hand column).

28See generallyRev. Rul. 2007-41 at 1423; Pub. 1828 at 9-10; Election Year Issues at 381-382.

29Rev. Rul. 2007-41 at 1423-4; Election Year Issues at 381.

30Pub. 1828 at 9 (Example 1, right-hand column).