On Sept. 28, pastors from 20 states will give politically based sermons from the pulpit as part of a protest
organized by the Alliance Defense Fund, a conservative legal-advocacy
group. The protest will challenge an Internal Revenue Code restriction
that limits the political activities of charitable organizations -
including churches and other religious groups - that are exempt from
taxation. According to the Internal Revenue Code, religious groups may
lose their tax-exempt status if they officially endorse a political
candidate. The ADF says that if its protest leads the Internal Revenue
Service to penalize houses of worship for their pastors' political
advocacy, ADF will bring a lawsuit challenging the constitutionality of
To discuss the ADF protest and IRS restrictions on the political
activities of religious organizations, the Pew Forum turns to
church-state scholar Robert W. Tuttle.
Robert W. Tuttle, David R. and Sherry Kirschner Berz Research Professor of Law and Religion, The George Washington University Law School
Jesse Merriam, Research Associate, Pew Forum on Religion & Public Life
Question & Answer
Before 1954, section 501(c)(3) of the Internal Revenue Code
permitted nonprofit organizations to endorse political candidates while
remaining exempt from federal income tax. But in 1954, the U.S.
Congress amended this part of the code to say that a charitable
organization loses its tax-exempt status if it intervenes in a
political campaign. Why did Congress add this restriction?
Many members of Congress, including Lyndon B. Johnson, a senator at
the time, voted for the amendment because they were concerned about
nonprofit organizations funding their opponents' political campaigns.
But because there was little debate over the amendment or how it would
influence churches, we don't know precisely why Congress enacted the
Notably, the 1954 amendment is often misunderstood as limiting
political advocacy, but the rule's actual purpose has to do with
political contributions. Under the Internal Revenue Code, there are
many different kinds of tax-exempt organizations. For example, section 527
of the code exempts all sorts of political organizations from federal
income tax. But organizations that qualify as charitable groups under
section 501(c)(3) are special because donors to these organizations may
deduct their contributions from their own federal income taxes. So a
primary purpose of the 1954 amendment was to prevent donors from
deducting political contributions from their taxes.
Why is the Alliance Defense Fund so interested in eliminating this restriction?
The ADF opposes the restriction because the rule requires churches
to choose between actively participating in political campaigns, on the
one hand, and accepting tax-deductible donations, on the other hand. As
a result, if a church wanted to promote or oppose a particular
political candidate, the church would be required to create a separate
organization to do so. Although this separate organization would be
exempt from taxes, contributors could not take a tax deduction for
their donations to this organization.
The ADF believes that this restriction takes political activity out
of the heart of a congregation's life. For example, a congregation that
wanted to retain its tax exemption under section 501(c)(3) could not
include political activity in its worship service unless the worship
service was financed by a separate organization. Moreover, ADF believes
that because IRS officials must examine the content of sermons or other
religious messages to determine whether a church has improperly engaged
in political advocacy, IRS enforcement of the rule entangles the
government in the operation of religious organizations.
If ADF's protest leads to a constitutional challenge in court, what arguments might ADF make?
The ADF would almost certainly argue that the 1954 amendment
violates the First Amendment's Free Exercise Clause, which prohibits
the government from regulating religious organizations more strictly
than their secular counterparts. Similarly, ADF will likely argue that
the amendment violates the Religious Freedom Restoration Act, a 1993
federal statute that prohibits the federal government from imposing a
"substantial burden" on a religious organization unless the government
demonstrates that it must impose that burden to achieve a "compelling
government interest." The ADF will also likely argue that the
restriction violates the First Amendment's Free Speech Clause, which
prohibits the government from regulating speech on the basis of its
content. Finally, ADF might also claim that IRS enforcement of the 1954
amendment violates the First Amendment's Establishment Clause by
requiring the IRS to scrutinize sermons or other religious messages,
thus excessively entangling government and religion.
How might the government defend the 1954 amendment?
The government will likely defend the 1954 amendment by arguing that
the rule does not violate congregations' rights under the Free Exercise
Clause or RFRA because the restriction treats religious organizations
just like other charitable and educational organizations. Moreover, the
government would say, the restriction does not bar congregations from
participating in campaigns; it only prohibits donors from making
tax-deductible political contributions. Likewise, the government will
likely argue, the restriction does not violate the Free Speech Clause
because the restriction does not prohibit the congregations from making
political statements; it only bars them from using tax-deductible
donations to do so. Finally, in response to ADF's Establishment Clause
argument, the government will likely argue that there is no excessive
entanglement of government and religion because the IRS does not need
to evaluate a sermon's theological merit to determine whether the
sermon promotes a politician.
How do you think a court might evaluate these arguments?
It's always difficult to predict how a court might decide a
hypothetical case because a court's decision often turns on a case's
particular facts. But past decisions give us a pretty good basis for
guessing that a court would uphold the constitutionality of the 1954
amendment's application to religious organizations.
The most relevant case on this issue is Branch Ministries v. Rossotti
(2000), a case in which the U.S. Court of Appeals for the District of
Columbia Circuit upheld the 1954 amendment's constitutionality. That
case arose after a congregation advocated for a presidential candidate,
prompting the IRS to revoke the congregation's 501(c)(3) status. The
congregation claimed that this revocation violated the Free Exercise
and Free Speech clauses. But the D.C. Circuit Court rejected both of
these arguments on the ground that the congregation was still free to
engage in political speech and activities.
The D.C. Circuit Court's reasoning in this case relied heavily on two U.S. Supreme Court decisions, Regan v. Taxation with Representation (1983) and Jimmy Swaggart Ministries v. Board of Equalization (1990). In Regan,
the high court held that 501(c)(3) status provides a monetary benefit
to certain tax-exempt organizations because it allows their donors to
take a tax deduction for contributions. Therefore, the court concluded,
the 1954 amendment does not violate the Free Speech Clause because the
amendment merely withholds a speech subsidy rather than restricts
Similarly, in the Jimmy Swaggart Ministries case, the
Supreme Court held that a tax imposed equally on all organizations does
not violate the Free Exercise Clause. The court held that although the
tax may increase the cost of religious activity, the tax does not
impose a "substantial burden" on religious exercise because it does not
prevent religious organizations from engaging in religious activity.
If ADF challenged the 1954 amendment's application to religious
organizations, I think it is very likely that a court would agree with
the Branch Ministries decision and reject the challenge. In the years since the Regan and Jimmy Swaggart Ministries
cases, there have been a number of important changes in free exercise
and free speech law, but those changes have only reinforced these
If the 1954 amendment was lifted for religious organizations
but not for other charitable organizations, would that raise a problem
under the First Amendment's Establishment Clause, which generally
prohibits the government from favoring religion over nonreligion?
This is an even more difficult and complicated question than the
previous one, and I could see a court going either way. On the one
hand, courts usually uphold legislative efforts to relieve burdens on
religious activity, even if those burdens are not so "substantial" as
to require an exemption under RFRA. So if Congress lifted the 1954
amendment, courts might be inclined to defer to the legislative
judgment that the amendment should not apply to religious
On the other hand, courts might be more skeptical of such a
religion-specific exemption from the 1954 amendment because this
exemption would potentially provide religious organizations with a very
significant benefit not extended to other charitable organizations.
Indeed, if the 1954 amendment applied to all 501(c)(3) organizations
except religious ones, those who contribute to congregations engaged in
political activity would be allowed to take an income tax deduction for
their contributions - thus offsetting some of the actual cost of the
donation - while contributors to other political organizations would
not be allowed to deduct their contributions. In other words, the
government would effectively subsidize the political activities of
Such a subsidy raises serious questions under the Establishment Clause. In Texas Monthly v. Bullock
(1989), the Supreme Court held that a Texas law that exempted religious
publications but not other publications from sales taxes violated the
Establishment Clause because the exemption effectively subsidized
religious publications. The court explained that although the
government may alleviate special burdens on religious activity, the
sales tax did not present such a special burden because it applied
equally to both religious and nonreligious publications.
So the Texas Monthly decision strongly suggests that
lifting the 1954 amendment only for religious organizations would
violate the Establishment Clause. But that doesn't mean that the
present Supreme Court would definitely find a constitutional violation
if Congress lifted the restriction only for religious organizations.
Indeed, because the present court has a much narrower view of the
Establishment Clause than the court that decided Texas Monthly, the present court might be willing to overrule the Texas Monthly
decision. The ADF is no doubt hoping that this will be the case. As I
said, it's very difficult to guess how a court would decide this issue.