Background
1.
Where do the restrictions on religious organizations’ participation in the
political process come from?
The Internal Revenue Code
prohibits intervention in political campaigns by organizations that are exempt
from federal income tax under section 501(c)(3), including religious
organizations. To qualify for 501(c)(3) tax-exempt status under the Internal
Revenue Code, an organization must meet the following requirements:
- The organization must be
organized and operated exclusively for religious, educational, scientific or
other charitable purposes;
- Net earnings may not inure
to the benefit of any private individual or shareholder;
- No substantial part of the
organization’s activities may involve attempts to influence legislation;
- The organization may not
intervene in political campaigns;
- The organization’s purposes
or activities may not be illegal or violate fundamental public policy.
The IRS has noted that “[c]hurches that meet [these requirements] are
automatically considered exempt and are not required to apply for and obtain
recognition of tax-exempt status from the IRS.” However, “[u]nlike churches,
religious organizations that wish to be tax-exempt generally must apply to the
IRS for tax-exempt status unless their gross receipts do not normally exceed
$5,000 annually.”2
The restrictions on political activities are some of the conditions
of maintaining tax-exempt status. Although other restrictions – including state
and local laws regulating various political activities as well as federal laws,
such as the Federal Election Campaign Act – also may affect participation by
religious organizations in the political process, the Internal Revenue Code
prohibition is the primary focus of this publication.
2. Has
this prohibition on political campaign intervention always been part of the Internal
Revenue Code?
No. The prohibition on
political campaign intervention did not become part of the Internal Revenue Code until 1954, when
an amendment to section 501(c)(3) was introduced by then-Senator Lyndon B. Johnson
during a Senate floor debate on the 1954 Internal Revenue Code. The prohibition
was added to the code without hearings, testimony or comment by any tax-exempt organizations.
Although there is no legislative history to indicate definitively why Johnson
sought enactment of the political campaign intervention prohibition, neither is
there any evidence that the prohibition was targeted at political campaign
intervention by religious organizations.3
3. Are
religious organizations singled out by the political campaign intervention prohibition
in the Internal Revenue Code?
No. All organizations that are
recognized as exempt from federal income tax under section 501(c)(3) of the Internal
Revenue Code are subject to the prohibition against political campaign intervention. Thus religious
organizations are not treated more harshly than schools, hospitals, social services
agencies, colleges and universities, scientific organizations, museums or other
charitable organizations exempt under section 501(c)(3) of the code.4
None of these organizations may intervene in political campaigns.
4.
Doesn’t the First Amendment to the U.S. Constitution protect the right of
religious organizations to engage in political activity?
The First Amendment provides
that “Congress shall make no law respecting an establishment of religion or prohibiting the
free exercise thereof ...” Although the Internal Revenue Code prohibition against political
campaign intervention may burden the exercise of religion to the extent that a
religious organization must choose between the receipt of the benefits of tax
exemption and intervention in a political campaign, not every burden on
religious exercise is constitutionally prohibited.
To date, courts have been
unsympathetic to First Amendment challenges to the political campaign
intervention prohibition. In the most prominent ruling on this prohibition, the
Court of Appeals for the D.C. Circuit upheld in 2000 the constitutionality of
the political campaign intervention prohibition as applied to a church, concluding
that the prohibition did not violate either the Establishment Clause or the
Free Exercise Clause of the First Amendment.5
(See Sidebar.)
More recently, the U.S. Supreme Court in January
2012 declined to hear a challenge to the constitutionality of the prohibition.6 In this case, the IRS
imposed an excise tax on Catholic Answers, a religious nonprofit organization
that is exempt from federal income taxes under section 501(c)(3). In 2004,
after the organization published a voter guide on its website as well as a series
of newsletters arguing that Sen. John Kerry (then the presumptive Democratic
candidate for president) should not receive Communion in Roman Catholic
churches, the IRS determined that the organization had engaged in improper
electioneering. The organization sued for refund of the excise tax and
challenged the constitutionality of the restrictions on campaign activity. The
IRS then refunded the tax, but the organization continued its legal challenge
and sought to have the restriction declared unconstitutional. The U.S. Court of
Appeals for the 9th Circuit held that the lawsuit was moot because the tax had
been refunded and declined to consider the constitutional challenge. Catholic
Answers sought review of that decision in the Supreme Court, but the high court
declined to review the decision.
IRS Restrictions on Political Intervention and Lobbying
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.7
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;8
rating candidates;9 and providing or
soliciting financial support (including loans10
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.
Branch Ministries v. Rossotti Case
Four days before the 1992 presidential
election, the Church at Pierce Creek in Binghamton, N.Y., placed a
full-page advertisement in USA Today and The Washington Times. The ad
began with the heading: “Christians Beware: Do not put the economy ahead
of the Ten Commandments.” The ad cited biblical passages and stated that
Gov. Bill Clinton supported abortion on demand, homosexuality and the
distribution of condoms to teenagers in public schools. The ad concluded
with the question: “How then can we vote for Bill Clinton?” At the bottom
of the ad, in fine print, the following notice appeared: “This
advertisement was co-sponsored by The Church at Pierce Creek, Daniel J.
Little, Senior Pastor, and by churches and concerned Christians
nationwide. Tax-deductible donations for this advertisement gladly
accepted. Make donations to: The Church at Pierce Creek.”
Following the special procedures for church
audits (see question 31), the IRS revoked the church’s section 501(c)(3)
tax exemption on the grounds that it violated the political campaign
intervention prohibition. The church challenged the IRS in court, claiming
that revocation of its tax-exempt status violated the Internal Revenue
Code, both the Free Speech and Free Exercise clauses of the First
Amendment, and the Religious Freedom Restoration Act. The church also
claimed that it had been singled out for prosecution on account of its
political views. The district court dismissed the case, concluding that
the IRS had authority under the Internal Revenue Code to revoke the
church’s tax-exempt status and that revocation did not violate the
Religious Freedom Restoration Act or the Free Speech or Free Exercise
clauses. The court also concluded that, in revoking the church’s
tax-exempt status, the IRS had not engaged in selective prosecution or
viewpoint discrimination.
The church appealed the decision of
the district court. The U.S. Court of Appeals for the D.C. Circuit
affirmed the district court’s decision on every count. Among other things,
the court of appeals noted that the church had an alternative means of
engaging in political activity because it could establish a related,
separately incorporated organization under section 501(c)(4)* of the Internal
Revenue Code and that the separate organization could express opinions
about candidates and even establish a PAC through which political
contributions might be made. Of course, no tax-deductible church funds
could be used to support the political activities of the section 501(c)(4)
organization or its PAC.
* Section 501(c)(4) organizations are
exempt from taxation, but contributions to them are not deductible.
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. 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.11
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.12 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 nonelectoral event, such as a scheduled vote on specific legislation by an
officeholder who also happens to be a candidate for public office.13
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.14
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.15
Lobbying includes both direct lobbying (directly contacting federal, state or
local legislators) and grassroots lobbying (asking members of the public to
contact legislators or to support or oppose particular legislation.)16
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 five and 15 percent of the organization’s
total activities.17
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.18
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.19
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.20
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 activities, however,
clergy and religious leaders should take steps to ensure that their actions are
not imputed to their religious organizations.21
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, posted on official organization websites or printed
in official organization publications.22
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 a
federal, state or local elective public office.23
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.24
Merely being a prominent political figure does not, by itself, make one a
candidate.25
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.26 If, however, an
appointment (e.g., Supreme Court justice) is made by or must be confirmed by a
legislative body, activities in support of or in opposition to the appointment would
be classified as lobbying, which is subject to the insubstantial lobbying
limitation.27
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.28
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.29
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.30
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.31 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.32
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.33
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.
Voter Education and Outreach
18.
May religious organizations become involved in voter education?
Yes. Religious organizations
may educate voters about the issues and about candidates’ positions on the
issues. However, voter education activities must be free from bias for or
against any candidate or political party.34
19.
May religious organizations publish or distribute voter guides?
It depends on the content of
the voter guide. Religious organizations may publish or distribute unbiased
voter guides for the purpose of educating voters about where the candidates
stand on various issues.35
The term “voter guide” refers generally to a compilation of candidates’
positions based upon candidates’ responses to questions posed or to a neutral
compilation of candidates’ issue positions. In order to ensure that they are
unbiased, voter guides should include all candidates for a particular office;
cover a broad range of issues of interest to voters that would be faced by
candidates for the particular office sought; evidence no bias in the selection
of questions posed or issues presented; present all candidates’ responses; and
contain no editorial comment or other indications of approval or disapproval of
any candidates or their positions.36
20.
Why must a broad range of issues be covered in voter education materials?
The range of issues that must
be covered in voter education materials depends on the nature of the office
sought by the candidate.37
For example, it is not necessary to pose questions on foreign policy to a
candidate for the local school board.38
Voter education should cover a wide range of issues that would be faced by a
candidate for a particular office. Presenting only a narrow range of issues clustered
around a particular topic runs the risk of exhibiting bias for or against
particular candidates by implicitly inviting readers to compare candidates’
positions on the narrow range of issues or to evaluate candidates based on the
religious organization’s position on these issues. All relevant facts and
circumstances are considered in determining whether voter education materials
violate the political campaign intervention prohibition.39
21.
May religious organizations publish or distribute legislators’ voting records?
Yes. Religious organizations
may, under certain circumstances, publish legislators’ voting records for the
purpose of educating voters.40
For example, a compilation of the voting records of all members of Congress on
a wide range of issues that is made available to the public during a campaign
period would not violate the political campaign intervention prohibition,
provided that it contains no editorial comment or other indications of approval
or disapproval of any member’s voting record.41
Factors that are considered in determining whether a voting record distributed
by a religious organization violates the political campaign intervention
prohibition are whether legislators are identified as candidates for re-election;
whether legislators’ voting positions are compared with the positions of other
candidates or of the religious organization; the timing, manner and
circumstances in which the voting record is distributed; and the breadth or narrowness
of the issues presented in the voting record.42
22.
May religious organizations distribute voter education materials prepared by a candidate,
political party or PAC?
No. Voter education materials
prepared by candidates, political parties or PACs are inherently biased since
they have been prepared to present certain candidates in a more favorable light
and thus enhance their chances for election.43
Religious organizations that distribute such materials would violate the
political campaign intervention prohibition.
23.
May religious organizations sponsor candidate forums?
Yes. Religious organizations
may sponsor unbiased candidate forums or debates for the purpose of educating
voters.44
In order to ensure that a candidate forum is unbiased, a religious organization
should not indicate its views on the issues being discussed, comment on
candidate responses or otherwise indicate approval or disapproval of any
candidate, party or position, or ask candidates to endorse the organization’s
positions, agendas or platforms. All legally qualified candidates should be
invited to participate. Questions should be presented by an independent,
nonpartisan panel and should cover a broad range of issues of interest to the
public that the candidate would face if elected. Each candidate should be given
an equal opportunity to present his or her views on the issues discussed.45
During a primary election, a religious organization may sponsor a candidate
forum or debate that is limited to legally qualified candidates seeking the
nomination of a particular political party.46 On
occasion, the number of legally qualified candidates for a particular office is
so large that it is impractical for a religious organization to conduct a forum
or debate to which all candidates are invited. In such circumstances, the
organization may adopt reasonable, objective criteria for determining which
candidates to invite and should apply the criteria consistently and
non-arbitrarily to all candidates.47
For example, an organization that conducted a candidate forum and invited the two major party candidates as
well as up to four candidates who had reached a 15-percent share of popular
support according to a credible, independent poll would not violate the
political campaign intervention prohibition.48
24.
May religious organizations conduct voter registration and get-out-the-vote drives?
Yes. Religious organizations
may conduct voter registration and get-out-the-vote drives, provided that they
are not biased for or against any candidate, political party or voting
position.49 Voter registration
and get-out-the-vote drives should not be conducted in cooperation with any
political party and should not target members of a particular party.
Communications about voter registration or get-out-the-vote drives should be
limited to urging people to vote or register to vote, along with listing the
hours and places for registering or voting. They should either mention no
candidates or all candidates, without favoring one candidate over any other.
Communications should not mention any political party except to identify the
party affiliation of candidates named.50
Religious Organization Facilities and Publications
25.
May the facilities of religious organizations be used for civic or political
events?
Religious organizations may
permit the use of auditoriums and gymnasium facilities to serve as polling places on Election Day
without violating the political campaign intervention prohibition. A religious
organization may also rent its facilities to candidates or political parties
provided that the facilities are not made available for free or at a reduced
charge, are made available to candidates on the same basis as they are to other
users and are made available to all candidates on an equal basis. Moreover, the
religious organization renting out its facility cannot advertise, promote or
provide other services in connection with the political event.51
Income from the rental of the facilities generally will not be subject to
unrelated business income tax, provided no ancillary services (e.g., supplying
catering services for the event) are provided in connection with the facility
rental.52
26. Do
special rules apply to websites belonging to religious organizations?
No. The same rules governing
political activity generally apply to materials posted on websites sponsored by religious
organizations.53 An activity that
violates the political campaign intervention prohibition in another medium will
also violate the political campaign intervention prohibition if conducted
through a website sponsored by a religious organization. If a religious
organization establishes a link on its website, it is responsible for the
consequences of establishing and maintaining that link, even if it has no
control over the content of the linked site. To lessen the risks of violating
the political campaign intervention prohibition, religious organizations should
periodically monitor linked content.54
27. Do
links to candidate-related materials constitute political campaign
intervention?
Not necessarily. The IRS will
evaluate all facts and circumstances with respect to candidate-related links to
determine whether political campaign intervention has occurred, including the
context for the link on the religious organization’s website; the exempt purpose,
if any, served by offering the link; whether all candidates are represented;
and the directness of the link between the religious organization’s website and
the webpage containing materials favoring or opposing candidates.55
28.
May religious organizations sell paid political advertising in their
publications?
Under certain circumstances,
religious organizations may sell paid political advertising without violating the political
campaign intervention prohibition. The political advertising must be accepted on
the same basis as other, nonpolitical advertising, must be identified as paid
political advertising and must be available on an equal basis to all
candidates. Further, the religious organization must expressly state that it
does not endorse the candidates whose ads appear. Additional factors, such as the
manner in which the religious organization solicits political ads and the
manner in which political ads are presented, are also considered. For example,
a religious organization that actively solicited ads from one candidate but
merely accepted ads from other candidates would not be considered to have made
the ads available on an equal basis.56
Once a religious organization accepts paid political advertising, it may not
selectively decline ads from candidates whose views do not agree with those of
the organization. Other factors to be considered in determining whether the
provision of paid political advertising constitutes political campaign
intervention include whether advertising is available only to candidates and
not to the general public; whether the fees charged to candidates for
advertising are the customary and usual fees; and whether the advertising
activity is an ongoing activity.57
Religious organizations may not accept free or reduced-rate political ads, as
this would constitute an in-kind
contribution to the candidate. Religious organizations are subject to unrelated
business income tax on the income from their paid political advertising.58
29.
May a religious organization sell or rent its mailing list to a candidate,
political party
or PAC?
A religious organization may
sell or rent its mailing list without violating the political campaign intervention prohibition,
provided it sells or rents the list to the candidate, political party or PAC on the same basis on which it
rents the list to others and that the list is available to all other candidates
on the same basis.59
A religious organization may not provide its mailing list to a candidate,
political party or PAC without charge, at a reduced charge or on a selective or
preferential basis, as this would constitute an in-kind contribution. Other
factors to be considered in determining whether the selling or renting of
mailing lists constitutes political campaign intervention include whether mailing
lists are available only to candidates and not to the general public; whether
the fees charged to candidates for mailing lists are the customary and usual
fees; and whether the mailing list activity is an ongoing activity.60
Sale or rental of mailing lists to candidates, political parties or PACs may
subject the religious organization to unrelated business income tax liability
if the transaction is not structured as a licensing arrangement.61
Enforcement
30.
What are the penalties if a religious organization violates the political
campaign intervention prohibition?
Unlike lobbying by a religious
organization, which is limited but not prohibited, political campaign intervention
by a religious organization is strictly prohibited.62
Thus, the organization’s 501(c)(3) tax exemption may be revoked if it engages
in any prohibited activity.63
This means that the organization’s income for the year would become subject to
income tax. An excise tax on political expenditures may also be imposed on the
religious organization as well as on the clergy member or other leader who
authorized the political expenditures.64
Depending on the circumstances, the excise tax may be imposed in addition to
revocation of tax exemption or instead of revocation of tax exemption.65
Generally, if the political expenditure is unintentional, the amount is small
and the religious organization institutes operational changes to prevent future
political expenditures, the IRS will not seek revocation of tax-exempt status.66
31.
Does the IRS target churches for enforcement of the political campaign intervention
prohibition?
No. There are special audit
procedures that the IRS must follow before commencing any inquiry about potential violation by a
church of the political campaign intervention prohibition.67
The IRS may begin a tax inquiry
only after a high-ranking Treasury official documents in writing the acts and
circumstances, including potential violations of the political campaign
intervention prohibition, that lead the official to reasonably believe that the
church may not be qualified for section 501(c)(3) tax exemption.68
Once an inquiry is begun, the IRS must follow special procedures set forth in
the Internal Revenue Code in its further dealings with the church.69
Thus, the IRS does not have unfettered discretion to investigate activities by
churches, including violations of the political campaign intervention
prohibition, and must obtain high-level authorization before doing so.
Generally, IRS inquiries about potential violations by churches of the
political campaign intervention prohibition are initiated based upon facts
reported by the media or complaints submitted by third parties.
IRS Guidance and Examples
Because of recurrent questions about these rules, the IRS has issued formal guidance to assist organizations exempt from tax under section 501(c)(3) of the Internal Revenue Code in understanding the prohibition against political campaign intervention. This guidance includes 21 examples, each involving a single type of activity and designed to illustrate how facts and circumstances are applied in determining whether a tax-exempt organization has engaged in prohibited political campaign intervention. The IRS cautions that combining more than one type of activity may result in an interaction among such activities that could alter the determination of whether political campaign intervention has occurred. Rev. Rul. 2007-41, 2007-25 I.R.B. 1421 (June 18, 2007).
The IRS website contains a number of resources relating to the prohibition against political campaign intervention for section 501(c)(3) tax-exempt organizations. These include news releases describing the rules and enforcement policies, the script of a 2006 IRS phone forum on political campaign intervention, the history of the political campaign intervention prohibition and relevant articles from annual Exempt Organizations Continuing Professional Education Texts. See: Political Campaign Intervention by 501(c)(3) Tax-Exempt Organizations - Educating Exempt Organizations, http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Political-Campaign-Intervention-by-501(c)(3)-Tax-Exempt-Organizations---Educating-Exempt-Organizations.
Examples of Impermissible Political Intervention
Minister C is the minister of Church I, a section 501(c)(3) organization. Church I publishes a monthly church newsletter that is distributed to all church members. In each issue, Minister C has a column titled “My Views.” The month before the election, Minister C states in the “My Views” column, “It is my personal opinion that Candidate U should be re-elected.” For that one issue, Minister C pays from his personal funds the portion of the cost of the newsletter attributable to the “My Views” column. Even though he paid part of the cost of the newsletter, the newsletter is an official publication of the church. Because the endorsement appeared in an official publication of Church I, it constitutes campaign intervention by Church I. [Pub. 1828, at 8 (Example 3)]
Minister D is the minister of Church M, a section 501(c)(3) organization. During regular services of Church M shortly before the election, Minister D preached on a number of issues, including the importance of voting in the upcoming election, and concluded by stating, “It is important that you all do your duty in the election and vote for Candidate W.” Since Minister D’s remarks indicating support for Candidate W were made during an official church service, they constitute political campaign intervention by Church M. [Pub. 1828, at 8 (Example 4)]
Minister F is the minister of Church O, a section 501(c)(3) organization. The Sunday before the November election, Minister F invites Senate Candidate X to preach to her congregation during worship services. During his remarks, Candidate X states, “I am asking not only for your votes, but for your enthusiasm and dedication, for your willingness to go the extra mile to get a very large turnout on Tuesday.” Minister F invites no other candidate to address her congregation during the senatorial campaign. Because these activities take place during official church services, they are attributed to Church O. By selectively providing church facilities to allow Candidate X to speak in support of his campaign, Church O’s actions constitute impermissible political campaign intervention. [Rev. Rel. 2007-41, at 1423 (Situation 9)]
Church P, a section 501(c)(3) organization, maintains a website that includes such information as biographies of its minister, times of services, details of community outreach programs and activities of members of its congregation. B, a member of the congregation of Church P, is running for a seat on the town council. Shortly before the election, Church P posts the following message on its website, “Lend your support to B, your fellow parishioner, in Tuesday’s election for town council.” Church P has impermissibly intervened in a political campaign on behalf of B. [Rev. Rul. 2007-41, at 1426 (Situation 21)]
Examples of Permissible Political Intervention
Minister A is the minister of Church J, a section 501(c)(3) organization, and is well-known
in the community. With their permission, Candidate T publishes a full-page ad in the local
newspaper listing five prominent ministers who have personally endorsed Candidate T,
including Minister A. Minister A is identified in the ad as the minister of Church J. The ad
states, “Titles and affiliations of each individual are provided for identification purposes
only.” The ad is paid for by Candidate T’s campaign committee. Since the ad was not paid for
by Church J, the ad is not otherwise in an official publication of Church J, and the endorsement is made by Minister A in a personal capacity, the ad does not constitute campaign intervention by Church J. [Pub. 1828, at 7 (Example 1)]
Minister C is the minister of Church L, a section 501(c)(3) organization, and is well-known
in the community. Three weeks before the election he attends a press conference at Candidate V’s campaign headquarters and states that Candidate V should be re-elected. Minister C does not say he is speaking on behalf of Church L. His endorsement is reported on the front page of the local newspaper and he is identified in the article as the minister of Church L. Because Minister C did not make the endorsement at an official church function, in an official church publication or otherwise use the church’s assets, and did not state that he was speaking as a representative of Church L, his actions do not constitute campaign intervention by Church L. [Rev. Rul. 2007-41, at 1422 (Situation 5)]
Endnotes:
2 IRS
Publication 1828, Tax Guide for Churches and Religious
Organizations 3 (Rev. September 2006) [hereinafter “Pub. 1828”]. (return to text)
3 Hypotheses
about the origins of the political activity prohibition abound. See,
e.g., Judith Kindell & John Reilly, Election Year Issues, FY 2002
IRS Exempt Organizations Technical Instruction Program 448-451 (August 2001)
[hereinafter “Election Year Issues”]; Deirdre Halloran & Kevin Kearney, Federal
Tax Code Restrictions on Church Political Activity, 38 Cath. Law. 105, 106-108 (1998),
which suggests that the prohibition represented Johnson’s response to support
provided by certain tax-exempt organizations to Dudley Dougherty, Johnson’s
challenger in the 1954 primary election. One of the most comprehensive articles
on the history of the 1954 amendment is Patrick L. O’Daniel’s More
Honored in the Breach: A Historical Perspective
of the Permeable IRS Prohibition on Campaigning by Churches, 42
B.C.L.Rev. 733 (2001). (return to text)
4 A Treasury Department
report about alleged violations of the campaign intervention rules during the
2004 election indicated that IRS investigations were focused in roughly equal
numbers on religious and nonreligious organizations. See Treasury Inspector General
for Tax Administration, Statistical
Profile of Alleged Political Intervention by Tax-Exempt Organizationsin the 2004 Election Season, May 12,
2009, page 5. (return to text)
5 Branch
Ministries v. Rossotti [hereinafter “Branch Ministries”], 211
F.3d 137 (D.C. Cir. 2000). (return to text)
6 Catholic Answers, Inc. et. al. v. United States, No. 09-56926, slip op.
(9th Cir. July 22, 2011), cert. denied 132 S. Ct. 1143 (Jan. 23, 2012). (return to text)
7 Treas.
Reg. § 1.501(c)(3)-1(c)(3)(iii); Rev. Rul. 2007-41, 2007-25 I.R.B. 1421 (June
18, 2007). See the IRS’ Frequently Asked Questions About the Ban on
Political Campaign Intervention by 501(c)(3) Organizations, http://www.irs.gov/charities/charitable/article/0,,id=179432,00.html. (return to text)
8 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 Ministries at 143; Election
Year Issues at 477-478. (return to text)
9 See
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). (return to text)
10 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. (return to text)
11 Election
Year Issues at 344-346. (return to text)
12 Id.(return to text)
13 Rev. Rul.
2007-41 at 1424. (return to text)
14 For more on
political advocacy by religious organizations, see the Pew Forum’s 2012 report Lobbying for the Faithful: Religious
Advocacy Groups in Washington, D.C., http://www.pewforum.org/lobbying-religious-advocacy-groups-in-washington-dc.aspx. (return to text)
15 Pub. 1828
at 5-6. (return to text)
16 Treas.
Reg. § 1.501(c)(3)-1(c)(3)(ii). (return to text)
17 See
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 five percent of time and
effort spent on lobbying was within acceptable limits). (return to text)
18 Treas.
Reg. § 1.501(c)(3)-1(c)(3)(ii). (return to text)
19 Pub.
1828 at 6. Under section 4912(c)(2)(B) of the Internal Revenue Code, the five
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. (return to text)
20 Rev. Rul.
2007-41 at 1422; Pub. 1828 at 7; Election Year Issues at 363. (return to text)
21 Rev. Rul.
2007-41 at 1422; Pub. 1828 at 7; Election Year Issues at 364. (return to text)
22 Id.(return to text)
23 Treas.
Reg. § 1.501(c)(3)-1(c)(3)(iii); Rev. Rul. 2007-41 at 1421. (return to text)
24 Election
Year Issues at 342; T.A.M. 9130008 (April 16, 1991). (return to text)
25 Election
Year Issues at 342. (return to text)
26 Election
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 Internal
Revenue Code for expenditures to support or oppose nonelective candidates. (return to text)
27 See
G.C.M. 39694 (Jan. 21, 1988). (return to text)
28 Rev.
Rul. 2007-41 at 1424; Pub. 1828 at 8-9; Election Year Issues at 380-382. (return to text)
29 Rev.
Rul. 2007-41 at 1423; Pub. 1828 at 8. (return to text)
30 Id.
at 9 (Example 1, left-hand column). (return to text)
31 See
generally Rev. Rul. 2007-41 at 1423; Pub. 1828 at 9-10; Election
Year Issues at 381-382. (return to text)
32 Rev.
Rul. 2007-41 at 1423-4; Election Year Issues at 381. (return to text)
33 Pub.
1828 at 9 (Example 1, right-hand column). (return to text)
34 See
generally Rev. Rul. 2007-41 at 1421; Pub. 1828 at 10; Election
Year Issues at 370-372. (return to text)
35 Rev.
Rul. 2007-41 at 1421; Election Year Issues at 370. (return to text)
36 Election
Year Issues at 371-372; Rev. Rul. 78-248, 1978-1 C.B. 154 (Situation 2). (return to text)
37 Election
Year Issues at 375. (return to text)
38 Id.
at 371, n. 20. (return to text)
39 Rev.
Rul. 2007-41 at 1421; Election Year Issues at 376. (return to text)
40 Rev.
Rul. 2007-41 at 1421; Election Year Issues at 370-371. (return to text)
41 Rev.
Rul. 78-248, 1978-1 C.B. 154 (Situation 1). But see Rev. Rul. 80-282, 1980-2
C.B. 178, where the IRS approved the distribution of a biased incumbent voting record
only in a very limited circumstance in which the voting record did not identify
incumbents who were candidates for re-election, distribution was not timed to
coincide with any election but was one of a series of
regularly distributed voting records, distribution was not targeted to areas
where elections were occurring, and the voting record was distributed to a
limited membership group and not broadly to the public. (return to text)
42 Election
Year Issues at 370. (return to text)
43 Id.
at 372. (return to text)
44 Rev.
Rul. 2007-41 at 1421-2; Pub. 1828 at 8-9; Election Year Issues at 372-375. (return to text)
45 Rev.
Rul. 2007-41 at 1422-3; Rev. Rul. 86-95, 1986-2 C.B. 73; Pub. 1828 at 8; Election
Year Issues at 373. (return to text)
46 See,
e.g., Fulani v. League of Women Voters Education Fund, 882 F.2d
621 (2d Cir. 1989). (return to text)
47 Election
Year Issues at 374. Under Federal Election Commission rules, the sponsoring
organization may limit participation based upon pre-established objective
criteria, but any candidate debate must include at least two candidates and may
not promote or advance one candidate over another. See 11 C.F.R. § 110.13(b). (return to text)
48 See
T.A.M. 9635003 (April 19, 1996). (return to text)
49 Rev.
Rul. 2007-41 at 1422; Pub. 1828 at 6; Election Year Issues at 378-379. (return to text)
50 Rev.
Rul. 2007-41 at 1422; Election Year Issues at 379. The
IRS has advised that sponsoring organizations may use voter registration lists
to identify unregistered voters but may not use such lists to target voters of
a particular party. See T.A.M. 9117001 (Sept. 5,
1990), in which the IRS concluded that a voter registration drive targeted to
conservative voters violated the political activity prohibition. However,
targeting historically disadvantaged groups is generally permissible. See,
e.g., P.L.R. 9223050 (March 10, 1992), in which the IRS concluded that
grants for registering homeless people to vote were not prohibited political
activities for the private foundation sponsor. (return to text)
51 See
Rev. Rul. 2007-41 at 1425 (Situation 17); Election Year Issues at 383. (return to text)
52 I.R.C. §
512(b)(3); Pub. 1828 at 13. (return to text)
53 Rev.
Rul. 2007-41 at 1425-6. (return to text)
54 Id.
at 1426. (return to text)
55 Id.(return to text)
56 Election
Year Issues at 384. (return to text)
57 Rev.
Rul. 2007-41 at 1425. (return to text)
58 I.R.C.
§ 513(c); Pub. 1828 at 12. (return to text)
59 Pub.
1828 at 10-11; Election Year Issues at 383-384. (return to text)
60 Rev. Rul.
2007-41 at 1425. (return to text)
61 I.R.C.
§ 513(h)(1)(B), which provides that the sale, exchange or rental of mailing
lists among section 501(c)(3) organizations is not an unrelated trade or
business. Courts have concluded generally that income from the licensing of mailing
lists to non-section 501(c)(3) organizations is nontaxable royalty income under
section 512(b)(2) of the Internal Revenue Code. (return to text)
62 The IRS
interprets the political activity prohibition as absolute. See Pub. 1828 at 7; Election
Year Issues at 352. (return to text)
63 A Treasury
Department report about IRS investigations into alleged violations of the
campaign intervention rules during the 2004 election revealed that very few
investigations resulted in the revocation of the organization’s tax status. In
most cases in which the IRS determined that the organization had violated the
rule on political activity, the IRS issued a warning letter that cautioned
against future violations of the prohibition. Treasury Inspector General for
Tax Administration, Statistical Profile
of Alleged Political Intervention by Tax-Exempt Organizations in the 2004 Election Season,May 12, 2009, pages 7-8. (return to text)
64 I.R.C.
§ 4955(a)(1) and (b)(1); Pub. 1828 at 11; Election Year Issues at 353-363.
In order to avoid a second-tier excise tax under section 4955, a religious
organization must “correct” any political expenditure by recovering the
expenditure to the extent possible and by adopting safeguards to ensure against
future political expenditures. (return to text)
65 See
Preamble, Final Regulations on Political Expenditures by Section 501(c)(3)
Organizations, 60 Fed. Reg. 62,209 (Dec. 5, 1995); Election
Year Issues at 353-354. (return to text)
66 Election
Year Issues at 354. (return to text)
67 I.R.C.
§ 7611. These special audit rules apply only to churches and organizations
claiming to be churches. (return to text)
68 I.R.C. § 7611(a)(2). (return to text)
69 Pub.
1828 at 22. (return to text)
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