Pastors Risk Losing 501(3)(c)Tax Exempt Status by Challenging IRS

Over one thousand pastors will join Alliance Defending Freedom (“ADF”) in an effort to prompt the IRS to enforce its 1954 tax code amendment prohibiting tax-exempt organizations, such as churches, from “directly or indirectly participating in, or intervening in, any political campaign on or behalf of (or in opposition to) any candidate for elective public office.” Any 501(3)(c) organizations found in violation of this tax code risk a denial or revocation of its tax exempt status and certain excise taxes may also be imposed.

ADF is a religious organization whose goal is to protect and defend religious freedom. The organization believes that this IRS tax code is unconstitutional because it violates the First Amendment by prohibiting pastors and other religious organizations from exercising their right to free speech. The organization will hold a “Pulpit Freedom Sunday” on October 7, 2012 where pastors will preach sermons that discuss the current political candidates and then make specific recommendations. The sermons will also be recorded and sent to the IRS in order to incite action by the IRS.

However, some pastors have reported that in the past, the IRS simply sent a letter warning of the violation but closes the case prior to being taken to court. In order for the group to challenge the constitutionality of the amendment, the IRS must first apply the code to a particular church or pastor. ADF is hoping that the IRS will respond by taking action against the bold religious leaders so that it may challenge this amendment in court.

It would be wise for these pastors to evaluate whether the action they are undertaking is worth the risk of losing their organization's tax exemption status. I envision that one argument that will be presented in court on behalf of the IRS is that the granting of tax exemption to charitable organizations is not a “right” it is a “privilege.” As such, the IRS has the right to restrict certain actions, even if it requires giving up a constitutional right. For example, under the US Constitution, citizens have the right to bear arms. With that right to bear arms, there are restrictions such as age, licensing requirements, criminal background check, etc. So for the sake of the organizations that they represent, the pastors involved should seriously evaluate whether participating in Pulpit Freedom Sunday is worth the risk of losing the organization’s exemption status.