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CHURCHES AND TAXES

September 28, 2006

A church in Pasadena is spoiling for a fight with the IRS over an anti-Bush sermon in the run-up to the last presidential election. They are refusing to cooperate with the IRS and setting themselves as victims of an effort to crush dissent.

It's an old story. In the 1980s Jerry Falwell's "Old Time Gospel Hour" radio show lost its tax exempt status for politicking.

It's a battle the IRS can't win. No matter what the IRS does, it's "crushing dissent." It's hard to avoid the idea that some churches goad the IRS into investigations to draw publicity.

There's a good reason churches aren't supposed to stray into politics:

The reason a church's political activities are related to tax code is to prevent a purely political organization from chartering itself as a religious organization, gaining tax exemption, and then doing nothing but campaigning, perhaps dressed up with some religious language now and then. Think about it: if your business could describe itself as a "charitable organization" and so gain tax exemption, why wouldn't it do so?

I think the IRS approach to this is to publicly announce investigations of churches to frighten them into line but to quietly settle as long as the churches say they are sorry. This enables them to keep churches from getting too out of hand without the awful publicity and expense of actually revoking tax exempt status. If a church remains stubborn and defiant for political reasons, though, it's hard for the IRS to avoid the issue - though I suspect they'll move as slowly as they possibly can.

Why preachers feel the need to stump for politicians is beyond me. Maybe some congregations are into that, but to me it's like preaching on behalf of adultery and theft. In any case, if you are on a church finance committee, parish council or board of trustees, be appropriately horrified if the preacher crosses the line. It's just too expensive.

The TaxProf has had good coverage of the issue. There's a post today on a legal analysis of the Pasadena case. Other links include a comprehensive roundup of Pasadena coverage and coverage of efforts of Americans United for Separation of Church and State to revoke the exempt status of right-leaning churches.

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