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Hoosier Musings on the Road to Emmaus

Thursday, December 01, 2005

Screwtape & Co. at the IRS

Judging from this memo, anyway.

(props to the Librarian for the heads up)


Blogger Reverend Ref + said...

The question I heard asked and is yet to be satisfactorily answered is this: Why isn't the IRS coming down on conservative evangelical church groups (ie Pat Robertson, Jerry Falwell, etc etc) for promoting the re-election of President Bush?

December 01, 2005 11:46 AM  

Blogger Dawgdays said...

The conservatives came out in support of All Saint's in this case. Probably because they would be caught in the same net.

December 01, 2005 12:07 PM  

Anonymous Shari said...

The history of the IRS going after churches began with Bill Clinton.

Churches are 501 3cs, just like NAF. As such, they have three explicit prohibitions against political activities:

• Candidate endorsements (or denouncements). A pastor speaking from the pulpit or otherwise in his capacity as the pastor, may not urge his audience to vote for or against a particular candidate.

• candidate ratings, and contributions of cash, goods, or

• services to a campaign.

In 1992, a Binghamton NY Church took out an advertisement against Bill Clinton highlighting his support for homosexuals and abortion. The ad did not say “don’t vote for Bill” but it did ask “How can Christians vote for Bill Clinton”

The IRS acted against the church. The church litigated against the IRS and lost both on first instance and on appeal.

I agree that the instance you cite regarding All Souls Episcopal Church in Pasadena sounds politically motivated. However, what's good for the goose is good for the gander. If liberals don't like the IRS coming calling, they should not have made the precedent.

Having said that, I think that there should be no tax deduction for religious purposes, and that our tithes should be just that. Conservative churches would have no trouble getting people to tithe. Liberal ones I'm not so sure about.

Shari (who is conservative and tithes.)

December 01, 2005 1:44 PM  

Blogger BBOvenGuy said...

All Saints has plenty of members who tithe. I'm one of them, in fact.

And yes, the reason conservatives are backing All Saints is because they know what we're going through could just as easily happen to them someday. Our rector was on an Evangelical talk radio show a couple of weeks ago, and the host said to him, "Pastor, if they're coming for you today, they'll be coming for us tomorrow."

December 01, 2005 1:57 PM  

Anonymous Shari said...

As I pointed out, they came for us yesterday. I don't recall any sermons from All Souls disapproving when it was "only" a conservative church being attacked by the IRS.

December 01, 2005 2:01 PM  

Blogger Jane Ellen+ said...

Ref, and Wes: Good points. I have an absolute abhorrance for using the pulpit for political axe grinding, either liberal or conservative. To use the context of worship to support or oppose a given candidate is a raw misuse of the authority of the preacher.

That being said, I firmly believe that the Gospel speaks to cultural and societal issues, and will proclaim so as I feel called. This action I will defend, regardless of any disagreement I may have with the specific interpretation.

Shari: Are you sitting down? Hold on to your seatbelt, take a deep breath, and pay close attention:

I agree with you.

I will take any legal deduction offered by the tax man. However (and while I grant that they result from some high-minded intentions by our legislators) I do not feel that charitable contribution deductions (along with many others) should be part of our tax code-- nor is my tithing in any way motivated thereby.

December 01, 2005 2:13 PM  

Anonymous shari said...

Wow! I agree with Jane completely!

The Gospel does speak to cultural issues and priests should be free to remind us of out duties in the world. (We can disagree on which specific issues we have a duty to change).

I loathe politicospeak from the pulpit.

I take advantage of all legal deductions.

I think virtually all charitable deductions including church contributions. Why should I pay for somebody else's Planned Parenthood contribution, and why should they pay for my Pro-life contributions?

December 01, 2005 3:10 PM  

Anonymous shari said...

Sorry, that was I think virtually all charitable deductions, including church contributions should be axed.

December 01, 2005 3:12 PM  

Blogger Dawgdays said...

Shari, I agree with you. I don't see this as a conservative/liberal issue.

I was not aware of the 1992 Binghamton case. I wasn't involved in the church at that time, so the news probably passed me by.

I believe the rule against "services to a campaign" is unfortunately vague, because in tax law, it's the IRS that gets to decide the meaning of terms such as these.

But, given that the rules exist, and the IRS is going to enforce them, they should be enforced fairly. It is unethical to target one group or another.

(I'm intentionally not commenting on the other issues raised in this thread. Not yet, at least.)

December 01, 2005 5:39 PM  

Anonymous shari said...

There's nothing new about trying to take away a nonprofits tax exempt status for political speech. It was rampant during the Clinton Administration, where:

In 1999: The IRS denied the Christian Coalition's bid for tax-free status, forcing the group to split into two wings, one focused on political causes.

In 1998: The IRS fined the Christian Broadcasting Network for mobilizing Christians to vote for presidential candidate Pat Robertson in the 1988 election. The amount of the fine was not disclosed.

In 1995: The IRS revoked the tax-exempt status of the Church at Pierce Creek in Binghamton, N.Y., for buying full-page ads in USA Today in 1992 that stated "Christians Beware ... Bill Clinton is promoting policies that are in rebellion to God's laws." The ads sought donations to help pay for the ads.

In 1993: The Old Time Gospel Hour, run by evangelist Jerry Falwell, paid $50,000 in back taxes for raising money for political purposes. The fine was a condition for reinstatement of the group's tax-exempt status.

However I agree that instead of politicizing the IRS (as happened under Clinton) and may be happening under Bush, the best solution is to simply get rid of the tax exemption for charities. Then anybody who feels strongly about any cause can support it, without expecting the rest of the United States to do likewise.

This would remove the problem of folks who think they are "prophets called to witness" while expecting the rest of the US to subsidize their political agenda.

December 01, 2005 6:20 PM  

Anonymous Micah said...

This is a non-political post, but is rather born of my economics background and my knowledge of the US taxcode. Section 501 (c) of the code addresses those corporations that are broadly defined as "non-profit." These corporations can take in money by doing any legal business, and can even buy and sell things for gain, but they cannot distribute that profit to their "owners." So, strictly speaking the "non-profit" tag applies not to the business itself but to its investors. In exchange for this provision, non-profit corporations do not pay any tax on their income.

However, there are some corporations that are defined under section 501 (c) 3 of the tax code. These corporations conduct certain types of businesses (education, religious, charitable, and som on) that the US government, as a matter of policy, wants to encourage. In exchange for confining their conduct to the particular purpose they choose (religion for religious, and so on) the corporations have gained the privilege for their donors not to pay taxes on the money they give in excess of the value they receive for their donation. For example, all the money donated to a church is tax exempt, since the services the church provides are otherwise free. But if you go to a diocesan ball, for example, where you receive a dinner, only the donation above the fair value of the dinner is tax exempt (unless the dinner was also donated).

Yet there are also corporations which are non-profit but which have not agreed to the restrictions on their conduct. These corporations are regulated by section 501 (c) 4 of the tax code. These corporations (often Political Action Committees are this type) may advocate for political causes, and even endorse candidates. However, the money donated to them is not tax exempt for the giver.

In all states I'm aware of, there is no reason why a church could not be 501 (c) 4, though it would be annoying to have to explain that over and over again. Better would be for a politically active church to have a separately incorporated PAC. You still couldn't advocate for a political campaign or speak on an election issue from the pulpit. And as Shari says, over 100 churches have been identified in the last round of investigations, from across the spectrum, with 60 of them still active (according to my latest info).

Societal issues, inasmuch as they touch on religious principles, are proper topics for religious speech, and the courts have frequently upheld this. The particular catch of the All Saints' case is his frame of the sermon as a political debate between Bush, Kerry, and Jesus, and the sermons proximity to the election (the Sunday before the election). Not that All Saints' long-standing opposition to the war, or some church's long-standing oppostition to abortion is not under scrutiny here.

Disclaimer: I am not an attorney or an accountant. This information is not to be understood as professional advice. It is a "best understanding" explanation of what I, as a political activist and religious professional, understand about US tax policy. If you want more information, see your tax professional.

December 02, 2005 9:12 AM  

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