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Where Permissible Issue Advocacy and Prohibited Campaigning Intersect, Uncertainty Persists By Nina J. Crimm, Professor of Law St. John's University School of Law, Jamaica, NY IRS Warns That Federal Tax Statutes Proscribe Political Campaign Activities In anticipation of the 2008 presidential election year, the IRS warned houses of worship and other §501(c)(3) organizations of their obligation to comply with the federal tax statutes that confer their tax-exempt status and that entitle their donors to claim charitable contribution deductions. Such entities may received these benefits only if they refrain entirely from any speech or activities that amount to participation in, or intervention in “(including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” Moreover, the IRS announced its intention to monitor such organizations for compliance with the proscription, especially during the election season. Obviously, to avoid violation of the restriction against political campaigning, houses of worship must understand the type of speech and activities that are absolutely prohibited by the federal tax statutes. That is not simple. Vague and Ambiguous Criteria Congress failed to define exactly in the tax statutes the political campaigning targeted as unsound for contributors to support with pre-tax dollars and for tax-exempt §501(c)(3) organizations to engage in. It delegated this task to the IRS. Yet, despite the passage of time, the IRS's interpretative regulations and other guidance make clear largely that these determinations are based on vague or ambiguous criteria because they are “facts and circumstances” sensitive. Key to a favorable outcome is that the house of worship's political expressions and activities, as demonstrated by all the facts and circumstances, are accomplished in a neutral, unbiased, non-preferential, and non-partisan manner. But what reasonable persons consider acceptable may differ. Often facts and circumstances do not present bright lines to those interpreting them. Clarity is lacking in numerous respects. IRS pronouncements have not crystallized the meanings or parameters of the specific words and phrases utilized in the tax laws. Moreover, because as a general matter the speech or actions of a house of worship must occur through an individual representative, when that individual's speech or action will be attributed to the house of worship is not always clear. Although a religious leader's speech during a worship service or functions on the grounds of a house of worship are attributable to the entity, in other forums audience perception of the religious leader's personal or representative role may determine whether there is attribution. Moreover, it is not just explicit statements by a religious leader that can place a house of worship at risk of violating the political campaign prohibition. Implied messages favoring or opposing a candidate for public office can trigger the same peril. But interpretations of implicit messages can vary significantly. Issue Advocacy The IRS has conceded that houses of worship may speak out on and involve themselves in “issues of public policy” without violating the political campaign restriction. In our real world, where religious tenets suggest or even mandate a particular stance by a religious leader in a discussion of abortion, war, euthanasia, or a host of other “issues of public policy” at election time, it may be impossible to do so in a neutral, unbiased, non-preferential, and non-partisan manner totally unconnected to any specific candidate.1 In other words, during election times, issue advocacy relevant to religious interests and dependent on religious tenets may be inextricably connected with expressions that IRS considers campaign activity. When Conceptually Permissible Issue Advocacy and Impermissible Campaign Activity Intersect Religious leaders and the IRS have encountered the intersection and conceptual collision of permissible issue advocacy and impermissible campaign activity by houses of worship in recent election years. During the 2004 presidential campaign between George W. Bush, a Methodist, and John Kerry, a Catholic, several instances tested the IRS's perception of the clash of issue advocacy and campaigning by leaders of houses of worship. One such test occurred on May 1, 2004, when the Reverend Michael J. Sheridan, Bishop of Colorado Springs, wrote and distributed a pastoral letter to Catholics of the Diocese of Colorado Springs.2 In the letter, Reverend Sheridan, prescribed a sanction for unfaithful Catholic politicians and voters: [W]hen Catholics go to the polls to vote, they take their consciences with them…. Anyone who professes the Catholic faith with his lips while at the same time publicly supporting legislation or candidates that defy God's law makes a mockery of that faith and belies his identity as a Catholic…. The November elections will be critical in the battle to restore the right to life to all citizens, especially the unborn and the elderly and infirm…. Any Catholic politicians who advocate for abortion, for illicit stem cell research or for any form of euthanasia ipso facto place themselves outside full communion with the Church and so jeopardize their salvation. Any Catholics who vote for candidates who stand for abortion, illicit stem cell research or euthanasia suffer the same fateful consequences. It is for this reason that these Catholics, whether candidates for office or those who would vote for them, may not receive Holy Communion until they have recanted their positions and been reconciled with God and the Church in the Sacrament of Penance. … As in the matter of abortion, any Catholic politician who would promote so-called “same-sex marriage” and any Catholic who would vote for that political candidate place themselves outside the full communion of the Church and may not receive Holy Communion until they have recanted their positions and been reconciled with God and the Church in the Sacrament of Penance.3 Although Reverend Sheridan's letter did not name George W. Bush or John Kerry or give their specific positions on the noted issues, it is clearly a communication that implicitly supports President Bush's bid for re-election and opposes Senator Kerry's candidacy for president. Despite assertions by at least one national watchdog group that Reverend Sheridan's letter constituted prohibited campaign activity, apparently the IRS chose not to initiate an inquiry. By comparison, the Reverend George F. Regas, Rector Emeritus of the All Saints Church, delivered a more explicit message in the same 2004 election season in a sermon entitled “If Jesus Debated Senator Kerry and President Bush.”4 The sermon named President Bush and Senator Kerry, and it explicitly indicated that President Bush led the country into the Iraq war “as a response to terrorism.” It admonished that war amounts to “the most extreme form of terrorism” and that Jesus would not support its many tragic costs. The Reverend stated: “When you go to the polls on November 2nd - vote your values. Jesus places on your heart this question: Who is to be trusted as the world's chief peacemaker?” The obvious implication was to suggest congregants vote for Senator Kerry. The IRS initiated an investigation of the All Saints Church, which led it to the conclusion that the sermon constituted prohibited campaign activity. Nonetheless, noting that the sermon appeared to be a “one-time occurrence,” the IRS concluded that All Saints Church continued to qualify as tax-exempt under §501(c)(3).5 The IRS's stated reason for this perplexing outcome is inconsistent with the absolute statutory ban against campaigning by houses of worship; there is no “one-time” exception provided either by statute or official administrative interpretations. Uncertainties Remain In 2007, the IRS released Rev. Rul. 2007-41, 2007-25 I.R.B. 1421, to provide further guidance on activities that constitute impermissible campaigning. Despite the IRS's renewed efforts, the revenue ruling did little, if anything, to provide clarity. Situations that will spark an IRS inquiry into a possible infraction of the rules remain unclear. It is unknown whether the lesson to take from the Reverend Sheridan's letter and the Reverend Regas' sermon is that insinuation of preferences for or against political candidates when engaging in issue advocacy are tolerable to the IRS but explicit statements are unacceptable. It is also not known whether the “one-time” exception that the IRS crafted without explanation for the All Saints Church will be extended to other houses of worship. Ultimately, at this time, houses of worship must live with such uncertainties. Perhaps in this context, the lesson to glean is “Advocate beware!” This commentary also will appear in the March 13, 2008, issue of the Tax Management Estates, Gifts and Trusts Journal. For more information, in the Tax Management Portfolios, see Crimm, 868 T.M., Tax Issues of Religious Organizations. 1 This Commentary does not address possible overlap or conflicts between the IRS's notions of what is considered campaigning and the concept of permissible electioneering communications under the Federal Election Commission (FEC) rules, §114.115, which was the FEC's response to the Supreme Court's holding in FEC v. Wisconsin Right to Life, 551 U.S. __, 127 S. Ct. 2652 (2007). The FEC rules craft a safe harbor to permit broadcasts within the 30/60 day blackout periods before federal primaries and elections by corporations and labor organizations if they are electioneering communications that are “susceptible of no reasonable interpretation other than as an appeal to vote for or against a clearly identified federal candidate.” 2 http://wf-f.org/Sheridan_May1Letter.html (last visited Feb. 25, 2008). 3 Id. 4 http://allsaints-pas.org. 5 IRS Closing Letter, Sept. 10, 2007, available at www.allsaints-pas.org/site/DocServer/Letter_from_IRS_to_All_Saints_Church.pdf

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