IRS Agrees To Monitor Church Political Activity

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The Internal Revenue Service recently announced that it will monitor churches for political activity. It is a rather convoluted route that brought the IRS to this announcement. It is actually a settlement between the IRS and the Freedom From Religion Foundation (FRFF) in which the FRFF had sued the IRS, alleging that the IRS routinely ignored complaints about churches engaging in political activity, promoting candidates, and speaking out on issues and proposed legislation. The Johnson Amendment, enacted in 1954, prohibits 501(c)(3) organizations from engaging in partisan political activity.

It is somewhat amazing that it required a lawsuit to force the IRS to investigate political activity by such organizations. First, as a result of a 2009 lawsuit, the IRS was ordered to make such investigations. The IRS maintained that it was not ignoring complaints of political activity, but it has failed to hire or appoint an official to investigate these complaints. In other words, they were apparently doing nothing to meet this court order. Secondly, the IRS should have been doing this all along since it is a part of the Federal Tax Code. So it has taken two lawsuits, one in which they lost and the other settled out-of-court to compel them to enforce the law. Will they now follow through?

The IRS, in respect of the First Amendment, has usually treaded softly in the area of getting into the affairs of churches or other religious organizations. Churches are not usually audited, in fact, they are not required to file a Form 990. Churches do not have to file for 501(c)(3) status, it is conferred automatically. Of note, however, is that churches are subject to the laws relating to 501(c)(3) organizations even though they do not have an IRS determination that they have qualified for such status.

It should be noted that this is not always been the case. The IRS has at times, selectively enforced this law, as Samaritan’s Purse and The Billy Graham Evangelistic Association were both the subject of IRS audits shortly after they ran ads supporting North Carolina’s amendment to preserve marriage and urging voters to vote for candidates supporting “Biblical values.” No specific candidates were supported or opposed.

The Johnson amendment was enacted through the efforts of then-Texas Senator Lyndon Baines Johnson. In 1954, Johnson won re-election to his Senate seat by a miniscule 87 votes, earning him the nickname “Landside Lyndon.” During the campaign, there were a number of religious organizations that actively opposed his candidacy. Once back in the Senate, Johnson worked to pass what is known today as the “Johnson Amendment,” which prohibited charitable groups from endorsing or opposing a candidate, ending 178 years of independence whereby pastors, priests, and rabbis could stand in the pulpit and say anything they chose about a candidate.

There are those who feel that this law should be repealed. In a 2013 editorial expressing such an opinion, The Washington Times stated “Free speech is free speech, and the First Amendment guarantees it for all, not just politicians, but rabbis, priests, and preachers, as well. It’s a simple act of constitutional fairness, 59 years overdue.”

But the bigger issue may be “Should the church speak politically?” Charles M. Kester states in response to this question that “When we go to church, we seek spiritual and not political instruction.” In many churches, liberals and conservatives worship side by side. It seems to me that churches should have the right to speak out, but that right should be exercised judiciously, addressing moral and ethical issues and refraining from wading into murky political waters.

Dr. John Stancil (My Bald CPA) is Professor Emeritus of Accounting and Tax at Florida Southern College in Lakeland, FL. He is a CPA, CMA, and CFM and passed all exams on the first attempt. He holds a DBA from the University of Memphis and the MBA from the University of Georgia. He has maintained a CPA practice since 1979 with an emphasis in taxation. His areas of expertise include church and clergy tax issues and the foreign earned income credit. He prepares all types of returns, individual and business.

Dr. Stancil has written for the Polk County Business Journal and has presented a number of papers at academic conferences. He wrote the Instructor’s Manual for the 13th edition of Horngren’s Cost Accounting. He is published in the Global Sustainability as a Business Imperative, Green Issues and Debates, The Encyclopedia of Business in Today’s World, The Palmetto Business Review, The CPA Journal, and in the NATP TaxPro Journal. His paper, “Building Sustainability into the Tax Code” was recognized as the outstanding accounting paper at the annual meeting of the South East InfORMS. He wrote a book entitled “Tax Issues Faced by U. S. Missionary Personnel Abroad ” that will soon be published.

He has recently launched a new endeavor, Church Tax Solutions, which presents online, on demand seminars on various church and clergy tax issues.

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One comment

  1. Kat Jennings says:

    Really enjoyed this very informative article John. We are looking forward to reading more of your blog posts on religion and taxes.

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