Many churches have their own website on the internet, and for good reason. A website is a great tool for promoting the mission and ministries of a church, and for sharing information with members. But few church leaders are aware that there are several legal and tax issues associated with the use of church websites, and unfamiliarity with these issues can result in unexpected liabilities. Part one addressed five issues associated with church websites:
- Issue #1: copyright infringement
- Issue #2: trademark infringement
- Issue #3: the Children's Online Privacy Protection Act
- Issue #4: invasion of privacy
- Issue #5: pedophiles
In this article we will address five more:
- Issue #6: defamation
- Issue #7: political campaign activities
- Issue #8: charitable contributions
- Issue #9: engaging in "commerce"
- Issue #10: sales taxes
Issue #6: Defamation
Any statements on a church website that are false, and that injure the reputation of another person, are potentially defamatory. Such statements may be made by persons speaking on behalf of the church, such as an editorial by a pastor. But, they also may include statements made by persons having no association with the church that are simply repeated on the church website. For example, a church website posts an article containing defamatory statements, or contains a "discussion board" on which someone posts defamatory statements. Some courts have ruled that merely hosting a discussion board on a website can result in liability for defamatory statements posted by third parties, especially if the host had reason to know of the defamatory statements and did nothing to remove or block them.
The worldwide scope of the internet may result in increased damages for defamation, since victims can argue that the damage to their reputation was global. It also should be noted that defamation laws vary from country to country, and liability may be easier to prove in other countries.
Here are some common techniques employed by website providers to reduce their risk of liability for defamatory content:
- Require persons to register in order to post messages to your discussion board. Registration allows the website provider to block users who post offensive and potentially defamatory information.
- Have a church employee moderate the discussion board, reviewing all messages before posting them.
- Have a church employee review all materials posted to the website to check for potentially defamatory information.
- Post a disclaimer on the website prohibiting anyone from posting defamatory material.
The Communications Decency Act
The federal Communications Decency Act immunizes providers of interactive computer services against liability arising from content created by third parties: "No provider … of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." This grant of immunity applies only if the interactive computer service provider is not also an "information content provider," which is defined as someone who is "responsible, in whole or in part, for the creation or development of" the offending content.
A website operator can be both a service provider and a content provider: If it passively displays content that is created entirely by third parties, then it is only a service provider with respect to that content. But as to content that it creates itself, or is "responsible, in whole or in part" for creating or developing, the website is also a content provider. Thus, a website may be immune from liability for some of the content it displays to the public but be subject to liability for other content.
Issue #7: Political Campaign Activities
Section 501(c)(3) of the tax code exempts from federal income taxation any church organized and operated exclusively for religious, charitable, educational, or other exempt purposes so long as it "does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office." The tax code's prohibition of any campaign activities by a church is absolute. There are no exceptions. Churches that post material on their website that promotes or opposes political candidates are jeopardizing their tax-exempt status. In a 2007 ruling, the IRS provided the following information regarding church websites:
A website is a form of communication. If an organization posts something on its website that favors or opposes a candidate for public office, the organization will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate.
An organization has control over whether it establishes a link to another site. When an organization establishes a link to another website, the organization is responsible for the consequences of establishing and maintaining that link, even if the organization does not have control over the content of the linked site. Because the linked content may change over time, an organization may reduce the risk of political campaign intervention by monitoring the linked content and adjusting the links accordingly.
Links to candidate-related material, by themselves, do not necessarily constitute political campaign intervention. All the facts and circumstances must be taken into account when assessing whether a link produces that result. The facts and circumstances to be considered include, but are not limited to, the context for the link on the organization's website, whether all candidates are represented, any exempt purpose served by offering the link, and the directness of the links between the organization's website and the web page that contains material favoring or opposing a candidate for public office. IRS Revenue Ruling 2007-41.
In this same ruling, the IRS provided the following example:
Example. Church P, a section 501(c)(3) organization, maintains a web site that includes such information as biographies of its ministers, times of services, details of community outreach programs, and activities of members of its congregation. B, a member of the congregation of Church P, is running for a seat on the town council. Shortly before the election, Church P posts the following message on its web site, "Lend your support to B, your fellow parishioner, in Tuesday's election for town council." Church P has intervened in a political campaign on behalf of B …. The [church] has intervened in a political campaign.
Issue #8: Using Credit Cards for Charitable Contributions
Many non-religious charities allow donors to make charitable contributions on their website. Some churches do the same. If your church has a website, and donors cannot make contributions "online," this is something you may want to consider. It is a convenient way for members to stay current on their contributions and pledges when they are not able to attend church.
The IRS has taken note of the thousands of websites maintained by churches and other charities that allow donors to make contributions online. It observed:
An increasing number of exempt organizations solicit contributions on the Internet. In some instances, the organization's website merely indicates where to send contributions to the organization. In other cases, the organization is able to accept contributions on the Internet, either directly or through a third party that provides a secure connection for credit card transactions. IRS Announcement 2000-84.
The IRS cautioned that a church or charity that solicits contributions on its website must comply with the substantiation requirements that apply to all charitable contributions:
There are numerous tax code provisions regulating the solicitation and receipt of charitable contributions. For example … charitable organizations that receive certain "quid pro quo" contributions in excess of $75 are required to provide a written statement to the donor that indicates that the charitable deduction is limited to the amount paid by the donor in excess of the value of the goods or services provided by the organization and that provides a good faith estimate of that value …. Donors making contributions of $250 or more to a charitable organization must substantiate the contribution with a contemporaneous written acknowledgement from the charitable organization in order for the deduction to be allowed.
Tip. The IRS has announced that the written acknowledgements a church or charity must provide to donors who make single contributions of $250 or more may by made "electronically, such as via an e-mail addressed to the donor." IRS publication 1771.
Issue #9: Engaging in "Commerce"
A host of federal employment and nondiscrimination laws apply to employers that are engaged in interstate commerce (most also require a minimum number of employees). These include federal laws banning employment discrimination on the basis of race, color, national origin, sex, religion, age, and disability.
Some courts have ruled that the operation of a website is strong evidence that an employer is engaged in interstate (and global) commerce. Churches that maintain a website will have a difficult time proving that they are not engaged in commerce. However, the courts have defined "interstate commerce" so broadly that many churches would satisfy this requirement with or without a website.
Issue #10: Sales Taxes
Some churches offer items for sale on their website. Examples include tapes of worship services, books, and music. Purchasers may be from different states. Is a church required to pay sales taxes on such sales, and if so, in which states? These are very complex questions that are beyond the scope of this article. Suffice it to say that churches should not sell items on their website without addressing the sales tax implications with a tax attorney.
The Digital Millennium Copyright Act
The Digital Millennium Copyright Act adopted certain limitations on the liability of online service providers for copyright infringement. Subsection 512(c) of the Copyright Act provides limitations on service provider liability for storage, at the direction of a user, of copyrighted material residing on a system or network controlled or operated by or for the service provider, if, among other things, the service provider has designated an agent to receive notifications of claimed infringement by providing contact information to the Copyright Office and by posting such information on the service provider's publicly accessible website. Copyright Office regulations describe how a service provider may designate an agent to receive notifications of claimed infringement.