IRS Concludes that Church Violated Ban on Campaign Intervention
Church's tax-exempt status not revoked for "one-time occurrence."

An Episcopal church in California invited a guest speaker to preach a sermon during a worship service on the Sunday before the 2004 presidential election. The guest speaker's sermon was entitled, "If Jesus Debated Senator Kerry and President Bush." The sermon allegedly was critical of various policies of President Bush, including the Iraq War and poverty relief. It was later posted on the church's Internet website.

The tax code prohibits churches from "participating or intervening" in any political campaign on behalf of, or in opposition to, a candidate for public office. The IRS launched a two-year examination of the church's campaign activities. It issued a letter to the church on September 10, 2007 in which it concluded that the church had violated the tax code's ban on campaign intervention. However, the IRS pointed out that "this appears to be a one-time occurrence and that you have policies in place to ensure that the church complies with the prohibition against intervention in campaigns for public office." As a result, the IRS elected not to revoke the church's tax-exempt status.

The IRS advised the church "to inform guest speakers of your policy and to be mindful of that policy when posting information that makes reference to specific candidates on your website during future election campaigns."

The IRS's resolution of this dispute has been criticized by the church, and its attorneys, on the ground that the IRS failed to clarify in its letter precisely what acts by the church ran afoul of the tax code's prohibition on campaign intervention. The church's rector has released the following statement: "While we are pleased that the IRS examination is finally over, the IRS has failed to explain its conclusion regarding the single sermon at issue. Synagogues, mosques and churches across America have no more guidance about the IRS rules now than when we started this process over two long years ago."

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