An internal IRS document provides additional clarification - FSA 1993—0921—1 Federal Income Taxation of Churches
Article summary. In order to maintain their tax—exempt status (for federal income tax purposes), churches and other religious organizations must comply with several requirements specified in section 501(c)(3) of the tax code. One of these requirements is that the organization must not participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office. A violation of this limitation can result in revocation of tax—exempt status. A recently released internal IRS memorandum addresses this important limitation, and provides helpful insights into the thinking of the IRS national office.
The participation by churches and church leaders in political campaigns is an American tradition. Common examples include:
- inviting candidates to speak during worship services
- distributing "voter education" literature reflecting candidates' views on selected topics
- voter registration activities
- enlisting volunteers for a particular candidate's campaign
- collecting contributions for a particular candidate
- statements by clergy during worship services either supporting or opposing various candidates.
Unfortunately, it is not well understood that these kinds of activities, as well—meaning as they may be, jeopardize a church's exemption from federal income taxation. This is because section 501(c)(3) of the Internal Revenue Code prohibits tax—exempt organizations (including churches) from any intervention or participation in political campaigns on behalf of or in opposition to any candidate for public office. To be sure, there have been massive violations of this prohibition during every presidential election year with not a word of protest from the IRS. But things are changing. In 1995 the IRS for the first time revoked the exempt status of a church as a result of its involvement in a political campaign, and over the past few years the IRS has made a number of pronouncements warning churches not to intervene in political campaigns.