The Tax Implications of Churches and Political Involvement

The tax implications for churches that engage in political campaigns and legislative lobbying.

To maintain their exemption from federal income taxes, churches and other religious organizations must comply with several requirements specified in section 501(c)(3) of the tax code. One requirement is that the church not participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office. Another requirement limits how much a church can lobby for or against legislation, referendums, and ballot measures.

Many churches have violated these requirements in the past with few, if any, adverse consequences. Over the past 30 years, for instance, there has been only one high-profile case involving the revocation of a church’s tax-exempt status letter by the Internal Revenue Service (IRS) due to the church’s engagement in prohibited political campaign activities (a decision that, notably, was later upheld by an appellate court).

Enforcement of the prohibitions on lobbying activities also has been limited at best. Even with such limited enforcement by the IRS, though, the tax consequences for a violation can be significant. As leaders evaluate the ways in which they believe their congregations are called to address political matters, they should carefully note the requirements—and the potential consequences triggered if they violate them.


The participation by churches and church leaders in political campaigns is an American tradition dating back to the founding of the republic. 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; and
  • statements made by ministers during worship services either supporting or opposing various candidates for office.

Unfortunately, it is not well understood that some of these kinds of activities, as well-meaning as they may be, may jeopardize a church’s exemption from federal income taxation.

This is because section 501(c)(3) of the tax code specifies that a church or other public charity is exempt from federal income taxation only if “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, and which 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.”

Note that there are two distinct limitations here. First, churches may not engage in substantial efforts to influence legislation. Second, churches may not participate or intervene in any candidate’s political campaign, even to an insubstantial degree.

It should be emphasized that none of the political activities is “illegal” for churches to conduct. The primary consequence of church political activity is that the church’s exemption from federal income taxation may be jeopardized.

Evaluating IRS enforcement

To be sure, there have been violations of these limitations by churches with hardly a word of protest from the IRS. That appeared to change in the 1990s, when the IRS for the first time revoked a church’s exemption letter for its involvement in a presidential campaign. However, in the years since, the IRS typically has only made several pronouncements indicating that politically related activities by churches no longer will be ignored.

In part, the IRS’s inaction over the years was due to a provision in a federal law (the Church Audit Procedures Act) that imposes limitations on IRS examinations of churches. The Act provides that the IRS may begin a “church tax inquiry” only if an appropriate “high-level Treasury official” (a regional IRS commissioner, or higher Treasury official) reasonably believes, on the basis of written evidence, that the church is not exempt, may be carrying on an unrelated trade or business, or is otherwise engaged in activities subject to taxation.

In 2009, a federal court in Minnesota ruled the IRS Director of Exempt Organizations (Examinations) was not a “high-level Treasury official” and therefore was not authorized to initiate a church tax inquiry on the basis of a reasonable belief determination that sufficient written evidence existed to warrant a church tax inquiry.

Frustrated by the 2009 federal court ruling, the Freedom From Religion Foundation (FFRF) in 2012 sued the IRS to compel it to enforce the ban on campaign intervention by churches. Two years later, the parties reached a settlement approved by a federal court in Wisconsin. The court’s order said FFRF was satisfied that the IRS “does not have a policy . . . of non-enforcement specific to churches and religious institutions.” A separate brief from FFRF said the organization believed “the IRS has a procedure in place for signature authority to initiate church tax investigations/examinations.”

The message seemed clear: The IRS was ready to monitor political campaign activities by churches, investigate possible violations, and enforce penalties. However, in the years to follow, a group of ministers openly and intentionally defied the campaign prohibition on the ground that it violated their constitutional rights to speak and to exercise their religion—with little, if any, response by the IRS.

While IRS enforcement of churches apparently remains limited, the possibility remains that political activities by churches can trigger IRS scrutiny. It is essential for church leaders to understand the ban on church involvement in political campaigns, the limitations on substantial lobbying activities related to legislation and ballot measures, and then to accordingly evaluate their church’s practices.

Political campaigns

In 1954, US Congress passed the “Johnson Amendment.” It is the basis of the income tax regulations in section 501(c)(3) of the tax code that limit political campaign intervention by tax-exempt entities, including churches. The language provides that neither a church nor any other organization can be exempt from federal income taxation if its charter empowers it “directly or indirectly to participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office.” The regulations further provide:

The term “candidate for public office” means an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, state, or local.

Activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate. Treas. Reg. 1.501(c)(3)- 1(c)(3)(iii).

This regulation provides some clarification. In particular, it clarifies that:

  • A “candidate” for public office includes local, state, and national candidates;
  • The prohibited intervention or participation in a political campaign can be satisfied either by the making of oral statements or by the publishing or distribution of written statements; and
  • Statements made in opposition to, as well as on behalf of, a particular candidate are prohibited.

Additionally, church leaders should note the IRS has determined political campaign intervention can be found even in very early stages of elective processes. IRS General Counsel Memorandum 39811.

IRS Guidance on Political Campaign Activities

IRS Publication 1828 (the “Publication”) includes IRS guidance regarding political campaign activities.

Below is a summary of some of the Publication’s most relevant parts for churches with respect to political campaign activities.

Political campaign activity: individual political activity by religious leaders

The Publication acknowledges that the campaign activity prohibition “is not intended to restrict free expression on political matters by leaders of churches or religious organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy.” However, “religious leaders can’t make partisan comments in official organization publications or at official church functions.”

To avoid potential “attribution” of their comments outside of church functions and publications, “religious leaders who speak or write in their individual capacity are encouraged to clearly indicate that their comments are personal and not intended to represent the views of the organization.”

Political campaign activity: inviting a candidate to speak

Many churches have invited political candidates to address the congregation during a worship service. Sometimes the candidate is a member of the church. In other cases, the candidate contacts the senior pastor and asks for permission to address the congregation.

Do such activities jeopardize a church’s tax-exempt status? The Publication addresses this question directly in two separate contexts:

  1. political candidates who address a church congregation as a candidate; and
  2. political candidates who do not address a church congregation as a candidate.

Speaking as a candidate

Churches “may invite political candidates to speak at its events without jeopardizing its tax-exempt status,” the Publication says. “Candidates may also appear without an invitation” at public events hosted by the church.

The Publication notes that when a candidate is invited to speak at a church as a political candidate the church must take steps to ensure that:

    • it provides an equal opportunity to the political candidates seeking the same office;
    • it does not indicate any support of, or opposition to, the candidate (stated explicitly when the candidate is introduced and in communications concerning the candidate’s attendance);
    • no political fundraising occurs;
    • the candidate is chosen to speak solely for reasons other than candidacy for public office;
    • a nonpartisan atmosphere is maintained on the premises or at the event where the candidate is present; and
    • the church clearly indicates the capacity in which the candidate is appearing and does not mention the individual’s political candidacy or the upcoming election in the communications announcing the candidate’s attendance at the event.

The Publication notes that in determining whether candidates are given an equal opportunity to participate, a church should consider the nature of the event to which each candidate is invited, in addition to the manner of presentation.

For example, “a church that invites one candidate to speak at its well-attended annual banquet, but invites the opposing candidate to speak at a sparsely attended general meeting, will likely be found to have violated the political campaign prohibition, even if the manner of presentation for both speakers is otherwise neutral.”

Speaking as a noncandidate

The Publication acknowledges that a church may invite political candidates (including church members) to speak in a noncandidate capacity. For example, some candidates are invited to speak at church services because they are “public figures” (such as “an expert in a non-political field,” a celebrity, or one who has “led a distinguished military, legal, or public service career”). When a candidate is invited to speak at an event in a noncandidate capacity, it is not necessary for the church or religious organization to provide equal access to all political candidates.

However, the church or religious organization must ensure that:

    • the individual speaks only in a noncandidate capacity and the church clearly maintains that noncandidate capacity through its promotions and any distributed materials;
    • neither the individual nor any representative of the church makes any mention of the individual’s candidacy or the election;
    • no campaign activity occurs in connection with the candidate’s attendance;
    • the “individual is chosen to speak solely for reasons other than candidacy for public office”; and
    • the church maintains a “nonpartisan atmosphere,” either “on the premises or at the event where the candidate is present.”

Public forums

Sometimes a church invites several candidates to speak at a public forum. The Publication warns that if such a forum is operated to show a bias for or against any candidate, then it would be prohibited campaign activity since it would be considered intervention or participation in a political campaign. The Publication suggests that when a church invites several candidates to speak at a forum, it should consider the following factors:

    • “whether questions for the candidate are prepared and presented by an independent nonpartisan panel”;
    • “whether the topics discussed by the candidates cover a broad range of issues that the candidates would address if elected to the office sought and are of interest to the public”;
    • “whether each candidate is given an equal opportunity to present his or her views on the issues discussed”;
    • “whether the candidates are asked to agree or disagree with positions, agendas, platforms, or statements of the organization”; and
    • “whether a moderator comments on the questions or otherwise implies approval or disapproval of the candidates.”

Voter education

The tax code notes that churches “are permitted to conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides) if they are carried out in a nonpartisan manner.”

Churches may conduct voter registration and get-out-the-vote drives, but only if “conducted in a nonpartisan manner.” Any voter education or registration activities that favor or oppose one or more candidates “is prohibited.”

During an election season, some churches distribute voter guides, often with information covering how candidates stand on various issues. This type of activity will not jeopardize a church’s tax-exempt status unless the guide “attempt[s] to favor or oppose candidates for public elected office.”

The following factors are considered when evaluating whether a voter guide constitutes prohibited political campaign activity:

    • whether the candidates’ positions are compared to the church’s positions—if so, it constitutes prohibited political campaign activity, and in guidance issued in 2006, the IRS said prohibited comparisons can arise through the content shared, the design and format of the guide, or the manner in which the guide is distributed;
    • whether the guide covers a variety of issues that the candidates would address if elected;
    • whether “the description of issues is neutral”;
    • whether all candidates running for the office are included; and
    • whether the descriptions of the positions use “the candidates’ own words in response to questions” or “a neutral, unbiased and complete compilation of all candidates’ positions.”

Also in 2006, the IRS made an important clarification regarding third-party voter guides. The agency said “[e]ach organization that distributes one or more voter guides is responsible for its own actions. If the voter guide is biased, distribution of the [third-party] voter guide is an act of political campaign intervention.”

Pamphleteering on church premises

The Publication is silent about whether churches can permit individuals (whether church members or not) or outside groups to distribute campaign literature on church property before and after worship services. In understanding how the IRS views political campaign activities (including public forums and, as addressed below, websites), church leaders should exercise caution.

Individuals and outside groups often are not subject to the ban on intervention in political campaigns, and so they can freely distribute campaign literature no matter how biased it may be. However, when they do so on church premises, they are jeopardizing the church’s tax-exempt status since the church, by allowing them to distribute biased campaign literature, may be viewed as indirectly intervening or participating in a political campaign. As a result, church leaders should not assume that they can safely permit others to do on church property what the church itself cannot.

Key point. Many church members have returned to their vehicles in the church parking lot following a worship service to find political campaign literature on their windshield. How does this affect the church’s exempt status? If church leaders were not aware of the pamphleteering, and did not condone or authorize it, there is no problem. However, if a person or group obtains permission from the pastor or other church leader to distribute literature on windshields, and if the literature is biased in favor of one candidate or political party, then the church’s exempt status is jeopardized.

Business activity

The Publication notes certain business activities by churches can constitute prohibited political campaign activity. The Publication does not give an exhaustive list of business activities, but includes the following in a general description:

    • “the selling or renting of mailing lists”;
    • “the leasing of office space”; and
    • “the acceptance of paid political advertising.”

The IRS also notes the possible tax treatment of any income received by the church from such activities.

The agency outlines the following four factors it considers when determining whether such business activities constitute prohibited political campaign activity:

    • “whether the good, service or facility is available to the candidates equally”;
    • “whether the good, service or facility is available only to candidates and not to the general public”;
    • whether any fees charged by the church are at “customary and usual rates”; and
    • whether the church regularly conducts the activity or does so “only for the candidate.”


Most churches today operate websites. It is common for many to use their sites to share information, statements, and links to other websites. The Publication describes the ways in which a church website can run afoul of the political campaign prohibition. It notes:

    • A church posting content favoring or opposing a candidate for public office “will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate.”
    • A church is responsible “for the consequences of establishing and maintaining” links to other sites, “even if the [church] doesn’t have control over the content of the linked site[s].” The Publication suggests churches should regularly monitor links to other websites to “reduce the risk of political campaign intervention.”
    • A church will not necessarily violate political campaign prohibitions by linking to candidate-related material. However, the IRS will evaluate the “facts and circumstances,” including (but not limited to) “the context for the link on the [church’s] website, whether all candidates are represented, any exempt purpose served by offering the link, and the directness of the links between the [church’s] website and the web page that contains material favoring or opposing a candidate.”

Lobbying activities

A church will lose its tax-exempt status “if a substantial part of its activities” engages in lobbying, according to 501(c)(3) of the tax code. The lobbying limitation was enacted by the US Congress in 1934.

The Publication defines lobbying as “attempting to influence legislation.” It defines legislation as “acts, bills, resolutions or similar items (such as legislative confirmation of appointive offices)” considered by US Congress, state legislatures, or local councils. It also defines legislation to include referendums, ballot initiatives, and constitutional amendments voted on by the public.

However, excluded from the IRS list are activities carried on by executive or judicial offices as well as administrative agencies.

The IRS provides clarification about permissible and prohibited lobbying activities by churches. It notes:

A church or religious organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

However, general efforts to address public policy issues are not classified as lobbying, the IRS says, and may include educational meetings and educational materials if provided “in an educational manner.”

What constitutes “substantial”?

The Publication is vague about how much lobbying constitutes a “substantial” part of a church’s overall activities. The agency says it employs a “substantial part test” for churches, evaluating all “pertinent facts and circumstances” in relation to “a variety of factors.” Among the factors considered:

    • time devoted by employees and volunteers for the lobbying; and
    • money and resources spent by the church for the lobbying.

The IRS has never endorsed a specific percentage in its definition of “substantial.” At least two courts have attempted to do so, with one court concluding activities are not substantial if less than 5 percent of an organization’s time and effort is devoted to lobbying activities. Seasongood v. Commissioner, 227 F.2d 907 (6th Cir. 1955). The other court concluded “substantial” meant when an organization devoted 16 percent to 20 percent of its budget to lobbying activities. Haswell v. U.S., 500 F.2d 1133 (Ct. Cl. 1974).

A federal appeals court in 1972 rejected the Seasongood “5-percent test.” The IRS, in its Internal Revenue Manual (the “Manual”), notes the Seasongood decision “provides only limited guidance because the court’s view of activities to measure is no longer supported by the weight of precedent.” The Manual also says most courts have either avoided using a percentage test or concluded a percentage test is not conclusive.

Unfortunately, this means churches have no clear standard to guide them with respect to whether particular efforts to influence legislation are “substantial.”

Possible tax implications of church political activities

The IRS describes several potential consequences for churches that violate the political campaign and lobbying prohibitions outlined in the tax code.

Potential consequences for political campaign violations

Should a church be found in violation of political campaign limitations, it “jeopardizes both its tax-exempt status . . . and its eligibility to receive tax-deductible contributions. In addition, it may become subject to an excise tax on its political expenditures,” the Publication says.

The excise tax may be imposed along with revocation of the church’s tax-exempt status, or instead of revocation, according to the Publication.

The excise tax entails the following:

    • 10 percent of the church’s political expenditures, levied against the church;
    • 2.5 percent of the church’s political expenditures, levied against “organization managers (jointly and severally) who, without reasonable cause, agreed to the expenditures knowing they were political expenditures” (not to exceed $5,000 for any one expenditure);
    • an additional tax of 100 percent of the church’s political expenditures, levied against the church, if the expenditures are not corrected within the period allowed by law; and
    • an additional tax of 50 percent of the church’s political expenditures, levied against managers (jointly and severally) who refuse to make the correction (not to exceed $10,000 for any one expenditure).

The Publication says the correction of a violating political expenditure involves “recovery of the expenditure, to the extent possible, and establishment of safeguards to prevent future political expenditures.”

The Publication also advises churches to evaluate local and state election laws, which may impose their own limitations and penalties for political campaign activities by tax-exempt entities.

Potential consequences for lobbying violations

Should a church be found to be conducting excessive lobbying activity “in any taxable year may lose its tax-exempt status, resulting in all its income being subject to tax,” the Publication notes.

The Publication also says a religious organization and its managers are subject to excise taxes for the political expenditures. However, the Publication does not explicitly include churches with its remarks about the excise taxes for lobbying violations.

What would losing tax-exempt status mean?

Were a church to experience revocation of its tax-exempt status, whether due to violating political campaign or lobbying limitations, several potential penalties would arise, including the following:

    • the church’s net income would be subject to federal income taxation;
    • the church’s net income would be subject to state income taxation (except in those few states not having an income tax);
    • donors no longer could deduct charitable contributions they make to the church;
    • the church would be ineligible to establish or maintain “403(b)” tax-sheltered annuities;
    • possible loss of property tax exemption under state law;
    • possible loss of sales tax exemption under state law;
    • possible loss of exemption from unemployment tax under state and federal law;
    • loss of preferential mailing rates;
    • a minister’s housing allowance might be affected;
    • the significant protections available to a church under the Church Audit Procedures Act may no longer apply; and
    • the exemption of the church from the ban on religious discrimination under various federal and state civil rights laws may be affected.

These consequences should be considered when deciding whether or not to engage in political activities.

Matthew Branaugh, attorney and content editor for, contributed to this article.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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