To maintain federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code, churches must follow specific rules. Two key restrictions apply:
- No political campaign activity—churches may not support or oppose any candidate for public office.
- Limited lobbying—churches may not devote a substantial part of their activity to influencing legislation.
While enforcement has historically been limited, violations can carry significant tax consequences. Church leaders should understand these restrictions and evaluate how their activities may be affected.
Historical Context: A Tradition of Political Engagement
Political involvement by churches and clergy is nothing new. Common examples include:
- Inviting candidates to speak at services
- Distributing voter guides or candidate literature
- Organizing voter registration drives
- Recruiting volunteers for campaigns
- Making statements for or against political candidates during worship
However, even well-intentioned actions can risk a church’s tax-exempt status.
What Section 501(c)(3) Requires
According to the law, a church is tax-exempt 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 … any political campaign on behalf of any candidate for public office.”
This means:
- No substantial lobbying (even if not related to elections)
- No political campaign activity whatsoever, even if minimal
These activities aren’t illegal—but they can result in loss of tax-exempt status.
IRS Enforcement: Rare but Real
Although violations have occurred with little IRS response, there have been some notable actions:
- 1990s: The IRS revoked a church’s exemption for engaging in a presidential campaign.
- Jimmy Swaggart Ministries (1992): Agreed to cease political activity after IRS findings.
- 2004 Ruling: A pastor’s comments opposing candidates were imputed to the church. The IRS imposed a tax but did not revoke status.
Limited enforcement is partly due to the Church Audit Procedures Act, which restricts when and how the IRS can investigate churches. A 2009 federal court ruling further limited IRS authority—though a later settlement in 2014 affirmed the IRS still had enforcement procedures in place.
Understanding Political Campaign Activity
What the Law Prohibits
Churches cannot:
- Make statements (oral or written) supporting or opposing candidates
- Distribute biased voter guides
- Allow use of church property or events to promote candidates
This includes all levels of government: local, state, and national.
What the IRS Says (Publication 1828)
The IRS allows personal political activity by church leaders, but not during:
- Official church functions
- Church publications
- Any event where the leader represents the church
To protect the church, leaders should clarify when they’re speaking personally—not on behalf of the church.
Candidates Speaking at Church
Speaking as a Candidate
Churches may invite candidates to speak—but must ensure:
- Equal opportunity is given to all candidates
- The church does not endorse or oppose the candidate
- No fundraising occurs
- The nonpartisan purpose of the visit is clear
- The church maintains a neutral tone in all announcements
Speaking as a Noncandidate
Candidates may also speak in a noncandidate capacity (e.g., as a public figure or expert). In these cases:
- The event must remain nonpartisan
- No mention of candidacy or elections is permitted
- The individual must be invited for reasons unrelated to the campaign
Hosting Forums or Debates
Public candidate forums are allowed—but only if they are neutral. The IRS evaluates:
- Who prepares and asks the questions
- Whether issues reflect public interest
- Whether all candidates get equal opportunity
- Whether the event avoids endorsements or disapproval
- Moderator neutrality
Voter Education and Registration
Churches may conduct:
- Voter registration drives
- Distribute nonpartisan voter guides
- Host educational events
But they must avoid:
- Comparing candidate views to the church’s positions
- Distributing guides with biased design, content, or placement
- Omitting candidates or editorializing their views
Even third-party guides may count as political activity if biased and distributed by the church.
Campaign Literature on Church Property
If individuals distribute campaign materials on church premises—especially with leadership’s permission—the church risks appearing to endorse a candidate.
Key point: If church leaders allow this, the IRS may view it as indirect campaign participation.
Unsolicited pamphleteering (e.g., flyers on windshields without church knowledge) is not a violation—unless church leaders gave permission.
Business Activities and Campaigns
Churches must be cautious with:
- Renting out space
- Selling mailing lists
- Accepting political advertising
IRS will consider:
- Equal access for all candidates
- Whether services are offered to the general public
- Standard pricing practices
- Whether the church routinely conducts the activity
Church Websites and Digital Content
The IRS treats websites like printed materials. Churches are responsible for:
- Content favoring or opposing candidates
- Links to outside political websites
- Context in which links or statements are shared
Churches should regularly review links and online materials during election seasons.
Lobbying Restrictions
Churches may lose tax-exempt status if a substantial part of their activity is lobbying. This includes:
- Urging the public to contact legislators
- Supporting or opposing legislation
- Advocating for ballot measures
What Isn’t Lobbying?
- Educating the public on policy issues
- Hosting educational meetings
- Distributing materials in an educational, nonpartisan way
How Much Is Too Much?
There is no clear IRS rule defining “substantial.” Courts have offered guidance:
- Less than 5% of a church’s time/resources may be considered insubstantial (Seasongood v. Commissioner, 1955)
- 16% to 20% was deemed substantial in another case (Haswell v. U.S., 1974)
The IRS considers all facts, including:
- Time spent by staff and volunteers
- Resources and money used for lobbying
Consequences for Violations
Political Campaign Violations
Possible penalties include:
- Loss of tax-exempt status
- Loss of tax-deductible contributions
- Excise taxes, such as:
- 10% on the church’s political spending
- 2.5% on responsible managers (up to $5,000)
- Additional taxes (up to 100%) if not corrected
- 50% on managers who refuse to correct (up to $10,000)
Correction involves recovering the funds and creating safeguards to prevent future violations.
Lobbying Violations
Excessive lobbying may lead to:
- Loss of tax-exempt status
- Federal and state taxes on all income
- Potential excise taxes on political expenditures (though churches are often excluded)
What Losing Tax-Exempt Status Means
If a church loses its status:
- Income becomes taxable
- Donors lose their charitable deduction
- The church may lose:
- Property tax and sales tax exemptions
- Exemption from unemployment tax
- Eligibility for 403(b) retirement plans
- Preferential mailing rates
- Protection under the Church Audit Procedures Act
- Exemption from religious discrimination claims in certain cases
These consequences are serious—and should be carefully considered when evaluating political involvement.
