Tax Consequences when Churches Participate in Political Campaigns

Abstract

The Internal Revenue Code conditions important tax benefits for churches on their not intervening in political campaigns on behalf of particular candidates. Churches that violate this condition are not eligible to receive deductible contributions and may not be tax-exempt. The Internal Revenue Service and many commentators take the position that the ban on partisan political activity should be vigorously enforced against churches and should apply to core religious activities such as sermons. The article demonstrates that this approach needlessly threatens religious liberties, causes undue entanglement of government with religion, and adversely affects political campaigns. There are convincing arguments for treating churches differently from other section 501(c)(3) organizations when interpreting and applying the prohibition against intervening in political campaigns. The article recommends that pastors and other church leaders be able to communicate with members about the merits of political candidates without risking loss of favorable tax status. Such leniency for churches is consistent with the legislative history of the prohibition and would not violate the Establishment Clause of the First Amendment. Furthermore, strict enforcement of the ban against participation in political campaigns by churches risks violating the Free Exercise Clause of the First Amendment and the Religious Freedom Restoration Act of 1993.