The Internal Revenue Service (IRS) recently faced a legal, media, and political firestorm after denying tax-exempt status to a Texas non-profit organization, Christians Engaged. The IRS denial letter read in part that the organization’s educational use of Christian principles made it a political advocate for the Republican Party.
Christians Engaged uses its biblical foundation as a guide “to awaken, motivate, and empower ordinary believers in Jesus Christ to pray for our nation regularly, vote in every election to impact our culture, [and] engage our hearts in some form of political education or activism for the furtherance of our nation.”
This clear-cut mission statement, however, initially proved inadequate for the IRS. In its rejection letter, the IRS claimed the actions of Christians Engaged placed it outside of 501(c)(3) coverage because it “engage[s] in prohibited political campaign intervention” and “operate[s] for a substantial non-exempt private purpose and for the private interests of the [Republican] party.”
To support this conclusion, the IRS pointed to the organization’s discussion of traditional Christian principles, such as “the sanctity of life, the definition of marriage . . . and religious liberty,” arguing that this made Christians Engaged a political campaign organization because those “[B]ible teachings are typically affiliated with the [Republican] party and candidates.”
But after an appeal, the IRS suddenly reversed its position and granted Christians Engaged non-profit status.
The initial determination and subsequent reversal leaves nonprofit religious organizations and churches to wonder—what is the law, and are we in compliance?
The IRS’s initial decision conflicted with the IRS’s own regulations, and it could have negatively impacted hundreds of similar religious non-profit organizations and churches.
In its appeal to the IRS, attorneys for Christians Engaged explained that in engaging the public, the organization “does not produce voter guides or otherwise suggest that recipients should vote for or against any particular candidate or candidates.” However, for individuals further involved in the organization, Christians Engaged provides a course to assist in learning “how ‘major political parties are organized,’” and “‘how to get involved . . . and make a difference in the political party of your choice[.]’” Once again, the organization refuses to endorse particular candidates or political parties.
26 U.S.C. § 501(c)(3) defines the types of organizations this tax exemption covers as:
Corporations . . . organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes . . . 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 (or in opposition to) any candidate for public office.
Initially, the IRS confused the idea of required nonparticipation in elections with a nonexistent requirement of neutrality on public policy issues.
But Revenue Ruling 2007-41 explains that, although “section 501(c)(3) organizations must avoid any issue advocacy that functions as political campaign intervention,” such organizations “may take positions on public policy issues, including issues that divide candidates in an election for public office.” Further, 26 C.F.R. § 1.501(c)(3)-1(d)(2) states that “educational organizations may ‘advocate a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion[.]’”
In fact, the IRS’s original determination “that the only valid interpretations of the Bible are those that comport with policy positions of the Republican party” was a blatant violation of the Constitution and the IRS’s own regulations.
Almost immediately after the issue received national exposure and the attention of several members of Congress, the IRS reversed itself and issued an updated determination letter to Christians Engaged, granting tax-exempt status.
Note: This article was first published on The Federalist Society and is re-published here with permission. The article presents the main points of an op-ed published in The Federalist Society. This work was authored by Lea Patterson. The full article can be found on the The Federalist Society website, here.