Tax exemption terror and political candidates

Are you suffering from “tax-exemption terror?”

Mike Whitehead

August 31, 2004

This phobia makes cultural cripples of many well-meaning pastors and church leaders who have developed an irrational fear of losing their church’s tax-exempt status. They are afraid to praise or criticize public officials or political candidates, even from a biblical-moral perspective, for fear that “someone” might file a complaint with the IRS.

Some people seem to fear that church-state separation constitutionally prohibits people of faith from bringing their religious convictions into the polling place, let alone the pulpit.   Such a phobia can paralyze church leaders and prevent them from helping their members to apply their Bible-based convictions when exercising their rights and duties of citizenship.

This fear is irrational because no church has ever lost its tax exemption because of a pastor’s biblical criticism of policies or politicians during a public worship service.  Still, many Christians shrink in terror from “politics” in order to protect their “tax exemption.”

Historic Baptists such as John Leland would be appalled at this modern surrender of religious freedom of speech. These Baptist forefathers  were willing to be jailed or to be hanged before they were willing to be licensed or muzzled by Caesar, who had no authority over when, where or what they could preach.  In 1920, Baptist statesman George Truett, pastor of First Baptist Dallas, went to the steps of the United States Capitol and demanded that Caesar keep his millstone off the church’s neck.

For some Christians, tax exemption may have become a modern millstone. Is it possible Baptists have allowed the principle of church-state separation to be so mangled by modern secularists that the distorted doctrine is now used to intimidate the church into silence about biblical positions on public policy issues? Have Baptists surrendered their religious liberty birthright in exchange for a bowl of tax-exemption pottage?

Part of the reason for the paranoia is an ambiguous statute. Section 501(c) (3) of the Internal Revenue Code has two rules, which regulate political activity by churches and exempt organizations.

The first rule permits some lobbying or “influencing legislation” by a church body, so long as it is “no substantial part of the activities” of the entity. The code does not define “influencing legislation” or “substantial part.”

The second rule prohibits a church or tax-exempt organization from “participat[ing] in or interven[ing] in [including the publishing and distributing of statements] any political campaign on behalf of any candidate for public office.” The code does not define “participate” or “intervene.”

What is the speed limit?

“Just tell me what I can and can’t do. Tell me the speed limit, and I’ll obey it,” you say. Unlike speed limits, the tax code is not always clear.

Come to think of it, speed limits are not always clear. A driver on an interstate highway may be going 65 miles per hour toward an unfamiliar city. Leaving the rural area and entering the suburbs, he has not seen a speed sign in a while, but he knows the limit must change to 55 mph somewhere near the city. He is in a hurry, but he feels uncomfortable not knowing if 65 mph is safe or risky.

Some people handle such daily dilemmas by going 40 mph, the legal minimum on the freeway. Others will weigh the circumstances and make a judgment about what is safe or risky until they see a clear signpost. Living with ambiguous tax laws requires similar judgment.

Preventive Law

Practicing such preventive law is prudent, but pastors and teachers will seek to balance their duties under an ambiguous law with their religious duty and constitutional right to preach prophetically to culture and government.

When balancing the risks, consider the fact that the Internal Revenue Service has never gone to court to enforce revocation of the tax-exempt status of a church because a pastor went too far in the pulpit in praising or rebuking a political candidate or in stirring up public pressure about some legislation. This is not to say churches should ignore the law just because the IRS has not enforced it. A driver should not drive as fast as he pleases just because he sees no police officer.

The fact that the IRS has judicially never enforced this section against a church, however, is relevant to reducing the fear churches have of this issue. It may show the IRS realizes the code is ambiguous, and strict enforcement would conflict with constitutional protections of religious liberty. Therefore, church members should feel more comfortable in making judgments about such activity with greater latitude than the letter of the law seems to give.

The IRS always could change its policy and start enforcing the letter of the law against churches. If that happens, churches will doubtless ask the Supreme Court to hear many of these cases in order to define the rights and duties of churches and members.

Until then, it is prudent to “drive with care” but without paranoia. Pastors don’t have to be tax lawyers to make practical daily judgments about complying with the law while still obeying Christ’s command to be “salt” and “light.” Like the driver on an interstate, pastors and churches can make some informed judgments about the level of risk with which they feel comfortable.

With these ideas in mind, consider the following samples and our estimates of the relative risks of violation of the tax code, using our analogy of miles per hour on the interstate.

What can you do?

1. Pastor Doe tells his neighbor, “I am voting for Smith.” Speed: 40 to 45 mph. Safe. The IRS and the Federal Election Commission laws apply to organizational activity, not individual citizen activity. Individual Christians, even when employed as pastors or staff members, may exercise their freedoms of speech and association to talk and work together as private citizens on matters of mutual concern, including issues and candidates.

2. Pastor Doe says from the pulpit, “The church does not officially endorse candidates, but I am voting for Smith because I believe his position on X is biblical.” Speed: 45 to 50 mph. Low risk. Lawyer Alan P. Dye recommends “a clergyman should not make a regular practice of endorsing candidates from the pulpit, lest his personal position be attributed to his church…”  If a pastor decides to endorse a person, it is better not to use the microphone and podium paid for by the church, or the time of the regular official worship service, or to use other church financial resources to accomplish the endorsement, lest the charge be made that, in spite of the church disclaimer, the endorsement was “sponsored” by and approved by the church.

3. The church adopts a resolution at a business meeting, which the pastor reads Sunday morning: “Our church body endorses Smith. His position on X issue is consistent with what we believe is biblical, and we are giving $1000 to his campaign.” Speed: 100 mph. Extreme risk. You have just blown the doors off Smokey’s patrol car, and he is thinking, “No more Mr. Nice Guy.” Call it careless or call it courageous, but you cannot call this preventive law.

4. The church sponsors a nonpartisan voter registration drive and spends church funds to promote it, to pay registration workers and to mail registration forms. Speed: 53 to 55 mph. Low risk. Nonpartisan efforts are safe.    Official church action attempting to register supporters of one candidate or party would be very risky. 

5. Pastor Doe invites Smith, the incumbent congressman, and all other candidates to speak in the pulpit on Citizenship Sunday, a month before the election. Speed: 53 to 55 mph. Low risk. Pastor Doe might want to make some disclaimer that “the church is not endorsing” candidates.

6. Pastor Doe invites only Smith and has him read the Bible and lead the morning prayer.  Speed: 60 to 65 mph. Moderate risk, even with a disclaimer.

7. Pastor Doe takes an offering Wednesday night to raise money to give to the election campaign of Smith. Speed: 75 to 80 mph. High risk.

8. Church funds are used to prepare, print and mail “voter scorecards,” listing the leading candidates and their voting records on various restrictions on abortion. No editorial comment is made. Speed: 55 to 60 mph. Moderate risk. Some commentators feel safer if the guide covers more than one general subject.

9. The voter scorecard bears the statement: “First Baptist is Pro-life.” Speed: 60 mph. Moderate risk. IRS may criticize the voter guide as “biased” under IRC 501 (c)(3). Recent action by the Supreme Court seems to indicate interest groups may advocate their position on an issue, such as “pro-life,” on voter guides, so long as they do not expressly advocate voting for a certain candidate.

10. A Sunday School teacher during class criticizes the mayor for supporting a homosexual rights ordinance. The mayor’s opponent is opposed to “gay rights.” Speed: 50 mph. Low risk. Statements by individual lay Sunday School teachers are not normally considered “official” actions or positions of the body.

11. The church gives its private mailing list to the Whig party, which mails campaign materials about its candidates to all church members. Speed: 99 mph. Risk: High. See number 3 above. Church gifts of mailing lists or other “in-kind” contributions are as bad as gifts of cash.  A church could rent such lists to partisan groups, at a fair market rates, to reduce the speed greatly.    

12. The church buys a full page ad in USA Today that says, “A vote for Bobby Williams is a sin against God.” Speed: Welcome to the Indy 500! Risk: you are no longer worried about the risk at this speed. The “no endorsement” rules apply to negative endorsements as well as positive.

Churches may want to evaluate their situations and develop a policy about what actions church members are comfortable with in this area. Some churches will choose to “drive slowly.”  Others will be comfortable “driving a little faster.”

Churches may want to get the advice of a private attorney who knows all the facts of the proposed actions and current tax laws, as well as federal and state campaign laws, to help draw the church’s policy more precisely. In addition to considering what the law permits, pastors will want to be sensitive to the attitudes of church members about avoiding any appearance of partisan political activity.

Knowing the truth about these laws should set churches free from the fear caused by tax-exemption terror. (Mike Whitehead has practiced law in Kansas City since 1975 and represents numerous non-profit religious organizations, including the Missouri Baptist Convention. He formerly served as General Counsel for the Ethics and Religious Liberty Commission (formerly Christian Life Commission) of the Southern Baptist Convention in Washington, D.C.   He was business vice president and interim president for Midwestern Baptist Theological Seminary, and was associate professor for church-state law.   He has served on national boards for Christian Legal Society and Alliance Defense Fund.)