Churches, tax exempt status, and candidate endorsements

Since the 1950s, a provision of federal tax law championed by then-Senator Lyndon Johnson has provided that 501(c)(3) organizations, including churches, charities, and other sorts of non-profits, endanger their tax-exempt status if too much of their activity is devoted to supporting or opposing candidates for office. Some churches and conservative groups have campaigned to relax or repeal this rule, an idea now endorsed by presidential candidate Donald Trump. Paul Caron at TaxProf has a link roundup. More: Benjamin Leff.


  • I like CAPRO’s proposal, as discussed at the end of Leff’s post. Make it clear that pastors can preach whatever they want from the pulpit, including political messages, which is the de facto situation right now anyway since the IRS doesn’t care what’s in your sermon even if you send them a copy and dare them to take action. Having that policy in writing as black letter law would protect everyone and ensure it doesn’t suddenly change on us in the future. But at the same time, don’t open the door to unlimited tax-deductible political expenditures, which would amount to a subsidy for TV commercials and mailers.

    There are some details that would have to be worked out at the margins. What if the sermon gets printed into the church’s newsletter and is mailed out to its members? What if the church normally spends money to broadcast its sermons and a political endorsement is contained inside? What if the church prints up the sermon and mails it to four million strangers in carefully selected Congressional districts? But a policy like this would still address the main concern, which is ensuring the IRS doesn’t care what you say from the pulpit.

    • mx, the details you mention seem to me at the heart of the matter, not the margins.

  • Easier solution: have churches pay taxes like any other money making organization. Then we don’t even have to quarrel about the definition of a church.

    • A church is not a “money making organization”, under normal circumstances. (Is that remark supposed to be some cheap shot at religion?) Even if you took away a church’s nonprofit status, it wouldn’t turn a profit, and even explicitly political 527 organizations don’t pay taxes like normal corporations do. It’s mostly a matter of whether the donations are tax-deductible for the donor or not.

      501(3)(c) says the following are exempt from taxation:

      Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), 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.

      So we aren’t quarreling over the definition of a church; “church” doesn’t appear in that. “Religious” does, but in this case nobody is arguing over whether they are religious, either. We’re arguing over what they should be allowed to say and do while keeping their status. Even if you somehow got rid of the whole religious aspect, the problem wouldn’t go away. Remember the whole “tea party” thing at the IRS? This is really just the same thing – organizations being investigated (or not) by the IRS as to whether they are crossing a political line created by tax laws.

      Right now the IRS is not enforcing the law as written, which means something is wrong – if we aren’t going to enforce it, we should change it. The current situation is not acceptable, because it doesn’t let the organizations know what they can or cannot do and say.

  • The foundations of this country and the rise to the thought of rebellion and the breaking away can be traced directly to people gathering in places of worship and in taverns.

    It therefore baffles me that we now have to even have a discussion as to whether churches can participate in the political process and how much regulation should be places on taverns and bars.