Nov 6

Written by: Casey S. Hale
11/6/2012 12:08 PM  RssIcon

Both The Huffington Post and ABC News included a story on their websites today about the IRS' suspension of enforcement actions against churches that engage in prohibited political activities.  According the story, the IRS suspended church audit activity back in 2009 and has no plans to resume church audits until the agency goes through a formal rule-making process on the issue.  This is especially interesting given Alliance Defending Freedom's ("ADF") recent promotion of Pulpit Freedom Sunday where some 1500 pastors across the country responding to ADF's call for pastors to engage in prohibited political activity by endorsing a candidate from the pulpit.

One of the purposes of Pulpit Freedom Sunday was to bait the IRS with an easy enforcement target so ADF could fight the political activity prohibition under Internal Revenue Code section 501(c)(3) in court.  But it looks like nothing may come of that this election cycle since the IRS isn't biting.

Nonprofit Law Prof Blog in its entry covering this same story suggested a different method of hooking the IRS on this issue:

"While a church that allegedly violates the prohibition on political campaign intervention cannot force the IRS to launch a church tax inquiry, such a church that has not yet applied for tax-exempt status could file such an application, fully disclose its actual or planned political activity, and then wait to see what the IRS does.  If the IRS grants the application that would give a green light for such activity.  If the IRS denies the application or refuses to rule on it for 270 days, the church could file a declaratory judgment action seeking a declaration that it qualifies for exemption, thereby forcing the IRS to litigate the validity of the prohibition assuming the church otherwise qualifies for exemption under Internal Revenue Code section 501(c)(3)."