By Sam Brunson
Yesterday, the House Committee on Appropriations reported H.R. 2995 to the House of Representatives. H.R. 2995, the Financial Services and General Government Oversight Appropriations Bill for FY 2017, if passed, would continue the trend of reducing the IRS’s budget, this time by $236 million.
It is undoubtedly worth looking at what exactly the bill does, but I’m interested in an amendment added yesterday by Rep. John Culberson (R-TX). Section 135 of the bill would make it even harder than it already is for the IRS to audit churches.
The IRS already faces significant limitations on its ability to audit churches. Unders section 7611 of the Code, the IRS can only start an audit if a high-level Treasury official reasonably believes that the church doesn’t qualify as exempt or that it has unrelated business taxable income. Then the IRS has to provide specific notice to the church about the audit.
And even if the IRS meets those requirements, the IRS faces significant statutory constraints on how long the audit can last andon when the IRS can audit a church again, among other things.
The result? Churches are rarely audited, and even more rarely lose their exemptions. While the IRS doesn’t disclose the number of church audits it performs, the ECFA suggests that there may be 100 church audits a year. And how many churches are there in the U.S.? Again, hard to say, but the U.S. Religion Census finds about 345,000 congregations in the U.S. That would be a 0.03% audit rate; even assuming the number of churches is off by a factor of 10, we’re talking a 0.3% audit rate. And I can only find one report of a church losing its exemption for violating the campaigning prohibition (even though thousands of churches have deliberately and explicitly violated it).
That, though, is apparently insufficient for Rep. Culberson, who claims he added his amendment to “protect churches from being bullied by the Internal Revenue Service (IRS) and left-wing activists whenever a church engages in educational political activity.”
And what would his amendment do? It would require the IRS Commissioner personally to consent to any determination that a church had violated the campaigning prohibition, it would require the IRS to notify the House Ways and Means Committee and the Senate Finance Committee of the determination within 30 days, and it would require that the determination not take effect for 90 days after the notification.
It’s good, I guess, that Congress is doing something. But where that something addresses a problem that doesn’t even pretend to exist while cutting the IRS’s budget and tying its hands unnecessarily, maybe it would be better if Congress didn’t do anything at all.