By Benjamin Leff
Last week, attendees at the Republican National Convention applauded loudly when Donald Trump repeated his promise that if he’s elected president, he’ll work to end the ban on political-campaign activity by tax-exempt churches. All 501(c)(3) organizations (including churches) have been prohibited from “intervening” in a campaign for public office for over half a century, and the arguments for and against the prohibition have remained remarkably consistent for decades. Activists on one side call for an end to the ban, which they believe is an infringement on free exercise of religion or free speech. Activists on the other side call for the IRS to actually enforce the ban, which they argue is being flouted by (mainly) churches who thereby distort the electoral process. A long list of academics has written articles from a wide range of perspectives, proposing a wide range of solutions (including my contribution way back in 2009). (I also spoke about this issue a few weeks ago in Australia, at a fabulous round-table at the University of Melbourne.) As Sam Brunson pointed out on this blog in May, the IRS is “stuck in the middle.”
In his post, Sam pointed out that “Over the last eight years or so, the Alliance Defending Freedom has sponsored an annual event it calls Pulpit Freedom Sunday, in which pastors preach a sermon that expressly violates the prohibition, then send a copy of their sermon to the IRS. Of the possibly thousands of churches that have participated over the years, none have lost their exemptions.” This is often presented as a dilemma for the churches: they want to get in to court, and are disappointed that the IRS won’t let them.
To me, this public stance on the part of the churches and Alliance Defending Freedom seems disingenuous. If they really want to get into court, why don’t they just use the statutory procedures provided to 501(c)(3) organizations under the law? When an organization other than a church wants to be recognized by the IRS as tax-exempt under section 501(c)(3), it is required to file an application to the IRS called a Form 1023. Churches can file the form if they want. On that form, the very first question of Part VII asks, “Do you support or oppose candidates in political campaigns in any way?” The applicant must check the box for “yes” or for “no.” The Form then asks, “If ‘yes,’ explain.” What a perfect place for a new organization to officially notify the IRS that it believes that endorsing a candidate from the pulpit is constitutionally protected speech.
But it gets even better. Once an application has been filed, the IRS has 270 days to provide the organization with a ruling as to whether the government considers it exempt or not. If the IRS notifies the organization that it is not exempt – or if the IRS fails to respond to the organization within 270 days – the organization can bring an action for a declaratory judgment in the US District Court, the Tax Court or the US Court of Federal Claims. Presto: the church has its day in court. There is the chance, of course, that the IRS would approve an application, even if the church clearly stated its intention to endorse a candidate for public office. But if it did so, it would probably just be a mistake, since the IRS would clearly be violating its own guidance by approving such an organization. Giant bureaucracies make mistakes sometimes, of course, and if it did approve the application without changing its guidance, churches who want to endorse candidates would have to decide what to do then. But my guess is that the IRS is unlikely to approve the 1023 of an organization that checks the “wrong” box in Part VII, question 1.
Admittedly, this procedure only works for new organizations. Existing organizations who have already filed Form 1023 do not have the opportunity to submit a new Form 1023, and therefore, can’t make use of the declaratory judgment procedure. But since it is not required for a church to have filed a Form 1023, some long-existing churches might not yet have filed one, and could do so now.
More importantly, it would be easy to create a new small organization that functioned as a church, and have this new organization submit its Form 1023 announcing its intention to endorse a candidate. This could be accomplished relatively easily. Anyone with a basic knowledge of exempt-organizations law could probably do it in an afternoon, if someone wanted to provide the filing fees. (Now that my students have finished taking the bar, they might have some time to help ;)). The organization would actually have to function as a church for the pendency of its application, which would involve holding regular worship meetings with some modest number of worshipers. But it doesn’t need to do much else. Then, sometime on or before November 8th, its leader would endorse (or oppose) a candidate during the worship meeting. It would probably take at least until then for the IRS to get around to denying the application (but in any case, not longer than 270 days), and the church would have its ticket to federal court.
Sam wrote an article explaining how the IRS could and should take clearly non-partisan actions to enforce the campaign-intervention prohibition by investigating only those churches that participate in Pulpit Freedom Sunday. I agree with Sam, but last May expressed the view that, “If it’s true that the IRS is just trying to get its ducks in a row after the so-called Tea Party Scandal, then I would personally give them a little wiggle room and not be too impatient if they choose to sit out this election cycle.” The nice thing about a new organization forcing the issue by submitting a 1023 is that it permits the IRS to say nothing during this election cycle, but forces it to jump on the issue pretty quickly after the election is over. It may well be that the IRS is already planning to do that, but sometimes it helps to have a deadline.
By the way, the fact that the debate about 501(c)(3) organizations and election-related speech has been going on for so long should not be taken by anyone as evidence that there is no possible solution. Trump’s embrace of repealing the prohibition may make knee-jerk Democrats like me want to defend it against all attack. And the effect of a simple repeal would indeed distort the campaign finance landscape (as has been explained recently), since it would permit all 501(c)(3) organizations to spend unlimited amounts of tax-deductible contributions on political campaigns, a benefit no other person (natural, corporate, or otherwise) has. But there are actually very sensible proposals that recognize the speech interests of churches and other 501(c)(3) organizations, while at the same time protecting against the distortions to campaign spending that folks like me fear. There’s no room in this post to discuss in detail specific proposals to resolve the impasse, but for those who are really interested, the Commission on Accountability and Policy for Religious Organizations (CAPRO) recently issued a report to Senator Charles Grassley with a number of proposals, including one that permits all 501(c)(3) organizations to engage in campaign-related speech, including endorsing a candidate, but only if that speech does not involve the expenditure of any funds in addition to those ordinarily expended in the organization’s charitable activities. So, a pastor (or the president of a university) could endorse a candidate at a regular worship service (or speech to the university community), but the organization couldn’t take out a full-page ad in a major publications (for example). Mike Batts, the chair of CAPRO, wrote a letter yesterday to Paul Streckfus, the publisher of the leading newsletter on the exempt-organizations sector, arguing that this approach of permitting “the freedom to communicate without spending money incrementally” best balances the very legitimate free-speech interests of 501(c)(3) organizations against concerns about the effect that it would have if such organizations could use tax-deductible contributions to make political campaign contributions. I am not specifically endorsing any of the opinions or recommendations of the Commission – including that one – but they do suggest that solutions exist that support the very real concerns expressed by both sides of this debate.