In the other corner is Barry Lynn, executive director of Americans United, who argued in an interview with the Deseret News that "the extremely valuable benefit of tax exemption can be granted with the rather modest string attached to not intervene in partisan political campaigns."
The impasse that drove off the referee began in 2008, when a U.S. District Court ruled that the IRS had improperly audited the Living Word Christian Center in Brooklyn Park, Minn., whose pastor had endorsed Minnesota Rep. Michele Bachmann from the pulpit.
When the IRS began auditing the church’s finances, the church pointed to the 1983 Church Audit Procedures Act, which required high-level IRS authorization to audit a church — just one level below the IRS commissioner.
The 1984 law was motivated by fears that politicized IRS audits would be used to intimidate and silence church leadership, violating two key elements of the First Amendment — the free exercise of religion clause and the freedom of speech clause.
When the court reversed the IRS action, the IRS began working on new church audit rules, hunkering down in the meantime. By November of 2009, Americans United called out the IRS in a letter on the new rule, noting that enforcement had been dropped. To this day, the new IRS audit rule remains unfinished.
Is it enforceable?
One reason the referee seems frozen is that current law can be hard to enforce and lead to complicated evasions.
For instance, in October 2012, the famed minister Billy Graham took out a full-page ad in the New York Times, which everyone understood as an endorsement of Mitt Romney.
“I believe it is vitally important that we cast our ballots for candidates who base their decisions on biblical principles and support the nation of Israel,” Graham wrote in the ad. “I urge you to vote for those who protect the sanctity of life and support the biblical definition of marriage between a man and a woman.”
But Graham did not really need to avoid naming names, if he spoke in his own voice and paid the ad from his own pocket. Ministers are allowed to speak out personally. But they cannot do so representing a tax-exempt church, and the church cannot pay for the ad. Churches are allowed to urge policy positions, but not endorse specific candidates.
In its 2009 Tax Guide for Churches and Religious Organizations, the IRS offered scenarios that would pass muster. If a minister endorsed a candidate, the IRS wrote, and the candidate printed an ad naming the minister and tying him to the church for identification purposes, then “the ad does not constitute political campaign intervention by Church.”
Still in limbo
Such complex rules, critics argue, tie religious leaders in knots and lead to disingenuous maneuvers to skirt the law.
The enforceability problem came to the surface when Senator Charles Grassley (R-IA), ranking member of the Senate Finance Committee, had his staff review the policy over a three-year period.
When the study concluded in 2011, Grassley’s staff concluded that the “electioneering” rules restricting churches and other nonprofit organizations should be repealed because the IRS cannot properly enforce them.
“The IRS is required to draw on its limited resources to police a provision that has no express purpose that can be deduced from the legislative history, is harsher than what is necessary to address legitimate policy concerns, is vague (and therefore difficult for charities to comply with and for the IRS to enforce), and rarely results in any punishment being imposed on non-complying organizations or excise tax revenues being collected for the U.S. Treasury,” Grassley’s staff wrote.
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