Bay Area Estate And Tax Planning Law Firm

Internal Revenue Service sued for non-enforcement of ban

On Behalf of | Dec 4, 2012 | Uncategorized |

Just two weeks ago we posted about the lack of IRS enforcement of the tax code which restricts religious institutions from making political endorsements, or risk losing their nonprofit status. Not only has the lack of enforcement by the IRS not gone unnoticed, it has generated a reaction from a group of non-religious people seeking to force the IRS into compliance.

According to news sources, the Freedom From Religion Foundation (FFRF) has filed a lawsuit against the Internal Revenue Service. The lawsuit states that the FFRF is suing the IRS for “its failure to enforce electioneering restrictions against churches and religious organizations.” The group claims that as many as 1,500 clergy violated the electioneering restriction on October 7, 2012 — “Pulpit Freedom Sunday.”

In most instances groups are fighting against, not for, enforcement or an audit so this lawsuit is unusual. There seems to be a significant amount of data supporting the lack of enforcement. The IRS has even spoken publicly about the lack of enforcement. In Bloomberg News it was reported that an IRS official stated that IRS audits of churches have been suspended.

Being classified as tax-exempt carries a number of financial benefits for organizations. Among the benefits for a charitable organization is that they are typically not required to pay property taxes. However, according to the IRS, a 501(c)(3) organization must not be “an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”

There has not yet been any response from the IRS regarding this lawsuit. Should any charitable organization have questions about their charitable status or potential tax obligations, it would be wise to consult with a legal tax professional.

Source: Examiner, “FFRF sues IRS to enforce church electioneering ban,” Trina Hoaks, Dec. 2, 2012