IRS Seeks to Separate Politics, Non-Profits

The non-profit status of some churches and other organizations is threatened as the IRS accuses them of politicking. What limits do organizations face if they hope to retain non-profit status?

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Charitable organizations, churches and community groups, don't have to pay taxes. In exchange for that benefit, they have to follow certain rules, like not officially endorsing candidates for office.

Now the IRS says that, in reviewing the 2004 election cycle, a record number of these non-profits did try to influence elections. This could be trouble for the groups. But should it be? Some advocates say non-profits should be able to endorse candidates, and influence legislation. Here's NPR's Mike Pesca.

MIKE PESCA reporting:

Two years ago, during the democratic primaries, a church near Memphis, Tennessee welcomed Wesley Clark to address the congregation. Pastor LaSimba Gray framed the candidate's appearance with these words.

Mr. LASIMBA GRAY (Pastor, New Sardis Baptist Church): General Clark is here with us now, and they're trying to get the Democrats not to talk about the war. Don't mention the war. No, don't do that to the president. We need to know how we can get into a war based upon some voodoo intelligence.

PESCA: Political speech like that happens in houses of worship all throughout the country, but Gray was careful not to offer an endorsement of General Clark, or an admonishment to vote against President Bush. That would have been a violation of tax law, says Mark Everson, Commissioner of the IRS.

Mr. MARK EVERSON (IRS Commissioner): You have a right to free speech. You have a right, obviously, to religious liberty. We're all familiar with that, but you don't have a right to a tax exemption.

PESCA: The majority of the complaints that the IRS received this year were found to have merit, and punishments are being beaded out. These include reprimands, fines, and, in three cases, recommendations that non-profit status be revoked.

Representative WALTER JONES (Republican, North Carolina): This is not about politics. This is about freedom of speech.

PESCA: U.S. Congressman Walter Jones of North Carolina has introduced legislation that would allow clergy to endorse candidates from the pulpit.

Representative JONES: If that's what that preacher thinks that he should say, that he believes that John Smith, who's running for office, will be a man who will protect the unborn, or if he believes that John Smith will be a candidate that would protect the women's right to choice, he should be able to say it. Why shouldn't he? If he feels or she feels, as a minister, that they are called upon to say these things, that they should be able to do so.

PESCA: The better question, says University of Miami Law Professor Frances Hill, is why should the rest of us subsidize anyone's political agenda, even a minister, a priest, or rabbis'? Hill reminds us exactly who has the tax-free status, here.

Professor FRANCES HILL (Law, University of Miami): Churches are not endorsing. Churches are not participating or intervening. Ministers are, and that is a very different proposition, because the First Amendment Right to Associate is a right of the people in the organization to control their organization.

PESCA: Hill notes that all non-profits are considered the same under the law. A church is indistinguishable from a soup kitchen, is indistinguishable from an educational organization. That's true, even if the subject of the education is something like why handguns should be legal, or why abortion shouldn't.

Of the non-profits investigated by the IRS, only 40 percent were churches, but we don't know if that's a function of who actually committed violations, or just a function of who made complaints; in IRS parlance, a referral. Professor Frances Hill.

Professor HILL: I think we need to know much more about the sources of the referrals.

PESCA: And just like the IRS can't disclose if an individual is being audited, they can't name the groups that were investigated or found to have been in violation. And while the IRS itself can initiate an investigation, Mark Everson declined to say if this had, in fact, taken place.

There's another huge issue here, beyond regulating if ministers endorsed from the pulpit, not allowed, or the sidewalk, allowed. Mark Everson says if the IRS doesn't play policeman, non-profits can be exploited to undermine all federal election law.

Mr. EVERSON: We need to retain the integrity of charities. They need to operate for the public good. If we don't maintain this standard, inevitably, you will find political campaigns and races masquerading as charities and churches.

PESCA: If that happens, it means a country founded on the principle of no taxation without representation, will move to an entirely different political model: representation without taxation.

Mike Pesca, NPR News, New York.

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