RE: Proposed Amendments to the Regulations Regarding Questions and Answers Relating to Church Tax Inquiries and Examinations

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1 VIA ELECTRONIC SUBMISSION November 2, 2009 CC:PA:LPD:PR (REG ) Courier s Desk Internal Revenue Service 1111 Constitution Avenue, N.W. Washington, D.C National Office 518 C St., N.E. Washington, D.C (202) (202) fax americansunited@au.org RE: Proposed Amendments to the Regulations Regarding Questions and Answers Relating to Church Tax Inquiries and Examinations Dear Sir or Madam: We write on behalf of Americans United for Separation of Church and State to comment on the Treasury Department s Proposed Amendments to the Regulations Regarding Questions and Answers Relating to Church Tax Inquiries and Examinations, dated July 31, 2009 ( Proposed Regulations ). Founded in 1947, Americans United is a non-partisan, non-profit membership organization dedicated to preserving the constitutional principle of church-state separation in order to ensure religious freedom for all Americans. Americans United has for many years supported the IRS ban on involvement by houses of worship in partisan politicking because such improper activity politicizes, divides and damages congregations and threatens to turn houses of worship into cogs in partisan political machines. The Proposed Regulations state that the Internal Revenue Service s ( IRS ) Exempt Organizations Division Director will be the designated high-level Treasury Department official charged with making reasonable belief determinations and approving tax inquiries of houses of worship. We appreciate the IRS efforts, in response to United States v. Living Word Christian Center, to clarify the enforcement responsibilities within the IRS for tax inquiries of houses of worship that engage in prohibited church politicking and for remedying violations of federal law. Given the pervasiveness of church politicking violations, as well as efforts by some organizations in recent years to encourage houses of worship to blatantly violate federal law, having a clear and valid enforcement regime is absolutely essential for the ongoing protection of religious liberty. Project Fair Play Americans United first became involved in church politicking issues formally in 1988, when the organization protested efforts by the Rev. Jesse Jackson, who was then seeking the Democratic presidential nomination, to collect funds for his campaign in churches.

2 In 1992, Americans United took the step of filing a formal complaint with the IRS after the Church at Pierce Creek in Binghamton, New York, placed a full-page advertisement in USA Today urging individuals to vote against Bill Clinton for President of the United States. The ad, headlined Christian Beware, asserted that Clinton s views were in violation of the Bible. It also contained an appeal for tax-deductible donations to run the ad in other newspapers. The church subsequently lost its tax-exempt status, and efforts to regain it through litigation against the IRS in federal court were not successful. In March 1996, Americans United launched a formal initiative, labeled Project Fair Play, to educate religious leaders and other Americans about the Internal Revenue Code ( IRC ) provisions relating to pulpit partisanship. Every election cycle, Americans United engages in a broad effort to send informational letters to clergy on how to comply with the IRC. In addition, in our capacity as a watchdog organization, we consistently file complaints with the IRS against houses of worship on a strictly nonpartisan basis when we are alerted to egregious violations of the IRC. Since the initiation of Project Fair Play, Americans United has filed 97 complaints with the IRS, alleging serious partisan politicking by churches and other religious entities. In recent years, the IRS has announced plans to step up its enforcement of the noelectioneering rule, assigning career IRS agents to oversee a project entitled the Political Activity Compliance Initiative ( PACI ). Announced in 2004, the PACI seeks to ensure compliance with the IRC and expedite the investigation process. This initiative has had positive results for the protection of religious liberty. In 2006, for example, the IRS reported that it investigated allegations of partisan political involvement by 46 churches and other religious organizations. Forty-two were determined to have violated the IRC and received written warnings. Further, the IRS announced that in 2006 it followed up on the organizations that received these warning to make certain that none had violated the IRC yet again. In 2008, the PACI included a component to educate houses of worship about the requirements of the IRC, special scrutiny of voter guides that may well cross the line into candidate-specific advocacy, and an investigation of how tax-exempt organizations are using the internet to address election-related issues. Americans United focused much of its effort during the 2008 election cycle on defending IRS rules against the Alliance Defense Fund s ( ADF ) Pulpit Freedom Sunday. The Pulpit Freedom Sunday initiative encouraged houses of worship to flagrantly violate federal tax law by urging their pastors to endorse or oppose political candidates from the pulpit. ADF s goal was to encourage the IRS to examine and take legal action against churches participating in the initiative, so that ADF could then try to invalidate the IRS entire investigative and enforcement regime in federal court. Following Pulpit Freedom Sunday, Americans United filed complaints with the IRS about six churches whose pastors endorsed candidates from the pulpit in clear defiance of federal tax law. In addition, three formers IRS officials filed a complaint with the IRS asserting that ADF violated ethics standards governing tax attorneys by urging clients to violate federal law. 2

3 Examples of Americans United s Filings with IRS During 2008 Election Cycle The 2008 election cycle demonstrated the severity of the problem of church politicking. Americans United filed several complaints during this cycle with the IRS, requesting investigations. We highlight three examples of our Project Fair Play activities below. Pentecostal Temple Church of God in Christ On January 16, 2008, Americans United filed a complaint with the Exempt Organizations Division about partisan political activity by the Pentecostal Temple Church of God in Christ in Las Vegas, Nevada. On January 13, 2008, then-u.s. Senator Barack Obama spoke during services at the Church in surprise appearance, as described by the Las Vegas Review Journal, in a January 14, 2008, article. The Journal indicated that the pastor of the church possibly violated federal law when he told his congregation that the more [Obama] speaks, the more he wins my confidence, and... if the polls were open today, I would cast my vote for this senator. The article also indicated that the pastor indicated from the pulpit that he want[ed] to see this man in office. Harlem Road United Methodist Church Also on January 16, 2008, Americans United filed a complaint with the IRS regarding activity by the Senior Pastor of the Harlem Road United Methodist Church in Galena, Ohio. In a letter issued on September 2, 2007, the senior pastor had endorsed Republican candidate Glenn Evans for Commissioner of Delaware County, Ohio. That letter was on church letterhead and, as of January 11, 2008, was prominently featured on the Evans campaign internet web site. In his letter to the Delaware County Republican Party, the senior pastor indicated that I would strongly encourage your endorsement of County Commissioner Glenn Evans in our upcoming elections. He went on to applaud Evans skills and passion, saying that Evans character will best embody the spirit and needs of our community, and that Evans is exactly the kind of person... we need in the Republican Leadership of Delaware County. The senior pastor also made clear that he was not making a strictly personal endorsement. Rather, he stated that [a]s Sr. Pastor of Harlem Road United Methodist Church, I have had the pleasure of observing [Evans ] actions, his motivations, his character and integrity behind the scenes, and I am proud to offer my endorsement and recommendation. With no reservations, the senior pastor concluded his letter, I deeply encourage your endorsement of Glenn Evans. Warroad Community Church Americans United also filed a complaint with the IRS on June 11, 2008, concerning the activities of the Pastor of the Warroad Community Church in Warroad, Minnesota. The pastor publicly announced from the pulpit that Christians should not vote for U.S. Senators Hillary Clinton or Barack Obama in the presidential election. The pastor was well aware that the IRC does not permit tax-exempt houses of worship to intervene in political campaigns, but chose to do so anyway. 3

4 The pastor s comments were the subject of a May 21, 2008, article in the Warroad Pioneer, a weekly newspaper. The article, headlined, Local pastor uses scripture to oppose presidential candidates Clinton and Obama, reported on a sermon the pastor delivered on May 18, At the time that the pastor delivered the sermon, both Hillary Clinton and Barack Obama were active candidates for the Democratic presidential nomination. The Warroad Pioneer article indicated that the pastor wasted no time in stating what he thought was the correct choice for the upcoming election. If you are Christian, you cannot support Hillary Clinton or Barack Obama... [B]oth Hillary and Barack favor the shedding of innocent blood [abortion] and the legalization of the abomination of homosexual marriage. About two weeks after the pastor preached his sermon, he sent a scan of the article from the Warroad Pioneer and an electronic mail message to Americans United. It read in part, I am writing you to let you know that I preached a sermon in my church on Sunday, May 18, 2008, that specifically addressed the current candidates for President in light of the Bible. As you can see from the attached newspaper article, I specifically made recommendations as to who[m] a Christian should vote for. I have read in the past about how you have a campaign to intimidate churches into silence when it comes to speaking about candidates for office, the pastor continued. I am letting you know that I will not be intimidated into silence when I believe God wants me to address the great moral issues of the day, including who will be our next national leader. Apparent Abandonment of Investigation The IRS response to the complaint against Warroad Community Church demonstrates that the lack of a legitimate investigation and enforcement regime for church politicking violations in light of the Living Word Christian Center decision is leaving serious violations of the IRC totally unremedied. On August 19, 2008, the IRS sent a Notice of Church Tax Inquiry ( NCTI ) to the Warroad Community Church. Subsequently, on November 17, 2008, the IRS issued a Notice of Church Tax Examination ( NCTE ) to the church. However, in a July 3, 2009, the IRS indicated to the church that it was closing its examination because of a pending issue regarding the procedure used to initiate the original inquiry. The IRS indicated in its letter that it reserved the right to commence a future inquiry to address the concerns described in the NCTI and NCTE after it resolves that procedural issue. The procedural issue apparently derived from the Living Word Christian Center decision that the Director of Exempt Organizations Examinations is not an appropriate high-level Treasury official who is legally authorized make the reasonable belief determination required before the IRS can commence an NCTI under the IRC. The fact that the Warroad Community Church may have escaped enforcement of the ban on partisan politicking by houses of worship as a result of the decision demonstrates just how important it is that the IRS promptly issue final regulations that set forth a defensible regime for investigating and remedying violations of the IRC ban. 4

5 Conclusion Americans United has long recognized that religion flourishes best when the wall between church and state is vigilantly maintained. Church politicking embroils houses of worship in divisive battles, pitting congregants against each other and their clergy. The IRS limitation on partisan politicking is an important legal requirement that ensures that houses of worship, like all other non-profit organizations, do not embroil themselves in partisan disputes. The IRS must aggressively enforce violations of IRC law in this area in order to preserve religious liberty, and we hope that the reconstituted enforcement structure envisioned in the Proposed Regulations will lead to greater confidence in the IRS investigative and enforcement efforts. We appreciate the opportunity to submit comments to the Proposed Regulations, given Americans United s deep interest in enforcing the ban on partisan politicking by houses of worship as an important component of preserving religious liberty. Please contact us at (202) if you have any questions regarding Americans United s comments. Sincerely, Rev. Barry W. Lynn Executive Director Aaron D. Schuham Legislative Director 5