The leftist organization Americans United for Separation of Church and State, or AU, has called for the Internal Revenue Service to revoke the tax-exempt status of my church and ministry because of the content of a recent “Falwell Confidential” I wrote in which I suggested that President Bush was the candidate of choice for conservative Christians. That commentary also appeared on this website.
Barry Lynn, the former American Civil Liberties Union operative, now heads AU. You have heard me refer to AU as a “surrogate of the Democratic National Committee.” My son, Jerry Jr., Liberty University’s vice-chancellor and general counsel, has suggested that Mr. Lynn rename his organization Americans United for Separation of Conservative Churches and State.
Mr. Lynn, like Jesse Jackson and Al Sharpton, for the purpose of seeking respectability in the media, likes to use the title “reverend,” even though I have been unable to find the name and location of any church he has ever pastored or the location and time where he ever delivered an actual sermon.
A couple of years ago while debating Mr. Lynn on a national TV talk show, I accused him of being an attack dog for the DNC and asked him why he never challenged Rev. Jackson, Rev. Sharpton, Bill Clinton, Al Gore and other liberals for brazenly campaigning in African-American churches. As a result, Mr. Lynn has since written some complaint letters to the IRS regarding such situations for the express purpose, in my opinion, of leaving an impression of impartiality.
Fright letters to churches are coming
About this time each election year, AU sends what I term a “fright letter” to thousands of conservative evangelical pastors telling them – quite incorrectly – that any use of voter guides, political discourse or other such activity could result in a loss of tax-exempt status for their churches.
However, no such letter is sent to African-American churches or to liberal mainline denominational churches. Traditionally, the Democratic candidates speak in many African-American churches during their presidential campaigns.
Last Sunday, July 18, Sen. John Edwards spoke in the pulpit of the St. Mark AME Church in Orlando. As reported in wire stories and on NBC Nightly News, the pastor of the church strongly endorsed the Kerry-Edwards ticket. As also shown on this same NBC broadcast, Sen. John Kerry, on April 4, spoke in a large African-American church where the pastor introduced him as “the next president of the United States.”
Bill Clinton and Al Gore routinely conducted similar church-based campaigning.
Mr. Kerry and Mr. Edwards will certainly follow this tradition right up to election time. I have been documenting this “church activity on the left” for many years. Neither AU nor the so-called “mainstream media” have expressed any outrage over this seeming violation of IRS tax regulations. This glaring and gross hypocrisy is obvious to all but those who are blinded by their leftist biases.
We have violated no laws or regulations
By the way, this Falwell Confidential weekly newsletter is owned and sponsored by the Liberty Alliance. The Liberty Alliance is a not-for-profit educational and lobbying organization. It is an IRS recognized 501(c)(4) corporation, chartered in Washington, D.C., that is allowed to lobby Congress and influence legislation.
Our goal at Liberty Alliance is to promote traditional family values and battle the liberals who would attempt to destroy the godly principles that were at the foundation of this nation.
We still hold to the four main tenets of the original Moral Majority as it was established in 1979. We are: 1) pro-family, 2) pro-life, 3) pro-defense and, 4) pro-Israel. Gifts to The Liberty Alliance are, by law, not tax-deductible.
Further, my website, http://www.falwell.com, is also sponsored by The Liberty Alliance. Neither my Thomas Road Baptist Church, Jerry Falwell Ministries nor Liberty University have any affiliation with the Liberty Alliance. As a publisher of a weekly newsletter (www.nljonline.com) and a monthly newspaper and as a taxpaying citizen, I may legally, under First Amendment protection, express my views and opinions just like Rev. Jackson, Rev. Sharpton and “Rev.” Lynn.
No church has ever lost its tax-exempt status
Every American pastor, as a taxpaying citizen, is free to express his views and opinions. I continually urge pastors who receive the traditional Barry Lynn “scare letter” to simply ignore it. America needs your voice!
The Church at Pierce Creek in Binghamton, N.Y., had its “IRS letter” pulled for one day a few years ago. For the full story on this single instance in American history where a church’s tax exemption was challenged, I am, by permission, reprinting an article by Mat Staver, general counsel and president of the Orlando, Fla.-based Liberty Counsel, a law firm of several hundred attorneys that defends the constitutional rights of churches and Christians. It appears below.
In the meantime, pastors, continue to speak the truth from your pulpits. Don’t let any inaccurate letters scare you away from urging your congregations to political action.
Church’s loss of tax-exempt status letter turns out to be a victory for churches
By Mathew D. Staver
On May 12, 2000, the Federal Court of Appeals for the District of Columbia sided with the IRS’ decision to revoke a tax-exempt letter ruling from the Church at Pierce Creek located in Binghamton, N.Y. However, the court ruling shows that the IRS has very little authority over churches. The ruling underscores the fact that churches do not need to fear the loss of their tax-exempt status.
The case began on Oct. 30, 1992, four days before the presidential election, when the Church at Pierce Creek placed full-page advertisements in USA Today and the Washington Times. Each ad bore the headline “Christians Beware” and pointed out that then-Gov. Bill Clinton had extreme views regarding abortion and homosexuality. The advertisement clearly noted that it was sponsored by the church and its pastor and furthermore solicited “tax-deductible donations” for the advertisement. The ads then gave the church’s address. As a result, the church received hundreds of contributions.
On Nov. 20, 1992, the IRS notified the church that it intended to conduct an inquiry as to whether the church was operating as a tax-exempt organization. After negotiations failed, the IRS revoked the church’s tax-exempt letter ruling and the church filed suit.
The court pointed out that under the Internal Revenue Code, churches are the only institutions that are not required to apply for tax-exempt status. Churches, by their very nature, are considered tax-exempt. While churches may ask the IRS for an advance letter ruling, churches are not required to do so. If a church does not seek a letter ruling, a donor’s contributions are still tax deductible. In the event of an audit, the donor must prove that the church is operating like a tax-exempt organization and following the requirements of IRS Code 501(c)(3), which includes a prohibition on endorsing or opposing a candidate for political office. If a letter ruling is in place, the donor simply points to the letter ruling on file with the IRS.
The Church at Pierce Creek had applied for and received a letter ruling. The IRS simply revoked the letter ruling and the church sued to get it back. The court noted that “because of the unique treatment churches receive under the Internal Revenue Code, the impact of the revocation is likely to be more symbolic than substantial.”
Indeed, the tax-exempt letter revocation is only symbolic and not substantive. During the oral argument, counsel for the IRS confirmed that if the church chose not to intervene in future political campaigns, it may hold itself out as a 501(c)(3) organization and receive all of the benefits of that status. The court wrote: “All that will have been lost is the advance assurance of deductibility in the event a donor should be audited.”
The court also pointed out that revocation of the letter ruling does not make the church liable for the payment of taxes. As the IRS conceded during oral argument, “the revocation of the exemption does not convert bona fide donations into income taxable to the church.” The court also noted that it knew of no authority “to prevent the church from reapplying for a prospective determination of its tax-exempt status and regaining the advance assurance of deductibility – provided, of course, that it renounces future involvement in political campaigns.”
So what is the impact of this ruling? It’s certainly not as Barry Lynn, of the Americans United for Separation of Church and State, declared by saying the ruling was a “staggering defeat for Pat Robertson, Jerry Falwell and others who want to convert America’s churches into a partisan political machine.” Indeed, this ruling actually helps Pat Robertson and Dr. Jerry Falwell.
Understand that the only thing the church lost in this case is its advance tax-exempt letter ruling. Contributions given prior to the revocation of the IRS letter are still deductible and are not taxable to the church. After the letter ruling was revoked, the church could continue as a church, continue receiving donations, and donors could continue to claim deductions on their income tax return, provided that the church did not continue to endorse or oppose candidates. If the church wants an advance letter ruling at some point in the future, it is free to ask for another one. Obviously in the case of the presidential election, the church could easily cease endorsing or opposing a candidate since the election had transpired.
Either the church was naive, or it sought to pick a fight with the IRS. The case included several hundred pages of newspaper articles where other churches had invited candidates to speak in services where the IRS did nothing. The Church at Pierce Creek sought to make headlines when it took out full-page ads in USA Today and the Washington Times. The Church then clearly identified itself and requested contributions. This is the first case in history where a church has ever lost its tax-exempt letter ruling. It is the most outrageous set of facts, because the full-page ads essentially put a target in the church’s front yard. Absent these outrageous facts, no church has ever lost its tax-exempt status.
Moreover, even with these facts begging for a fight with the IRS, the case shows the IRS has almost no teeth. A church can give up the tax-exempt letter ruling, and continue on after that date so long as it doesn’t actively endorse or oppose a candidate. A church can then apply for another letter ruling at some point in the future if it chooses to do so. In this way, the church can continue on with its activity with virtually no interruption.
The IRS regulations are clear that, while churches may not endorse or oppose a candidate for political office, churches may educate about the candidates’ viewpoints. Education can take the form of sermons, forums, debates, or voter guides. The church may educate about its doctrinal positions that are relevant to the political races. Education is perfectly permissible for a 501(c)(3) organization. Moreover, churches can engage in lobbying for or against legislation so long as churches do not devote more than a substantial part of their overall activity toward lobbying efforts. Indeed, no church has ever lost its tax-exempt status for engaging in too much lobbying.
Despite the huffing and puffing of groups like Americans United for Separation of Church and State or People for the American Way, they are no more powerful than the wolf blowing against the little pig’s brick house. I am sure that these organizations will try to terrorize pastors into silence, but everyone should know that, instead of a muzzle, this case is actually a megaphone for churches.