Posted on July 19, 2006

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IRS Warns Tax-Exempt Groups to Avoid Campaigning

The Internal Revenue Service has been warning churches and nonprofit organizations to avoid improper campaigning during the upcoming political season or face possible revocation of their tax-exempt status, the Associated Press reports.

In notices to fifteen thousand nonprofits, church denominations, and tax preparers, the IRS detailed its Political Activity Compliance Initiative, through which the agency will expedite investigations of claims of improper campaigning. No longer waiting for an annual tax return to be filed or the fiscal year to end, the agency has empowered a three-person committee to make an initial review of complaints and then vote whether to pursue the investigation in detail. "While the vast majority of charities and churches do not engage in politicking, an increasing number did take part in prohibited activities in the 2004 election cycle," said IRS commissioner Mark W. Everson in a statement.

Since that year, the IRS has investigated more than two hundred organizations, and determined that sixty-two were in violation. Three nonprofits lost their tax exemption and fifty-nine received warning letters, with some ordered to pay an excise tax.

This month, OMB Watch, a Washington, D.C.-based government watchdog group, issued a report criticizing the enforcement program, claiming it could prompt retaliatory complaints against organizations unless the IRS develops clear guidelines. "I don't think this is a case of bad faith," said author of the report Kay Guinane. "I just think it's a poorly structured program."

“IRS Warns Churches to Avoid Campaigning.” Associated Press 7/18/06.

Primary Subject: Public Affairs
Secondary Subject(s): Religion
Location(s): National, United States

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