IRS Audits of Churches

The Internal Revenue Service is very particular about churches supporting or opposing a candidate for public office, especially during an election year. The IRS’ definition of supporting or opposing a candidate is very broad. Almost any statement referencing a candidate can be subject to IRS inquiry and audit. People should know that the IRS doesn’t have unfettered discretion to limit a church’s right to exercise free speech. If your pastor and/or church is ever a subject of IRS inquiry, it is vitally important that a tax attorney is retained for advice before responding to the IRS.

Just because a church is a tax exempt organization, doesn’t mean it doesn’t have constitutionally protected rights. As we head into a contested election cycle, here are some guidelines of what churches and pastors have a right to do or not to do. For further details, please feel free to contact me and I can provide a more thorough guideline.

1. Discuss the positions of candidates on public issues. Pastors and churches are free to discuss the positions of candidates on issues – including criticizing or praising them for their positions. This is called issue advocacy.

2. Pastors can personally endorse a candidate. While the church cannot support or oppose a candidate, the pastor in his/her personal capacity can support and endorse a candidate for public office. The pastor should make it clear that he/she is endorsing the political candidate in his/her personal capacity only.

3. Churches may lobby for legislation. Churches may spend up to 20% of its funds for lobbying activities. As a result, a church may discuss legislative issues, support or oppose legislation, encourage its members or the general public to support or oppose legislation, and support other organizations with their lobbying efforts. Furthermore, churches may lobby candidates on their positions on issues and distribute educational material to candidates or at political events, as long as this is being done to get out the organization’s message and not to assist any candidate. This is a vitally important right, as many churches are seeking to protect the rights of the unborn and traditional understanding of marriage.

Conservative churches are often the target of liberal organizations that seek to silence them with threats and actual complaints to the IRS of alleged and unfounded political intervention. Unfortunately, the IRS responds very quickly to complaints of alleged political intervention with threats of audits. Churches and their members should know that religious organizations classified as houses of worship have much more legal protection from arbitrary audits than individuals and other types of non-profit organizations. If your church or pastor needs additional guidance on these issues, please do not hesitate to contact me.