Being “Tax-Exempt” Doesn’t Guarantee “Free Speech”

A few weeks ago, 33 pastors, backed by the Alliance Defense Fund, decided to endorse candidates from the pulpit in direct contravention of 501(c)(3) laws.  Their argument?  Constitutionally protected free speech.

I’m seeing the same meme show up in comments.  Let’s get something straight: no law is telling any church what their leaders can or cannot say.  But tax laws restrict what kinds of things an organization can say in order to qualify for tax-exempt status.  If you want to have completely free speech, don’t ask the taxpayers for a handout in the form of tax exemptions.  The Treasury needs to remain impartial, particularly with respect to candidates for public office.

Another important reason for this rule is that the government wants to be sure that political contributions are always taxable.  Taken to an extreme, if pastors were allowed to endorse candidates and engage in any political discourse they liked, then candidates could set up shell churches, get 501(c)(3) tax exempt status, and have their supporters donate to these churches and get a Schedule A charitable deduction for, you guessed it, a political contribution.  And one more thing — the church would be exempt from disclosure rules too.  The only way to prevent these abuses is to draw a bright line between tax-exempt organizations and influencing legislation and endorsing (or opposing) candidates.

Accepting tax-exempt status means that you tell the government — and the people — that your organization is going to act in the general welfare.  By applying for a tax exemption, your organization gives up the right to make certain forms of speech.  Want to say whatever you want?  Don’t be tax-exempt.  Want to be tax-exempt?  Leave politics out of the sermon.

Simple.

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10 Responses to Being “Tax-Exempt” Doesn’t Guarantee “Free Speech”

  1. Nephi says:

    It’s not a financial issue. It’s a moral issue. It’s promoting the best method for salvation for as many of Gods children as possible. This is why the church leaders spoke up on this matter. This is what they truly believe. The LDS church does more humanitarian work, welfare work, and good will than any other organization. You can waste your time kicking against the pricks, trying to fight to hurt an organization that does much good if you want, but these efforts would be better spent doing other things.

  2. toby darling says:

    Just like the efforts put forth for the hate. The 40 million dollars would have helped a lot more in other places. They can take their magic pants and go straight to hell. They are no more or less a cult.

  3. Steve says:

    It’s a gross simplification–to the point of inaccuracy–to state that a 501c3 corporation has to “leave politics out of the sermon” if they want to keep their tax-exempt status. While it’s true that a church cannot officially campaign for a political CANDIDATE and keep its tax exemption, there is no similar outright ban on “politics” in general. (The pastors who publicly endorsed candidates appear to be engaging in a sort of civil disobedience, in an attempt to bring a Constitutional challenge against the rule against endorsing candidates. The constitutionally granted tax power of the federal government being firmly established as a distinct enumerated power, they really don’t have much of a chance).

    However, a church only forfeits its 501c3 classification for “lobbying” activities if such activities constitute a “substantial” part of the church’s total activity.

    The LDS church’s activities relating to proposition 8 were not part of a campaign for any candidate, so if its tax exemption is to be revoked it must be shown that its activities pertaining to proposition 8 were a substantial portion of its total activities. If we only go by the LDS church’s “official” involvement (the issuance of a four-paragraph memo in June, the creation and maintenance of preservingmarriage.org, a few encouraging sermons by church leaders, etc.) then it’s really hard to make the argument that these activities constitute a “substantial portion” of the activities of an organization that has 50,000 missionaries serving all over the world. So we must go a step further and make the case that the activities of Mormons acting in their individual capacity is legally attributable to their church. I’m no constitutional scholar, but I don’t think that argument would fly. Good luck.

  4. Locke- Someone who reads says:

    Read US Title 26 501 (c)(3) subsection h. For the tax exempt organization to be disqualified, it needs to exceed the limit set on lobbying for the year, 150% of the norm. Also, you obviously have no charitable contribution experience, or you would know that service is not tax deductible, therefore not within the lobbying limitations. I’ll spell it out for you: since the numbers of resources dedicated are dedicated by individuals donating time and money, and the church has only released one document for Proposition 8, and no money, this does not take away any tax exempt status. This is ridiculous, trying to defame churches by stating numbers, when you haven’t even read the laws.

    Now I know you’ll pitch a fit and claim that you have some law experience, but c’mon, it’s obvious you don’t. You’re just another angry person out there who believes that everyone else in the world agrees with them and that moral people are a minority. The Church of Jesus Christ of Latter-Day Saints has done nothing wrong and are being marked for their beliefs. Read the law before trying to crucify people, Pilot. You’re wrong.

  5. lds501c3 says:

    Locke,

    You clearly didn’t read the law. Churches are specifically disqualified for the provisions of Subsection (h) (as elsewhere noted in this blog). Read 501(h)(3) and 501(h)(5)(A).

  6. After reading through the article, I just feel that I need more information on the topic. Can you suggest some more resources please?

  7. Being “Tax-Exempt” Doesn’t Guarantee “Free Speech”

    Guaranteed Free Speech, Guarantees Free Speech.

    Congress shall make no law…
    501c3 is the government label of ‘Charitable Organization’ on a Religion or a Church being a Law, Regulation, Certification that the Church meets the Regulatory and Policy Standards of the Government.
    …respecting an establishment of religion…
    If the religion does not meet the government standards they are denied ‘tax exempt status’ and are regulated as a business or shut down in some other way, usually involving Taxes or Law Enforcement.
    …or prohibiting the free exercise thereof…
    Adhering to the Regulations and Policies is Tricky. The Religion Can’t speak out against, or for politics in any substantive way. Instructing on Government and Peacefully Organizing Political Protesting or Demonstrations.
    …or abridging the freedom of speech…
    Congregations Advocating Politics or Religious Political Speech is not allowed in churches because it would violate the separation of Church and State, So 501c3 organizations are not allowed to discuss that in a religious setting or effort
    …or of the press…
    There can be no religious efforts or material printed to promote specific bill, propositions, candidates as well as specific political organizations, parties or movements
    …or the right of the people peaceably to assemble…
    The religious meetings can’t be held in public and non-religious events and public assemblies on public or private land require permits.
    …and to petition the government for a redress of grievances…
    There can be no use of religious meetings, churches or 501c3 organizations petition for specific political parties, actions, policies or movements.

    http://sovereignthink.wordpress.com/2010/09/15/latter-day-glory/

    sovereign think

  8. Eleanore says:

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