This post was originally published on Forbes Jun 17, 2015
Rules about not-for-profits not getting involved in politics have been the source of much tsoris for the IRS. They are at the heart of the neverending Lois Lerner Tea Party scandal. And then there is Pulpit Freedom Sunday, where pastors dare the IRS to come after them, the Freedom From Religion Foundation sues the IRS and then when the IRS settles the suit promising to do something, maybe, the pastors freak out. Of course, the 501 organizations that are the focus of these controversies are involved in government politics. What about an organization that is focused on church politics? Can that be tax exempt? That was the question that the IRS was addressing in PLR 201523022.
The organization, which we will call Org for now is planning preaching engagements, revivals, Bible Studies, worship services, and mission outreach trips. With that on the agenda, it would seem that exempt status would be a cakewalk. But there is more. The primary focus of Org is the election of "F" to be a bishop of the "E" Church.
The "E" Church does not have appointed bishops. Delegates are elected by grassroots clergy and lay members to go to a quadrennial conference where the bishops are elected. It is the bishops that govern the church.
It strikes me as something of a compromise between hierarchical churches where bishops are appointed and churches with extreme congregational independence. If you locked a bunch of Catholics who wanted things more democratic and Southern Baptists who wanted things more organized in a room and told them they had to agree on a governance model for the Southern Catholic Convocation, it might be what you would end up with - or not.
Anyway, I love to penetrate the redaction on private letter rulings. On this one, I'm sticking my neck out a bit, because I have no way of confirming it, but I would be very surprised if the "E" Church turned out to be anything other than the African Methodist Episcopal Church which is gearing up for its 50th Quadrennial Conference and Bicentennial Celebration in Philadelphia in 2016. [See Note]
AME bishops are elected for life at the conference and are required to retire from active service at the General Conference nearest their 75th birthday. AME was founded in 1816 by Rt. Rev. Richard Allen in Philadephia. According to Wikipedia:
The African Methodist Episcopal Church has a unique history as it is the first major religious denomination in the western world that developed because of sociological rather than theological differences. It was the first African-American denomination organized and incorporated in the United States. The church was born in protest against racial discrimination and slavery.
If I am reading the roster correctly, there are five retirements in 2016 and campaigning has started in earnest. Here are some examples of the candidates.
There are a lot more so it would be a real stroke of luck if "F" was one of those three.
The ruling notes that the focus of the organization on electing "F" is real clear.
You arrange for F to travel to various E churches to preach, teach, and exhort the word of God, where after the event you may conduct activities to make audience members aware of the fact that F is running for bishop. You have printed advertisements and distributed campaign materials (postcards, bookmarks, ink pens, and buttons) in support of F's candidacy. Your corporate name, H, and your website URL, J, each consists of a short phrase unambiguously communicating the candidacy of F and support for such candidacy. Your website solicits donations for the F's election campaign. You conduct an annual dinner dance fundraiser where attendees are advised that the proceeds benefit H.
Your revenues come from online donations, other contributions, and the annual fundraising gala. Funds are used to pay for administrative expenses, public relations, print/written communications, social media, marketing and strategy, fundraising, and travel.
Org argues that supporting "F"'s candidacy really is an exempt purpose:
You contend that support of F's candidacy for the office of bishop furthers exclusively charitable or religious purposes by providing opportunities for preaching, teaching, and exhorting the word of God. F is the vehicle by which your vision and mission of transforming lives through relevant preaching and teaching of God's Word are accomplished. You state that, "Upon the prayerful election of F as a bishop of the E Church, the members of H would be able to continue the vision and mission as set forth and adopted by the organization."
The IRS is not buying it.
To be exempt under Section 501(c)(3) of the Code, you must be organized and operated exclusively for exempt purposes within the meaning of that section. An organization is "operated exclusively" for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of such exempt purposes specified in Section 501(c)(3). See Section 1.501 (c)(3)-1 (c)(1) of the Regulations. In addition, your activities must serve the public interest and may not benefit private interests more than incidentally, as described in Section 501(c)(3)- 1(c)(2) of the Regulations. Your Director/Chairman, F, is a private individual, as defined in Section 501(a)-1(c) of the Regulations, as she has a personal and private interest in your activities. Your support of F's candidacy inures to her benefit by being designed to help advance her career from pastor to bishop, with all the additional power and presumably higher compensation that the higher office entails.
It will be interesting to see if this ruling generates any reaction. It strikes me that it is pretty reasonable.
Update On Kent Hovind
My readers who follow this blog because of its coverage of the intersection of taxation and religion have to be familiar, by now, with the matter of Kent Hovind, whose prosecution and imprisonment for tax related crimes has sparked an enthusiastic social media campaign on his behalf. Hovind's conviction for contempt of court was overturned and the government withdrew more serious fraud and conspiracy charges almost a month ago. His release date from his 2006 conviction is August 9th, but before the new charges had been filed he had been approved for home confinement beginning in February. So there was some hope that he would be allowed to go home after the contempt conviction was reversed.
Instead, he was transferred to several different facilities and is now at the Federal Correctional Institution in Yazoo, Mississippi where he was incommunicado for over a week and is being held in the Speical Housing Unit. His supporters received a letter from him yesterday and he indicates that the conditions are harsh. Here is Rudy Davis's analysis of the letter.
The Hovindication narrative has some significant holes in it, but at this point it does seem that the government is jerking Hovind around unnecessarily.
Note
I received a tweet pointing out an error above, which I am leaving, because it actually makes the point that the person contacting was making. One of the campagin for bishop advertisements is actually for someone seeking to be a bishop in African Methodist Episcopal Zion Church and further that other Methodist denominations elect bishops.
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