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 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.
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.
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."
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.