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Internal Revenue Code (IRC) section 501 is the portion of the United States tax code that was enacted by Congress to provide various groups with exemptions from taxation.[1] Churches and religious organizations, like many other charities, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions.[2]

Although the IRC 501(c)(3) tax exemption was established in part to protect the religious heritage of the United States, it was subsequently used as a political strategy to silence and eliminate the Church's ability to shape public policy. Restrictions were added to the tax code that prevents Churches from influencing legislation and banning its involvement in political campaigns. These restrictions, which are a required condition of maintaining tax-exempt status, are a clear violation of the First Amendment of the U.S. Constitution in prohibiting the free exercise of religion and speech.

First Amendment: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. [1]

Qualifying groups

Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.[2] However, numerous other types of organizations may also receive exemptions under the 501c3 including: charitable, religious, educational, scientific, literary, testing for public safety, amateur sports competition, and preventing cruelty to children or animals.[3] These other qualifying groups, including religious organization, who desire a tax exempt status must apply using form 1023.

Political restrictions

Lobbying activities

When Congress originally enacted the 501c3 tax code, there were no restriction on the activities of charities or Churches to influence legislation (lobbying). In 1919 a U.S. Department of Treasury regulation stipulated that organizations formed to disseminate controversial or partisan propaganda ”were not educational” within the meaning of the statute. The first specific statutory restriction was added it as a floor amendment to the Revenue Act of 1934.[4] It imposed a lobbying restriction on charitable organizations, stating that:

"no substantial part of an organization’s activities constitute carrying on propaganda or otherwise attempting to influence legislation"

Substantial part

Based on this restriction, tax exempt organizations are permitted to lobby to affect legislature so long as they do not devote a substantial part of their activities to attempting to influence legislation. Two different tests are employed to determine substantiality of lobbying activities.[5] The older test, enacted in 1934, applies a facts and circumstances criteria to determine substantial part, wherein the purpose and activities of the organization are paramount considerations. The newer test introduced in 1976 provides that organizations may elect to be governed by an expenditure test.[4] Under the expenditure test, the extent of an organization’s lobbying activity will not jeopardize its tax-exempt status, provided its expenditures, related to such activity, do not normally exceed an amount generally based upon the size of the organization.[6] Lobbying may cause revocation of exempt status only if the amounts spent on lobbying normally exceed 150 percent of either of the nontaxable amounts over a four year period.[4]

Most court cases have tended to avoid any attempt at percentage measurement of activities. While neither the Service nor the courts have adopted a percentage test for determining whether a substantial part of an organization’s activities consist of lobbying, some guidance can be derived from two cases Seasongood (6th Cir. 1955), and Haswell (Ct. Cl. 1974). Under Seasongood, a five percent safe harbor has been frequently applied as a general rule of thumb regarding what is substantial. Similarly, lobbying activities that exceed the roughly 16 to 20 percent range of total activities found in Haswell are generally considered substantial.[4]

Influencing legislation

Attempts to influence legislation include action by the Congress, State or local governing body, or by the public. Restrictions upon these actions are not limited to direct communications to members of the legislature (direct” lobbying). Indirect communications through the electorate or general public (grass roots” lobbying) are also considered to constitute attempts to influence legislation.[4]

This provision was tested in the case of Christian Echoes National Ministry, Inc. v. United States (10th Cir. 1972). Christian Echoes National Ministry published articles and produced radio and television broadcasts that urged recipients to become involved in politics and to write to their representatives in Congress to urge that they support prayer in public schools and oppose foreign aid. The organization argued that attempts to influence legislation would occur only if legislation were actually pending. The Tenth Circuit concluded that the regulation properly interpreted the statute, and that the organization was engaged in attempting to influence legislation, even if legislation was not pending.[4]

To further regulate lobbying groups, the Lobbying Disclosure Act of 1995 was enacted (2 U.S.C. 1601 et seq), which requires organizations that engage in lobbying to register and report on their activities. In addition, the Act limits IRC 501c4 organizations that engage in lobbying by rendering them ineligible to receive Federal funds as an award, grant, or loan.[4]

Campaign activities

Lyndon B. Johnson. 1964. Presidential photo.

Restrictions on political campaign activity by charities and Churches was created by Congress only 50 years ago. In 1954, Congress approved an amendment to place an absolute ban on 501(c)(3) organizations from engaging in any type of activity that attempts to influence the election of a public official.[7] This amendment, which was introduced by Senator Lyndon B. Johnson, also added Churches to the IRC list of qualifying organizations for the first time, an action he called a "favor" to the Church.[8] It was introduced during a Senate floor debate on the Internal Revenue Code, and the prohibition added to the Code without hearings, testimony or comment by any tax-exempt organizations.[9] To the extent Congress has revisited the ban over the years, it has in fact strengthened the wording. The most recent change came in 1987 when Congress amended the language to clarify that the prohibition also applies to statements opposing candidates.[7]

Under the Internal Revenue Code, all IRC section 501(c)(3) organizations, including Churches and religious organizations, are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made by or on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.[2]

First Amendment violation

The Internal Revenue Service claims the 501c3 was enacted in recognition of our rights established by the First Amendment of the U.S. Constitution (see quote below), but the restrictions put in place by subsequent liberal politicians are antithetical to and clear violates of the Establishment Clause or the Free Exercise Clause of the First Amendment.

The following quote is from the forward of the IRS tax guide for Churches and Religious Organizations.

Congress has enacted special tax laws applicable to churches, religious organizations, and ministers in recognition of their unique status in American society and of their rights guaranteed by the First Amendment of the Constitution of the United States.[2]
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The First Amendment provides that “Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof ...” However, to date, courts have upheld IRC restrictions when challenged on the grounds that it violates the First Amendment. In 1992, in the case of Branch Ministries v. Rossotti, the Court of Appeals for the D.C. Circuit upheld the constitutionality of the political campaign intervention prohibition as applied to a Church.[10]

The Church at Pierce Creek (Branch Ministries) in Binghamton, N.Y., placed a full-page advertisement in USA Today and The Washington Times, which stated that Gov. Bill Clinton supported abortion on demand, homosexuality and the distribution of condoms to teenagers in public schools. The IRS subsequently revoked the Church’s 501(c)(3) status on the grounds that it violated the political campaign intervention prohibition. The Church challenged the IRS in court, claiming that revocation of its tax-exempt status violated section 501(c)(3), both the Free Speech and Free Exercise clauses of the First Amendment, and the Religious Freedom Restoration Act.[9] The court concluded that the prohibition did not violate either the Establishment Clause or the Free Exercise Clause of the First Amendment, in part on the grounds that for such burden to be unconstitutional it must put "substantial pressure on an adherent to modify his behavior and to violate his beliefs".

The Church appears to assume that the withdrawal of a conditional privilege for failure to meet the condition is in itself an unconstitutional burden on its free exercise right. This is true, however, only if the receipt of the privilege (in this case the tax exemption) is conditioned
"upon conduct proscribed by a religious faith, or ... denie[d] ... because of conduct mandated by religious belief, thereby putting substantial pressure on an adherent to modify his behavior and to violate his beliefs." Jimmy Swaggart Ministries, 493 U.S. at 391-92[10]

Moral implication

The Church has always been exempt from paying income tax. This state favor is due to the religious heritage of the United States and Christian beliefs of its founding fathers. The political restrictions that were later put in place are indicative that the U.S. is slipping into the hands of liberal humanists.

By accepting this state favor, U.S. Churches are concomitantly modifying their behavior and violating their beliefs. These restrictions have caused the Church to become uninvolved in politics, and thereby, the moral majority of the population has allowed practices such as abortion and homosexuality to become legalized, and God to be disallowed from public schools.

Although the IRC prohibitions may indeed be a burden upon the free exercise of religion, the question remains - does it constitute substantial pressure to violate beliefs? After all, this state favor amounts to nothing more than a financial incentive to stay out of politics. The Church may certainly choose between the receipt of the benefits of tax exemption and political action. It is, in fact, the moral obligation of the Church to choose against this enticement and regain its place as the leaders of the nation.


  1. § 501. Exemption from tax on corporations, certain trusts, etc. U.S. Code Collection. by Cornell University Law School.
  2. 2.0 2.1 2.2 2.3 Tax guide for Churches and Religious Organizations by the U.S. Internal Revenue Service.
  3. Exempt Purposes - Internal Revenue Code Section 501(c)(3) by the U.S. Internal Revenue Service
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 P. Lobbying Issues by Judith E. Kindell and John Francis Reilly. U.S. Internal Revenue Service
  5. Lobbying by the U.S. Internal Revenue Service
  6. Measuring Lobbying Activity: Expenditure Test by the U.S. Internal Revenue Service
  7. 7.0 7.1 Charities, Churches and Politics by the U.S. Internal Revenue Service
  8. 501c3 Facts by Heal Our Land Ministries.
  9. 9.0 9.1 Politics and the Pulpit 2008 by The Pew Forum on Religion & Public Life
  10. 10.0 10.1 Branch Ministries v. Rossotti U.S. Court of Appeals for the D.C. Circuit.

See Also

External links