News Intelligence Analysis
[Yurica Report Editor's Note: click here to read the full IRS Report]
February 25, 2006
I.R.S. Finds Sharp Increase in
Illegal Political Activity
By STEPHANIE STROM
The I.R.S. said yesterday that it saw a sharp increase in prohibited
political activity by charities and churches in the last election
cycle, a trend that it aims to reverse as the country heads into
the midterm elections.
The tax agency found problems at three-quarters of the 82 organizations it examined after having received complaints about their political activities, according to a report the Internal Revenue Service released. The infractions included distributing materials that encouraged people to vote for particular candidates and giving cash to campaigns.
The agency said it was seeking to revoke the exemptions of three organizations but did not name them, pending an appeals process. Charities are generally prohibited from campaigning for candidates, although they can take stands on issues.
The internal revenue commissioner, Mark W. Everson, devoted much of a speech to a civic group yesterday in Cleveland to the subject.
"We've seen a staggering increase in money flowing into campaigns, and the question is whether all this money is encroaching upon and polluting the charitable sector," Mr. Everson said in a telephone interview before his address. "We saw a disturbing amount of political intervention in charities in the last election cycle."
While pointing out the extent of the problem, the agency published more guidance for nonprofit organizations, including examples of what is permissible and what is not. Mr. Everson warned that the agency would be more aggressive in addressing prohibited political activity as election campaigns moved into full swing.
"You have the ever-increasing influence of money in politics and the fact that charities are subject to much less regulation than campaigns for parties," he said. "Those two things come together to create an opportunity that is at variance with what the statute limiting political activity by charities allows."
Advocates for nonprofit groups praised the report, saying it was unusually clear and straightforward.
"They're getting information out early this year, before we get into the heat of an election year," said Liz Towne, director of advocacy programs for the Alliance for Justice, which has urged the tax agency to provide better guidance. "By releasing data on their findings, they're moving toward more transparency."
Barry W. Lynn, executive director of Americans United for Separation of Church and State, which has filed dozens of complaints about churches' political activities, said, "It's no longer possible for critics to say the I.R.S. is blind or toothless, because this announcement is a pretty major indication that they are serious about educating charities and about imposing appropriate penalties."
The complaints by the group include one on July 15, 2004, against Jerry Falwell Ministries, saying falwell.com had endorsed President Bush and urged readers to donate $5,000 to the Campaign for Working Families. Such activities are illegal, Mr. Lynn said, and the Web site was quickly changed.
Almost half the tax-exempt groups under examination are churches. Churches played a pivotal role in the 2004 elections, and the Republican Party, in particular, harnessed their influence to register, educate and deliver voters. Both parties are cultivating churches for future elections. Democratic senators have been courting the Rev. Rick Warren, who draws more than 20,000 people a week to his Saddleback Church in Lake Forest, Calif., and the North Carolina Republican Party made waves when its leader sent an e-mail request for church directories.
Of the 47 complaints against churches under investigation, 37 were found to have merit. The agency found that three had no merit, and seven examinations were pending. Over all, 82 of 110 examinations have been completed.
All Saints Church, a liberal Episcopal church in Pasadena, Calif., is among those awaiting a decision. The agency began an investigation after a former pastor gave a sermon in which he imagined a debate among Jesus, President Bush and Senator John Kerry and in which he criticized the Iraq conflict.
A lawyer for All Saints, Marcus Owens, said he did not know the status of the investigation.
"The I.R.S. agent assigned to All Saints doesn't even return my calls," Mr. Owens said. "The I.R.S. sent an inquiry and then an examination letter. It has never done anything further."
Mr. Owens also represents the National Association for the Advancement of Colored People, whose chairman, Julian Bond, gave a speech in July 2004 sharply critical of Mr. Bush and Vice President Dick Cheney. The N.A.A.C.P. declined to cooperate in the following investigation, and Mr. Owens said it had not heard from the I.R.S. since early last year.
Mr. Owens, who formerly led the unit in the agency responsible for overseeing tax-exempt groups, said he had concerns about the report.
"I wonder whether or not all the 50 or 60 organizations they identified as having engaged in illegal political intervention really did have significant issues," he said. "That having been said, give me an hour and my computer and I can sit down and give the I.R.S. 200 good audit leads on questionable political activity."
Last month, a group of religious leaders representing Christian and Jewish denominations filed a complaint against two large politically active churches in Ohio, Fairfield Christian Church and World Harvest Church, and their leaders, the Revs. Russell Johnson and Rod Parsley.
The churches, which deny wrongdoing, said the I.R.S. had not contacted them since then.
Copyright 2006The New York Times Company
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