Church Sermons Targeted by IRS

In a game of law and punishment where the rules are unclear, First Amendment protected speech from the pulpit of a church clashes against the risk of financial punishment if the Internal Revenue Service revokes a church’s tax-exempt status for crossing the line into politics.

The problem, debated Wednesday at the National Press Club in Washington, D.C., is that there is no consensus on where that line is. Court litigation on the issue of the separation of church and state, traditionally deferred by the Supreme Court to the Congress’ guidance, appears to be the path to a battle over freedom of speech and religion, and government authority to regulate and tax.

The Federalist Society-sponsored debate was moderated by attorney Steffan N. Johnson. The panel consisted of Benjamin W. Bull, chief counsel for the Alliance Defense Fund and a constitutional law expert, law professor Douglas Laycock from the University of Michigan, Rev. Barry W. Lynn, executive director of Americans United for Separation of Church and State, and tax law expert Donald B. Tobin, associate faculty professor for the Ohio State University law school.

Critics of regulations limiting free speech and the practice of religion claim that current regulations violate the First Amendment’s free exercise clause, but supporters contend they preserves the First Amendment’s establishment clause.

Johnson — who has argued more than 40 cases before the Supreme Court, including cases of religious freedom — set the debate issue as the constitutional validity of the 1954 amendment by the then newly elected Texas Sen. Lyndon Baines Johnson, who would become the 36th president of the United States. Johnson’s amendment changed the IRS code, prohibiting tax-exempt entities and churches from endorsing or opposing political candidates. In effect, the amendment punishes critics for speaking out by removing their tax-exempt status and rewards other non-profits for keeping quiet, thereby retaining that status.

Bull told the approximately 100 people gathered that there is something “very wrong” with a law that rewards those who don’t criticize politicians. He characterized the Johnson Amendment as a punitive measure to gag critics. He said the IRS has declined to litigate the constitutionality of the Johnson Amendment, but the courts will rule it unconstitutional if the case is ever heard because the amendment creates a two-tiered system of favored and disfavored churches under government surveillance.

Bull said government law cannot even determine exactly when a person becomes a candidate, but the IRS will judge the use of “code words” in pulpit speech and recognize transgressions of the tax-exempt regulations when they see it. Nobody knows what is legal or is not, and a pastor’s intent is irrelevant. A sermon could accidently transgress the law, incurring IRS punishment.

“If a church is not politically correct, it loses its tax status,” Bull said. “It should send chills down all our spines.”

Lynn said “there is nothing insidious” about the amendment which was non-controversial in 1954. The law does not prohibit opinions on great moral issues — it merely prohibits churches from using their financial resources to promote or resist a political candidate. To suggest pastors hold a special privilege over other tax-exempt entities was “terribly problematical,” Lynn said. Recent polls conducted for Americans United for Separation of Church and State indicate most believe the policy is sound.

Bull countered that hyper-regulation of church speech will “nationalize” the churches, placing them under government control.

“Play ball or lose their tax-exempt status,” Bull said.

Lynn rejected the notion that government rules for tax-exempt status amounted to censorship and ask if there is “something magic” about the pulpit. He said it is rare for the IRS to go after the tax-exempt status of a church and that the IRS does not do enough about political statements. He dismissed the contention that the law is vague and said ministers have only to ask themselves if their statement promotes or opposes a specific candidate, and if so, don’t say it.

“The IRS needs to put more teeth into that law and increase the number of penalties,” Lynn said.

Laycock said a sermon on a moral issue is at the core of First Amendment protection, but the government has the right to impose limits on campaign contributions and disclosure requirements for 501(c)(3) entities. The line is crossed when cash is spent in violation of tax exempt regulations, but a sermon does not raise or spend cash and should not be regulated. Any rules put on pulpit speech “can be put on anyone.” Church and state separation is not at issue because historically churches have always been involved in discussions of moral issues in conflict with politics.

Laycock agreed that the rules are vague and called increased regulation of speech from the pulpit a potential “atom bomb” for churches, non-profit organizations and the donors who make tax-deductible contributions and would face IRS audits if those donations are later ruled non-tax deductible.

“Tax exemption is a privilege, not a right,” Tobin said, and it is granted by the Congress and does not come from the Constitution. Rules on moral statements risk the danger of creating a government-favored religion. Pastors can endorse candidates and get involved in campaigns, but they cannot use the money and the power of the church to do so. Congress does not want churches “meddling in campaigns” and does hold the authority to set rules for tax-exempt status and can prohibit them from lobbying.

Laycock said that church leaders have a special moral leadership role to church members that no other type of organization possesses. Regulation of speech from the pulpit erodes the constitutional entitlement clause of the First Amendment when applied to churches and is intimidation by the system of justice.

Johnson asked the panel where the line should be drawn for conditions on tax-exempt status for churches.

“That’s the debate,” Tobin said. “The closer you get to that line, the harder it is to tell if you’re over it.”

Laycock said the discussion was turning into a debate about what is a political statement and what is a church sermon and that there is a need for an identifiable line between a statement and the cost of commenting on moral and political issues.

One point the entire panel agreed on was that churches and religious leaders have always been involved in major political issues in the past and will continue to do so.

“For 166 years, pastors have spoken out,” Bull said. “What are we afraid of now?”

For more information about the Federalist Society and webcasts of the debate, visit their website at