On Jan. 4, 2005, the “Houses of Worship Free Speech Restoration Act of 2005” was introduced by Rep. Walter Jones (R-NC) in the U.S. House of Representatives. The legislation is a revised version of a bill he has introduced in every Congress since 2001. The new bill would permit religious organizations to engage in limited types of campaign activity, in unlimited amounts, without jeopardizing their tax-exempt status. It would amend the Internal Revenue Code (IRC) so that religious congregations would be allowed to disseminate political information in the “content, preparation or presentation of any homily, sermon, teaching, dialectic, or other presentation made during religious services or gatherings”. Background H.R. 235’s predecessor would have permitted churches, integrated church auxiliaries and conventions or associations of churches to participate or intervene in political campaigns on behalf of or in opposition to candidates for public office without losing their tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. The previous legislation had significant campaign finance implications. Specifically, the legislation would have allowed houses of worship and their leaders to pay for television/radio sham issue ads promoting or attacking federal candidates; advertisements that advocate the election or defeat of a candidate pay for phone bank and direct mail communications; make hard money contributions to federal candidates and political parties; and make soft money contributions directly to state and local parties (if permissible by state law). It would have also permitted these kinds of activities in state or local elections. The bill was introduced in response to Branch Ministries v. Rossotti, 211 F.3d 137(D.C. Cir. 2000),where the U.S. Court of Appeals for the D.C. Circuit upheld the authority of the Internal Revenue Service (IRS) to revoke the tax-exempt status of churches that engage in prohibited campaign activities. Current Law Churches and religious organizations are among several types of organizations exempt from federal income taxes by Section 510(c)(3) of the IRC. To be eligible for tax-exempt status the 501(c)(3) must not: “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” This is an absolute prohibition. Violation of the regulation can result in the loss of tax-exempt status for a nonprofit. In Branch Ministries v. Rossoti, the U.S. Court of Appeals for the District of Columbia Circuit upheld the IRS revocation of the exempt status of the Church at Pierce Creek in Binghamton, NY. The church and its pastor had placed huge political ads in two national newspapers four days before the 1992 presidential elections and suggested that tax-deductible contributions would be accepted to pay for the advertisement. Branch Ministries emphasized the point that a church can lose its tax exempt status for participating in partisan election activities, but there is an important distinction between partisan political campaign activities and issue-oriented advocacy activities. Tax law allows 501(c)(3)s to engage in issue activities during an election season if it is part of ongoing work and related to the group’s mission. But these activities should not be increased or timed in order to influence the outcome of an election. Many types of election-related activities do not fall under the “campaign activity” prohibition. The key distinction is that voter education and mobilization activities cannot support or oppose a particular candidate, directly or indirectly. Permissible election-related activities include: voter education; publishing candidate responses to questionnaires; nonpartisan voter drives; and sponsoring debates and forums. Campaigns on ballot initiatives and referendums are considered lobbying, not partisan electioneering, because no candidate is involved. Non-electoral advocacy, focused on issues, is always permissible. These activities include lobbying for or against confirmation non-elected officials, such as judges, lobbying on legislation, commenting on proposed regulations, participating in hearings held by agencies and litigation. The Pending Legislation: Summary The recently introduced version of H.R. 235 continues to provide an exemption for houses of worship to engage in political campaigns in support of or in opposition to candidates for public office. Under current law, this is a prohibited activity for 501(c)(3)s that can result in loss of tax-exempt status. The bill would create a new Section 501(q) that would allow preparation and presentation of partisan messages in “any homily, sermon, teaching, dialectic, or other presentation” as long as it is made during a religious service or gathering. It would take effect at the beginning to the next tax year after enactment. In addition, members and leaders of religious organizations would be permitted to express “personal views on political matters” during regular religious services “as long as these views are not disseminated beyond the members and guests assembled together at the service.” Mailings with partisan messages that involve more than an incremental cost and broadcasts that meet the definition of “electioneering communications” under federal campaign finance laws would be considered “beyond the members and guests assembled together at the service”. Political expenditures and “electioneering communications” in federal elections, as defined in federal campaign finance law, would be prohibited. The bill makes no mention of such expenditures in state or local elections. The Pending Legislation: Issues UNDUE PREFERENCE FOR RELIGIOUS SPEECH This legislation would give religious organizations the right to engage in activities that would remain prohibited for secular 501(c)(3) groups. Both types of groups receive tax deductible donations, which result in cost to the national treasury. No justification for providing this preference for religious organizations has been offered, and we do not believe it can be justified. UNLIMITED PARTISAN ACTIVITIES PERMITTED H.R. 235 is narrower than earlier versions of the bill in that it limits the type of activities permitted, but it is more expansive in that there is no ceiling on the number of partisan activities that could be permitted. Under H.R. 235, the permitted campaign-related activities would have to occur in the “content, preparation, or presentation of any homily, sermon, teaching, dialectic, or other presentation made during religious service or gatherings,” but any amount of these activities could be conducted provided they were part of the presentation at a religious gathering. The broad language would permit much more than a Sunday morning appearance by a candidate or the occasional endorsement speech. It would allow religious gatherings consisting entirely of political content. Is a rally for a candidate held in the house of worship a religious gathering? Would the definition of a religious gathering include a phone bank that started with a prayer session for volunteers? The preparation and presentation of content for religious services or gatherings could involve considerable expenditure of funds generated by tax-deductible dollars. For example, publicity for a special event featuring a candidate or party representative could involve expenditures for mass mailings or general advertising. On election day religious organizations could pay for buses to take voters to the polls if the bus ride included a religious presentation. DISSEMINATION The current version of H.R. 235, on its face, would limit dissemination of campaign activities outside the house of worship. Earlier versions of the bill expressly allowed for the widespread dissemination of the election-related presentations by radio or television broadcast, mass media and mailings. Section 3 of H.R. 235 states, “No member or leader of an organization described in 501(q) of the Internal Revenue Code of 1986 shall be prohibited from expressing personal views on political matters or elections for public office during regular religious services, so long as these views are not disseminated beyond the members and guests assembled together at the service” (emphasis added). The new HR 235 would allow a religious leader to express personal views at a regular religious service, however, there is no definition of what constitutes a regular religious service.? If the definition includes services that are broadcast on television or radio, the result would be that campaign endorsements and other partisan statements could reach a wide audience. Without a clear definition of the location and the constitution of a regular religious service, we can only assume that it would permit the broadcasting of the service. Additionally, the legislation does not define “members and guests”. If a religious leader engages in a regular religious service at a campaign rally, are people in the audience members and guests, and therefore the recipient of the religious leaders political views? Would guests include a television audience? H.R. 235 includes a prohibition on distributing partisan statement in a “…mailing that results in more than incremental cost to the organization…” This allows partisan political information or advertisements in mailings that would not result in any extra cost to the organization. For example, if a house of worship has a weekly newsletter that already is disseminated to its congregants, adding a religious leader’s personal beliefs or even a campaign advertisement would not result in increased cost. Low cost distribution mechanisms, like email, could also be used for wide distribution of a partisan statement. Thousands of additional names could be added to an email list with a few keystrokes, at no additional incremental cost. CAMPAIGN CONTRIBUTIONS and CAMPAIGN FINANCE REFORM Since the language of HR 235 would permit any activity that could be deemed part of a sermon or other presentation during a religious service or gathering, it allows for the express endorsement or opposition to a candidate for public office during a sermon, as well as other partisan communications. While houses of worship that are incorporated could not make direct financial or in-kind contributions to federal candidates, religious leaders could request that contributions be made directly to the candidate’s committee or other political organizations. Unincorporated religious organizations would not be covered by the Federal Election Campaign Act’s ban on corporate contributions. The Bipartisan Campaign Reform Act of 2002 bans broadcasts by corporations, including nonprofits, that mention federal candidates within 90 days of a federal election or 30 days of a primary with federal candidates. Current regulations implementing this provision exempt unpaid broadcasts and those funded by 501(c)(3)s, including religious organizations. The rationale for the 501(c)(3) exemption was that these groups would be prohibited from making broadcasts that support or oppose candidates as a result of their tax-exempt status. If the tax code is changed to allow religious organizations to make partisan statements, and religious gatherings occur on television or radio, then this exemption may be changed, at least with respect to religious organizations. A federal district court has ordered to Federal Election Commission to re-consider the exemption, and that proceeding is scheduled to take place in the summer of 2005. In any case, unincorporated religious organizations would not be limited this provision. STATE AND LOCAL ELECTIONS The bill is silent on contributions to state or local candidates or campaigns. State and local campaign finance laws would govern that activity State and local laws vary by jurisdiction, but they are usually more permissive than federal campaignfinance law. Conclusion Current law protects the integrity of charitable nonprofits by preventing individuals from using tax-deductible contributions to avoid campaign finance laws. It also prevents individuals from using charitable nonprofit organizations, which are, by definition, organized for public purposes, to advance their personal partisan political views. Supporters of the bill claim religious leaders are afraid to speak out on public issues. However, all 501(c)(3)s, including religious organizations, are allowed to engage in advocacy activities such as legislative lobbying, public education campaigns, comment on public policy, and litigation. The prohibition on intervening in elections for 501(c)(3) organizations exists to protect the integrity of the election process. The 501(c)(3)s receive a tax-exemption because their work is educational, religious or charitable. It is an acknowledgment that the organization performs an activity that relieves some burden that benefits society as a whole. Taxpayers should not be required to fund the political activities of tax-exempt organizations. Additionally, tax-exemption is afforded to religious organizations as a safeguard to preserve separation of church and state by preventing governments from using taxation to favor one religion over another. Allowing churches to advocate for one political party or another would blur the line between the separation of church and state. The money in the collection plate should not pay for bumper stickers or attack ads on behalf of a politician or political party.