IRS Allows Churches to Endorse Political Candidates

In a court filing, the Internal Revenue Service said houses of worship can now keep their tax-exempt status despite endorsing political candidates.

Under Section 501(c)(3) of the Internal Revenue Code, churches, educational institutions and some types of non-profit organizations are exempt from tax on their income and donations to them are tax-deductible as itemized deductions for donors. That section says:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does 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.

It is unclear how the IRS can eliminate the clause that prohibits political activity without an act of Congress. Donald Trump has long promised to repeal that portion of the tax code, but nothing of the sort has gone before Congress.

Without that clause, churches could harness the conditioning of their congregations to donate and turn it to the benefit of specific political campaigns. Churches do not have to disclose key financial information, so they would become a new source of dark money for candidates.

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