IRS Issues Guidance for Examination of Churches' Political Activities

BNA's Dec. 2 Daily Report For Executives [Subscription Required] reports on a Memorandum from March 2005 that was posted on the website of the Internal Revenue Service last month. The Memorandum For All EO Examination Managers and Revenue Agents gives detailed guidance to Revenue agents on how to examine 501(c)(3) organizations, including churches, for improper political participation in election campaigns of candidates for public office. BNA says:

Instructions from IRS headquarters cautioned agents and managers that contacts with charities "may be perceived as IRS intimidation." The agents were instructed to tell the organization contacted about the basis of the inquiry--such as a church's distribution of candidate ratings--and in some cases ask the organization for a detailed response. The memorandum ... instructed IRS agents and managers on how to implement the service's Political Intervention Project (PIP). The project was intended to put on a fast-track complaints about improper political advocacy by charitable organizations.... IRS is working to clear approximately 130 cases from the 2004 presidential campaign ... including activities by about 50 churches, IRS Exempt Organizations Director Martha Sullivan told BNA....