In May, the Internal Revenue Service issued a 63-page proposal (full text) to update procedures for a parent organization to obtain 501(c)(3) non-profit status rulings for a group of subordinate organizations. The Notice explains its purpose, saying in part:
The Internal Revenue Service (IRS) is issuing this guidance in proposed form to provide an opportunity for public comment because the IRS recognizes that, if finalized, the proposed revenue procedure would make substantial changes to the procedures set forth in Rev. Proc. 80-27 and that the application of these new procedures may impose an additional administrative burden on central organizations with group exemption letters in existence on the date the final revenue procedure is published in the Internal Revenue Bulletin (preexisting group exemption letters).
The IRS oversees more than 4,000 group exemption letters that include more than 440,000 subordinate organizations. The IRS has considered how to reduce the administrative burden and increase the efficiency of the group exemption letter program, to improve the integrity of data collected for purposes of program oversight, to increase the transparency of the program, and to increase compliance by central organizations and subordinate organizations with program requirements....
Last week, a 14-page joint comment letter (full text) was filed with the IRS by the Evangelical Lutheran Church, the United Church of Christ, The United Methodist Church, The Episcopal Church, and the Reformed Church in America. It contends that the proposal in its present form violates both RFRA and the 1st Amendment, saying in part:
This letter asks that if the IRS adopts a revamped procedure for the administration of the group ruling exemption process, it make an accommodation to allow the faith communities to continue their status quo.... We do not believe the IRS desires a set of modifications that would burden the expression of religious beliefs in ways that would range from making group rulings overwhelmingly unmanageable to obviously unconstitutional....
The Proposed Revenue Procedure requires that subordinate organizations participating in a group exemption ruling must adopt a uniform governing instrument...
Considering the decades during which these religious organizations added first thousands, and then tens of thousands, of subordinate organizations to their group rulings, the impact of this requirement going forward is enormous....
Further, the very act of requiring uniform governing instruments is theologically untenable in these denominations that have chosen respective ecclesiastical structures and relationships that best express their beliefs about where authority resides and how it is exercised, and how and by whom ultimate decisions about key theological issues are made....
Even if RFRA were not dispositive, the First Amendment would bar the IRS from effectively dictating polity and structure matters inside a denomination. The IRS cannot close the Group Exemption process to all churches except those able to eccelsiologically impose specific civil forms on subordinates.
Other denominations have also filed comment letters. [Thanks to Jennifer Gniady for the lead.]
