Zachary Cummings (J.D. 2008, Regent) has published Note, Prophetic Speech and the Internal Revenue Code: Analyzing I.R.C. § 501(c)(3) in Light of the Religious Freedom Restoration Act, 20 Regent U. L. Rev. 151 (2008).  Here is the Conclusion:

Currently, under § 501(c)(3), any partisan campaign intervention undertaken by a church, such as the Church at Pierce Creek, will result in the revocation of the tax-exempt status of that church or religious institution. The Supreme Court has yet to rule on the constitutionality of the prohibition on participation in political campaigns by churches. Thus, § 501(c)(3) remains in question. Churches such as All Saints Episcopal Church and the Church at Pierce Creek, however, are bound by religious duty and conviction to speak prophetically, even if this means that their prophetic speech resounds into the political sphere. Indeed, it is apparent that, at certain times, churches are compelled to become involved in political campaigns, in recognition of their prophetic ministry.

Thus far, attempts to reformulate the partisan campaigning prohibition to overcome the prohibition’s violation of RFRA have failed to recognize that distinctions between political and religious content are not always applicable when dealing with Christian prophetic speech. Recent popular proposals, such as the Crane-Rangel Amendment, have suggested that churches and religious organizations would be allowed to dedicate a certain percentage of their income to partisan political activity. These proposals, however, require the government to determine which church activities are political and which are religious and how much of this partisan political activity is appropriate and should be tolerated. Plans that suggest a “substantial part” test–similar to § 501(c)(3)’s lobbying-prohibition test–should be used to determine the extent to which churches may engage in partisan political intervention. This test would also entail a judicial or governmental determination of the character of church activities, such as Christian prophetic speech. Certain scholars have even suggested that the tax code should allow churches and other religious institutions to engage in partisan political intervention, without any fear of having their taxexempt status revoked, but any church funds expended in partisan political activity would be taxed by the government. This last plan would necessitate a delineation and classification of all of a church’s activities as either political or religious. It is therefore likely that this plan would require even more invasive church investigations than those conducted under the present enforcement regime, as well as judicial or governmental determination of the nature of all of a church’s activities. Indeed, all of the proposed changes to § 501(c)(3) proffered recently have required either an implicit or an explicit judicial or governmental determination of what is religious and what is political. Hence, these proposed changes would also run afoul of the standards imposed by RFRA.

With the increasing prominence of so-called “faith-and-values voters,” on both the left and the right, the influence of churches and other religious institutions will almost certainly come under increasing scrutiny both by nongovernmental organizations and by the IRS. As the prominence of churches in politics increases, the IRS and the United States government will likely be forced to deal with the troubling consequences of the current law. The current law and the proposed changes to the current law violate the free-exercise right of churches and other religious institutions as guaranteed in RFRA and also create excessive entanglement of the State in the Church’s affairs. History bears out that an unconditional tax exemption for churches and other religious institutions not only avoids the problems associated with the current law, but also promotes religious freedom and religious pluralism. Therefore, courts should abandon and Congress should repeal the current prohibition in § 501(c)(3) against partisan political intervention by churches and other religious institutions to protect religious institutions from violations of their right to free exercise as safeguarded by Congress in the Religious Freedom Restoration Act.