Wednesday, May 19, 2004
Monday’s post on whether the Bishop of Colorado placed his diocese’s tax exemption in jeopardy by telling Catholics in a pastoral letter that that “any Catholics who vote for candidates who stand for abortion, illicit stem cell research or euthanasia suffer the same fateful consequences [as the candidates who support these issues]” spawned a great deal of discussion in the blogosphere and among Tax Profs.
Here are some of the blogosphere comments:
• InstaPundit
• ProfessorBainbridge.com
• The Right Coast
• The Catholic Factor
• The Galvin Opinion
Here are the first six Tax Prof posts in a two-dozen (and growing) thread:
• Jeff Sherman (Chicago-Kent):
I’ve been reluctant to respond to Don’s posting because my personal reaction to the Bishop’s letter is such that I fear I won’t be able to limit my comments to tax issues. But I’ll try. I agree that the Bishop’s letter is “very close to the line.” Indeed, I’d say it crosses it. Let’s assume for the sake of argument that the IRS would be willing to revoke the relevant tax exemption. My question is, whose exemption is it? Is each diocese a separate taxpayer with its own taxpayer I.D. number? Does each diocese apply to the IRS for an exemption letter? If the “taxpayer” comprises more than one diocese, could the activities in one diocese jeopardize the entire “taxpayer’s” exemption?
• Ellen Aprill (Loyola-L.A.), who is about to become one of the Council Directors of the ABA Tax Section and sees part of her role as representing tax academics to the Council:
The Catholic Church has a group exemption. The memo to those covered by this group exemption reminds them about the prohibition on political activity. In addition, the U.S. Conference of Catholic Bishops has posted on its website lengthy and detailed guidance on the churches and the prohibition in the tax code regarding political activity by tax-exempt charities. I refer to it frequently and have recommended it to representatives of other religious groups. Further, Deidre Dessingue, the Associate General Counsel of the USCCB, has written a wonderful booklet on Politics and Pulpit for the Pew Forum.
Technically, there is no de minimis rule in the Code as to this prohibition – any political activities (which for this purpose referes to activities in connection with a candidates’s campaign for public office) results in loss of qualification for exempt status. As a practical matter, the IRS often ignores de minimis violations. In other contexts, the IRS has acted. In Branch Ministries, a church had its exemption revoked after it placed full-page advertisements in USA Today and the Washington Times urging Christian not to vote for then-presidential candidate Bill Clinton. Then ad urged readers to make tax-deductible donations for the advertisement. The D.C. Circuit Court upheld the revocation. It rejected the church’s First Amendment argument, concluding that loss of exemption and thus loss of tax-deductible contributions would not unconstitutionally burden the church’s existence.
• Donald Tobin (Ohio State):
The attached link, to the United States Conference of Catholic Bishops (USCCB), has information regarding the Catholic Church’s exemption. There is also a memo explaining the exemption from the USCCB’s Office of the General Counsel. It appears that groups listed by the USCCB as being affiliated with the Church receive an exemption. It also appears that each group is thereby granted its own exemption. So it may be that a subgroup can have its exemption contested without impacting the entire Church.
• Richard Schmalbeck (Duke):
I don’t know how a “group exemption” would work in the context of a possible revocation of status. But on the basis of the litigation involving sexual abuse, it appears that each diocese has a separate corporate existence. So if only one disocese violates the prohibition on campaign activities, it would seem that surgical revocation of only that diocese’s exempt status should be possible. The black sheep could simply be culled from the group, without disturbing the others. And even if that were not the case, churches are entitled to an automatic presumption of exemption, without being required to file a form 1023. So couldn’t any diocese (presuming it hadn’t published a bishop’s letter threatening dire consequences if its parishioners vote for Kerry) take the position that it was still entitled to its presumption of exempt status? The surgical solution seems relevant in part because any threat to the exempt status of the Catholic church generally over this would just be laughed off; but if a more targeted inquiry could be started, it might have a chance of being taken seriously.
Of course, not even the Colorado Springs diocese is in any real danger, I’m sure. But I think that the Bishop’s letter was quite outrageous, and I would like to see a little something about the exemption angle hit the popular press. It couldn’t hurt to have reporters calling the IRS to get a statement explaining why the diocese shouldn’t at least get something of a cease-and-desist warning.
• Allan Samansky (Ohio State):
For what it’s worth, I am troubled by the conclusion that Bishop Sheridan’s letter should raise questions about tax status of the Catholic Church (or that of any diocese).
We would expect religious persons to vote for candidates who take positions that are consistent with their religious beliefs and ideals. And church leaders should be free to tell adherents what those beliefs and ideals are “supposed to be.” That is what the letter does. It mentions the November elections, but so what. Should we require church leaders to communicate by winks and nods, rather than direct statements?
Final point. The letter we are discussing is much different from the newspaper ad in Branch Ministries that
solicited “tax-deductible donations” for the ad. The Bishop’s letter seems to have been directed only to
Catholics.
• Richard Schmalbeck (Duke):
Section 501(c)(3) defines exempt charitable organizations as ones that, among other things, do not participate in any political campaign on behalf of or in opposition to any candidate for public office. The bishop’s letter, written in his official capacity to his parishioners, makes an unambiguous reference to the national elections this November, and, as Don Tobin said initially, cannot be read in any other way than as a letter urging parishoners not to vote for Kerry. I think it is actually quite a bit worse than the Branch
Ministries advertisement, since the bishop’s letter doesn’t merely urge the recipients not to vote for Kerry–it tells them that doing so may “jeopardize their salvation.” What bigger guns can be brought to bear on those who believe, as at least some Catholics do, that the hierarchy of the church is authorized to make theological determinations of this sort? Obviously many who hear this will disregard it, but do we doubt that there are some readers who will think that eternal damnation isn’t something about which they want to
take any chances?
There are First Amendment issues lurking here, surely; but the Supreme Court in TWR and the DC Circuit in Branch Ministries made it clear that Congress is permitted to define the exemption boundaries in ways that effectively require charitable organizations to choose between exempt status and the fullest exercise of free speech. If the church wants to participate in campaigns, it can do so, but only if it gives up its exempt status. I think that’s a good rule for a lot of reasons, prominently including its effect in discouraging the sort of heavy-handed political activity encountered in this instance, which seems to me extremely dangerous.
For more Tax Prof commentary on this issue, tax academics are invited to join the TaxProf Discussion Group.
Not much tax-related content here (except perhaps a veiled reference to the impact of gas taxes), but I could not resist this great photo (courtesy of the 
