Sadly, the hubris of the heads of these churches may hurt their parishioners. Remember, the Constitution protects the right to speech and religion, but not tax exemption…

The New York Times has the latest… Pastors’ Web Electioneering Attracts U.S. Reviews of Tax Exemptions.

Phill Kline and I have never met, but I feel like I know him. He once was Attorney General in the state of Kansas, and when he ran for re-election in 2006 used some very, very questionable tactics in getting church support for his campaign. As you know if you’re a regular reader, that’s illegal under tax law. I wrote a complaint to the IRS on behalf of an organization I used to work for, and it got a fair amount of attention from the local press. Kline lost that election, but became a county DA in Kansas right afterwards. This year he’s running for reelection and lo and behold, guess who’s got yet another 501(c)(3) problem? Phill Kline. This time, it’s a supporter who has put her pro-life group’s tax status in jeopardy by basically fundraising for Mr. Kline’s campaign under the banner of her group’s letterhead. Check out the letter at the Nonprofit Law Prof blog (a regular read for me these days!).

In any event, it’s funny running into Phill Kline again in the pages of Kansas newspapers for more issues with campaign intervention by (c)(3)s…

I try to be objective here on the blog, but I really can’t do that with Westminster Baptist Church… I won’t bother repeating their beliefs, but most of you have heard of their act. This week, they lost a tax case regarding exemption of their van used to drive to and fro. The nonprofit law prof blog raises a good point that this may not necessarily have been a good ruling from a pure tax law standpoint. If we replaced the petitioner with another group, would many of us feel ok about the ruling?

The ongoing saga of Sen. Grassley’s investigation into megachurches, including Kenneth Copeland Ministries, brought this response from KCM in a press release:

However, the Church respectfully disagrees with Senator Grassley’s position that churches are no different from any other tax-exempt organization. Any government inquiry into the affairs of a church raises serious constitutional issues that must be carefully balanced against the government’s need to evaluate the effectiveness of the laws of the land. To ensure its constitutional rights are not unnecessarily infringed upon, the Church firmly believes that it must be given the protections from disclosure afforded by the federal tax laws and the benefit of the processes and procedures that apply to inquires of churches made by the IRS.

When I have taught tax exempt law concepts in seminars and conferences, I have found that some in the secular charitable world find the unofficial distinctions and preferences often afforded to religious entities as unfair and unjust. I’m not sure I totally agree with that (there are a host of reasons why churches and religious institutions should be held to different standards than groups like Nature Conservency or even small community charities). I think it’s an interesting discussion however – what do you think? Should churches and religious institutions be treated differently by the IRS and tax law?

Update… today’s Des Moines Register… did Sen. Grassley lose his delegate spot at the GOP convention because he’s pursuing churches?

The Chronicle of Philanthropy reports that Nina Olson, the national taxpayer advocate, has noted an improvement in the Internal Revenue Service’s processing of exemption applications, but still sees room for improvement. As anyone who has applied for exemption recognition recently can attest, she’s absolutely right. The process needs to improve – ten years ago the process was measured in months (even weeks if you were lucky). Now, the length of your wait can last over a year under some circumstances…

The Chronicle is reporting an impending legal firestorm:

In a test of federal tax law, a conservative legal group is encouraging pastors to preach about election candidates in September, reports The Wall Street Journal.

The Alliance Defense Fund hopes a court case will result from this open defiance of tax rules, which bar churches from engaging in partisan politics, and that the restrictions will be struck down by the courts.

Would the current Supreme Court turn back the decades-old ban on electioneering by churches? Would there be an equal protection problem if this was not also extended to other public charities? These and other questions might be answered in the next couple of years…

Roll Call reports…

Tax regulators are hinting at an imminent crackdown of outside political outfits masquerading as nonprofit organizations, groups that already are making a splash in the 2008 Congressional primaries.

So, we might see some of the new 501(c)(4)s that were gearing up to engage in a lot of activity supporting or opposing candidates drop out before they begin… this might prompt some litigation depending on how the IRS chooses to enforce things. It’s still stinging from losing the DLC case recently, and I suspect the DLC’s success may prompt other 501(c)(4)s to fight it out in the courts with the IRS over anything in the exempt activity (loosely speaking, anything that supports or opposes a candidate) category.

Church Executive Magazine asks whether the IRS is amping up enforcement this year.

NBC is reporting that the Senate Finance committee is renewing its demands for certain churches to provide detailed financial information. The letters sent today are a follow-up to letters sent last year to a virtual who’s who of large televangelist ministries, including Benny Hinn and Kenneth Copeland.

These ministries are 501(c)(3) organizations that are required to turn over certain financial information through their Form 990s upon public request. The Senate investigation is turning up the heat on the financial practices of some of these organizations.