Earlier this month, President Trump issued an Executive Order on religious freedom, with special emphasis on political expression by religious organizations. Regarding federal tax law which prohibits churches and nonprofits from endorsing or opposing political candidates, the IRS has taken the position that political remarks made during a church sermon can be a violation of the law, resulting in possible revocation of the church’s tax-exempt status.
Trump’s order calls for the IRS and other federal agencies to take a hands-off approach to this type of political expression and for the federal government to “respect and protect the freedom of persons and organizations to engage in religious and political speech.” The order states that the Department of the Treasury should not take any “adverse action” (such as tax penalties or the denial of tax-exempt status) against organizations exercising their religious freedom through political expression.
Though a step in the right direction, the executive order does not yet indicate a major policy change. Michael Batts, CPA and President of Batts, Morrison, Wales & Lee, says that the executive order basically reflects the current practical stance of the IRS, as there is no publicly-known case in the US of the IRS denying a church’s tax-exempt status in response to comments made during a worship service. Further, Batts asserts that Trump’s order is not a substitute for legislation, since executive orders can be rescinded by future administrations and can only be practiced to the extent permitted by law.
Time will tell as bills currently in the House and Senate seek to create a change in the law that would clearly permit churches and nonprofits to engage in political communications as relevant to their customary exempt activities.
Click here to read more on this Nonprofit Special Alert from Batts, Morrison, Wales & Lee.