May 15, 2000

Appeals Court Says IRS Was Right to Strip Church's Tax Exemption

A federal appeals court has ruled that the Internal Revenue Service properly pulled the tax exemption of a New York church after it ran newspaper advertisements opposing Bill Clinton as a 1992 presidential candidate. Under the law, churches and charities must not participate in political campaigns in behalf of, or in opposition to, candidates for public office.

The church said, however, that it was penalized in part because it had opposed Bill Clinton -- and noted that other churches and pastors that had supported Democratic candidates had not gotten in trouble with the I.R.S.

The I.R.S. revoked the tax exemption of Branch Ministries -- operating as the Church at Pierce Creek -- in early 1995. The service said the ads, which ran in USA Today and The Washington Times four days before the 1992 presidential election, were examples of the church's illegal partisan politicking.

Under the headline: "Christians Beware. Do not put the economy ahead of the Ten Commandments," the advertisements listed Mr. Clinton's stand on abortion, homosexuality, and other issues. The ads concluded: "Bill Clinton is promoting policies that are in rebellion to God's laws."

The fine print at the bottom of the ads informed readers: "Tax-deductible donations for this advertisement gladly accepted."

Branch Ministries sued the I.R.S. last year over the lost tax exemption and lost in federal district court.

Now, the U.S. Court of Appeals for the District of Columbia Circuit has also backed the revenue service.

The appeals court rejected the churchs argument that the I.R.S. had violated its constitutional rights by engaging in "selective prosecution" against it. The church had pointed to news accounts allegedly showing "explicit endorsements of Democratic candidates by clergymen as well as many instances in which favored candidates have been invited to address congregations from the pulpit," the court said.

The church, according to the court, "complains that despite this widespread and widely reported involvement by other churches in political campaigns, it is the only one to have ever had its tax-exempt status revoked for engaging in political activity. It attributes this alleged discrimination to the services political bias."

The court noted that lawyers for the revenue service had conceded that if some of the church-sponsored political activities reported in the news media and cited by the church were accurately reported, the churches were in violation of federal law and could have their tax exemptions revoked.

But the court said that, even if the I.R.S. could have revoked the tax exemptions, Branch Ministries "has failed to establish selective prosecution because it has failed to demonstrate that it was similarly situated to any of those other churches."

The court continued: "None of the reported activities involved placement of advertisements in newspapers with nationwide circulations opposing a candidate and soliciting tax deductible contributions to defray their cost."

The appeals court also rejected the churchs arguments that the I.R.S. violated its rights to freely exercise its religion under the First Amendment and federal law.

For example, the court said that the church had alternate ways to communicate its sentiments about candidates for public office. The court spelled out the way a church could form a related advocacy group under Section 502(c)(4) of the Internal Revenue Code that in turn could form a political action committee "that would be free to participate in political campaigns."

A copy of the decision in the case, Branch Ministries, Inc., et al. v. Charles O. Rossotti, is available on the appeals court's Web site at