The Wisconsin-based Freedom from Religion Foundation (FFRF) has filed a lawsuit with the Internal Revenue Service that raises an interesting question. The group challenges the government’s different treatment of religious and non-religious non-for-profit organizations. While tax-exempt 501(c)(3) nonprofit organizations must file a detailed application form, fee and annual information to obtain and maintain their tax-exempt status, churches and other religious organizations are exempted from the requirement to file the reports and fees. The lawsuit alleges that the added expensive and detailed paperwork is a form of discrimination against non-religious groups.
The lawsuit does raise a valid question of why such forms are not uniformly required or waived for all groups. An atheist group is presumably not treated as falling under a religious exception despite that fact that it is an alternative to such faith organizations. The lawsuit alleges that “[t]he preferential treatment provided to churches and other affiliated religious organizations constitutes an exclusive and discriminatory benefit to religion in violation of the Establishment Clause, as well as the equal protection rights required by the Due Process Clause of the Fifth Amendment to the United States Constitution,” states the lawsuit filed Thursday in U.S. District Court in Madison.
The lawsuit seeks a court order to stop the IRS “from continuing to exempt churches and other affiliated religious organizations from the application and annual information filings required of all other non-profit organizations under §501(c)(3).”
Notably, the IRS Commissioner is accused of a non-enforcement policy with regards to electioneering by churches:
In fact, however, the Internal Revenue Service, under the direction of the
Defendant Shulman, has followed and continues to follow a policy of non-enforcement of the
electioneering restrictions of §501(c)(3) against churches and other religious organizations.
22. As a result, in recent years, churches and religious organizations have been
blatantly and deliberately flaunting the electioneering restrictions of §501(c)(3), including during
the presidential election year of 2012. Illinois Bishop Daniel Jenky, for example, required that a
partisan letter be read by every celebrating priest in the diocese to congregants the weekend
before the recent Presidential election.
What do you think?
Here is the lawsuit.
COMPLAINT
The Plaintiff, Freedom From Religion Foundation, Inc., as its Complaint against the
Defendant, Douglas Shulman, Commissioner of the Internal Revenue Service, alleges as follows:
1. The Plaintiff, Freedom From Religion Foundation (“FFRF”), seeks a Declaration
under 28 U.S.C. §2201 that the Defendant, Douglas Shulman (“Shulman”), in his capacity as
Commissioner of the Internal Revenue Service (“IRS”), has violated, continues to violate, and
will continue to violate in the future, the Establishment Clause of the First Amendment to the
Constitution of the United States by failing to enforce the electioneering restrictions of
§501(c)(3) of the Tax Code against churches and religious organizations. The Defendant’s
actions also violate the Plaintiff’s Equal Protection rights.
2. Plaintiff requests the Court to enjoin the Defendant Shulman from continuing a
policy of non-enforcement of the electioneering restrictions against churches and religious
organizations. The Plaintiff also requests the Court to order the Defendant to authorize a high
ranking official within the IRS to approve and initiate enforcement of the restrictions of
§501(c)(3) against churches and religious organizations, including the electioneering restrictions,
as required by law.
3. This Court has federal question jurisdiction pursuant to 28 U.S.C. §1331 with
respect to the relief sought against the Defendant Shulman. The Court also has the authority to
issue a declaratory judgment under 28 U.S.C. §2201. The Court further has the authority to
award injunctive relief under 28 U.S.C. §1443 and Fed. R. Civ. P. 65.
4. The United States has waived sovereign immunity, pursuant to 5 U.S.C.§702, for
actions that seek specific relief other than money damages, as in this case.
5. Venue is appropriate in the District Court for the Western District of Wisconsin
pursuant to 28 U.S.C. §1391(e), where FFRF has its principal office.
6. The Plaintiff is a tax-exempt non-profit organization under §501(c)(3) of the Tax
Code, and as such, FFRF must and does abide by the electioneering restrictions of §501(c)(3).
7. The Plaintiff is a non-profit membership organization that advocates for the
separation of Church and State and educates on matters of non-theism. The Plaintiff has more
than 19,000 members, residing in every state of the United States, as well as the District of
Columbia.
8. FFRF represents and advocates on behalf of its members throughout the United
States.
9. FFRF’s membership includes individuals who are federal tax-payers who are
opposed to government preferences and favoritism toward religion.
10. The Defendant Shulman is the Commissioner of the Internal Revenue Service,
with a principal address of 1111 Constitution Avenue N.W., Washington, D.C. 20224; the
Defendant Shulman is sued in his official capacity.
11. The Establishment Clause of the First Amendment to the United States
Constitution prohibits governmental preference for, endorsement of, and discrimination in favor
of religion.
12. Section 501(c)(3) of the Tax Code prohibits all non-profit organizations,
including churches and other religious organizations, from intervening in political campaigns as
a condition of their tax-exempt status.
13. All organizations that are recognized as exempt from federal income tax under
§501(c)(3) of the Tax Code are subject to the prohibition against political campaign intervention.
14. All organizations, including churches and religious organizations, that are exempt
from federal income tax under §501(c)(3) of the Tax Code are prohibited from participating or
intervening, directly or indirectly, in political campaigns on behalf of or in opposition to any
candidate for elective public office.
15. The restrictions of §501(c)(3) on electioneering activities do not preclude
discussions of issues that are not linked to support for or opposition to candidates; the fact that
candidates may align themselves on one side or another of an issue does not restrict the ability of
religious organizations to engage in discussions of that issue.
16. A discussion of issues violates the electioneering restrictions of §501(c)(3) of the
Tax Code if the discussion contains overt support for or opposition to a particular candidate.
17. Factors relevant to determining whether an advocacy communication constitutes
impermissible campaign intervention include: (a) whether the communication identifies one or
more candidates for a public office; (b) whether the communication expresses approval or
disapproval of one or more candidates’ positions and/or actions; (c) whether the communication
is delivered close in time to an election; (d) whether the statement makes reference to voting or
an election; and (e) whether the issue addressed in the communication has been raised as an issue
distinguishing candidates for a given office.
18. The electioneering prohibition of §501(c)(3) applies to tax-exempt organizations,
including churches and religious organizations, and to the actions of individuals, including clergy
or other religious leaders, acting as representatives of tax-exempt organizations; the prohibition
of §501(c)(3) does not apply to the political activities of clergy or other religious leaders
undertaken in their individual capacities.
19. The Internal Revenue Service follows special procedures before commencing
inquiries about potential violations of §501(c)(3) by a church or religious organization.
20. The IRS may initiate a tax inquiry of a church or religious organization if a highranking
IRS official documents in writing the acts and circumstances, including potential
violations of the electioneering prohibition, that lead the official to reasonably believe that the
Church may have violated the requirements for tax exemption under §501(c)(3).
21. In fact, however, the Internal Revenue Service, under the direction of the
Defendant Shulman, has followed and continues to follow a policy of non-enforcement of the
electioneering restrictions of §501(c)(3) against churches and other religious organizations.
22. As a result, in recent years, churches and religious organizations have been
blatantly and deliberately flaunting the electioneering restrictions of §501(c)(3), including during
the presidential election year of 2012. Illinois Bishop Daniel Jenky, for example, required that a
partisan letter be read by every celebrating priest in the diocese to congregants the weekend
before the recent Presidential election.
23. More than 1500 clergy reportedly also violated §501(c)(3) on October 7, 2012, in
a deliberate and coordinated display of noncompliance with the electioneering restrictions of
§501(c)(3), including prominent megachurches.
24. The Billy Graham Evangelistic Association ran blatantly partisan full-page ads in
October of 2012 in the Wisconsin State Journal; the Ministry also ran ads in the New York Times,
USA Today, the Wall Street Journal, and more than a dozen national and battle ground state
newspapers before November 6, 2012. The Association also published expressly partisanship
matter on its website at http://www.billygraham.org.
25. Open and notorious violations of the electioneering restrictions of §501(c)(3) by
churches and other religious organizations have been occurring since at least 2008, with churches
recording their partisan activities and sending the evidence to the IRS.
26. The Internal Revenue Service, however, under the direction and leadership of the
Defendant Shulman, is following a policy and practice of non-enforcement of §501(c)(3) against
churches and religious organizations.
27. The IRS, under the direction of Defendant Shulman, on information and belief,
has failed even to designate an official with authority to initiate enforcement of §501(c)(3)
against churches and other religious organizations.
28. The non-enforcement of the electioneering restrictions of §501(c)(3) against
churches and other religious organizations constitutes preferential treatment to churches and
religious organizations that is not provided to other tax-exempt organizations, including FFRF,
which are required to comply with the electioneering restrictions of §501(c)(3).
29. The Defendant’s non-enforcement of §501(c)(3) as to churches and religious
organizations provides preferential treatment that is not neutrally available to other tax-exempt
organizations, including the plaintiff FFRF in this case.
30. The non-enforcement of §501(c)(3) as to churches and other religious
organizations by the IRS, under the direction of Defendant Shulman, directly benefits churches
and religious organizations, while discriminating against other non-profit organizations,
including the plaintiff FFRF, solely on the basis of religious criteria.
31. §501(c)(3), as administered by the defendant Shulman, provides preferential
treatment that is not neutral and generally applicable to all tax-exempt organizations.
32. The policy of non-enforcement of the electioneering restrictions of §501(c)(3) as
to churches and religious organizations, by the Defendant Shulman, violates the Establishment
Clause of the First Amendment.
33. The preferential treatment of churches and other religious organizations by the
Defendant results in obligations on secular non-profits, including the Plaintiff FFRF, that are not
imposed on churches, which distinction arises exclusively from the application of religious
criteria.
34. The Plaintiff is disadvantaged vis à vis churches and religious organizations by
the Defendant Shulman’s policy of non-enforcement of the electioneering restrictions against
churches and other religious organizations.
35. Churches and religious organizations obtain a significant benefit as a result of
being non-exempt from income taxation, while also being able to preferentially engage in
electioneering, which is something secular tax-exempt organizations cannot do.
36. The preferential tax-exemption that churches and other religious organizations
obtain, despite noncompliance with electioneering restrictions, amounts to more than
$100,000,000,000 annually in tax-free contributions made to churches and religious
organizations in the United States.
37. The policy and practice of non-enforcement of electioneering restrictions against
churches and religious organizations by the Defendant Shulman and the Internal Revenue
Service confers benefits solely on the basis of religious criteria, on the basis of which the
Plaintiff FFRF does not qualify solely because of the application of religious criteria.
38. As a result of the discriminatory administration of §501(c)(3) by the Defendant
Shulman and the IRS, the Plaintiff FFRF seeks equal treatment herein in the form of a level
playing field, including by denying such preferential treatment to churches and religious
organizations.
39. The Defendant’s policy of non-enforcement of electioneering restrictions against
churches and other religious organizations has the effect each year of excluding billions of
dollars from taxation and this exclusion is available only to churches and religious organizations
with the concomitant right to also engage in electioneering activities.
40. The tax benefits preferentially provided to churches and other religious
organizations constitute an exclusive and discriminatory subsidy to religion in violation of the
Establishment Clause and the Equal Protection Clause of the United States Constitution.
WHEREFORE, the Plaintiff FFRF demands judgment against the Defendant Shulman and
the IRS as follows:
a. Declaring that the policy of the Internal Revenue Service, under the direction
of Defendant Shulman, violates the Establishment Clause and the Due Process
Clause of the United States Constitution by providing preferential treatment to
churches and religious organizations;
b. Enjoining the Defendant Shulman, and the Internal Revenue Service, from
continuing to allow preferential and discriminatory treatment under
§501(c)(3) of the Tax Code exclusively to churches and religious
organizations;
c. Ordering the Defendant Shulman and the IRS to forthwith comply with
necessary steps to designate an IRS official legally authorized to initiate
action against churches and other religious organizations that are reasonably
believed to have violated the electioneering restrictions of §501(c)(3);
d. Awarding the Plaintiff its reasonable costs and disbursements of this action as
allowed by law;
e. Awarding such other relief as the Court deems just and equitable.
Dated this 13th day of November 2012.
BOARDMAN & CLARK LLP
Source: Raw Story
‘A few years ago, while visiting or, rather, rummaging about Notre-Dame, the author of this book found, in an obscure nook of one of the towers, the following word, engraved by hand upon the wall:—
~ἈNΆГKH~
These Greek capitals, black with age, and quite deeply graven in the stone, with I know not what signs peculiar to Gothic caligraphy imprinted upon their forms and upon their attitudes, as though with the purpose of revealing that it had been a hand of the Middle Ages which had inscribed them there, and especially the fatal and melancholy meaning contained in them, struck the author deeply.
He questioned himself; he sought to divine who could have been that soul in torment which had not been willing to quit this world without leaving this stigma of crime or unhappiness upon the brow of the ancient church.
Afterwards, the wall was whitewashed or scraped down, I know not which, and the inscription disappeared. For it is thus that people have been in the habit of proceeding with the marvellous churches of the Middle Ages for the last two hundred years. Mutilations come to them from every quarter, from within as well as from without. The priest whitewashes them, the archdeacon scrapes them down; then the populace arrives and demolishes them.
Thus, with the exception of the fragile memory which the author of this book here consecrates to it, there remains to-day nothing whatever of the mysterious word engraved within the gloomy tower of Notre-Dame,—nothing of the destiny which it so sadly summed up. The man who wrote that word upon the wall disappeared from the midst of the generations of man many centuries ago; the word, in its turn, has been effaced from the wall of the church; the church will, perhaps, itself soon disappear from the face of the earth.
It is upon this word that this book is founded.
March, 1831.’
Sanctuary…..
The Primary need for Church and its tax-free status is that it is one place that stands APART from the marketplace and gives hope to those whose needs are not met there….the church does not answer to the State….and there is need for this to be so ….for many many people who are so tried by the edicts and sucking greedy wind of taxes and ‘wants’ of the State (especially true now….) that without the Sanctuary and promise of their faith, they would be less than Zombies….(mayt even look like Republicans!)….
nick spinelli – I’m from Madison, too. Annie Laurie Gaylor is a co-founder of the Freedom From Religion Foundation. She didn’t “inherit it” from her mother. Can you give some examples of local “petty horseshit?”
Judge Crabb was correct in her ruling on the National Day of Prayer. It is unconstitutional for the President to support it. It was the Obama Administration who decided to appeal it.
“On April 15, 2010, Judge Crabb ruled that the statute establishing the National Day of Prayer was unconstitutional as it is “an inherently religious exercise that serves no secular function.” Judge Crabb also stated in her opinion, “If the government were interested only in acknowledging the role of religion in America, it could have designated a ‘National Day of Religious Freedom’ rather than promote a particular religious practice.”
The most interesting part I have learnt from ,my Mormon friends ( I am an Atheist ) in Vegas where I live, is that they give checks for much larger amounts to their churches and get cash back. I am sure this practice must be very common in all religions where cash donations are a mode de jour..
I am against any tax exempt organisation because in fact, as someone mentioned earlier they all have business models and hence ARE businesses.
Regarding this case, I also think it is not going to go anywhere but if this Plaintiff has “the cajones” and the money, then she should keep on petitioning the same to the higher courts with the refinements needed in her case. I wish her all the best,
I expect a motion to dismiss for failure to state a claim, lack of standing, non-justiciable issue, no valid case or controversy, failure to exhaust administrative remedies, and sovereign immunity of various sorts.
If the court denies the motion to dismiss they may take some of it up to the 7th circuit on an interlocutory appeal.
Right, freaking on.
What Blind Faithiness said
Another local aspect. Freedom From Religion has gotten favorable rulings in the past from Judge Barbara Crabb, a liberal Western District of Wisconsin Judge.. However, some have been overturned by the 7th Circuit. One fairly recent one in particular involved National Prayer Day. Gaylor was beaming w/ the favorable ruling from Crabb, but it was overturned by the 7th Circuit.
The “test” ought to be whether the organization is not for profit. To say that some organization collects money for the “greater good” is all well and good until the organization starts paying its employees to collect the money from chumps and give it out to schmucks. They need to keep their ducks in a row. If JimBob is raking in money for himself then he should be taxed for sure. Basically the IRS should assume that all churches and all not for profit charities are crooked con game organizations. Follow the money. Tax the rich! Pretty simple really. Oh, and when they pass that plate at Mass. Drop in a slug or two and see if they catch on who done it. You will know when the Priest corners you in the Confession booth. If he gives you any crap tell him to keep his paws off children. Praise the Lard on Sunday and Krisco on Monday. Pass the ammunition while you are at it.
One wonders how many “religious” organizations exist simply for the preferential tax treatment.
The arguments are legally interesting, but the bottom line is that this case will go nowhere for the simple reason that the government has great discretion with which it choses to enforce or not enforce its laws. Thus, if one group believes that it is being discriminated against for whatever reason, there is little recourse, and the courts will turn a blind eye, even if there may appear to be some merit to the argument. This case is akin to a taxpayer arguring that the IRS is discriminating against middle class taxpayers who owe money and have their property seized–compared with how the IRS treats billionaires like Warren Buffett–who owes the IRS more than $1 billion and hasn’t paid a dime of it for more than 10 years (let alone the mounting interest and penalties). The taxing authority has long been the black hole of government, and Justice Roberts proved that again with his approval of Obamacare as an acceptable discriminatory tax. The only way to change the differing tax treatments is to get the law itself changed.
That’s fine. Next all non-profits need that distinction removed. After all, are they really not for profit? They raise money, they pay salaries, they buy insurance, they conduct business…pretty much they are a business. Some people agree with their mission, others do not. Yup. They are definately business’. No more tax exempt status for you!
It does seem the IRS is following a policy of actively treating some 503(c) orgs differently than others. I see no compelling reason for them to do so.
It’ll be interesting to see what kind of reasoning the IRS will put forward as to why they engage in this special treatment (or if they even acknowledge it as “special”).
Yeah, this lawsuit seems to have merit, and I hope it succeeds.
This will be an interesting case to follow. My (admittedly biased) view of the 1st amendment would suggest that the government cannot treat religious and non-religious groups differently. The more popular take (I assume) is that it can’t treat one religion differently from another but that is incomplete IMO.
Oh noes! Atheists expect religious and non-religious groups to be held to the same standard and the same laws! Without preferential treatment and hypocrisy, religion can’t survive!
Annie Laurie Gaylor who inherited this organization from her mom is very active in the Madison area. I can abide issues like this, and substantially agree w/ the complaint. However, she diminishes herself w/ a lot of petty horseshit locally. I surmise she does it just to get into the news and get publicity, following PT Barnum’s, “The only bad publicity is no publicity”. But, it’s a double edged sword. Even in ultra liberal Madison many folks who agree w/ her mission throw their hands up w/ her tactics. Maybe she just needs to hire a good PR person. But, idealogues are by nature impractical.
What court will hear this case if it goes to trial? Does that mean that the ruling could automatically have an effect on Federal income taxes for churches(and other 501c3) across the US?
I’m glad that these challenges are being brought and hoping that this will be heard. If nothing else, lawsuits like this could expose and define the boundaries for non-profits regarding political speech, advocacy, and taxes, especially since those old boundaries don’t seem to be respected by many of the holy and righteous anymore.
Justice Holmes,
I’ve traditionally been in the camp that favors the exemption on the grounds that the power to tax something is the power to destroy it, but given the gross encroachment of religious organizations upon government and a seeming pass from the IRS for engaging in partisan political activism? I’m starting to re-evaluate my position on that. As long as taxation could be done on a non-denominational manner (i.e. no preference was given to one faith over the other to avoid Lemon issues) then perhaps the time for the free ride should be over. I haven’t made up my mind yet, but I am certainly considering changing my stance.
Kudos to the Freedom from Religion Foundation! And good luck!
It’s a start. I would rather take the exemptions away but its a start.
Interesting argument. I’ll be very interested in seeing how it plays out. Especially since the IRS is currently not enforcing rules concerning separation of church and state. The steady erosion of the Establishment Clause (and the 14th for that matter) is quite worrisome.