IRS “Targeted” Catholic League

-Submitted by David Drumm (Nal), Guest Blogger

Bill Donohue, president of the Catholic League, writes: “Just weeks after Barack Obama was elected president in 2008, I was notified by the IRS that the Catholic League was under investigation for violating the IRS Code on political activities as it relates to 501(c)(3) organizations.” So, that would be when George W. Bush was the President. The recent media attention directed towards IRS investigations of Tea Party, 501(c)(4), organizations, was just too enticing for Donohue. For 501(c)(3) organizations, the IRS requires that the organization “may not participate in any campaign activity for or against political candidates.” It might be interesting to see how well the Catholic League upheld its commitment to this requirement.

Unlike 501(c)(4) organizations, donations to 501(c)(3) organizations are generally tax-exempt. In return for this benefit, these organization agree to the IRS terms and conditions. The language in the IRS specifically designates “political candidates” as being off limits.

However, the September 2008 issue of Catalyst, the journal of the Catholic League, in an article entitled “OBAMA’S PUBLIC POLICY BLUNDERS,” Donohue wrote:

Recently, Sen. Obama has disappointed Catholics again. This time regarding his public policies on school vouchers, faith-based initiatives and selective infanticide.

In the October 2008 issue, Donohue writes of then-candidate Nancy Pelosi: “Pelosi is wildly out of touch with the Catholic Church.” Donohue writes of vice-presidential candidate Joe Biden: “As the only Catholic on either ticket, Biden could have been a real asset to Obama, but instead he has become a liability.” Donohue defends Keith Fimian, the Republican candidate for Virginia’s 11th Congressional District. Donohue also defends Sarah Palin by noting: “Republican vice presidential nominee Sarah Palin’s religion has come under severe scrutiny. Unfortunately, some of the coverage has been downright unfair.”

What was the result of the IRS investigation? Acdording to Donohue:

In the end, the IRS concluded that although the Catholic League had “intervened in a political campaign,” it was “unintentional, isolated, non-egregious and non-recurring”; our tax-exempt status remained intact.

Donohue responds:

I intentionally addressed political issues, and did not intervene in the campaign …

However, Donohue’s legal accumen seems to differ from that of the United States Conference of Catholic Bishops (USCCB) Office of General Counsel, who offers this advice:

A Catholic organization may not directly or indirectly make any statement, in any medium, to endorse, support, or oppose any candidate for public office, political party, or PAC. [Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii).]

Nonprofit attorney Gene Takagi agrees with that interpretation. Takagi writes that 501(c)(3) organizations “cannot make endorsements (whether in support or in opposition to a candidate); and cannot allow the use of the organization’s resources without giving equal opportunity to other candidates.”

If Donohue wants to issue his political opinions regarding candidates, he is free to give up his organization’s tax-exempt benefit.

H/T: Steve M., David Weigel.