The IRS warned pastors attending a faith leader’s summit in Washington D.C. recently not to speak from their pulpits about candidates or elections.  As reported by OneNewsNow, IRS official Peter Lorenzetti attended the summit and told pastors that prohibited activities include anything that supports or opposes a candidate for public office.  Mr. Lorenzetti’s statements are not surprising or even noteworthy given the fact that IRS officials have been interpreting the Johnson Amendment in this way since its addition to the tax code in 1954.  So why should we be concerned about these statements?

Well, for starters, Mr. Lorenzetti’s statements follow a long pattern by the IRS of intimidating pastors and churches into silence on the issues surrounding candidates and elections.  The Johnson Amendment operates as a direct restriction on the speech of pastors and churches.  There is no denying this fact.  And there is no denying the fact that the Johnson Amendment is unconstitutional.  It is never permissible to allow a government agency the power to punish a church for something its pastor says from the pulpit.  Where did America’s churches ever get the idea that it was okay to invite IRS officials into the process of sermon preparation and allow them to wield the power of censorship over what your pastor says from the pulpit?  Such a regime is not okay, and indeed, it is unconstitutional.

That’s why ADF started Pulpit Freedom Sunday in 2008 – to restore a pastor’s right to speak freely from the pulpit and to remove the pen of censorship from the hand of government officials.  Because we believe that the Constitution protects the right of a pastor to speak freely from the pulpit and that government should hold no sway over a pastor’s sermon preparation or delivery.  It is for every pastor and church to decide for themselves what is said from their own pulpit.

Pulpit Freedom Sunday is October 7, 2012.  If you are a pastor, please sign up to participate to exercise your constitutional rights on that day together with hundreds of other pastors  from across the country.  If the IRS wants to continue to enforce the Johnson Amendment against pastors and churches, then it will continue to take a sustained and united effort to remind the IRS of the constitutional rights of pastors and churches.  If you are not a pastor, please send every pastor you know to www.pulpitfreedom.org to learn more and to sign up to participate on October 7, 2012.

As readers of this blog know, ADF has conducted Pulpit Freedom Sunday since 2008.  Pulpit Freedom Sunday is a legal project designed to restore a pastor’s right to speak freely from the pulpit without fearing government censorship or control.  The government, by applying the Johnson Amendment to churches and pastors, has been mandating that certain content in a pastor’s sermon is off-limits and can result in penalties against the church.  ADF launched Pulpit Freedom Sunday in 2008 to challenge the constitutionality of the Johnson Amendment.  We believe that it is unconstitutional for the government to attempt in any way to censor a pastor’s sermon.

In 2008, 33 pastors preached sermons evaluating candidates in light of Scripture and then making specific recommendations about those candidates.  They sent their sermons to the IRS.  The number of pastors increased to 84 in 2009 and increased from there to 100 in 2010.  Last October, the amount of pastors jumped dramatically to 539 pastors who participated in Pulpit Freedom Sunday!  These pastors made their sermons public.  They were not preaching secretly or trying to “get away” with something.  Rather, these pastors sincerely want to regain their right to speak freely during their sermons without having to wonder or fear if a government agency is going to punish the church because of something the pastor said from the pulpit.

Over six months have now come and gone since Pulpit Freedom Sunday 2011.  And it has been over four years since Pulpit Freedom Sunday 2008.  Yet the IRS has remained silent.  No pastor has been punished or threatened with punishment by the IRS for participating in Pulpit Freedom Sunday.  I’ve speculated before about the reasons why the IRS has remained silent.  But, in reality, the reasons are unimportant.  What is important is that the IRS has said nothing and done nothing in response to Pulpit Freedom Sunday.

We cannot let up and must continue to march forward to regain a pastor’s right to speak without the presence of the government in the pulpit.  Pulpit Freedom Sunday is coming up on October 7, 2012.  Please, if you are a pastor, sign up to participate this year in Pulpit Freedom Sunday.  And if you are not a pastor, then send every pastor you know a link to our website at www.pulpitfreedom.org.  All the information any pastor needs to become aware of the issues and to sign up to participate is on the website.  We must continue our efforts to get the government out of the pulpits of America.  Will you stand together with us and hundreds of other pastors this October?

Why is your church tax exempt?  Why should it continue to be tax exempt? If I were to sit down and ask you these questions, would you have a clear and coherent answer? I suspect this is something we seldom think about. After all, tax exemption for churches has always been given and we assume, because of its historical longevity, it always will be given.

The fact that most Americans cannot explain why their church is tax exempt indicates a forgotten history and is emblematic of a society that has systematically devalued the church as a beneficial societal institution.

Whenever I litigate a case about church tax exemption or Pulpit Freedom Sunday, the inevitable media comments go something like this: “Churches should pay taxes just like everyone else! They have tons of money, so why can’t they pay their fair share? Why should churches get a free ride? Make them pay!” Comments like these are more prevalent today than any other time I can remember.

Cases involving local governments attempting to tax churches are also becoming more prevalent. For example, ADF recently litigated and won a case against the City of Mission, Kansas, for attempting to impose a “driveway tax” on churches. Or consider the case of Liberty Assembly of God in New Hampshire which was slapped with a property tax bill simply because the local taxing authorities rifled through the church buildings and concluded that because some rooms were “untidy,” the church was not using them for a religious purpose.

So why should churches be tax exempt? There are very sound and valid reasons for church tax exemption. First, there is the “social benefit” theory of tax exemption. This recognizes the fact that churches provide great benefits to society by their good works. Churches minister to the poor and needy in the community, provide numerous social services for the downtrodden among us, and reach out to the “least of these” in thousands of different ways. The social benefit theory justifies tax exemption for churches as a kind of bargain – churches provide needed services, so they are entitled to tax exemption.

One corollary of the “social benefit” theory that is often overlooked is what I have termed the “intangible benefit” theory of tax exemption. This highlights the intangible and often unseen benefits provided by churches to the community. Things like reduced crime rates resulting from transformed lives, suicides prevented when people surrender to Christ, and people with destructive behavioral patterns that harm the community changing into hard-working and virtuous citizens who contribute to the well-being of the community. It is difficult to put a price tag on these types of intangible benefits provided by churches, but there is no question that they exist.

An interesting study conducted a few years ago attempted to put a value on the economic worth of one church. The study estimated that the First Baptist Church of Philadelphia provided over six million dollars of economic value to the community, a figure that is nearly ten times the church’s annual budget.

It is easy to see the benefits provided by churches. In fact, churches provide more social services and intangible benefits to the community than they would ever pay in taxes. It makes no sense to tax churches because the tax dollars taken from the church reduce the amount of benefits it can provide to the community. In a very real sense, taxing churches harms society.

But there is also a constitutional reason why churches are tax exempt. Our history is one of an unbroken practice of exempting churches from taxation. Churches were exempt from the very first time the tax code was passed at the federal level, and have remained exempt in every iteration of the tax code ever since. Every state in America also exempts churches from property taxes. When the U.S. Supreme Court decided a case regarding the property tax exemption of churches, called Walz v. Tax Commission, it stated that providing a tax exemption for churches was a less intrusive option under the Constitution than requiring churches to pay taxes.

That makes sense when you stop and think about it. As the Supreme Court said in a very early case, “The power to tax involves the power to control.”  Taxation is, in essence, a very strong assertion of control by a sovereign over its subjects. Exempting churches is a way to ensure that the state cannot control churches.

Overall, there are very good reasons why churches are tax exempt. We need to remember these reasons and proclaim them to others in society who reflexively shout that the Church should pay its fair share. We should take up the cause of passionate defenders of church tax exemption like Kentucky State Representative Whittaker. During the debates on the Kentucky Constitution in 1890, he loudly proclaimed, “Let an untaxed Gospel be preached, in an untaxed church-house, from an untaxed pulpit; let the emblem of a crucified, but risen Christ be administered from an untaxed altar, and, as the spire points heavenward, . . . let it stand forever untaxed.” Amen.

Every time I talk about Pulpit Freedom Sunday, I inevitably get a comment from an audience member that goes something like this, “You know, if churches just unincorporated, they wouldn’t be subject to the IRS,” or “Because churches aren’t required to apply for tax exemption, they aren’t subject to 501(c)(3) of the tax code.” People have told me that churches have willingly gagged themselves in exchange for tax exemption and that they should just unincorporate or give up their exemption letter from the IRS and they could then be free to do what they want. Behind these questions and statements lies an admirable heart for the independence of the church. But these also demonstrate a fundamental and potentially dangerous misunderstanding of the law.

This misunderstanding has been propagated in different ways through the years in movements, booklets, and websites. The basic argument is that churches are free and if they don’t incorporate or ask for tax exemption from the government, then the IRS can’t regulate them or force them to pay income taxes (or do anything else for that matter).

This view is wrong under the law as it exists today. But in order to understand this, we need to take a few steps back. Churches are unique in that they enjoy a special status under the tax code. Normally, to be considered exempt from income taxes, an organization must apply for an exemption from the IRS and demonstrate that it meets the requirements to be considered one of the exempt categories of section 501(c) of the tax code. Every organization that does not fall within one of the exempt categories of section 501(c) of the tax code is considered taxable.

But churches are different. Under section 508(c)(1)(A) of the tax code, churches are exempt from applying to the IRS for tax exempt status. Thus, churches are automatically exempt from income taxes under the federal tax code without first applying to the IRS for recognition of exempt status.

This is where the misunderstanding comes in. Some think that this unique status of churches under the tax code means that churches are not regulated by the tax code at all.  This view is wrong.  The bottom line is that whether or not a church applies to the IRS for recognition of tax exempt status or chooses not to do so, they are still subject to the tax code.

Cases have dealt with this issue. In Taylor v. Commissioner of Internal Revenue, the United States Tax Court agreed that, under section 508(c)(1) of the tax code churches do not have to apply for tax exempt status and are considered automatically exempt. But the court also stated, “Nothing in section 508(c)(1) relieves a church from having to meet the requirements of section 501(c)(3).”  Basically what the Taylor court was saying is that churches are still subject to the restrictions in section 501(c)(3) of the tax code even if they never apply to the IRS for recognition of tax exempt status.

In a similar case called Universal Life Church v. Commissioner of Internal Revenue, the Tax Court stated:

Section 508(c) exempts various organizations, including churches from the notification requirements of section 508(a). Thus while most organizations claiming tax exempt status under section 501(c)(3) must inform the Commissioner of their application for exempt status… churches need not make such a notification.

Despite this, the Tax Court went on to hold that this unique status does not prevent the Commissioner of the IRS from auditing a church.

The upshot of these cases is that even though churches are not required to apply for a tax exemption from the IRS, churches are still subject to the restrictions in section 501(c)(3) of the tax code. That means all churches are required to abide by 501(c)(3).  And if you think about this logically, it makes sense.  The way the federal tax code works is to begin from the assumption that all organizations are taxable unless they meet an exemption from taxation specified in the tax code.  Thus, for a church to be considered exempt from taxation, it must meet a specific exemption under section 501(c) of the tax code.  The specific exemption that churches fall under is section 501(c)(3).

And this is where the problem arises because the restrictions on churches in 501(c)(3) are unconstitutional. The passage of the Johnson Amendment in 1954 added a restriction to 501(c)(3) that allows the IRS to censor a pastor’s sermon from the pulpit.  That’s what Pulpit Freedom Sunday is intended to address. It doesn’t help for churches to hide their heads in the sand and pretend like the tax code doesn’t apply to them. Instead, churches should stand and boldly confront the unconstitutional restriction and regain the right of pastors to speak freely from their pulpits without any restriction.  If you are a pastor, visit our website and sign up to participate in Pulpit Freedom Sunday.

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Earlier, Kevin Theriot blogged about the Supreme Court’s decision in EEOC v. Hosanna-Tabor.  The case was a phenomenal win for religious freedom and has far-reaching implications.  In analyzing the opinion, one important implication is that the Supreme Court has announced heightened protection for the internal affairs of a church and for situations that affect the faith and mission of the church.

In a court decision from 1990 called Employment Division v. Smith, the Court allowed the government greater latitude to restrict the free exercise of religion.  The Court held in Smith that if a law was neutral as to religion and if it was generally applicable to all people, then the government was allowed to burden the free exercise of religion.  The Smith case marked a drastic departure from the Supreme Court’s earlier precedents which uniformly held that any law, even if that law was neutral and generally applicable, could not burden the free exercise of religion unless the law was justified by a compelling governmental interest that was advanced in the least restrictive means available.  This test is the strongest test available under the constitution.  In applying this test over the years, the Court candidly acknowledged that the test was strong medicine and that many laws burdening the free exercise of religion did not meet this test and were invalidated because they violated the Free Exercise Clause of the First Amendment.

Critics of Pulpit Freedom Sunday frequently cite to Smith and say that the Johnson Amendment is a law that is neutral and generally applicable so churches have no valid legal argument that the Johnson Amendment violates the Free Exercise Clause.  The Hosanna-Tabor decision changes that analysis, though.  In Hosanna-Tabor the Supreme Court retreated some from its analysis in the Smith case.  It stated: “Smith involved government regulation of only outward physical acts.  The present case, in contrast, concerns government interference with an internal church decision that affects the faith and mission of the church itself.”  Essentially, the Supreme Court created a “church exception” to the Smith case.  This means that a law that may in fact be neutral and generally applicable will now have to meet the pre-Smith compelling interest standard if it interferes with internal church matters that affect the faith and mission of the church itself.  The Supreme Court, in effect, broadened and strengthened the Free Exercise rights of churches.

This is good news for pastors chafing under the unconstitutional restriction of the Johnson Amendment.  What affects the faith and mission of the church itself more than a governmental restriction on a pastor’s sermon from the pulpit?  By allowing the government to punish pastors for preaching a certain way from the pulpit, we are allowing the government to drive and change the faith and mission of the church itself.  By allowing the IRS to declare certain topics to be off-limits or to prohibit the application of biblical truth to elections and sermons, we are allowing the government to dictate what the faith and mission of the church is and how it should be applied and proclaimed from the pulpit.

The Hosanna-Tabor case means that the IRS will now have to demonstrate a compelling reason for restricting a pastor’s sermon from the pulpit.  They cannot do so.  In fact, there is no legitimate reason for the Johnson Amendment.  And if you take a moment to understand the history behind the adoption of the Johnson Amendment, you’ll understand just how true that is.  Hosanna-Tabor is one more indication that the Johnson Amendment is unconstitutional and should be struck down at the earliest opportunity.

Pastors should be encouraged by the Supreme Court’s recent decision.  Now is the time to seize the opportunity and reclaim the right of pastors to speak freely from their pulpits without fearing governmental censorship or intimidation.  If you are a pastor, please sign up now to be a part of Pulpit Freedom Sunday.  For everyone else, forward this to your pastor and encourage them to sign up for Pulpit Freedom Sunday as well.  Standing together, we can and will make a difference.