RL34447
Churches and Campaign Activity: Analysis Under Tax and Campaign Finance Laws
April 14, 2008

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Summary:

Churches and other houses of worship qualify for tax-exempt status as Internal Revenue Code ? 501(c)(3) organizations. One qualification for ? 501(c)(3) status is that these organizations may not participate in political campaign activity. They are permitted under the tax laws to engage in other political activities (e.g., distribute voter guides and invite candidates to speak at church functions) so long as such activity does not support or oppose a candidate. Additionally, church leaders may engage in campaign activity in their capacity as private individuals without negative tax consequences to the church. The tax code's political campaign prohibition is sometimes referred to as the "Johnson Amendment," after then-Senator Lyndon Johnson, who introduced the provision as an amendment to the Revenue Act of 1954. While some have argued the prohibition violates churches' free exercise and free speech rights under the First Amendment, the two federal courts of appeals to address the issue have reached the opposite conclusion. Separate from the prohibition in the tax code, the Federal Election Campaign Act (FECA) may also restrict the ability of churches to engage in electioneering activities. Legislation introduced in the 110th Congress, H.R. 2275, would repeal the political campaign prohibition in the tax code. If this bill were enacted into law, churches could engage in campaign activities without jeopardizing their tax-exempt status, but they would still be subject to applicable campaign finance laws. This report examines the restrictions imposed on campaign activity by churches under tax and campaign finance laws, discusses recent IRS inquiries into such activity, and analyzes H.R. 2275.