IRS Investigates 350 Charities Over Charges of Improper Politicking

The Internal Revenue Service has started investigations into more than 350 nonprofit organizations for engaging in possible illegal political activities during the 2006 election cycle.

But the IRS could soon face legal challenges from some of those organizations as it attempts to crack down on charities and religious groups that donate money to political candidates or campaign for those running for contested seats. Federal law prohibits religious congregations and charities from participating in partisan political campaigns in support of, or in opposition to, candidates for public office.

The law became a point of controversy during the 2004 election, when the IRS received scores of complaints about groups that were getting involved in political campaigns. In 2004, the agency received 166 complaints about organizations suspected of electioneering and started 110 investigations. It also set up an audit process aimed at stopping the activities.

Ultimately, about three-quarters of the organizations reviewed by the IRS were found guilty of violating the law and five organizations were stripped of their tax-exempt status because of electioneering activities.

But the audits drew criticism from some organizations and members of Congress, who questioned whether they were being used to stifle disagreement with President Bush, who was running for reelection in 2004.

A Treasury Department review found no evidence of political bias and the IRS continued the audits for the 2006 election cycle.

The IRS’s latest report suggests the furor over the 2004 election has done little to cut down on illegal activities by charities.

The IRS received 237 public complaints alleging illegal campaign activities by nonprofit groups during the 2006 election cycle. Those complaints prompted 100 formal investigations.

In addition, the agency also reviewed public campaign-finance reports for state and federal candidates and uncovered 269 organizations that made direct contributions to candidates totaling nearly $345,000. Of that total, more than $121,000 has been returned to the organizations in the form of refunds from candidates.

The 2006 audit remains a work in progess. To date, the IRS has issued written warnings to 26 organizations that it found to have violated the law and dismissed cases against 14 charities. Sixty groups are still under investigation.

Among the most common activities pursued by the charities that have been investigated:

• In 16 cases, organizations were accused of allowing candidates to campaign at official functions sponsored by the charities.
• Fifteen groups have been accused of posting signs on their property endorsing a candidate.
• Fourteen organizations are alleged to have distributed printed documents supporting candidates.
• In 13 cases, church officials have been accused of making statements during routine religious services endorsing candidates.

Barry W. Lynn, executive director of Americans United for Separation of Church and State in Washington, says he believes the IRS’s recent enforcement efforts have sent a strong message to nonprofit groups — particularly church organizations that have previously used their pulpits to endorse or oppose political candidates.

But Mr. Lynn says he doesn’t expect church groups to stay quiet during the 2008 presidential election, even though the IRS is being more aggressive in investigating complaints.

“We’re in for a heavy season of church politicking during the next 18 months,” Mr. Lynn says. “Religion is going to play, for good or for ill, a major role in this coming election.”

Preparing for 2008

That activity, in fact, has already begun.

Mr. Lynn’s organization recently complained to the IRS about recent statements made by the evangelist Bill Keller, president of Bill Keller Ministries, in St. Petersburg, Fla., regarding the Republican presidential candidate Mitt Romney.

“If you vote for Mitt Romney, you are voting for Satan,” Mr. Keller wrote to subscribers to his online prayer ministry, LivePrayer.com.

In an interview, Mr. Keller defended the statement, saying it was not political.

“I’m a minister. The comments I’ve made about Romney and the Mormon religion are of a spiritual nature,” Mr. Keller says. “I often comment on issues like abortion and homosexuality — all of the key spiritual issues that transcend into the political arena.”

Mr. Keller says he understands and respects the law and makes sure that he does not endorse specific candidates.

But another Christian leader, Mark Holick, pastor of the Spirit One Christian Center in Wichita, Kan., says he believes the law prohibiting campaigning by church officials is unconstitutional.

Mr. Holick says his organization is under investigation by the IRS for using a marquee outside of his church to post statements about campaign contributions a doctor who performs abortions made to Kathleen Sebelius, Kansas’s governor, and about other candidates for statewide office who also accepted such gifts or had supported legalized abortion.

The IRS has also questioned his organization about a voter’s guide and about an article written by Mr. Holick on the church’s Web site that mentioned Sen. Hillary Rodham Clinton, Democrat of New York.

Such activities, Mr. Holick says, are protected under the First Amendment. As a result, he plans to continue making statements — and would consider suing the IRS if it attempts to sanction his church.

“These were not political issues. These were gospel issues. We’ve been a vocal, pro-life, pro-family church for 16 years,” Mr. Holick says. “Until they come and lock the doors, we’ll continue to do them.”

Copies of the IRS report on potential violations in the 2006 campaign are available at the IRS Web site.

The IRS has also issued updated guidelines on political activities for charities, which includes more than 20 hypothetical situations involving political activities by nonprofit groups and the IRS’s guidance on whether those activities are legal.