Churches can lobby directly with legislators, run political ads in their circulars, sell their mailing lists to candidates, distribute voters’ guides about where candidates stand on issues and even drive parishioners to voting centers but according to a 1954 IRS code, they cannot tell parishioners who to vote for. (Then-Senator Lyndon B. Johnson sought the enactment when his democratic primary opponent Dudley Dougherty received public support from right-wing billionaires like oil magnate H. L. Hunt who wrote off the expenses of his propaganda agency Facts Forum as a donation to charity.) Today, if religious organizations do intervene with a political campaign, they risk losing their tax-exempt nonprofit status and have to pay federal income tax just like corporations. The IRS has revoked nonprofit status in less than five such intervention cases since the rules were adopted in 1954. Those include the Christian Echoes National Ministry which endorsed Goldwater in 1964, Jerry Falwell’s Old Time Gospel House which funneled money to conservative candidates in the 1980s, and nearly ten years ago, Randall Terry’s hometown church in Binghamton, New York which ran a full-page ad in USA Today and The Washington Times that accused Clinton of supporting “policies that are in rebellion to God’s Laws” and solicited “tax-deductible donations” to help fund future ads. Most IRS inquiries about potential violations by churches are initiated based upon articles reported by the media or complaints submitted by third parties.
In 2004, the IRS determined that the religious nonprofit organization Catholic Answers had engaged in improper electioneering when it published a voter guide arguing that Democratic presidential candidate Sen. John Kerry should not receive Communion in Roman Catholic churches. The organization paid the excise tax but later sued the IRS for refund of the tax and challenged the constitutionality of the restrictions on campaign activity. The IRS refunded the tax, but Catholic Answers continued its legal challenge. The US Court of Appeals for the 9th Circuit said the suit was moot because the tax had been refunded. The Supreme Court (in January 2012) declined to review the decision.