Sunday, Sept. 26, 2010, was the third annual Pulpit Freedom Sunday advocating that a pastor or other religious leader has the right to speak on political issues without the threat of the loss of the 501(c)(3) tax-exempt status of the organization he or she represents.
In this heated midyear election, we are seeing the mobilization of independent voters and religious organizations becoming more involved in the federal and state electoral campaign for candidates for public office. Citizens United, the recent supreme court decision, struck down the Bipartisan Campaign Reform Act of 2002 prohibition regarding the use of corporate funds for independent expenditures advocating the election of defeat of candidates for public office, allowing nonprofit organizations to use corporate treasury funds directly for political communications for the first time.
It’s important to remember that this decision overruled an election law restriction on political speech under 2 U.S.C. section 441(b) of the BCRA, but did not cover the Internal Revenue Code (IRC) disallowance of business deductions for political purposes under IRC section 162(e), or the prohibitions and restrictions against political expenditures by section 501(c)(3) organizations that could jeopardize the tax-exempt status of such organizations.
For a general discussion of the Citizens United decision, see “Citizens United Changed Landscape: May Produce Same Land Mines for Nonprofit Organizations.”
Confusion has arisen as to what is the current state of the law for tax purposes on advocating or requesting candidates for public office by leaders of churches and other religious organizations. “Politics in the Pulpit” explains the rules on political intervention for religious organizations. “A Primer on How to Avoid the Pitfalls of Electioneering from a Tax Perspective” provides additional guidance for nonprofit organizations during an election year.
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