On November 14, 2012, the Freedom From Religion Foundation (FFRF) filed a lawsuit against the Internal Revenue Service (IRS) for "its failure to enforce electioneering restrictions against churches and religious organizations." The lawsuit, which was filed in U.S. District Court for the Western District of Wisconsin, states that "[a]s many as 1,500 clergy reportedly violated the electioneering restrictions on Sunday, Oct. 7, 2012."
According to a press release issued by FFRF, the suit makes reference to full-page ads that were placed by the Billy Graham Evangelical Association on three Sundays leading up to the 2012 presidential election. The organization describes the ads as "'blatantly political.'" In addition to issuing complaints against Billy Graham's group, FFRF states that they have issued letters of complaint to the IRS on 27 other violations of electioneering laws so far this year.
The press release points to an October 22 Bloomberg BNA report that says that IRS official Russell Renwicks stated that IRS audits of churches have been suspended. They further claim that there is no evidence that any action has been taken in the past three years relating to auditing churches.
According to a report by the IRS entitled Election Year Issues, "[a]n organization will not qualify for tax exemption under IRC 501(c)(3) unless it "'does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.'" The report goes on to clarify what is meant by participation and intervention as follows:
The regulations provide that activities that
constitute participation or intervention in a political
campaign include, but are not limited to, the
publication or distribution of written or printed
statements or the making of oral statements on
behalf of or in opposition to a candidate for public
These activities are strictly prohibited and are subject to taxation and can lead to the loss of tax-exempt status. Yet, certain tax-exempt organizations, especially churches, continue to violate regulations governing tax-exempt organization with no consequences. The FFRF complaint contends that "[t]his non-enforcement “'constitutes preferential treatment to churches and religious organizations that is not provided to other tax-exempt organizations, including FFRF.'” It further says that “'Churches and religious organizations obtain a significant benefit as a result of being non-exempt from income taxation, while also being able to preferentially engage in electioneering, which is something secular tax-exempt organizations cannot do.'”