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October 8th, 2010

The IRS and Churches

By Nathan Tucker

Recently, Pastor Cary Gordon of Cornerstone World Outreach in Sioux City wrote a letter to other pastors to urge them to encourage their congregations to vote against retaining the three Supreme Court justices who are on the November ballot.  These justices participated in the unanimous Iowa Supreme Court ruling last year that overturned Iowa’s Defense of Marriage Act.

In his September 3rd letter, Gordon asks his fellow pastors “to commit to confront the injustice and ungodly decisions of the Iowa Supreme Court by boldly calling upon their flocks to ‘vote no on judicial retention’ for the three consecutive Sundays prior to Election Day.”

Recognizing that this could jeopardize a church’s tax-exempt status under IRS regulations, Gordon assures participating pastors that the Christian non-profit law firm “Liberty Institute will defend any courageous pastor or priest in the state of Iowa (from the IRS)—in court—for free—that is willing to follow the example of the New Testament church fathers who challenged the unscriptural public policies of their day as an example for every generation to follow.”

This letter found its way into the hands of Americans United for Separation of Church and State, who in turn reported it to the Internal Revenue Service.  Rev. Barry Lynn, the executive director of Americans United, said that “I don’t think I have ever seen a more outrageous effort to politicize churches.”  Belying his true agenda, Lynn went on to say that it’s “even more appalling that they are doing so in a bigoted attempt to deny civil rights to a targeted minority.”

On Jan Mickelson’s morning radio show Tuesday, Gordon stated that he looked forward to a confrontation with the IRS, hoping to take the case all the way up to the U.S. Supreme Court if need be to win the free speech rights of pastors.  IRS regulations prohibit churches and other charitable organizations formed under section 501(c)(3) from endorsing or opposing candidates for elected office.

Supporters of the regulation argue that it is not a free speech issue at all.  Rather, they maintain that the federal government is well within its right to define, for purposes of granting tax exempt status, what constitutes charitable activity.  Accordingly, churches and other organizations are perfectly free to influence political elections as they desire, but if they wish not to be taxed by the federal government they have to play by its rules.

The problem with that, however, is that the federal government lacks the authority to use its taxing power to regulate matters outside its constitutional jurisdiction.  This issue is not so much a free speech issue as it is a federalism issue—the federal government cannot do indirectly through its taxing power what it cannot do directly through one of its enumerated powers.

Under the Tax and Spend Clause, Congress has the authority to tax and spend “to pay the debts and provide for the common defense and general welfare.”  Traditionally, the term “general welfare” was understood to be shorthand for the remainder of Congress’ powers which are listed immediately following the Clause.

Since the New Deal Era, however, Congress has read the term “general welfare” to mean pretty much whatever its heart desires.  At this point in time, the political pressure is too great to spend federal money that it is unrealistic to hope that Congress would go back to the term’s original public understanding.

It is not too much to hope, however, that Congress would once again recognize a few common sense limited restrictions on its tax and spend power, most of which have, at one time or another, been recognized by the courts.

The first restriction is that Congress cannot spend money on earmarked projects that circumvent otherwise applicable merit-based or competitive allocation processes because such earmarks violate the principle of national general welfare.  The term “general welfare” means nothing if congressmen are allowed to earmark federal monies for specific projects rather than allocate the funding through an open process available nationwide.

The second is that Congress cannot impose upon state or local governments any obligation or duty to make expenditures unless such expenditures shall be fully reimbursed by the federal government.

Third, and perhaps most important but also most difficult to comply with, Congress lacks the constitutional authority to use its tax and spend power to regulate or prohibit any object or activity that is not necessary and proper to a power enumerated in the Constitution.  It can spend money on those objects, but it is powerless to regulate them.  Such regulations are left up to the States.

These are a few basic limitations on federal authority to tax and spend that would continue to allow states and the American people to feed at the trough of federal monies but also restore some resemblance of a federal government of limited, enumerated powers.

In this case, the federal government has used its tax and spend power to create an entire regulatory scheme of what non-profits—under either 501(c)(3), 501(c)(4), or section 527—can say and do.  This is a clear violation of even the minimum constitutional restrictions described above because it attempts to regulate an area not entrusted to it by the Constitution.

While we may acquiescence in Congress’ decision to promote charities by giving them a tax break even though promoting charity is not a constitutionally enumerated power, it cannot take the additional step and attach strings to its tax break.  This is a power denied to Congress by the Constitution, and congressmen who are serious about being faithful to that document should seek to repeal these regulations.

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About the Author

Nathan W. Tucker
Nathan W. Tucker is a Davenport attorney and author of We The People: The Only Cure to Judicial Activism. He can be contacted at

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