THE IRS SHOULD PULL BARACK OBAMA’S TAX-EXEMPT STATUS
DATELINE: February 27, 2008, Chicago
The United Church of Christ (UCC) recently received a letter from the IRS stating that it was under investigation for a speech that Senator Barack Obama gave at the UCC's 50th anniversary General Synod in Hartford Connecticut on June 23, 2007. The IRS is concerned that the UCC may have intervened in the presidential campaign by allowing Obama to make the speech that he made.
We have read the Obama speech and the Church's blog discussing the circumstances surrounding the speech. We have to say, the facts make this is a...
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very close call. Obama's speech is not a typical stump speech. Much of the speech is relatively innocuous when it comes to politics. Most of it is devoted to Obama's faith, how he came to it, and what it means to him. Yet, Obama begins the speech by noting that he is running for president. He then devotes a paragraph to his "change" mantra, referring to health care and Iraq. Those are two subjects that are at issue in this election cycle. He then moves away from what we view as politics and begins to speak about his personal experience with faith and religion.
Later in the speech he discusses the Christian-Right. That discussion struck us as criticism that veers toward the political realm. Shortly after that discussion, Obama talks about fighting to expand the Earned Income Tax Credit. Obama then says,
I have made a solemn pledge that I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family's premiums by up to $2500 a year. That's not simply a matter of policy or ideology – it's a moral commitment.
At that point, Obama is in full campaign mode. He then takes up Iraq and illegal immigration. This portion of the speech is far afield of religion, although many religious leaders do hold moral convictions on these issues. Obama is a politician and a candidate. These issues are his business, and he is not supposed to be conducting his business in this setting.
In fact, Obama's remarks about illegal immigration reveal exactly when he crosses the line because he, himself, draws the distinction between the political and sectarian sectors, stating,
Now, as children of God, we believe in the worth and dignity of every human being; it doesn't matter where that person came from or what documents they have. We believe that everyone, everywhere should be loved, and given the chance to work, and raise a family.
But as Americans, we also know that this is a nation of laws, and we cannot have those laws broken when more than 2,000 people cross our borders illegally every day. We cannot ignore that we have a right and a duty to protect our borders. And we cannot ignore the very real concerns of Americans who are not worried about illegal immigration because they are racist or xenophobic, but because they fear it will result in lower wages when they're already struggling to raise their families. [italics added]
And so this will be a difficult debate next week. Consensus and compromise will not come easy. Last time we took up immigration reform, it failed. But we cannot walk away this time. Our conscience cannot rest until we not only secure our borders, but give the 12 million undocumented immigrants in this country a chance to earn their citizenship by paying a fine and waiting in line behind all those who came here legally.
We do acknowledge that there is an argument that this passage, when taken by itself, does not constitute a prohibited political intervention because immigration reform apparently was being considered by Congress at the time. However, that line of reasoning requires a review of several factors before a conclusion can be reached whether there has been a prohibited intervention. When put in the context of this particular speech, we think the passage is problematic.
As the speech comes to an end, Obama returns to his religious theme.
The UCC defends itself by noting that Obama was,
one of 60 diverse speakers representing the arts, media, academia, science, technology, business and government. Each was asked to reflect on the intersection of their faith and their respective vocations or fields of expertise. The invitation to Obama was extended a year before he became a Democratic presidential candidate.
By the time Obama spoke, he was a presidential candidate. In response to that fact, the UCC took several precautions. According to the UCC Web site,
Before Obama spoke to the national gathering of 10,000 UCC members, Associate General Minister Edith A. Guffey, who serves as administrator of the biennial General Synod, admonished the crowd that Obama's appearance was not to be a campaign-related event and that electioneering would not be tolerated. No political leaflets, signs or placards were allowed, and activity by the Obama campaign was barred from inside the Hartford Civic Center venue.
Last year, the IRS issued Revenue Ruling 2007-41 (June 18, 2007), in which it addressed candidate appearances where the candidate is speaking or participating as a non-candidate. In that ruling, the IRS laid out six factors that the IRS examines to determine whether an appearance constitutes a prohibited intervention by a Section 501(c)(3) organization. In describing the six factors, the IRS states,
Candidates may also appear or speak at organization events in a non-candidate capacity. For instance, a political candidate may be a public figure who is invited to speak because he or she: (a) currently holds, or formerly held, public office; (b) is considered an expert in a non political field; or (c) is a celebrity or has led a distinguished military, legal, or public service career. A candidate may choose to attend an event that is open to the public, such as a lecture, concert or worship service. The candidate's presence at an organization-sponsored event does not, by itself, cause the organization to be engaged in political campaign intervention. However, if the candidate is publicly recognized by the organization, or if the candidate is invited to speak, factors in determining whether the candidate's appearance results in political campaign intervention include the following:
Whether the individual is chosen to speak solely for reasons other than candidacy for public office;
Whether the individual speaks only in a non-candidate capacity;
Whether either the individual or any representative of the organization makes any mention of his or her candidacy or the election;
Whether any campaign activity occurs in connection with the candidate's attendance;
Whether the organization maintains a nonpartisan atmosphere on the premises or at the event where the candidate is present; and
Whether the organization clearly indicates the capacity in which the candidate is appearing and does not mention the individual's political candidacy or the upcoming election in the communications announcing the candidate's attendance at the event.
Unfortunately, the IRS does not indicate whether these factors each carry equal weight, whether a balancing test must be applied, or whether coming down on the wrong side of just one factor is fatal to the organization's tax-exempt status.
We are more sympathetic to the UCC than we normally are in these cases. That's largely because the UCC took precautions to prevent Obama's speech from becoming a political event. As the UCC points out, they told the crowd that this was not a campaign speech, they prohibited signs and leaflets in the hall, as well as campaign activity by the Obama organization. It is also notable that Obama was chosen before his candidacy and that he was just one of 60 speakers who were chosen because they represented church members who came from different walks of life.
According to the IRS, 40 Obama volunteers staffed campaign tables outside the Hartford Civic Center to promote Obama's campaign. The UCC has responded that the volunteers were not permitted to enter the forum. This is obviously an important aspect of this dispute, but more details are needed before this fact can be treated as pro or con from the UCC's standpoint. Specifically, was this space that the UCC controlled? Could those opposed to Obama occupy this space?
The question is what steps must a Section 501(c)(3) organization take to control the words that come out of a speaker"s mouth. As we noted above, the Obama speech struck us as more religious than his normal stump speech, but it clearly also had elements of a campaign speech. To protect its exempt status: Must the church or other Section 501(c)(3) organization review the text of each speech? Must it cut the microphone off if a speaker veers toward the political realm? Must it make a statement following the speech disavowing the political comments? Or, must it offer other candidates a similar forum to respond? We don't know.
The IRS and the UCC must share Hillary Clinton's frustration with Obama. One of Clinton's problems has been the spiritual nature of Obama's speeches, which tend to be more about that "vision thing" than laundry lists of policy prescriptions and the steps to implement them. It is exactly Obama's level of generality that makes it so difficult to separate the religion from the politics. But as we have noted, despite the overall general tone of Obama's speech to the UCC, he crossed the line at certain points in that speech.
We don't have a good answer to the question of whether the UCC's tax-exempt status should be revoked. We can tell you that it won't be revoked over this one incident. The church took enough concrete steps to prevent Obama's speech from becoming a campaign event or an endorsement by the UCC of Obama. As a consequence, the IRS simply isn't going to go to the mat on this one, particularly when it caved in the case of the NAACP and All Saints Church, both cases that involved officials or former officials rather than an outsider.
We do think Congress must step in and write a prohibition on political campaign activity that addresses the reality of how churches and other Section 501(c)(3) organizations interact with political candidates. In addressing this problem, we would like to see Congress take an approach akin to that taken by the intermediate sanctions in Section 4958. That is, rather than penalizing the innocent entity or the entity that can't control a speaker once the speech has begun, the sanctions should focus on the speaker's conduct, penalizing the speaker. Many will argue that this raises First Amendment issues. We recognize that possibility, but are not convinced. Obviously, the speaker has a right to speak, but the speech in question is by invitation. Consequently, this is not silencing the speaker in terms of access to the public square.
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