The following item was included in IRS Exempt Organization Update e-mail newsletter on June 2, 2008.

Text Script of Audio Interview on Charities and Politics

Branscome: Hi. I'm Theresa Branscome from the Internal Revenue Service. Are charities, including churches, allowed to get involved with elections? Here to discuss this is Steve Miller. He's the Commissioner of the Tax Exempt & Government Entities Division of the IRS. Welcome, Steve.
Miller: Hi, Theresa.
Branscome: There have been some stories lately about charities and churches getting involved in political campaigns. Are they allowed to do this?
Miller: Well, as tax-exempt organizations, charities and churches are subject to certain restrictions and limitations. They're exempt from federal income tax. They're called 501(c)(3) organizations. They're eligible for tax-deductible contributions. And in exchange for these privileges, Congress has set forth certain rules that they need to follow. One of those rules is that churches and charities can do a variety of voter-education activities but they can't intervene in a political campaign. And courts that have looked at this have upheld this restriction. And our job as the IRS is to enforce these rules.
Branscome: And how exactly does the IRS do that?
Miller: We take a two-pronged approach. First, we go out to try to educate folks on what the rules are, and, secondly, we have to enforce those rules.
Branscome: Can you tell me a little bit more about the education effort?
Miller: Sure. We do an awful lot of outreach and speaking. We also create a number of educational materials, including Plain Language Guidance. So there's lots of information for people on our website.
Branscome: And that's the irs.gov website, right?
Miller: Right.
Branscome: And what about the enforcement side?
Miller: Well, we obviously do get information from folks, and we read the newspapers about possible problems that have occurred. When we get that information, a team of folks takes a look and determines actually whether they think there's enough for us to go out and actually do an investigation.
Branscome: And what would prompt an investigation?
Miller: For example, if a charity or a church endorsed or it opposed a particular candidate, that would be a reason for us to take a look at that organization. We actually, if people want to take a look, there's a revenue ruling on our website that actually has 21 examples that give folks a better understanding of the types of things that they can and should stay away from doing.
Branscome: Okay. So, say that that has happened, where a charity otherwise participates in a political campaign. What does the IRS do then, especially if it finds the charity has acted improperly?
Miller: It's gonna depend on the severity of the violation. It could be as minimal as a letter to the charity explaining the rules or, in some cases, possibly an excise tax. In other cases, we could revoke the tax-exempt status, and what that means is that the organization would have to pay tax, like a for-profit corporation, and that happens very rarely. Generally, we work with the charity to avoid doing this. And what that means is that we walk through what the rules are with the charity and we help them to comply into the future.
Branscome: What if a church or charity has more questions? Where should they go?
Miller: They ought to check out our website at irs.gov. Near the top of the home page, you click on "Charities & Non-Profits.” Once you get to that page, you hit the "Political Activities” link.
Branscome: Okay. Steve, thank you so much for this information.
Miller: Thanks, Theresa.
Branscome: And thank you all for joining us. I'm Theresa Branscome. Learn more at the IRS's official website -- www.irs.gov .