IRS investigation
into liberal church draws fire from Right and Left

With the campaign season in full swing, a liberal Pasadena, Calif., church is locked in an escalating dispute with the IRS over an antiwar sermon--delivered two days before the 2004 presidential election--that could cost the congregation its tax-exempt status.

Religious leaders on both the right and left are watching closely, afraid the confrontation at All Saints Church in this Los Angeles suburb will compromise their ability to speak out on issues they see as morally important, such as abortion and same-sex marriage, during the midterm election campaign.

Under federal tax law, church officials can legally discuss politics, but to retain tax-exempt status, they cannot endorse candidates or parties. Most who do so receive a warning.

According to the IRS, the only church ever to be stripped of its tax-exempt status for partisan politicking was the Church at Pierce Creek near Binghamton, N.Y., which was penalized in 1995 after running full-page newspaper ads against Bill Clinton during the 1992 election season.

Before this fall's congressional races, the IRS warned that it would be scrutinizing churches and charities--important platforms, particularly for Republicans--for unlawful political activity.

All Saints is an Episcopal church of about 3,500--the largest west of the Mississippi--and has long had a reputation for liberal social activism among its largely affluent, Democratic-leaning membership.

During World War II its rector spoke out against the internment of Japanese-Americans. The Reverend George Regas, who headed the church for 28 years before retiring in 1995, was well-known for opposing the Vietnam War, championing female clergy, and supporting gays in the church.

The dispute centers on a sermon titled "If Jesus Debated Senator Kerry and President Bush,'' which Regas delivered as a guest pastor. Though he did not endorse a candidate, he said Jesus would condemn the Iraq war and Bush's doctrine of preemptive war.

"I believe Jesus would say to Bush and Kerry: 'War is itself the most extreme form of terrorism. President Bush, you have not made dramatically clear what have been the human consequences of the war in Iraq,' " Regas said, according to a transcript.

The IRS reprimanded the church in June 2005 and asked that it promise to be more careful. Church officials refused.

Last week the IRS demanded documents and an interview with the rector by the end of the month. Church officials will probably fight the action, said the rector, the Reverend Ed Bacon. That would mean the IRS would have to ask for a hearing before a judge.

"You can't talk about the love of the neighbor without talking about public policy," Bacon said.

Pastors elsewhere echoed those sentiments.

In South Dakota, where citizens in November will vote on the nation's most restrictive abortion law, preachers have taken classes to avoid breaking federal law.

"I would think that that speech should not be censored and neither should ours," said the Reverend Ron Traub of the Pasadena case. Traub, senior pastor at the First Assembly of God in Sioux Falls, S.D., said he never mentions candidates by name but tells his congregation to vote for the abortion ban and for politicians who espouse the church's values.

"When the IRS comes into my pulpit and tells me I cannot speak on issues, on spiritual and moral issues, I believe my congregation will be willing to stand with me and say, 'If you want to take away our IRS status, go ahead,"' he said. "The only approval that we need is the approval of God."

Steve Miller, commissioner of the IRS tax-exempt and government entities division, would not comment on the specifics of the investigation but denied the agency had any partisan agenda.

"It's a delicate area, there's no question," Miller said. "But we are not trying to curtail people's right to speak."

Miller said the agency completed investigations of 90 tax-exempt churches and charities in 2004 and found wrongdoing in 70% of the cases. Four--none of them churches--lost their tax-exempt status. In 2005 the agency began audits of 70 churches and charities, and it has 40 cases pending so far this year.

Earlier this year IRS commissioner Mark W. Everson promised more robust enforcement.

In recent years Republicans in particular have teamed with conservative evangelical leaders to motivate would-be voters, a strategy credited with helping President Bush win reelection. Intensified IRS enforcement could erode the relationship between religious and political leaders, according to some political strategists.

"The IRS action will hinder the ability of some of the churches to make their lists available, to make their pulpits available, to make their sanctuaries available," said Democratic strategist Donna Brazile.

Others say the All Saints case will barely affect politicians' use of churches.

All Saints has been known as "a headquarters for political activity'' since the 1970s, said Steve Frank, a GOP consultant who organizes churches for political campaigns. The IRS is probably using the sermon as an excuse to investigate the church's expenditures, Frank said.

"It's not a question of the IRS going after one ideology. They're going after anybody that violates the law," he said. "The reality is, it doesn't stop a minister from teaching...what they believe is the truth within the Bible." (Gillian Flaccus, AP)