All Saints Receives Vindication from IRS

This IRS update just sent to members of All Saints Church and as a media advisory:

All Saints Receives Closure, Vindication from IRS;

The Church Vows to Pursue Legislative Clarity

All Saints Church announced today that the IRS has confirmed that it has closed its investigation of the Church, and the Church will not be subject to excise tax in connection with any alleged political campaign intervention. All Saints also reported that, in light of its experience in defending against its own examination, and to support all churches, synagogues and mosques who speak truth to power in the prophetic tradition, it plans to work through federal legislative channels to increase the legal protections available for freedom of the pulpit from ill-founded or politically motivated tax investigations.

In a letter of October 22, 2007, the IRS responded to the Church’s inquiry, raising questions about ambiguities and irregularities in the examination. In the response, the IRS informed the Church that the “examination is now closed and no further enforcement action, including imposition of taxes…will be pursued in connection with Dr. Regas’ sermon delivered on October 31, 2004 or any other activities involving” the Church in 2004. Further, in response to the Church’s request to the Treasury Inspector General for Tax Administration to review the propriety of certain aspects of the IRS investigation of All Saints, the IRS agreed that the “review is appropriate.” The Church is confident that the Treasury Inspector General’s review will only further validate the Church’s concerns regarding the course of the examination.

All Saints will also work for legislative and administrative changes in conjunction with its Congressional representative, the Honorable Adam Schiff. The Church is optimistic the enactment of additional statutory provisions can provide further clarity regarding the scope of the rules and safeguards as to the IRS’s enforcement mechanisms.

All Saints’ Rector, the Rev. J. Edwin Bacon said, “We are pleased with these concessions from the IRS and hope that the agency now recognizes that it both initiated and pursued this examination in violation of its own procedural requirements and without proper grounds to do so. All Saints continues to support the principle underlying the federal tax prohibition against campaign intervention but is also passionately committed to defending the freedom of the pulpit and to continuing to address the critical and moral issues of our day, such as war, poverty and society’s responsibility to care for its least fortunate members.”

While the IRS investigation may have undermined the confidence of other organizations to worship without fear of intimidation during an election season, All Saints will continue to stand firm in its resolve to protect the freedom of the pulpit, not simply for itself, but for all churches, synagogues and mosques that may come under attack. The Church is also proud to stand shoulder-to-shoulder with any other faith community that finds itself victim to government entanglement with its religious practices.

Background:

The IRS initiated its investigation solely on the basis of a sermon preached by the Rev. Dr. George Regas, Rector Emeritus of the Church, on the Sunday before the 2004 Presidential Election. In that sermon, Dr. Regas did not endorse any candidate or party, but rather, spoke eloquently and forcefully about the moral and social issues of poverty, war, hope and justice, in keeping with the long tradition of All Saints’ social justice mission.

In September 2006, the IRS served the Church and its Rector with two highly intrusive summonses seeking the production of a wide range of documents and testimony regarding the church’s practices and policies. Out of grave concern regarding both the legal and procedural bases for the examination, the Church’s Vestry voted to decline to reply to the summonses in order to allow the Church to raise its concerns in a court of law.

The IRS appears to have referred the case against All Saints to the Department of Justice for summons enforcement. Apparently, DOJ declined to pursue the matter, and the IRS issued the Church a closing letter on September 10, 2007. The Church then followed up with a letter to the Commissioner of the IRS and the Treasury Inspector General regarding various legal and procedural defects that arose in the course of the examination.

From the outset of the investigation, All Saints has called for greater clarity of the line that separates issue advocacy from partisan politics, a standard that, under the current IRS regulations, is vague and ill-defined.

==========

UPDATE: Episcopal Life has picked up the story: Pasadena parish receives vindication from IRS

.