IRS exams found that nearly 3 out of 4 churches, charities, and other civic groups suspected of having violated restraints on political activity in the 2004 election did so, the agency said yesterday.

Most of the examinations that have concluded found a single, isolated incidence of prohibited campaign activity.

In three cases, however, the Internal Revenue Service uncovered violations egregious enough to recommend revoking the groups' tax-exempt status.

The majority of charities and churches followed the law, but the examinations found a ''disturbing" amount of political intervention in the 2004 elections, IRS Commissioner Mark Everson said.

''It's disturbing not because it's pervasive, but because it has the potential to really grow and have a very bad impact on the integrity of charities and churches," Everson said in an interview.

The agency, recognizing that these issues are likely to be coming up in ever greater numbers as the 2006 election seasons comes into full swing, has issued a detailed set of guidelines of what is and is not permissible as part of a stepped up education and enforcement effort going into the 2006 campaign season.  Here is an excerpt:

The Prohibition on Political Campaign Intervention

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.  The prohibition applies to all campaigns including campaigns at the federal, state and local level.  Violation of this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.  Those section 501(c)(3) organizations that are private foundations are subject to additional restrictions that are not described in this fact sheet.

What is Political Campaign Intervention?

Political campaign intervention includes any and all activities that favor or oppose one or more candidates for public office.  The prohibition extends beyond candidate endorsements.  Contributions to political campaign funds or public statements of position (verbal or written) made by or on behalf of an organization in favor of or in opposition to any candidate for public office clearly violate the prohibition on political campaign intervention.   Distributing statements prepared by others that favor or oppose any candidate for public office will also violate the prohibition.   Allowing a candidate to use an organization's assets or facilities will also violate the prohibition if other candidates are not given an equivalent opportunity.   Although section 501(c)(3) organizations may engage in some activities to promote voter registration, encourage voter participation, and provide voter education, they will violate the prohibition on political campaign intervention if they engage in an activity that favors or opposes any candidate for public office.  Certain activities will require an evaluation of all the facts and circumstances to determine whether they result in political campaign intervention.  

Voter Education, Voter Registration and Get Out the Vote Drives

Section 501(c)(3) organizations are permitted to conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides)  if they are carried out in a non-partisan manner.  In addition, section 501(c)(3) organizations may encourage people to participate in the electoral process through voter registration and get-out-the-vote drives,  conducted in a non-partisan manner. On the other hand, voter education or registration activities conducted in a biased manner that favors (or opposes) one or more candidates is prohibited.

This, and other resources  available on the IRS web site should help those concerned about the abuse of the tax-code to determine what is and is not, in fact, a violation.

These resources may take on added importance in light of recent Republican efforts to obtain church membership directories in North Carolina, and similar efforts by the Bush/Cheney campaign in 2004, according to a report by the Interfaith Alliance.

Meanwhile, according to Americans United for Separation of Church and Statethe results of the IRS investigation

..."proves that the IRS intends to fully enforce the law barring houses of worship from intervening in political campaigns," said the Rev. Barry W. Lynn, executive director of Americans United. "Pastors tempted to follow the Religious Right's siren song into partisan activity need to sit up and take notice."

Continued Lynn, "Churches have no business becoming cogs in a candidate's political machine. It damages the integrity of the church, and it violates federal tax law. This report indicates that the IRS takes allegations of violations seriously."

In 1996, Americans United launched "Project Fair Play," an effort to educate religious leaders about IRS regulations governing politicking. As part of that effort, AU reports egregious violations of the law to the IRS. The organization reported 11 houses of worship and other religious non-profits in 2004.

The IRS report notes that of 132 cases examined, 82 are closed. In three cases, revocation of tax-exempt status was proposed. In 55 cases, the non-profits were issued written warnings. In one case, the IRS applied an excise tax.

Activities examined included the distribution of fliers promoting certain candidates, candidate endorsements from pulpits, churches displaying candidate signs and churches improperly permitting candidates to seek votes during church appearances.

"This report should lay to rest Religious Right claims that houses of worship have a right to engage in partisan politicking," said Lynn. "They don't, and any that ignore the law and do so anyway could face severe sanctions."