Congressional Democrats are challenging the Internal Revenue Service’s recent ruling that the Family Research Council — a far-right advocacy group labeled a “hate group” by the Southern Poverty Law Center — may be classified as a “church” and therefore not have to disclose its finances.
As previously reported by BNG, the IRS has given wide berth to the definition of “church,” which has been a point of criticism before. But the ruling on behalf of the Family Research Council appears to be a bridge too far for Congressional watchdogs and other religious leaders.
By its classification as an “association of churches,” the nonprofit advocacy group no longer will be required to file an annual Form 990, the financial reporting standard for most U.S. nonprofits. Entities classified as churches also are allowed greater ability to discriminate in employment practices and are shielded from certain investigations by the IRS.
In a letter sent Aug. 1 to Secretary of the Treasury Janet Yellen and IRS Commissioner Charles Rettig, 40 Democratic lawmakers urged the IRS to reconsider its classification of the Family Research Council, which is based in Washington, D.C. The evangelical advocacy group says it is “committed to advancing faith, family and freedom in public policy and the culture from a biblical worldview.” In practical terms, that means rallying opposition to LGBTQ persons, abortion and women’s rights while claiming evangelical Christians in America are persecuted today.
The letter was spearheaded by U.S. Reps. Suzan DelBene of Washington state and Jared Huffman of California.
The Congressional letter explains that according to existing law, nonprofit organizations including churches “must not devote a substantial part of their activities to attempting to influence legislation, political activity or public policy.”
Yet, the letter adds, the Family Research Council “is primarily a political advocacy organization. … Recently, the FRC filed amicus briefs supporting the overturning of Roe v. Wade, advocated for legislation that would ban gender-affirming surgery, and sought religious exemptions to civil rights laws.”
For the Family Research Council to claim it is a church or an association of churches “strains credulity,” the lawmakers said.
For the Family Research Council to claim it is a church or an association of churches “strains credulity,” the lawmakers said. “They do not hold religious services, do not have a congregation or affiliated congregations, and do not possess many of the other attributes of churches listed by the IRS.”
Further, this ruling “is one example of an alarming pattern in the last decade — right-wing advocacy groups self-identifying as ‘churches’ and applying for and receiving church status.”
Therefore, the congressional leaders said, “We urge the IRS to swiftly review the tax-exempt status, and whether there are other political advocacy organizations that have obtained church status, but do not satisfy the IRS requirements for churches, integrated auxiliaries, and conventions or associations of churches. Further, we urge the IRS to improve the review process for organizations seeking church status to ensure that organizations that are not churches cannot abuse the tax code.”
These concerns come amid a wider alarm previously sounded about a host of other evangelical nonprofits — from the Billy Graham Evangelistic Association and Samaritan’s Purse to preschools and prep schools — hiding their financial reporting behind claims of being churches.
According to a search of IRS records, thousands — perhaps tens of thousands — of nonprofits that are not technically churches have been granted “church” status by the IRS. Many of these are small evangelistic operations, for example, that relate to churches but are neither churches nor associations of churches.
The IRS also has carved out a special exemption for some faith-based schools.
The IRS also has carved out a special exemption for some faith-based schools, according to information distributed by the U.S. Council of Catholic Bishops. The council advises Catholic schools: “To qualify for the Form 990 filing exemption, the school must be of a general academic nature below college level and be affiliated with a church or operated by a religious order.”
A cursory search of IRS records for just one state, Texas, revealed multiple dozens of listings of private religious schools and high-dollar prep schools — all able to shield their financial reporting behind the claim of being a church. This group also includes private foundations that manage millions of dollars in assets for private religious schools.
Some IRS watchdogs claim other businesses — from insurance agencies to real estate firms and sports teams — also have been granted church status by the IRS.
Digging through IRS records to prove that point, however, is a Herculean task because there are millions of nonprofits exempted from Form 990 as churches. The database of IRS-determined “churches” in Texas alone includes more than 21,000 entries.
When is a ‘church’ not really a church? Only when defined by the IRS | Analysis by Mark Wingfield