Friday, September 18, 2015

8th Circuit Rules ACA Opt-Out Provision May Violate RFRA

As reported (slightly imprecisely from my legal perspective) in Reuters, the United States Court of Appeals for the 8th Circuit, parting ways with other appellate courts deciding the issue, has issued two rulings lending support to the position that the Affordable Care Act (“ACA”) violates the rights of religiously affiliated employers by forcing them to take action that they sincerely believe would constitute complicity in the provision of contraceptive coverage, including abortifacients.  The cases are Dordt College v. Burwell and Sharpe Holdings, Inc. v. United States Department of Health and Human Services.  This post will highlight language from Sharpe Holdings.


As many readers are aware, regulations under the ACA require nonexempt employers to provide their employees with insurance coverage for FDA-approved contraception, which, as the United States Supreme Court has recognized, includes drugs that may prevent a fertilized egg from attaching to the uterus.  The same regulations permit certain religious organizations that object to providing such coverage to opt out of the coverage by filing a form with their third party administrators or by notifying the Department of Health and Human Services of their objection. In Sharpe Holdings, the plaintiffs argued that “both the contraceptive mandate and the accommodation process impose a substantial burden on their exercise of religion in violation of the Religious Freedom Restoration Act of 1993 (RFRA).”  More precisely, the plaintiffs ”contend that the government is coercing them to violate their religious beliefs by threatening to impose severe monetary penalties unless they either directly provide coverage for objectionable contraceptives through their group health plans or indirectly provide, trigger, and facilitate that objectionable coverage through the Form 700/HHS Notice accommodation process.”  Accordingly, they petitioned the district court to “enjoin enforcement of the contraceptive mandate and the accommodation regulations against them.” The district court granted the requested injunctive relief.


The United States Court of Appeals for the 8th Circuit in Sharpe Holdings affirmed the district court’s order granting injunctive relief.   The appellate court concluded that the district court “did not abuse its discretion in finding that [two nonprofits] were substantially likely to succeed on the merits of their claim that the contraceptive mandate and the accommodation process substantially burden their exercise of religion in violation of RFRA and that the current accommodation process is not the least restrictive means of furthering the government’s interests.”


In accepting the plaintiffs’ argument that the ACA regulations substantially burdened their exercise of religion, the court relied heavily on the Supreme Court’s Hobby Lobby decision:


As Hobby Lobby instructs, however, we must accept CNS and HCC’s assertion that self-certification under the accommodation process—using either Form 700 or HHS Notice—would violate their sincerely held religious beliefs. See Hobby Lobby, 134 S. Ct. at 2778; see also Hernandez v. Comm’r, 490 U.S. 680, 699 (1989) (“It is not within the judicial ken to question the centrality of particular beliefs or practices to a faith, or the validity of particular litigants’ interpretations of those creeds.”). It is not our role to second-guess CNS and HCC’s honest assessment of a “difficult and important question of religion and moral philosophy, namely, the circumstances under which it is wrong for a person to perform an act that is innocent in itself but that has the effect of enabling or facilitating the commission of an immoral act by another.” Hobby Lobby, 134 S. Ct. at 2778. As discussed above, Form 700 or HHS Notice will inform CNS and HCC’s TPA of its obligations to facilitate contraceptive coverage for CNS and HCC’s employees and plan beneficiaries and thus will play a part in providing the objectionable contraceptives. As in Hobby Lobby, CNS and HCC sincerely believe that the actions “demanded by the . . . regulations [are] connected to” illicit conduct “in a way that is sufficient to make it immoral for them to” take those actions. Id. CNS and HCC have drawn a line between actions they find “to be consistent with [their] religious beliefs” and actions they consider “morally objectionable.” Id. (citing Thomas, 450 U.S. at 715). And it is not for us “‘to say that the line [they] drew was an unreasonable one.’” Id. (quoting Thomas, 450 U.S. at 715); see also Priests for Life, slip op. at 12 (Kavanaugh, J., dissenting from denial of rehearing en banc) (“Judicially second-guessing the correctness or reasonableness (as opposed to the sincerity) of plaintiffs’ religious beliefs is exactly what the Supreme Court in Hobby Lobby told us not to do.”).


In holding against the government on whether the ACA regulations are the least restrictive means for furthering a compelling government interest, the 8th Circuit emphasized the government’s burden of proof on the issue, and found that it “has not shown that these [several possible] alternatives [discussed in the opinion] are infeasible.”



September 18, 2015 in Church and State, Federal – Legislative | Permalink | Comments (0)

Friday, September 4, 2015

Mayer on Churches and Taxes

Fellow blogger Lloyd Hitoshi Mayer, Professor of Law at the University of Notre Dame School of Law, has posted an interesting, brief opinion piece, What John Oliver Got Wrong (and Right) About Churches and Taxes, on America: The National Catholic Review.  He begins with the following:


One of the reasons I like “Last Week Tonight with John Oliver” is that it usually gets its law right. I was therefore looking forward to its piece on churches, especially since I had talked on background with Oliver’s staff and so knew it was coming. The piece was as funny as I expected, but unfortunately it also struck a few false legal notes that are worth clarifying.


Mayer critiques various aspects of the popular HBO show’s segment on churches, including its failure “to mention the long history of tax benefits for churches of all faiths,” but focuses on Oliver’s never having answered the question of why tax laws treat certain televangelists (the apparent object of Oliver’s scrutiny) “the same as other churches.”  Says Mayer:


The answer is simple and yet is never mentioned in his piece—the Constitution’s Establishment Clause.


The First Amendment states “Congress shall make no law respecting an establishment of religion . . . .” This means neither Congress nor the IRS can choose among theologies.  That is why the IRS has no choice but to recognize as religious any group that sincerely holds its beliefs and does not engage in illegal activities. Oliver sharply criticizes this standard, but what is the alternative? Do we want Congress or, horrors, IRS agents picking and choosing which theologies are “correct” and which are not? ….


This sincerely held belief standard is also not meaningless. With all due respect to Oliver’s attorney, his newly founded “church”—Our Lady of Perpetual Exemption—almost certainly would not survive IRS scrutiny. No one watching the piece could believe that there is a sincere religious belief at its heart, much less at the heart of its purported congregation of audience members. The IRS will probably leave it alone because ultimately any donations it receives will go to a bona fide charity (Doctors Without Borders).


Mayer concludes with the following words:


None of this is to defend the “prosperity Gospel” or the excesses of the televangelists that Oliver criticizes. But the government cannot and should not choose among theologies or treat churches differently because their members sincerely hold beliefs that are out of the mainstream or even ridiculous in the eyes of many. It is instead up to you and me and, yes, John Oliver to his credit, to bring the beliefs and practices of these ministries into the light so the harm they cause can be clearly seen by those who otherwise might be lured into giving to them.



September 4, 2015 in Church and State, Current Affairs | Permalink | Comments (0)

Marshall Posts Paper on Charitable Choice

William P. Marshall, the William Rand Kenan, Jr. Distinguished Professor of Law at the University of North Carolina School of Law, has posted  Remembering the Values of Separatism and State Funding of Religious Organizations (Charitable Choice): To Aid is Not Necessarily to Protect on SSRN.  Here is the abstract:


When we are thinking about whether we have moved beyond separatism, the non-constitutional implications of this observation are worth considering. Does the current turn in constitutional law towards a more deferential approach to aid to religion programs mean that the policy arguments against such programs also should be discounted? Or should we remember the values of separatism in making legislative choices? This essay concludes that the values of separatism should continue to inform legislative judgment. To aid religion is not always to protect it, and the protection of religion and religious freedom fostered by separatism should not be forgotten even as the constitutional barriers to state aid to religion continue to subside.

Part I of this essay introduces this topic by discussing the values of separatism in their relation to current legislative attempts to provide state monies to religious institutions that offer social services -- legislative initiatives that popularly have been entitled “charitable choice.” Part II canvasses the constitutional background surrounding charitable choice and concludes that such programs would likely be found constitutional. Accordingly, the question of whether such programs should be adopted is more a matter of legislative choice than of constitutional mandate. Part III then addresses the legislative calculus. It begins by discussing why support for aid to religious programs is popular in the current political climate. The essay suggests that much of the political impetus behind such programs stems from the belief shared by many of defenders of religion that excluding religious institutions from the class of potential government beneficiaries reflects an anti-religious animus that warrants correction. The section contends, however, that this perception that anti-aid equates to anti-religion is misguided. The separationist objections to charitable choice noted in Part I demonstrate that the anti-aid position may be based on pro-religion values. Aid to religion does not always benefit religion. Remembering the values of separatism means understanding that government support of religion may harm, as well as assist, the religious mission.



September 4, 2015 in Church and State, Publications – Articles | Permalink | Comments (0)

Tuesday, September 1, 2015

Does Equal Protection Require Accommodation of Moral Conviction to Same Degree as Religious Belief?

In Anti-abortion Group Wins Case Against Obama, USA Today reports that United States District Court Judge Richard Leon of the District of Columbia has ruled that the “anti-abortion group March for Life does not have to offer insurance coverage for contraceptives under President Obama's health care law, marking the first time an exemption was granted for moral, rather than religious, reasons.”  Although the Affordable Care Act generally requires employers to offer employees health insurance plans that include coverage for contraceptives, churches are exempted from the requirement, and other religiously oriented nonprofits have gradually obtained a similar accommodation (which some continue to litigate as insufficiently protective of their religious convictions). 


The story reports why Judge Leon’s ruling is significant:

Leon ruled that the Obama administration, through the Department of Health and Human Services, already is going further than protecting religious beliefs through its exemptions. Rather, he said, it is "protecting a moral philosophy about the sanctity of human life" — a philosophy shared by many non-religious groups, particularly one "founded exclusively on pro-life principles."


"March for Life has been excised from the fold because it is not 'religious,'" Leon wrote. "This is nothing short of regulatory favoritism."


This decision is sure to spark a fire of commentary and additional analysis.  Readers can expect more blog coverage of this fascinating legal development.




September 1, 2015 in Church and State, Current Affairs | Permalink | Comments (0)

Wednesday, March 11, 2015

Study Finds Combination of Employment and Income Policies, New Tax Credit, Could Cut NYC Poverty Rate

I just came across this 116-page report commissioned by the Federation of Protestant Welfare Agencies, Catholic Charities of the Archdiocese of New York, and the UJA-Federation of New York titled How Much Could Policy Changes Reduce Poverty in New York City?  The report was actually prepared by the Urban Institute.  According to the report, a combination of employment and income policies, in-kind benefits, and a new tax credit could significantly reduce the poverty rate in New York City, where 20 percent of all residents currently live in poverty.

Giving a summary of the report, the Philanthropy News Digest states that

the report . . . analyzed the potential impact of a transitional jobs program, increased earnings supplements, a $15/hour minimum wage, increased Supplemental Nutritional Assistance Program benefits, more housing vouchers, guaranteed childcare subsidies, and a tax credit for non-working seniors and people with disabilities.  Among the individual policy options, the study found the jobs program likely to be most effective (assuming that 50 percent of the unemployed living under the poverty line participate), reducing the poverty rate from 21.4 percent to an estimated 15.9 percent, followed by the tax credit for seniors and people with disabilities, a $15/hour minimum wage, and increased SNAP benefits.

The combined effect of multiple policy options, however, would be far greater, the report argues.  Based on an analysis of three scenarios, the study found that even the least extensive combination — increased SNAP benefits, Earned Income Tax Credit, and childcare benefits; the tax credit for non-working seniors and people with disabilities; and 25 percent participation in the transitional jobs program at $9/hour but no change in the minimum wage or housing subsidies — would nearly halve the city's poverty rate to 12.1 percent. In the scenario with the most extensive combination of policy options, including 50 percent participation in the jobs program at a minimum wage of $15/hour, Paycheck Plus earning supplements, and housing vouchers for half the people on the waiting list, the poverty rate would fall by more than two-thirds, to 6.7 percent.

The study also found that the most effective individual policies, the jobs program and the tax credit, were the most expensive, and that total costs for the combination of policy options was estimated to range from $6.5 billion to $9.1 billion. While the costs are substantial, the report concludes, the analysis shows "that a package of policies can greatly reduce the number of people living in poverty," with potential long-term effects "that differ from those in the short run, especially if less near-term poverty helps more of today’s children avoid poverty in adulthood."

I guess the question we need to ask is this: who would pay for the program?  And if your ready answer is "The taxpayers," I have a follow-up question: Which taxpayers? American taxpayers?  New York State taxpayers?  New York City taxpayers?  A combination of all three?

March 11, 2015 in Church and State, Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Friday, January 23, 2015

Winer & Crimm: Gods, Schools, and Government Funding

9781409450313Ashgate has released a new book by Lawrence H. Winer (Arizona State) and Nina J. Crimm (St. John's) titled God, Schools, and Government Funding.  Here is the description:

In recent years, a conservative majority of the U.S. Supreme Court, over vigorous dissents, has developed circumventions to the Establishment Clause of the First Amendment that allow state legislatures unabashedly to use public tax dollars increasingly to aid private elementary and secondary education. This expansive and innovative legislation provides considerable governmental funds to support parochial schools and other religiously-affiliated education providers. That political response to the perceived declining quality of traditional public schools and the vigorous school choice movement for alternative educational opportunities provokes passionate constitutional controversy. Yet, the Court’s recent decision in Arizona Christian School Tuition Organization v. Winn inappropriately denies taxpayers recourse to challenge these proliferating tax funding schemes in federal courts. Professors Winer and Crimm clearly elucidate the complex and controversial policy, legal, and constitutional issues involved in using tax expenditures - mechanisms such as exclusions, deductions, and credits that economically function as government subsidies - to finance private, religious schooling. The authors argue that legislatures must take great care in structuring such programs and set forth various proposals to ameliorate the highly troubling dissention and divisiveness generated by state aid for religious education.

Lloyd Mayer

January 23, 2015 in Books, Church and State | Permalink | Comments (0) | TrackBack (0)

Saturday, November 29, 2014

Update on Nonprofits & Politics: Aprill and Colinvaux Articles, AALS Program, IRS Controversy Developments & More

13-Colinvaux-Roger-004 Aprill_new_webWhile perhaps the congressional attention to the now 18 months old and counting IRS controversy will decline as the focus shifts to governing (we hope) and 2016 (unavoidably), the bubbling pot that is now nonprofits and politics continues to boil.  Here are some of the latest developments:

Ellen Aprill (Loyola-L.A.) has posted The Latest Installment of the Section 501(c)(4) Saga: The Section 527 Obstacle to Effective Section 501(c)(4) Regulations, and Roger Colinvaux (Catholic) has posted Political Activity Limits and Tax Exemption: A Gordian's Knot, Virginia Tax Review (forthcoming).  (And, as noted by Paul Caron when I presented at Loyola-L.A., I am working on a draft article currently titled Taxing Politics, which I should hopefully be able to post early in the new year.)

At the 2015 AALS Annual Meeting, the Section on Nonprofit and Philanthropy Law and the Section on Taxation are co-sponsoring IRS Oversight of Charitable and Other Exempt Organizations – Broken? Fixable? on Saturday, January 3rd, from 10:30 a.m. to 12:15 p.m.  The topic grew out of the IRS controversy, although the panel's scope will be much broader.  Marcus Owens (Caplin & Drysdale) will be moderating, and panelists include Ellen Aprill (Loyola-LA), Phil Hackney (LSU), Jim Fishman (Pace), Terri Helge (Texas A&M), Dan Tokaji (Ohio State), and Donald Tobin (Maryland).

In news relating directly to the IRS controversy, the staffs of the Senate Permanent Subcommittee on Investigations issued dueling reports, neither of which said much more than we have already heard (repeatedly) from both sides of the aisle.  At the IRS, new TE/GE Commissioner Sunita Lough issued her annual Program Letter, emphasizing accountability and transparency as she continues to try to move the division beyond the controversy (referenced obliquely as "the challenges over the last year for the IRS and TE/GE specifically").  And to the annoyance of her critics, Lois Lerner gave an extensive interview to Politico.  

And there is more:

  • On the election law/FEC side of things, there are lawsuits still pending that asset Crossroads GPS (Public Citzen v. FEC) and American Action Network and Americans for Job Security (CREW v. FEC) should have registered and reported as political commitees.  (Hat tip: Paul Barton's article this past week in the BNA Daily Tax Report)

Lloyd Mayer


November 29, 2014 in Church and State, Federal – Executive, Federal – Judicial, Federal – Legislative, In the News, Publications – Articles | Permalink | Comments (0) | TrackBack (0)

Monday, November 17, 2014

D.C. Circuit Rejects Challenge to Accommodation under Affordable Care Act

In an Associated Press story, the Tulsa World reports that the United States Court of Appeals for the District of Columbia Circuit has rejected a challenge by religious groups, including Priests For Life and the Roman Catholic Archbishop of Washington, to an accommodation devised by the Obama administration to enable the groups to avoid paying for contraception under the Affordable Care Act.  The court concluded that the accommodation does not impose an unjustified substantial burden on religious exercise in violation of the Religious Freedom Restoration Act (“RFRA”). 

The facts are likely familiar to most readers, and are summarized in the story as follows:

The Affordable Care Act requires that women covered by group health plans be able to acquire Food and Drug Administration-approved contraceptive methods at no additional cost. In response to an outcry from religious groups, the government devised the accommodation, but the groups continued to oppose the regulations.   

To be eligible for the accommodation, a religious organization must certify to its insurance company that it opposes coverage for contraceptives and that it operates as a nonprofit religious organization.

The opinion succinctly captures the plaintiffs’ objection to the accommodation:

The contraceptive coverage opt-out mechanism substantially burdens Plaintiffs’ religious exercise, Plaintiffs contend, by failing to extricate them from providing, paying for, or facilitating access to contraception. In particular, they assert that the notice they submit in requesting accommodation is a “trigger” that activates substitute coverage, and that the government will “hijack” their health plans and use them as “conduits” for providing contraceptive coverage to their employees and students. Plaintiffs dispute that the government has any compelling interest in obliging them to give notice of their wish to take advantage of the accommodation. And they argue that the government has failed to show that the notice requirement is the least restrictive means of serving any such interest.

 The court rejected the plaintiffs’ RFRA claim.  Said the court:

We conclude that the challenged regulations do not impose a substantial burden on Plaintiffs’ religious exercise under RFRA.  All plaintiffs must do to opt out is express what they believe and seek what they want via a letter or two-page form.  That bit of paperwork is more straightforward and minimal than many that are staples of nonprofit organizations’ compliance with law in the modern administrative state. Religious nonprofits that opt out are excused from playing any role in the provision of contraceptive services, and they remain free to condemn contraception in the clearest terms. The ACA shifts to health insurers and administrators the obligation to pay for and provide contraceptive coverage for insured persons who would otherwise lose it as a result of the religious accommodation.

The court further concluded that, even if the law were deemed to substantially burden the plaintiffs’ exercise of religion, the regulation is supported by compelling governmental interests, and the accommodation “requires as little as it can from the objectors” while still serving those interests.

In the AP story, the Archdiocese of Washington is quoted as characterizing the decision as "very troubling and deeply flawed."

Here is the opinion.   Here is an entry on the opinion from the SCOTUSblog.


November 17, 2014 in Church and State, Federal – Judicial | Permalink | Comments (0) | TrackBack (0)

Friday, September 26, 2014

Reuters: Muslim Scholars Present Rebuttal to Islamic State

Reuters is reporting that over 120 Islamic scholars from around the world have issued an open letter denouncing Islamic State militants and refuting their religious arguments.  Many of these scholars are themselves leading Muslim voices in their own countries.

The 22-page letter, written in Arabic and heavy with quotes from the Koran and other Islamic sources, strongly condemns the torture, murder and destruction  Islamic State militants have committed in areas they control.

The Reuters report states in part:

"You have misinterpreted Islam into a religion of harshness, brutality, torture and murder," the letter said. "This is a great wrong and an offense to Islam, to Muslims and to the entire world."

[The letter's] originality lies in its use of Islamic theological arguments to refute statements made by self-declared Caliph Abu Bakr al-Baghdadi and his spokesman Abu Muhammad al-Adnani to justify their actions and attract more recruits to their cause.

The letter is addressed to al-Baghdadi and "the fighters and followers of the self-declared 'Islamic State'", but is also aimed at potential recruits and imams or others trying to dissuade young Muslims from going to join the fight.

Nihad Awad of the Council on American Islamic Relations (CAIR), which presented the letter in Washington on Wednesday, said he hoped potential fighters would read the document and see through the arguments of Islamic State recruiters.

"They have a twisted theology," he said in a video explaining the letter. "They have relied many times, to mobilize and recruit young people, on classic religious texts that have been misinterpreted and misunderstood."

Reuters describes the 126 signatories as "prominent" Sunni men from across the Muslim world -- from Indonesia to Morocco, and from other countries such as the United States, Britain, France and Belgium.

Among those who signed are "the current and former grand muftis of Egypt, Shawqi Allam and Ali Gomaa, former Bosnian grand mufti Mustafa Ceric, the Nigerian Sultan of Sokoto Muhammad Sa'ad Abubakar and Din Syamsuddin, head of the large Muhammadiyah organization in Indonesia.  Eight scholars from Cairo's Al-Azhar University, the highest seat of Sunni learning, also put their names to the document."



September 26, 2014 in Church and State, Current Affairs, In the News, International | Permalink | Comments (0) | TrackBack (0)

Monday, August 25, 2014

Church Tax Inquiries Starting Up Again (without final regs)

IRSOver the summer the Freedom from Religion Foundation announced that it had agreed to the dismissal (without prejudice) of its lawsuit against the IRS alleging that the IRS had filaed to enforce against churches the prohibition on political campaign intervention.  See previous post regarding the 2013 rejection of the IRS' motion to dismiss this case for more details.  What is most dramatic about this development is the letter from the IRS to the DOJ attached to the Foundation's Memorandum in Support of Motion to Dismiss detailing the current audit activity relating to churches.  Here is the substance of that letter:

1. Subsequent to the publication of proposed regulations on section 7611 of the Internal Revenue Code on August 5, 2009, the IRS has processed several cases involving churches using procedures designed to ensure that the protections afforded to churches by the Church Audit Procedures Act are adhered to in all enforcement interaction between the IRS and churches. The procedures require the reasonable belief determination under section 7611(a) to be made by the Commissioner, TEGE, either directly or as concurrence to the determination made by the Director, Exempt Organizations.

2. Our written procedures for our Dual Track process for information items (a.k.a. referrals) alleging violation of the political intervention prohibition of section 501(c)(3) require evaluation of the information item by our Review of Operations (“ROD”) unit and then the Political Activities Referral Committee (“PARC”). With regard to these referrals that concern violations by churches, the PARC has determined that as of June 23, 2014, 99 churches merit a high priority examination. Of these 99 churches, the number of churches alleged to have violated the prohibition during 2010 is 15, during 2011 is 18, during 2012 is 65, and during 2013 is one.

This comes after an apparent hiaitus in such activity, as detailed in a previous post.  What is perhaps most surprising is that it has come without the finalization of the proposed regulations referenced in the above letter regarding exactly who, within the IRS, has sufficient authority to sign off on church tax inquiries and, if justified, church examinations.  

While an intervenor represented by the Becket Fund for Religious Liberty sought to prevent the dismissal, according to the Becket Fund the court ultimately granted the requested dismissal.

Media Coverage:  Christianity Today; Washington Times.

Lloyd Mayer

August 25, 2014 in Church and State, Federal – Executive, In the News | Permalink | Comments (0) | TrackBack (0)

Thursday, December 5, 2013

AP: "Law Shields Churches, Leaves Pensions Unprotected"

SitelogoThis story was a little while ago, but the Associated Press reported how the fact that church pension plans are exempt from many laws that normally regulate such plans has left many employees of church-affiliated entities, including hospitals, with little recourse when pension funds are severely underfunded.  This exemption includes not being covered by federal Pension Benefit Guaranty Corporation and not being subject to the Employee Retirement Income Security Act, or ERISA.  Based on the article, it appears this issue has been a particular problem at a number of Catholic-affiliated hospitals.

Lloyd Mayer

December 5, 2013 in Church and State, In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 4, 2013

Federal District Court Strikes Down Minister Housing Allowance as Unconstitutional

Clergy Housing Allowance no border_medA federal District Court in Wisconsin has struck down the exclusion from gross income for vcertain housing allowances provided to "ministers of the Gospel" by Internal Revenue Code § 107 as a violation of the Establishment Clause.  As previously discussed here, the same court is also considering challenges to the church exemption from Form 990 filing and the alleged lack of IRS enforcement against churches for violating the political campaign intervention the prohibition.  As John Colombo has detailed in this space, the key question in all of these cases - including in the almost certain government appeal of the housing allowance decision - will be whether the plaintiffs have standing to even bring these claims.  For reasons Professor Colombo details, it is unlikely that they do.  As a commentator to the TaxProf Blog post on this story noted, the judge in the housing allowance case also previously ruled that the National Day of Prayer presidential proclamation was unconstitutional, only to have that case dismissed on appeal for lack of standing.  Nevertheless, this case and the other challenges are currently still alive and proceeding, although news reports state the judge has stayed her decision on the housing allowance pending appeal.

Media Coverage:  ForbesHuffington Post; see also the stories linked to in the above TaxProf Blog post.

Lloyd Mayer

December 4, 2013 in Church and State, Federal – Judicial, In the News | Permalink | Comments (1) | TrackBack (0)

Saturday, September 28, 2013

Controversy Swirls as Texas Panel Selects Biology Textbooks

It's a new day, a new week.  But let's begin it with an age-old story -- a story about law, education and religion.

The New York Times is reporting that as Texas gears up to select biology textbooks for use by high school students over the next decade, the panel responsible for reviewing submissions from publishers has stirred controversy because a number of its members do not accept evolution and climate change as scientific truth.

According to the Times,

One is a nutiritonist who believes "creation science" based on biblical principles should be taught in the classroom.  Another is a chemical engineer who is listed as a "Darwin Skeptic" on the Web site of the Creation Science Hall of Fame.  a third is a trained biologist who also happens to be a fellow of the Discovery Institute, the Seattle-based center of the intelligent-design movement and a vice president at an evangelical ministry in Plano, Texas.

The Times continues:

In the state whose governor, Rick Perry, boasted as a candidate for president that his schools taught both creationism and evolution, the State Board of Education, which includes members who hold creationist views, helped nominate several members of the textbook review panel.  Others were named by parents and educators.  Prospective candidates could also nominate themselves.  The state's education commissioner, Michael L. Williams, a Perry appointee and a conservative Republican, made the final appointments to the 28-member panel.  Six of them are known to reject evolution.

Kathy Miller, president of the Texas Freedom Network, which monitors the activities of far-right organizations, lamented that "Utterly unqualified partisan politicians will look at what utterly unqualified citizens have said about a textbook and decide whether it meets the requirements of a textbook."

Miller's statement reflects the view of some Texans who worry that ideologically driven review panel members and state school board members are slowly eroding science education in the state.  Some parents even worry that if the State Board of Education has its way, their children will not be able to compete for jobs that require scientific backgrounds.

Others -- especially teachers -- see nothing wrong in teaching creationism or its cousin, intelligent design, as valid scientific alternatives to Darwinian evolutionary theory.  The Times concludes its story as follows:

In Texas, the debate has each side borrowing from the other to make its point. Those who challenge evolution invoke the scientists Carl Sagan and Richard Dawkins, while those who plead for the sanctity of science cite Genesis and the Book of Job.       

At the public hearing this month, Michael Singer, a biology professor at the University of Texas who teaches courses to nonscience majors, said his students were often nervous about learning evolution. “I tell them that the Book of Job says that their faith will be tested,” he said. “You don’t need faith to believe what the evidence suggests. You need faith to believe what the evidence doesn’t suggest.”       

Then he pulled out a £10 note from his native Britain to show the audience: on one side was a picture of Queen Elizabeth II, on the other, Charles Darwin.

Time will tell how this all ends.  Have a great week ahead.





September 28, 2013 in Church and State, Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 18, 2013

Third Standing Shoe Drops: Challenge to Church Form 990 Filing Exemption Survives Motion to Dismiss

As readers of this blog know, two lawsuits challenging the preferential federal tax law treatment of churches and ministers and brought by the Freedom from Religion Foundation survived motions to dismiss on standing grounds .  A year ago, the U.S. District Court for the Western District of Wisconsin found FFRF had standing to challenge the income tax exemption for parsonages and pastor housing allowances provided by Internal Revenue Code section 107.  About a month ago, the same court concluded FFRF had standing to challenge the IRS's alleged lack of enforcement of the section 501(c)(3) political campaign intervention prohibition as against churches. 

Finally, about four weeks ago the same court rejected the government's motion to dismiss FFRF's complaint challenging the exemption for churches from having to file an annual information return (the Form 990) with the IRS.  Relying heavily on its decision in the first case it considered, the court found that FFRF alleged a sufficient injury in fact because it is not able to claim such an exemption since it does not qualify as a church.  FFRF also challenged the exemption of churches from the exemption application (Form 1023) requirement applicable to other groups seeking recognition of their section 501(c)(3) status, but the court questioned whether FFRF and the other plaintiff in the case had a future injury in fact that would justify the injunctive relief they were seeking given that both groups had already filed their applications and paid their application fees.  It therefore asked the plaintiffs to demonstrate why their second claim should not be dismissed.

As John Colombo detailed in his previous post about the second case, and for the reasons Johnny Rex Buckles described in this space more generally and I also discussed with respect to Establishment Clause claims, this trio of decisions appears inconsistent with long-standing precedents relating to standing in the tax area.  The judge in all three cases also has previously been reversed on a standing issue relating to an Establishment Clause challenge to the National Day of Prayer brought by FFRF.  In that case the district court found the statute requiring that the President proclaim a National Day of Prayer each year to be a violation of the Establishment Clause, but the U.S. Court of Appeals for the Seventh Circuit concluded FFRF and the other plaintiffs lacked standing to bring the case (Freedom from Religion Foundation v. Obama, 651 F.3d 803 (7th Cir. 2011)). 

A similar fate for the trio of tax cases therefore seems likely as well.  Before the cases get to the appellate court, however, there may be some interesting information uncovered in discovery.  While the housing allowance and Form 990 cases appear to turn solely on the statutory provisions and so should not require much if any factual discovery, the lack of enforcement case would appear to require discovery regarding the extent to which the IRS has enforced the political campaign intervention prohibition as against churches and non-churches in recent years.  While there is some anecdotal information available regarding such enforcement efforts, since the quiet end of the IRS's Political Activity Compliance Initaitive  after the 2008 election season (and perhaps earlier - the IRS never issued a report for that election season) there has not been more comprehensive information available regarding enforcement in this area. While not FFRF's primary aim, the discovery in their lawsuit may reveal a lot about the frequency and results of that enforcement.

Lloyd Mayer


September 18, 2013 in Church and State, Federal – Judicial | Permalink | Comments (0) | TrackBack (0)

Friday, August 16, 2013

Nonprofit Coalition Disagrees with Commission

Yesterday we blogged about the recently-released report from the Commission on Accountability and Policy for Religious Organizations which recommended that clergy should be able to say whatever they believe is appropriate in the context of their religious services or other regular religious activities even when that includes content related to political candidates.  Under the Commission's new world order, such communication would be permissible as long as the organization’s cost would be the same with or without it.   The NonProfitTimes and the Chronicle of Philanthropy are today both reporting that Independent Sector, a leading coalition for nonprofits, has strongly criticized the Commision's recommendations.

“This is a deeply disturbing and troubling option,” said Independent Sector's President & CEO, Diana Aviv. “We think it should not be a possibility,” she said.

According to Aviv, some parts of the report and its recommendations were unclear, while other parts were contradictory and required further reading and study.  She viewed the report and recommendations as having the intent to “drive a truck” through the clear separation of political activity and nonpartisan political activity from other activity.

“While we agree with the commission that there is no clarity in this area, the solution is not to gut everything,” Aviv said. “This actually contaminates our advocacy work.”

The only item in the report that Independent Sector agreed with was that current regulations are vague and require clarity.  According to Aviv, a strong argument exists for reviewing the limits put in place in 1969 and 1976. Current regulations allow charities to interact with public officials on a limited basis, which Aviv said is an appropriate distinction since organizations work to educate officials on issues relevant to their missions and members.

“Speaking out and engaging in advocacy on issues is critical to the ability of nonprofits to achieve their missions. This is an entirely different matter than endorsing candidates or getting involved in political campaigns,” she said.  She sees three necessary solutions to the political speech issue: (1) greater clarify over what is political activity: (2) clearer definition of what “unsubstantial” means for 501(c)(3) organizations; and (3) disclosure of donors to 501(c)(3) organizations if their donations are used for partisan activity.


August 16, 2013 in Church and State, Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Thursday, August 15, 2013

Commission Speaks on Clergy and Free Political Speech

The Commission on Accountability and Policy for Religious Organizations has released its second report in response to a request from Sen. Charles Grassley (R-Iowa) for guidance.  The approximately 60-page report titled  “Government Regulation of Political Speech by Religious and Other 501(c)(3) Organizations: Why the Status Quo Is Untenable and Proposed Solutions” made three primary recommendations: 

  • Clergy should be able to say whatever they believe is appropriate in the context of their religious services or other regular religious activities without fear of reprisal by the Internal Revenue (IRS), even when that communication includes content related to political candidates. The communication would be permissible provided that the organization’s costs would be the same with or without the political communication.
  • Secular nonprofits should have “comparable latitude when engaging in regular, exempt-purpose activities and communications.”
  • Current IRS policy not permitting tax-deductible funds to be disbursed for political purposes should be preserved.

According to Commission Chair Michael Batts, “The law prohibiting political campaign participation and intervention by 501(c)(3) organizations as currently applied and administered lacks clarity, integrity, respect, and consistency.”  He maintains that 501(c)(3) organizations’ leaders “are never quite sure where the lines of demarcation are, and the practical effect of such vagueness is to chill free speech -- often in the context of exercising religion.”  

The report discusses the history of the ban on political campaign participation or intervention, which was included in the Revenue Act of 1954.  It also identifies key cases in which the IRS has examined organizations or their leaders for certain actions, particularly several instances during the 2004 presidential campaign.

The Evangelical Council for Financial Accountability (ECFA) established the commission in response to a January 2011 request by Sen. Grassley to coordinate a national effort to provide input on accountability, tax policy and political expression for nonprofits in general and religious organizations in particular.  The commission is comprised of 14 members and 66 panel members, including legal experts and representatives of religious and nonprofit sector organizations.


August 15, 2013 in Church and State, Current Affairs, In the News, Religion | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 26, 2013

Mike Huckabee: Churches Should Consider Abandoning Exempt Status

The Huffington Post reports that in a speech to a group of Southern Baptist ministers in Houston on Monday, Mike Huckabee said that churches should consider giving up exempt status.  "I think we need to recognize that it may be time to quit worrying so much about the tax code and start thinking more about the truth of the living God, and if it means that we give up tax-exempt status and tax deductions for charitable contributions, I choose freedom more than I choose a deduction that the government gives me permission to say what God wants me to say."  Huckabee confirmed his views in a tweet Tuesday evening.

I don't think I've ever uttered the words "I agree with Mike Huckabee," but there's a first time for everything.  So here goes: I agree with Mike Huckabee.  The primary issue, of course, is the ability of churches to engage in political campaign activity, the same issue at the core of the 501(c)(4) mess.  But in the 501(c)(3) category, we have a nice, bright line: political campaign activity is completely banned.  Nevertheless, that hasn't kept churches and their ministers (on both the right and the left of the political spectrum, by the way) from blatantly violating the law (for examples, see my prior posts here and here).

My view on the relationship of churches to 501(c)(3) has always been the same: if they want 501(c)(3) status, they need to play by the rules.  If they don't want to play by the rules, give up 501(c)(3) status, and engage in politics to their hearts content.  They don't get to break the rules and then whine that the government is picking on them, any more than 501(c)(4)'s should get to blatantly break the rules and whine that the government is picking on them.  So - quit whining, and suck it up.  Make  your choice and live with it.  Be like Mike (Huckabee).



June 26, 2013 in Church and State | Permalink | Comments (3) | TrackBack (0)

Monday, June 24, 2013

The Bright Lines Project: Good Work, But It Needs Another Bright Line

Although some of the hubbub about 501(c)(4)'s and political activity has settled over the past couple of weeks, we shouldn't overlook the fact that the central fault leading to this mess was (and is) a set of un-administrable (and therefore unenforceable) rules regarding political campaign activity by exempt organizations.

In my back and forth with Rosemary Fei on 501(c)(4)'s, she mentioned that she was part of a group trying to provide better guidance on the line between prohibited political activity and permitted legislative lobbying or issue advocacy activity.  This work is called The Bright Lines Project, and a full draft of their effort as of May, 2013, is available here.

In many ways, the project advances the IRS's own guidance on political activity by 501(c)(3) organizations published in Revenue Ruling 2007-41, but provides additional bright lines (pun unavoidable) on what is permitted and what isn't.  It is a very thoughtful effort, modeled after the regulations on what constitutes lobbying expenditures under Section 4911 and the 501(h) election and fills some nagging holes in the IRS's guidance in Rev. Rul. 2007-41.

But I do think the project makes one mistake and ignores another very deep problem in this area.  The one mistake is a sort of "pulpit speech" exception that is referred to as an exeption for "personal, oral remarks at official meetings."  The project's explanation of this exeption is as follows:

Oral remarks made by anyone (other than a candidate) who is present in person at an official meeting of an organization held in a single room or location, so long as no announcement of the meeting refers to any candidate, party, election, or voting. This exception covers only oral remarks about candidates made by and to persons in attendance, not any other form of communication of those remarks, whether written, electronic, recorded, broadcast, or otherwise transmitted. A prominent disclaimer must be made to those attending, stating that such remarks are the speaker's personal opinion and are not made on behalf of the organization, and that the speaker is not advocating any of the actions set forth in Rule 3 [e.g., expressly calling for the election or defeat of a specific candidate or political party]

In it's examples, the Project notes that this rule would "permit a pastor to express his or her personal views on candidates from the pulpit. It would also allow parents at a PTA meeting, including officers, to express their views on candidates for school board. It would permit speeches, sermons, or discussions at any meeting of any tax-exempt organization to include expressions of opinion on those running for public office in upcoming elections, so long as such views were not made officially or on behalf of the organization."

My own view is that this exception is a huge mistake, because it will be exploited to the hilt by organizations intent on "having their say" about candidates.  Face it - a Catholic priest, giving his "opinions" on candidates at Mass on the Sunday before the election will be viewed as an official church position, regardless how strong the "disclaimer" is that is attached to the remarks.  We actually have a useful bright line on this kind of activity right now under Rev. Rul. 2007-41: you can't do it.  The revenue ruling makes clear that speech such as this at an official function of an organization is prohibited, whether a disclaimer is attached or not.  That seems to me to be an excellent bright line, and we should not replace it with an exploitable exception that is hardly a bright line.

The second major problem with the project is that it says nothing about the core problem that plagues 501(c)(4)'s (and 5's and 6's), which is "how much political activity is too much?"  The project makes no attempt to set a bright line for when political activity becomes a "primary purpose" or otherwise address the "how much" issue.  

This is a critical failing.  The (c)(4) problem is as much (in my opinion, more) about how much political activity is permitted as it is in the dividing line between issue advocacy and campaign activity.  Right now, we have nothing other than the vague notion that a (c)(4)'s "primary purpose" can't be political campaign activity - but there is no standard for judging "primary purpose."

So why not adopt a very clear bright line on this latter issue: the amount of political campaign activity permitted by (c)(4)'s, (5)'s and (6)'s is . . . zero.  None.  Absolute prohibition.  Many of my colleagues believe there should be some "de minimis" amount of campaign activity permitted.  I've heard things like "15%" thrown around, for example.  But here's the problem: 15% OF WHAT?  Of expenditures?  Which expenditures?  Of employee time?  What if volunteers are used?  Is the 15% per year or on a 4-year rolling average that we use elsewhere in 501(c)?  If it's a 4-year average, that means an organization can "save up" for the presidential campaigns that happen every four years.  Providing a de minimis exception is hardly a "bright line" in this area, unless one is going to couple it to a specific mathematical test like that provided in 501(h)/4911 for lobbying by 501(c)(3)'s.  And anyone who's worked with that regime will tell you that it is incredibly complex, particularly when it comes to allocating expenditures (and I'd argue that the test doesn't account for volunteers or the fact that modern communication - e-mail and web sites - cost very little but have major communications impact).  Do we REALLY want to go down that road?  And if so, why? What is gained by such a rule other than complication and confusion?  What part of "NONE" is so hard to understand or hard to comply with that we need an exception of some kind?

So I'll say it again.  If we're really concerned about political campaign activity by (c)(4)'s, (5)'s and (6)'s, prohibit it; any organization that engages in political campaign activity in any amount that wants exemption should be subject to disclosure rules as Lloyd Mayer and others have argued - that is, shuffle them to 527 or some similar regime.

To actually solve the problems that led to the current mess, we need both bright line tests to distinguish between issue advocacy and political activity AND we need a bright line on how much activity is permitted.  In the case of political campaign activity, "NONE" is a nice bright line that is mostly (not completely, I'll admit) incapable of exploitation . . . 


[This represents a bit of change to my position, by the way - I'm actually OK with a 501(c)(4) category for organizations whose primary purpose is issue advocacy, including lobbying, IF such organization is prohibited from ANY campaign activity.  It's probably a good thing to have such an organization that is also prohibited from receiving deductible contributions under 170 in order to avoid having (c)(3)'s used to end-run the 162(e) limits on the deductibility of lobbying expenses, and I'm also convinced there is a useful public benefit to issue advocacy.]





June 24, 2013 in Church and State, Federal – Executive, Federal – Legislative | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 13, 2013

Arizona Taking Steps to Exempt "Fallow" Church Property

A couple of years ago one of my students, Brittany Viola (not the Olympic platform diver) wrote a note for the University of Illinois Law Review on the property tax status of "fallow" property owned by exempt organizations, particularly churches.  A PDF of that article is available here.  In the article, Ms. Viola discussed how various states, particularly in the Northeast, were attempting to tax "fallow" property - for example, shuttered Catholic schools or churches that had been closed by the local diocese (though this issue was by no means limited to property owned by the Catholic church).  The essence of the legal issue was the requirement of most state property tax exemption laws that the exempt property be "used" for an exempt purpose; arguably, fallow church property is not being "used" for religious purposes; it literally isn't being "used" at all, and hence potentially does not meet the requirements for exemption.

It appears that Arizona is in the midst of considering legislation that would protect this fallow property from taxation.  This article in the East Valley Tribune details legislation that was first proposed in the Arizona House that would permit religious organizations to buy undeveloped property and hold it subject to exemption (this original version of the legislation also apparently would have exempted other property owned by churches, but used for non-religious purposes, like student dormitories).  Word today is that a compromise version of this bill passed the Arizona House, and although it no longer protects things like student dormitories, it does apparently still provide for exemption of fallow land (I haven't been able to find a full-text version of the amended bill; I'll try to link it when I do).

I've written before about my view that churches ought not to be given the tax benefits accorded "charities." While some clearly do produce "public goods" in the form of helping the poor and disadvantaged, many are nothing more than clubs for believers.  The modern case for general tax exemptions for churches usually rests on the notion that taxing them would be unconstitutional (a violation of the federal free-exercise clause, or similar provisions in state constitutions).  I don't agree - and think that a neutral tax law applied to religious organizations would be upheld.  (The historical rationale for religious exemptions comes from the proposition that human beings could not (or should not) tax God; there are references in ancient Egyptian history and the Old Testament regarding the proposition that human beings did not have the authority to tax priests or temples.  I think we're sort of past the "if we tax churches, plagues of locusts will destroy the fields" theory.)  Social clubs do get federal income tax exemption under Section 501(c)(7), but clubs do not get the other major benefits of charitable tax exemption under 501(c)(3) (e.g., the ability to receive tax-deductible donations or to issue tax-exempt bonds), and states generally do not provide property tax exemptions for clubs.  So let's give churches the same tax benefits we give all social clubs and nothing more.

A colleague at another institution once floated the idea that churches ought to be taxed, but get an unlimited charitable deduction for actual charitable works, like expenditures for programs to help the poor.  That also sounds fine to me.  But the idea that we should be expanding exemption for churches to property that isn't even used for religious worship, particularly given the strains on local budgets, is in my view ludicrous.


March 13, 2013 in Church and State, State – Legislative | Permalink | Comments (1) | TrackBack (0)

Friday, December 7, 2012

Religious Leaders v. Senator Grassley

The tireless nonprofit watchdog, Senator Grassley from Iowa, has turned his attention in recent years to what he perceives as irresponsible financial activity carried on by certain religious figures and organizations, television evangelists in particular.  After some back and forth, religious leaders agreed to established a commission, the Evangelical Council for Financial Accountability, to examine Sen. Grassley's concerns and to comment on some of his proposed solutions.  The Council recently released its findings in a 94-page report soothingly titled "Enhancing Accountability For the Religious and Broader Nonprofit Sector."  With that title, who could object?

It appears that Senator Grassley objects, primarily because the bottom line of the report is that nothing should change.  In the Senator's words, "[t]he report gives less attention to resolving some of the thornier questions, such as how to build accountability from entities that exploit vagueness in current laws and regulations for individual benefit rather than the greater good."  He added, ominously, that if Congress follows through with plans to overhaul the tax code, many of the issues that he has raised "will be ripe for review."

A story in The Chronicle of Philanthropy summarizes events and provides links to the report and Sen. Grassley's statement about it.


December 7, 2012 in Church and State, Current Affairs | Permalink | Comments (0) | TrackBack (0)