IRS Scandal: Damage is Done

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As we learn more about the recent IRS scandal, it appears that it was not limited to low-level employees in Cincinnati.  Top IRS officials in Washington may have known what was going on as far back 2011.  Although the president has promised a full investigation into the matter, much of the damage has already been done.  An alleged criminal who successfully defends himself in court is still sullied by the criminal trial itself.  Likewise, even if the IRS is successful in explaining away some of the accusations of political bias, there are many individual taxpayers who will have already lost faith in the IRS.

When people ask me about interacting with the IRS, I tend to speak very bluntly about the adversarial relationship; that the IRS is not on their side in looking for tax relief and that their one goal is to collect as much money from them as legally possible.  However, I stop short of saying that the IRS will cheat people out of the money they have earned or that they will treat some groups or people differently, even though I know for sure that it’s not out of the question.  No doubt this scandal raises some serious questions for the average taxpayer:

“If high-level IRS administrators will not deal fairly and neutrally with all taxpayers, or will turn a blind eye to bias, then why couldn’t it just as easily (or even more easily) happen with regard to my own individual taxes?” 

“If the IRS will not administer the tax laws fairly and neutrally, then why am I even paying?”

Churches: Avoid Mentioning Romney or Obama

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photo via flickr.com

It is common for some churches and religious leaders to integrate current events and circumstances into their sermons.  Currently the hottest topics around the nation happen to be political, as the Republicans and Democrats work around the clock to impress voters.  However, if they care to avoid tax problems, churches have to be very careful not to come out in support of one candidate over another.  Out of an abundance of caution, churches (and those who speak on their behalf) should not mention specific candidates this election year.  In fact, they should do little more than encourage their congregations to vote, and maybe provide non-partisan voter education information.

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. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.  Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

~ www.irs.gov

Ordinary people are going to talk about politics at church; this is not the kind of activity that is prohibited by 501(c)(3).  But if you hear anything (or read anything) coming from those with authority to speak for your church that favors one candidate over another, or has the effect of favoring one of the candidates, you can be sure that this is a violation of the Internal Revenue Code.  Consult a tax attorney for more information.