Branch Ministries v. Rossotti (D.C. Cir. 2000)

The IRS revoked a church's tax-exempt status in 1995 for engaging in prohibited political activities in a case called Branch Ministries v. Rossotti. The church involved in this case, the Church at Pierce Creek, placed full-page advertisements in two national newspapers days before the 1992 presidential election urging Christians to vote against then-presidential candidate Bill Clinton due to his stand on certain moral issues. The following statement appeared at the bottom of the ads:

This advertisement was co-sponsored by the Church at Pierce Creek, Daniel J. Little, Senior Pastor, and by churches and concerned Christians nationwide. Tax-deductible donations for this advertisement gladly accepted. Make donations to: The Church at Pierce Creek. [mailing address].

The IRS "concluded that the placement of the advertisements violated the statutory restrictions on organizations exempt from taxation and, for the first time in its history, it revoked a bona fide church's tax-exempt status because of its involvement in politics."

The Church challenged that revocation, but a federal trial court ruled in favor of the IRS and a federal appellate court affirmed. "The sole effect of the loss of the tax exemption will be to decrease the amount of money available to the Church for its religious practices," the appellate court said, and that was not a constitutionally significant burden on its free exercise. The court noted that the IRS had assured the Church that, "if [it] d[id] not intervene in future political campaigns, it [could] hold itself out as a 501(c)(3) organization and receive all the benefits of that status."

Another ground for rejecting the Church's free exercise arguments was the fact that the Church could "initiate a series of steps that will provide an alternate means of political communication." Further, the court held that the Church's free speech rights had not been violated because "[t]he restrictions imposed by section 501(c)(3) are viewpoint neutral; they prohibit intervention in favor of all candidates for public office by all tax-exempt organizations, regardless of candidate, party, or viewpoint."

The court also rejected the Church's argument that the IRS had engaged in selective prosecution in violation of the Constitution when it revoked the Church's tax-exempt status. Many other churches had violated these restrictions, the Church said, and yet it had been singled out by the IRS. The Church attributed this action to political bias on the part of the Service. To support its claim, the Church "submitted several hundred pages of newspaper excerpts reporting political campaign activities in, or by the pastors of, other churches that have retained their tax-exempt status. These include reports of explicit endorsements of Democratic candidates by clergymen as well as many instances in which favored candidates have been invited to address congregations from the pulpit." The court held that the Church had not demonstrated that it had been singled out for prosecution from those who were similarly situated. It said:

At oral argument, counsel for the IRS conceded that if some of the church-sponsored political activities cited by the Church were accurately reported, they were in violation of section 501(c)(3) and could have resulted in the revocation of those churches' tax-exempt status. But even if the Service could have revoked their tax exemptions, the Church has failed to establish selective prosecution because it has failed to demonstrate that it was similarly situated to any of those other churches. None of the reported activities involved the placement of advertisements in newspapers with nationwide circulations opposing a candidate and soliciting tax deductible contributions to defray their cost.

Finally, the court noted, "[b]ecause the Church has failed to establish that it was singled out for prosecution from among others who were similarly situated, [it did not need to] examine whether the IRS was improperly motivated in undertaking this prosecution."