The 508(c)(1)(a) Initiative Workshop

Nor does the revocation necessarily make the Church liable for the payment of taxes.
As the IRS explicitly represented in its brief and reiterated at oral argument, the
revocation of the exemption does not convert bona fide donations into income taxable to
the Church. See 26 U.S.C. § 102 (“Gross income does not include the value of
property acquired by gift․”). Furthermore, we know of no authority, and counsel
provided none, to prevent the Church from reapplying for a prospective determination of
its tax-exempt status and regaining the advance assurance of deductibility-provided, of
course, that it renounces future involvement in political campaigns.
We also reject the Church's argument that it is substantially burdened because it has no
alternate means by which to communicate its sentiments about candidates for public
office. In Regan v. Taxation With Representation, 461 U.S. 540, 552-53, 103 S.Ct.
1997, 76 L.Ed.2d 129 (1983) (Blackmun, J., concurring), three members of the
Supreme Court stated that the availability of such an alternate means of communication
is essential to the constitutionality of section 501(c)(3)'s restrictions on lobbying. The
Court subsequently confirmed that this was an accurate description of its holding. See
FCC v. League of Women Voters, 468 U.S. 364, 400, 104 S.Ct. 3106, 82 L.Ed.2d 278
(1984). In Regan, the concurring justices noted that “TWR may use its present §
501(c)(3) organization for its nonlobbying activities and may create a § 501(c)(4)
affiliate to pursue its charitable goals through lobbying.” 461 U.S. at 552, 103 S.Ct.
1997.
The Church has such an avenue available to it. As was the case with TWR, the
Church may form a related organization under section 501(c)(4) of the Code. See 26
U.S.C. § 501(c)(4) (tax exemption for “[c]ivic leagues or organizations not organized for
profit but operated exclusively for the promotion of social welfare”). Such
organizations are exempt from taxation; but unlike their section 501(c)(3) counterparts,
contributions to them are not deductible. See id. § 170(c); see also Regan, 461 U.S.
at 543, 552-53, 103 S.Ct. 1997. Although a section 501(c)(4) organization is also
subject to the ban on intervening in political campaigns, see 26 C.F.R. § 1.501(c)(4)-
1(a)(2)(ii) (1999), it may form a political action committee (“PAC”) that would be free to
participate in political campaigns. Id. § 1.527-6(f), (g) (“[A]n organization described in
section 501(c) that is exempt from taxation under section 501(a) may, [if it is not a
section 501(c)(3) organization], establish and maintain such a separate segregated fund
to receive contributions and make expenditures in a political campaign.”).
At oral argument, counsel for the Church doggedly maintained that there can be no
“Church at Pierce Creek PAC.” True, it may not itself create a PAC; but as we have
pointed out, the Church can initiate a series of steps that will provide an alternate
means of political communication that will satisfy the standards set by the concurring
justices in Regan. Should the Church proceed to do so, however, it must understand
that the related 501(c)(4) organization must be separately incorporated; and it must
maintain records that will demonstrate that tax-deductible contributions to the Church
have not been used to support the political activities conducted by the 501(c)(4)
organization's political action arm. See 26 U.S.C. § 527(f)(3); 26 C.F.R. § 1.527-
6(e), (f).
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