Under Fire
Conservative Christian legal non-profit faces accusations of ethics violations.
October 31, 2008 at 08:00 PM
8 minute read
By the time you read this, Pulpit Freedom Sunday will have come and gone, but its consequences will still be with us.
Pulpit Freedom Sunday, which took place Sept. 28, was an Alliance Defense Fund (ADF) project that urged hundreds of ministers to deliver overtly political sermons in hopes that the IRS would launch investigations of their churches' tax-exempt status.
The ADF, a non-profit conservative Christian group of attorneys, promised to work with participating ministers to “ensure maximum effectiveness in challenging the IRS” and then to defend their churches on a pro bono basis if the IRS tried to enforce the law against political activities by tax-exempt churches. The ultimate goal was a Supreme Court ruling overturning the ban on political endorsements by tax-exempt churches.
In other words, a tax-exempt charity was using its legal staff to persuade other tax-exempt charities to violate the law. That did not sit well with some prominent Washington, D.C., tax lawyers who filed a vigorous complaint with the IRS Office of Professional Responsibility.
Thus, Pulpit Freedom Sunday lives on in ways the ADF lawyers probably did not expect. Three Caplin & Drysdale lawyers who are former top IRS officials urged the IRS to immediately investigate whether the ADF lawyers violated Circular 230 when they promoted Pulpit Freedom Sunday. Although I understood that lawyers should not urge others to break the law (duh!), I was not aware of Circular 230, which spells out the rules for lawyers who practice before the IRS. Any lawyer who violates those rules is subject to sanctions ranging from a private reprimand to public censure, suspension and even disbarment. A violator could even lose his or her state license, depending on the state's disciplinary rules.
Citing Circular 230, the complaint asserts the ADF lawyers engaged in “incompetent and disreputable conduct,” including willfully assisting or counseling a client to violate federal tax law. The tax law is Section 501(c)(3) and the “disreputable” conduct is persuading ministers to endorse or speak against candidates for president or otherwise engage in prohibited electioneering from the pulpit.
Now the ADF lawyers have a new set of clients–themselves. They face a formal review of their conduct as lawyers. There is no reliable track record on this kind of complaint because few of them are filed. But given the prominence of the complainants (a former IRS commissioner, former head of the ethics office and former head of the exempt organizations division), this one should get some serious attention.
To exacerbate ADF's predicament, on the same day Caplin & Drysdale filed its complaint focusing on the ethical conduct of the ADF lawyers, a group of clergy filed a complaint focusing on ADF itself. The group claimed the ADF's “manipulation of religious leaders” amounted to “the largest single mass violation of Section 501(c)(3) since its enactment” in 1954.
They called for an investigation into whether ADF jeopardized its own tax-exempt status. They also noted that individuals who donate to a charity knowing it is engaging in prohibited activity (i.e., encouraging violation of law) may not claim a charitable deduction for that gift. They also pointed out foundations that gave money to the ADF for its pulpit project could have the ADF's “illicit conduct” attributed to them by the IRS.
I doubt the ADF lawyers were prepared for this quadruple whammy. Instead of defending just the churches they urged to break the law, they now face defending themselves as ethical attorneys, their own charity's tax-exempt status, the deductibility of their donors' contributions and the tax status of their foundation supporters. They also created a lot of work for their donors' attorneys and for the IRS Office of Professional Responsibility.
My hope is the questions raised by these complaints can be answered before the next presidential election.
By the time you read this, Pulpit Freedom Sunday will have come and gone, but its consequences will still be with us.
Pulpit Freedom Sunday, which took place Sept. 28, was an Alliance Defense Fund (ADF) project that urged hundreds of ministers to deliver overtly political sermons in hopes that the IRS would launch investigations of their churches' tax-exempt status.
The ADF, a non-profit conservative Christian group of attorneys, promised to work with participating ministers to “ensure maximum effectiveness in challenging the IRS” and then to defend their churches on a pro bono basis if the IRS tried to enforce the law against political activities by tax-exempt churches. The ultimate goal was a Supreme Court ruling overturning the ban on political endorsements by tax-exempt churches.
In other words, a tax-exempt charity was using its legal staff to persuade other tax-exempt charities to violate the law. That did not sit well with some prominent Washington, D.C., tax lawyers who filed a vigorous complaint with the IRS Office of Professional Responsibility.
Thus, Pulpit Freedom Sunday lives on in ways the ADF lawyers probably did not expect. Three
Citing Circular 230, the complaint asserts the ADF lawyers engaged in “incompetent and disreputable conduct,” including willfully assisting or counseling a client to violate federal tax law. The tax law is Section 501(c)(3) and the “disreputable” conduct is persuading ministers to endorse or speak against candidates for president or otherwise engage in prohibited electioneering from the pulpit.
Now the ADF lawyers have a new set of clients–themselves. They face a formal review of their conduct as lawyers. There is no reliable track record on this kind of complaint because few of them are filed. But given the prominence of the complainants (a former IRS commissioner, former head of the ethics office and former head of the exempt organizations division), this one should get some serious attention.
To exacerbate ADF's predicament, on the same day
They called for an investigation into whether ADF jeopardized its own tax-exempt status. They also noted that individuals who donate to a charity knowing it is engaging in prohibited activity (i.e., encouraging violation of law) may not claim a charitable deduction for that gift. They also pointed out foundations that gave money to the ADF for its pulpit project could have the ADF's “illicit conduct” attributed to them by the IRS.
I doubt the ADF lawyers were prepared for this quadruple whammy. Instead of defending just the churches they urged to break the law, they now face defending themselves as ethical attorneys, their own charity's tax-exempt status, the deductibility of their donors' contributions and the tax status of their foundation supporters. They also created a lot of work for their donors' attorneys and for the IRS Office of Professional Responsibility.
My hope is the questions raised by these complaints can be answered before the next presidential election.
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