The recent involvement of tax-exempt organizations in hot-button political issues has caused watchdog groups to question if the organizations are engaging in prohibited campaign intervention. The tax code prohibits certain organizations, including charities and churches, from intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. The involvement of these organizations in political causes reflects the nonprofit sector’s valuable interest in social issues and public affairs. However, that interest is hampered by the uncertainty of what is allowed in many election-related activities.

Liberty University (LU), a private, tax-exempt university founded by the late Rev. Jerry Falwell, dropped official recognition of the university’s College Democrats club due to the National Democratic Party’s platform on abortion and marriage equality, according to LU's Chancellor Rev. Jerry Falwell, Jr. Without official recognition, the club cannot receive funding from the university or use the university’s name on anything affiliated with the club.

Mark Vine, LU’s Vice President for Student Affairs, sent the LU College Democrats an e-mail on May 15 revoking recognition for the club. The e-mail says that the "Democratic Party Platform is contrary to the mission of LU and to Christian doctrine (supports abortion, federal funding of abortion, advocates repeal of the federal Defense of Marriage Act, promotes the 'LGBT' agenda, Hate Crimes, which include sexual orientation and gender identity, socialism, etc)."

Americans United for Separation of Church and State (AU) sent a letter to the Internal Revenue Service (IRS) asking the agency to review Liberty University’s tax-exempt status. AU’s letter highlights that the university provides the College Republicans club with official recognition and funding. In an AU press release, Executive Director Rev. Barry W. Lynn said, "Liberty University is a tax-exempt institution and isn’t allowed to support one party over another. If the school insists on pushing policies that favor Republicans over Democrats, it should have to surrender its tax exemption." There is a gubernatorial primary in Virginia on June 9, which raises the question about whether LU’s action could be intended to affect the outcome of an election.

Liberty University announced in a press release on May 28 that it had plans to file a complaint on June 1 against AU, alleging that AU is politically biased and files "these letters to silence churches and other conservative organizations by intimidating them."

There are also complaints that the Maine Diocese of the Catholic Church is violating tax law by helping push a referendum that would repeal same-sex marriage in the state. According to SFGate.com, an online affiliate of the San Francisco Chronicle, the Empowering Spirits Foundation filed an IRS complaint against the Diocese, alleging that it is "engaging in political activity by collecting signatures for the referendum [and, thus,] violating IRS rules applying to nonprofits." The referendum is designed to overturn Maine’s recently enacted marriage equality law, which expands civil marriage to same-sex couples.

By participating in the referendum, the Maine Diocese is engaging in direct lobbying, according to IRS regulations. Support or opposition to a referendum is considered lobbying because the general public is considered the legislative body in this case. The Diocese, a 501(c)(3) organization, can legally engage in direct lobbying as long as it is not a "substantial part" of its activities. Thus, the Diocese is not prohibited from participating in the referendum process as long as it is not supporting or opposing a candidate. However, Leonard Cole, an attorney who specializes in tax and nonprofit issues, told the Associated Press, "It's hard for me to imagine how you seek someone's signature on a petition without it arguably at least being an attempt to influence their vote once the measure was on the ballot." Presumably, Cole is challenging the legitimacy of IRS regulations that make actions on referenda a lobbying activity, not a political intervention.

Leaders of tax-exempt organizations have also been extremely vocal about the Washington, DC, City Council’s passage of legislation on May 5 to recognize valid same-sex marriages from other jurisdictions. Some religious leaders have vowed to target city council members who supported the legislation, according to the Washington Post.

AU warned that DC pastors who target politicians for supporting the marriage equality legislation risk their institutions’ tax-exempt status. "Religious leaders have the right to speak out for or against same-sex marriage, but they cannot use the resources of their churches to elect or defeat candidates," said Lynn in another press release.

A pastor can make an endorsement as an individual but not as a representative of a church. IRS Rev. Rul. 2007-41 states, "Leaders cannot make partisan comments in official organization publications or at official functions of the organization." AU says it will monitor the DC situation and will report any tax-exempt organization to the IRS that violates the prohibition against campaign intervention.

Many complaints might never be filed if the IRS guidance for tax-exempt organizations was less ambiguous. Clarifying ambiguous IRS voter engagement rules would not only prevent organizations from unknowingly participating in prohibited activities, but it would also enable organizations to engage in issue advocacy without the fear of unintentionally violating rules that are too vague for many organizations to understand.