IRS reverses course, grants tax-exempt status to Christian group it accused of being too political

Internal Revenue Service
Internal Revenue Service | (Courtesy, The Heritage Foundation)

The IRS has reversed an earlier decision denying tax-exempt status to a Christian organization it had previously deemed too political because it advises voters to read what the Bible says on issues such as the sanctity of life and marriage.

Christians Engaged, a nonprofit group based in Garland, Texas, led by conservative activist Bunni Pounds, had previously applied for an exemption under Section 501(c)(3), only to be rejected earlier this year.

However, the First Liberty Institute, which helped to represent the Christian group, announced Wednesday that the IRS has granted Christians Engaged's request for tax-exempt status.

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“This is truly great news for our client, as well as religious organizations and churches across America,” said First Liberty Institute counsel Lea Patterson in a statement shared with The Christian Post. 

“We are grateful the IRS changed course to bring its decision into line with the Constitution and its own regulations.”

Christians Engaged President Bunni Pounds said she was “incredibly thankful to the IRS for doing the right thing.”

“… we look forward to continuing our mission of educating more followers of Jesus to pray for our nation and to be civically engaged. When we stand up, our republic works for all Americans,” she added in the statement. 

In 2019, Christians Engaged applied for tax-exempt status, only to receive a notice of denial from IRS Exempt Organizations Director Stephen A. Martin on May 18.

In the notice, Martin argued that the group was too political, asserting that they “engage in prohibited political campaign intervention.”

“You are also not operated exclusively for one or more exempt purposes within the meaning of Section 501(c)(3), because you operate for a substantial non-exempt private purpose and for the private interests of the [Republican] party,” wrote Martin.

Pounds, who heads Christians Engaged, ran for Congress in 2018 but lost in the Republican primary. The organization's vice president is Trayce Bradford, who previously led the pro-family advocacy group Texas Eagle Forum.

Martin claimed that the group should be denied tax-exempt status because it works to instruct people on what the Bible says about various issues that "generally distinguish candidates and are associated with political party platforms."

Patterson noted in several media interviews that the IRS had granted a tax exemption to former first lady Michelle Obama and her activist group When We All Vote, as a counter to Martin's reasoning for denying Pounds' organization tax-exempt status.  

In June, Christians Engaged filed an appeal with the help of the First Liberty Institute, arguing that the IRS’ reasoning was flawed in multiple ways, namely that it invented “a nonexistent requirement that exempt organizations be neutral on public policy issues.”

The appeal also argued that the agency wrongly assumed that "Christians Engaged primarily serves private, nonexempt purposes rather than public, exempt purposes because he [Martin] thinks its beliefs overlap with the Republican Party’s policy positions."

Christians Engaged received the backing of several Republican members of Congress who sent a letter to the IRS on June 25 imploring the government agency to reverse its decision against the nonprofit.

“The IRS must objectively analyze applications for tax-exempt status and cannot allow political biases to creep into its decisions,” reads the letter in part.

“We urge you to immediately review Christians Engaged’s application for 501(c)(3) status personally, and terminate the IRS staff involved in the flawed and politically motivated reasoning behind the determination.”

In 2013, the IRS garnered controversy when the agency admitted to targeting conservative groups' tax-exempt applications with the terms “Tea Party” or “Patriot” in them during the 2012 presidential election season.

Lois Lerner, then director of the IRS Exempt Organizations Division, gave an apology, stating at the time that it was “absolutely inappropriate and not the way we should do things.”

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