Sermon could cost Calif. church tax-free status

updated 9:43 p.m. ET Nov. 7, 2005

LOS ANGELES - The Internal Revenue Service has warned a prominent liberal church that it could lose its tax-exempt status because of an anti-war sermon a guest preacher gave on the eve of the 2004 presidential election, according to church officials.

The Rev. George F. Regas did not urge parishioners at All Saints Episcopal Church to support either President Bush or John Kerry, but he was critical of the Iraq war and Bush’s tax cuts.

The IRS warned the church in June that its tax-exempt status was in jeopardy because such organizations are prohibited from intervening in political campaigns and elections.

The church’s rector, J. Edwin Bacon, told his congregation about the problem Sunday.

“It’s important for everyone to understand that the IRS concerns are not supported by the facts,” Bacon said.

Bacon later said he chose Sunday to inform the congregation because Nobel Peace Prize winner Archbishop Desmond Tutu was in attendance and because he believes a decision from the IRS is imminent. He called the IRS threat “a direct assault on freedom of speech and freedom of religion.”

An IRS spokesman in Washington declined to comment Monday, saying he could not discuss particular cases.

Fears of retribution
Some All Saints members said they feared the 3,500-member church was being singled out for its political views.

All Saints has long been vocal about its positions. Its Web site mentions the upcoming special election in California and says three Republican-backed propositions would “alter the very fabric of our lives as a democracy by limiting the right to representation and the right to express a political point of view.” Regas, who gave the 2004 sermon, retired 10 years ago as the church’s rector.

Marcus Owens, the church’s tax attorney and a former head of the IRS tax-exempt section, said the agency offered to drop the proceedings if the church admitted wrongdoing. The church declined the offer, he said.

The IRS has revoked a church’s charitable designation at least once. A church in Binghamton, N.Y., lost its status after running advertisements against Bill Clinton’s candidacy before the 1992 presidential election.

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