Sermon moves IRS to act

Stepping up its probe of allegedly improper campaigning by churches, the Internal Revenue Service on Friday ordered a liberal Pasadena parish to turn over all the documents and e-mails it produced during the 2004 election year with references to political candidates.

All Saints Episcopal Church and its rector, the Rev. Ed Bacon, have until Sept. 29 to present the sermons, newsletters and electronic communications.

The IRS investigation was triggered by an antiwar sermon delivered by its former rector, the Rev. George F. Regas, at the church two days before the 2004 presidential election. The summons even requests utility bills to establish costs associated with hosting Regas’ speech. Bacon was ordered to testify before IRS officials Oct. 11.

The tax code bars nonprofits, including churches, from endorsing or campaigning against candidates in an election.

Facing the possible loss of his church’s tax-exempt status, Bacon said he plans to inform his roughly 3,500 active congregants about the investigation during Sunday’s services. Then he plans to seek their advice on whether to comply.

“There is a lot at stake here,” Bacon said in an interview. “If the IRS prevails, it will have a chilling effect on the practice of religion in America.”

The congregants will have two choices: consent to the IRS request, or decline, which could result in the matter being referred to the Department of Justice and, possibly, U.S. District Court in Los Angeles, All Saints’ lead attorney Marcus Owens said.

“The congregation’s decision will be clear on Sunday or a few days after that,” Owens said. “My guess is they will be unlikely to respond demurely and acquiesce in the government’s request at this stage. The issues are too close to the quick of their fundamental religious beliefs.”

Members of All Saints have a long history of social activism. The sermon that attracted the IRS’ attention was delivered by Regas, who was well-known for opposing the Vietnam War, championing female clergy and supporting gays and lesbians in the church.

The medieval-looking church, just east of City Hall, seems to embody staid, moneyed Old Pasadena, but the liberal outlook goes back decades. During World War II, its rector spoke out against the internment of Japanese Americans. Regas headed the church for 28 years before retiring in 1995.

Exactly how the congregants will make their feelings known on the IRS issue is yet to be decided.

“It may come via e-mail, or as a yea or nay on Sunday, or some other means,” said Keith Holeman, a spokesman for the church.

IRS spokesman Frank Fotinatos declined to comment on the matter saying, “We can’t confirm or deny any ongoing investigation.”

Rep. Adam B. Schiff (D-Burbank), who unsuccessfully tried to launch a Government Accountability Office investigation into the IRS’ probes of churches nationwide last year, called the summons “a very disturbing escalation” of the agency’s scrutiny of All Saints.

“I don’t want religious organizations to become arms of campaigns,” he said. “But they should be able to talk about issues of war and peace without fear of losing tax-exempt status. If they can’t, they’ll have little to say from the pulpit.”

The view was echoed by the Rev. Bob Edgar, an ordained elder in the United Methodist Church and general secretary of the National Council of Churches USA. “I’m outraged,” he said. “Preachers ought to have the liberty to speak truth to power.”

“There is a lot more to be done about this, and it may include some actions of nonviolent civil disobedience,” Edgar said. “Since 9/11, the IRS, like the FBI, has been moving back to the 1950s and 1960s when a great deal of such activity was propagated against church leaders like Martin Luther King.”

In July, the IRS warned 15,000 tax-exempt groups across the nation, including churches and nonprofit organizations, to stay neutral on politics.

At the time, IRS officials said the agency also began expediting investigations into charges of improper campaigning under a new enforcement program, the Political Activity Compliance Initiative. Under it, the IRS will no longer wait for an annual tax return to be filed or for the tax year to end before investigating allegations of wrongful campaigning.

Since 2004, the IRS has investigated more than 200 organizations nationwide.

Federal law prohibits the IRS from releasing the names of those under investigation, but the agency in July said it had 100 cases pending -- 40 of them churches.

Among them is the agency’s case against the NAACP, which drew the IRS’ attention in July 2004, after the organization’s chairman, Julian Bond, criticized the Bush administration’s policies on civil rights.

All Saints came under IRS investigation shortly after Regas delivered a guest sermon that depicted Jesus in a mock debate with then-presidential candidates George W. Bush and John F. Kerry.

The sermon, which did not endorse or oppose any of the candidates, addressed the moral and religious implications of various social issues facing the nation at the time.

Regas’ suggestion that Jesus would have told Bush his preemptive war strategy in Iraq “has led to disaster” prompted a letter from the agency in June 2005 stating that “a reasonable belief exists that you may not be a tax-exempt church.”

After nearly a year without communication with the agency, Bacon said he was “quite surprised” Friday when an IRS agent handed him the summons at his church.

In addition to seeking electronic communications, the summons requests “a copy of all oral communications identifying candidates for public office delivered at All Saints Church or at events sponsored by All Saints Church between Jan. 1, 2004, and Nov. 2, 2004.”

The summons also asks for various financial records. “Please provide an accounting of all expenditures associated with delivery of the sermon, including allocations of overhead.” All Saints officials take that to mean such things as the pay of church staff.

Bacon said the IRS’ renewed investigation raises concerns that it may reflect an attempt to quash the church’s discussions of “fundamental religious issues with policy implications before the midterm elections, and in a way that intrudes into core religious practices.”

“Despite the drain on our finances and the time we will spend defending this attack on the freedoms of religion and speech, All Saints Church will continue without interruption or fear what has distinguished its mission for 125 years,” Bacon said.

louis.sahagun@latimes.com