Complaints about the sermon led to an investigation by the
Internal Revenue Service (IRS) into whether the sermon voided the church's tax-exempt status as a prohibited political endorsement. The church responded by claiming that the IRS is selectively enforcing the rule by not pursuing actions against conservative churches. In response to the investigation, Rector Ed Bacon gave a sermon called, "Neighbor Love is Never Neutral."
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In September 2006, the IRS issued a summons against All Saints demanding that the church turn over documents related to the controversial sermon. All Saints Church's response was that the IRS was violating the church's First Amendment rights and that the Church would challenge the IRS's actions in a summons enforcement proceeding in the United States
Federal District Court. The church then established a charitable fund to raise money for its legal defense.
The
Pasadena Star News reported that All Saints would remain defiant against the IRS. Rector Ed Bacon asserted that political activism was "in the DNA" of the church.
Result of IRS investigation
On September 25, 2007, CCH reported in
Federal Tax Day:
On September 10, 2007, the IRS notified the congregation that it was closing its investigation. The IRS determined that the sermon was political campaign intervention. It offered no explanation as to why the sermon violated the ban on political intervention. The IRS also did not indicate if it intended to impose excise taxes under Code Sec. 4955 [see
26 U.S.C. § 4955] on the church or its officers. However, it did not revoke the church's exempt status.
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According to the
Pasadena Star News, the IRS told church officials that the sermon constituted an endorsement of a candidate. Rector Ed Bacon demanded that the IRS apologize and that the IRS be investigated.
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The Rev. Ed Bacon stated:
While we are pleased that the IRS examination is finally over,
the IRS has failed to explain its conclusion regarding the single sermon at issue. Synagogues, mosques and churches across American have no more guidance about the IRS rules now than when we started this process over two long years ago.[12]
The Church's legal counsel has asked the IRS for a clarification of the decision, and for assurance that the IRS did not act under pressure from the White House. The Church has also requested that the U.S. Treasury Inspector General for Tax Administration (TIGTA) examine the IRS's investigation.
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All Saints Episcopal Church (Pasadena, California) - Wikipedia