This story was on my morning Yahoo thing this morning:
http://news.yahoo.com/s/ap/20060224/ap_on_go_ot/irs_politics
IRS Finds Charities Overstep Into Politics
By MARY DALRYMPLE, AP Tax Writer
WASHINGTON - IRS exams found nearly 3 out of 4 churches, charities and other civic groups suspected of having violated restraints on political activity in the 2004 election actually did so, the agency said Friday.
Most of the examinations that have concluded found only a single, isolated incidence of prohibited campaign activity.
In three cases, however, the IRS uncovered violations egregious enough to recommend revoking the groups' tax-exempt status.
"While the vast majority of charities, including churches, did not engage in politicking, our examinations substantiated a disturbing amount of political intervention in the 2004 electoral cycle," IRS Commissioner Mark Everson said in a statement.
The tax agency looked only at charities, churches and other tax-exempt organizations referred to the IRS for potentially violating laws that bar them from participating in or intervening in elections, including advocating for or against any candidate.
Those referred to the IRS represent a tiny fraction of more than 1 million tax-exempt organizations organized under section 501(c)(3) of the tax law.
The IRS examined 110 organizations referred to the tax agency for potentially violations, and 28 cases remain open.
Among the 82 closed cases, the IRS found prohibited politicking and sent a written warning to 55 organizations and assessed a penalty tax against one group. Those organizations included 37 churches and 19 other organizations.
In the three additional cases in which the IRS recommended revoking tax-exempt status, none of the organizations were churches. The agency did not identify the three.
The IRS found tax violations unrelated to politics in five cases. Examinations of the 18 remaining groups did not turn up any wrongdoing.
Among the prohibited activities, the examiners found that charities and churches had distributed printed material supporting a preferred candidate and assembled improper voter guides or candidate ratings.
Religious leaders had used the pulpit to endorse or oppose a particular candidate, and some groups had shown preferential treatment to candidates by letting them speak at functions.
Other charities and churches had made improper cash contributions to a candidate's political campaign.
The IRS said the cases covered "the full spectrum" of political viewpoints.
The tax agency set up a task force in 2004 to review allegations of improper political activity. The special procedures, revealed shortly before the election, drew criticism from some tax-exempt groups.
An audit by Treasury Department inspectors found nothing inappropriate in the examinations, but it faulted the IRS for creating the appearance of political motivations by waiting too long to announce the project and contact organizations.
The IRS said it plans to continue using the task force, and its speedier procedures, for this year's election and in the future. It also released detailed guidance to charities and churches about the prohibitions against political activities.
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