The Internal Revenue Service yesterday reversed itself and indicated that tax-exempt organizations may continue to publish "report cards" on the legislative votes cast by senators and representatives without imperiling their tax exemptions.
The IRS action -- hailed as "a major victory for free speech" by David E. Landau, an American Civil Liberties Union attorney -- came only two weeks after a constitutional challenge to the agency was filed in U.S. District Court here.
Legally, only one organization, an arm of the United Church of Christ, won clearance to continue issuing a nonpartisan score card in which a legislator's vote on each of 10 selected issues gets a "+" if it coincides with the position of the UCC staff and a "-" if it does not. But other groups matching the church's approach -- which doesn't specifically call for any candidate's election or defeat -- presumably will be free to issue similar materials.
The Ucc's Office for Church Society (OCS) is in a tax category under which the contributions it receives are deductible by the donor. No receipts can be spent on intervention in political campaigns, and no more than 20 percent of the budget of such a group can be spent on lobbying. Among thousands of other organizations in the same IRS category -- 501(c)(3) -- are the League of Women Voters' Educational Fund, the National Wildlife Federation, and Planned Parenthood.
By contrast, other tax-exempt groups are free to engage in political activities because the contributions they receive cannot be deducted by the donors. Examples in this category -- 501(c)(4) -- are the Sierra Club, Common Cause, and the ACLU.
The OCS case dates back to June 1978, when the IRS, in issuing a new ruling on "voter education" by tax-exempt groups, invited requests for so-called "private letters" on how a particular activity would be affected.
In January 1979, the OCS, represented by the ACLU, asked the agency to rule that publication of voting records in its newsletter, "UCC Network," did not constitute "participation or intervention in a political campaign on behalf of any candidate for public office." When the IRS failed to issue the requested letter, the OCS went to court. Lawyer Landau argued that the IRS should not lift the tax-exempt status of the church, which has about 6,000 local congregations and a membership of some 2 million persons.
The mission of the church as set out in its constitution includes a recognized responsibility "at home and abroad for . . . education, publication . . . social action, health and welfare, and any other appropriate area of need or concern," Landau wrote.
The mandate of the OCS in fulfilling this mission includes publication, in the newsletter, of congressional voting records on issues in "a broad spectrum of areas of church concern," including defense spending as it relates to the promotion of "Christ's message of peace among men," and aid to underdeveloped nations as it concerns "the eradication of hunger," he told the IRS.
Under Supreme Court rulings giving First Amendment protection to publication of voting records, he said, the IRS should hold that such publication is not the political "participation" barred by its ruling on 503(c)(3) groups.
The IRS, in conferences in March and June 1979, and in January 1980, did not grant the OCS's request for a ruling. Its possible administrative remedies exhausted, the OCS filed its First Amendment suit in court, naming IRS Commissioner Jerome Kurtz and Treasury Secretary G. William Miller as defendants.
Nine days later, the IRS sent a letter approving the OCS newsletter listings of voting records, but with the understanding that it would continue to be distributed only to the usual 2,000 subscribers and "will not be targeted toward particular areas in which elections are occurring."
The ACLU said it "hopes the IRS will now re-examine its unduly restrictive rules." OCS director S. Garry Oniki said he hoped the ruling is a precedent the IRS will honor in behalf of all churches and public interest groups.