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, saying he could not discuss particular cases.
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 special election in California and the three defeated Republican-backed propositions that it said 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.
The IRS threat is part of a larger controversial federal probe of political activity at churches and nonprofit groups.
Over the past year, the Internal Revenue Service has looked at more than 100 tax-exempt organizations across the United States for allegations of promoting — either explicitly or implicitly — candidates on both ends of the political spectrum, according to the IRS. None have lost their nonprofit status, though investigations continue into about 60 of those.
The IRS denies any political motivation behind the initiative it started last year. The treasury department's inspector general found in February that there was some mismanagement of the investigations but no indication of them being used as a political tool to silence critics of the Bush administration.
However, the IRS action has triggered an unusual coalition of critics who say they are concerned about the impact on freedom of speech and religion.
When Ted Haggard, head of the 30-million-member National Association of Evangelicals, heard about the All Saints case this week, he told his staff to contact the National Council of Churches, a more liberal group.
Haggard said he personally supports the war in Iraq and probably would not agree with much in the Rev. George Regas' 2004 sermon at All Saints, which was cited by the IRS as the basis for its probe. But Haggard said he wants to work with the church council "in doing whatever it takes to get the IRS to stop" such actions.
"It is a violation of the Constitution for the IRS to threaten that church. It may not be a violation of IRS regulations, but IRS regulations have been wrong," said Haggard, who is pastor of the 12,000-member New Life Church in Colorado Springs.
Robert Edgar, general secretary of the National Council of Churches, cheered when he heard of Haggard's offer, which Edgar said represented a rare reaching out by the evangelical group to the council.
Edgar, a United Methodist minister, former Democratic congressman from Pennsylvania and ex-president of the Claremont School of Theology, said the IRS move against All Saints appeared to be "a political witch hunt on George Regas and progressive ideology. It's got to stop." He stressed that Regas did not endorse a candidate in the sermon.
Edgar said he did not favor the bill repeatedly introduced by North Carolina Republican Congressman Rep. Walter Jones, R-N.C., that would allow pastors to endorse candidates without putting their tax-exempt status at risk. Existing law is adequate, as enforcement does not vary for churches with different ideologies, Edgar said.
The tax code prohibits nonprofits from "participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office." The ban includes endorsements, donations, fund raising, or any other activity "that may be beneficial or detrimental to any particular candidate."