IRS Reverses Course, Grants Tax-Exemption to Texas Religious Group

The Internal Revenue Service (IRS) building is seen in Washington on Feb. 19, 2014. (Jim Watson/AFP/Getty Images)

A senior IRS executive who had previously denied tax-exemption to Christians Engaged has reversed his decision, awarding the favorable designation to the Texas prayer group.

Stephen K. Martin, director of exempt organization rulings and agreements, had initially cited a claim that prayer and Bible study favor Republicans as the reason for Christians Engaged’s denial of tax-exempt status. However, in a letter received by the Christian organization on July 7, Martin announced a reversal regarding that decision.

“We’re pleased to tell you we determined you’re exempt from federal income tax under Internal Revenue Code 501(C)(3). Donors can deduct contributions they make to you under IRC Section 170,” the letter reads.

Martin didn’t say in the letter why he reversed his previous position, which was first reported by The Epoch Times and which prompted a national backlash.

Martin had said in a May 18 letter to the group, which was recognized as exempt from state taxes in 2019, that it wasn’t eligible for federal exemption because it “[engages] in prohibited political campaign intervention” and “[operates] for a substantial non-exempt private purpose and for the private interests of the [Republican] party.”

Christians Engaged encourages its followers to pray on a nonpartisan basis for government leaders at all levels, and to be active in civic affairs by voting and by applying biblical values to public affairs issues.

The group was represented in an appeal of Martin’s initial decision by First Liberty Institute, a Plano, Texas-based public interest law firm that specializes in religious freedom litigation.

“This is truly great news for our client, as well as religious organizations and churches across America,” Lea Patterson, counsel for First Liberty Institute, said in a statement. “We are grateful the IRS changed course to bring its decision into line with the Constitution and its own regulations.”

In the appeal of Martin’s May decision, Patterson argued three points against the initial finding by the IRS executive.

“By finding that Christians Engaged does not meet the operational test, Director Martin errs in three ways 1) he invents a nonexistent requirement that exempt organizations be neutral on public policy issues; 2) he incorrectly concludes that Christians Engaged primarily serves private, nonexempt purposes rather than public, exempt purposes because he thinks its beliefs overlap with the Republican Party’s policy positions; and 3) he violates the First Amendment’s Free Speech, and Free Exercise, and Establishment clauses by engaging in both viewpoint discrimination and religious discrimination,” Patterson wrote.

Christians Engaged President Bunni Pounds said in the same statement: “I am incredibly thankful to the IRS for doing the right thing, and we look forward to continuing our mission of educating more followers of Jesus to pray for our nation and to be civically engaged. When we stand up, our republic works for all Americans.”

The IRS media relations office didn’t respond to a request for comment on Martin’s reversal by press time.

Martin’s denial in May and The Epoch Times’ reporting of it prompted a flurry of negative media coverage for the federal tax agency. Multiple members of Congress, who saw a repeat of the targeting scandal in 2013 under Martin’s predecessor, Lois Lerner, also spoke out against the initial decision.

“The IRS under the Biden-Harris administration is up to no good and appears to be abusing its vast powers for political gain,” Rep. James Comer (R-Ky.), the top GOP member of the House Committee on Oversight and Government Reform, told The Epoch Times.

“This attack on religious liberty must be stopped and investigated. No federal bureaucrat should be able to wield such massive power and ignore government regulations to target an organization based on their religious beliefs.”

Leading House Democrats declined to respond to The Epoch Times’ request for comment, including House Speaker Nancy Pelosi of California, House Majority Leader Steny Hoyer of Maryland, Oversight Chairwoman Carolyn Maloney of New York, and Judicial Chairman Jerrod Nadler, also of New York.

Contact congressional correspondent Mark Tapscott at [email protected]