A reader emailed me today and asked if I could blog about a question: “Would the Mormon Church lose its tax-exempt status if it reinstituted polygamy?”[fn1]
This is one of the joys of being a law professor—you get to engage with hypotheticals, no matter how unlikely, to tease out subtle legal questions. So the upfront caveat: the church isn’t going to reinstate polygamy. But the question is a fun one.
The short answer, of course, is no. It wouldn’t lose its tax exemption if it reinstate polygamy.
The longer answer is still no, but it’s a little trickier to sus out.
And the question goes, as many of these things do, back to the Supreme Court’s Bob Jones decision. I’ve mentioned Bob Jones a number of times while blogging (including here, here, and here). Essentially, in its opinion, the Supreme Court said that the IRS could deny tax exemption to racially discriminatory schools, even if the school was affiliated with a religion and its racism was religiously-motivated. The Court adopted the IRS’s view that tax-exempt entities couldn’t violate “fundamental public policy.”
When Bob Jones comes up in the context of the church, it’s usually an argument that the church ended its racially exclusionary temple and priesthood ban so that it wouldn’t lose its exemption (which is both wrong and anachronistic) or that it should lose its exemption because of its stance on the LGBTQ community (which won’t happen).
But “fundamental public policy” isn’t the only grounds the Court looks at. What the Court says over is that the “purpose of a charitable trust may not be illegal or violate established public policy” (emphasis added).
Why do I bring up illegality? Because the IRS has addressed the question of polygamous organizations being tax-exempt twice, both times in 2013. It denied both exemptions in private letter rulings,[fn2] but it did an absolutely terrible job of anonymizing the rulings, so we know that one was for the now-defunct Principal Voices of Polygamy,[fn3] and organization set up to educate the public about polygamy, provide aid to polygamous families, and lobby on their behalf. The other was for a communitarian FLDS organization. (For more detail, you can check out my article on taxing communitarian organizations.)
In the Principal Voices of Polygamy ruling, the IRS details that polygamy is illegal both federally and in PVoP’s state. Based on the organization’s statements about its goals and purposes, the IRS determined that “one of your substantial purposes is to support what has heretofore been and continues to be an illegal activity.” Therefore, it denied PVoP a tax exemption.
The FLDS ruling should technically require more unpacking, since it wasn’t applying to be a 501(c)(3). But for these purposes, I’ll leave out the important but confusing details. Essentially, the IRS argued that
“The common law of trusts specifies that a charitable trust cannot be created for an illegal purpose. … In fact, Restatement specifically identifies promotion of polygamy as an illegal purpose in comments to that section. Because you advocate and engage in activities that contravene state laws and state and federal public policy, you cannot be a valid religious trust. Because you are not a valid religious trust, you cannot be recognized as a religious or apostolic association under 501(d) of the Code, notwithstanding that you have a common treasury and engage in business for the common benefit of members.”
So that’s a pretty clear statement that the IRS thinks that polygamy is incompatible with tax exemption. So why do I think reinstating polygamy wouldn’t cause the church to lose its exemptions? Several reasons:
First, I think the IRS was wrong here, at least with respect to the illegality part of things. Yes, PVoP’s principal mission was to advocate on behalf of polygamous families, but it didn’t somehow engage in polygamy and, based on the ruling, it doesn’t seem to have encouraged people to engage in polygamy. Rather, it wanted polygamy accepted and understood. (A second ground the IRS mentioned may have carried more weight: while a 501(c)(3) can lobby, such lobbying has to be an insubstantial part of its activities. PVoP did exempt educational and charitable stuff, and I don’t have a sense for what percentage of its activities included lobbying. But that’s not the main grounds the IRS used.)
Both organizations could have, but chose not to, challenge the IRS’s determination. Why? My guess is that at least PVoP didn’t have the money to hire attorneys to challenge it. (I don’t know much about the FLDS, but it wouldn’t shock me if they don’t have access to super-sophisticated tax counsel.) So this is where difference number one is: the LDS Church has plenty of money to spend on legal representation, and plenty of attorneys who would be willing to represent it. Even if the IRS were to take the view that a polygamy-endorsing church didn’t qualify for tax exemption, it wouldn’t have the last word.
But also, you’ll notice the centrality of polygamy in the IRS’s description of the PVoP. One of PVoP’s “substantial purpose[s],” according to the IRS, was promoting polygamy. Even a 21st-century LDS Church that reinstated polygamy would presumably have a lot more going on than just polygamy. It would, I suppose, depend on precisely how it was reinstated, but I have trouble imagining a world in which a reinstated polygamy was a substantial purpose of the church.
But more critically, these rulings came at an interesting juncture. The following year, the Supreme Court issued its opinion in Hobby Lobby, recognizing a corporation as having religious liberty rights. And it has since expanded both the scope of free exercise and the scope of corporate rights. As unpopular as polygamy remains, I don’t think we’re in the same world as were were in 1879, when the Supreme Court decided Reynolds.
Thus my longer answer: I arrive at the same place, but not without some ambiguity and analysis. It’s not an obvious answer, but I’m pretty confident it’s the correct answer.
[fn1] My interlocutor clearly knows me, because this is precisely the kind of question I can’t resist addressing!
[fn2] A private letter ruling is a nonprecedential ruling made to an individual taxpayer about a specific tax issue. Tax attorneys use them to get a sense of what the IRS’s thinking is
[fn3] Don’t click on the links from this website: the orgs website is defunct and now is owned by someone else.
ChristianSW, CC0, via Wikimedia Commons