## Facts

- Christian Echoes National Ministry, Inc. was a nonprofit religious corporation founded in 1951 that conducted religious broadcasts, publications, and evangelistic campaigns.
- The ministry’s communications regularly addressed public affairs and urged supporters to take political action on legislative and governmental matters.
- In 1953, the IRS recognized the organization as tax-exempt under I.R.C. § 501(c)(3).
- After re-examining the organization’s activities in 1962–1963, the IRS concluded the ministry had substantial involvement in attempts to influence legislation and other political activities inconsistent with § 501(c)(3).
- In 1964, the IRS notified the organization that its exemption was revoked and advised it of protest rights.
- The IRS assessed FICA taxes for 1961 and 1963–1968 (plus interest). The organization paid and sued for a refund, arguing it remained exempt and that revocation burdened its constitutional rights.

## Issues

1. Whether the organization’s lobbying and political activities were substantial enough to disqualify it from exemption under I.R.C. § 501(c)(3).
2. Whether the IRS had authority to revoke the exemption retroactively for the tax years used to assess FICA taxes.
3. Whether revocation and enforcement of § 501(c)(3)’s political-activity limits violated the First Amendment (speech and religious exercise) or the Fifth Amendment (due process/vagueness).

## Decision

- The Tenth Circuit reversed the district court and upheld the IRS’s revocation of the organization’s § 501(c)(3) exemption.
- The court concluded the organization’s efforts to influence legislation and political outcomes were substantial and failed § 501(c)(3)’s operational requirements.
- The court held retroactive revocation was authorized by statute and regulation and was not an abuse of IRS discretion on the record presented.
- The court rejected First Amendment claims, reasoning the organization could speak and engage in politics but could not demand the financial advantage of tax-exempt status while doing so.
- The court rejected Fifth Amendment and vagueness challenges, finding the statutory standard and guidance sufficient and the organization’s activities plainly within prohibited conduct.

## Legal Principles

- Tax exemption under § 501(c)(3) is a conditional government benefit; Congress may deny exemption to organizations that substantially lobby or engage in prohibited political activity.
- An organization is not “operated exclusively” for exempt purposes if a substantial part of its activities consists of attempting to influence legislation or political outcomes.
- The IRS may retroactively revoke or modify an exemption ruling when later information shows the ruling was erroneous or material facts changed or were not fully disclosed, subject to discretionary limits.
- Denial of tax-exempt status based on substantial lobbying/political activity does not, by itself, violate free speech or free exercise because the organization remains free to engage in such activity without the tax subsidy.
- Due process is not violated where statutory terms and administrative guidance provide adequate notice and the challenged conduct clearly falls within the prohibited category.

## Conclusion

The Tenth Circuit held that substantial lobbying and political activity disqualifies a religious organization from § 501(c)(3) status, that the IRS may revoke exemption retroactively in appropriate circumstances, and that applying these limits does not violate the First or Fifth Amendments when the organization remains free to speak but not to claim the tax benefits tied to statutory conditions.


Christian Echoes Nat’l Ministry, Inc. v. United States, 470 F.2d 849 (10th Cir. 1972)