D-12 | Civil Law Considerations—Financial Law
Prohibition Against Political Intervention.
In the
capacity as a representative of a US diocese, epar-
chy, parish, school, hospital, religious order, or
other section 501(c)(3) tax-exempt organization, a
religious worker or seminarian may not endorse or
oppose any political candidate or otherwise inter-
vene or participate in a political campaign on behalf
of any candidate.
63
Fund Raising Restrictions.
The immigration issues
chapter of these
Guidelines
summarizes restrictions
on US fund-raising activities by R and F visa holders.
Many diocesan or eparchial policies prohibit unau-
thorized parish-based fund-raising appeals. In addi-
tion, both universal and particular canon law and
US tax law provisions raise significant obstacles to
fund raising by international religious workers under
diocesan, eparchial, or parish auspices, whether for
personal or family needs or for the support of reli-
gious or charitable organizations/works in their
countries of origin.
Contributions to Catholic organizations rec-
ognized as tax-exempt under section 501(c)(3) of
the Code are deductible by individual US donors.
Contributions made directly to or indirectly for
the benefit of foreign charities, including foreign
parishes, dioceses, eparchies, and religious insti-
tutes are
not
deductible by individual US donors.
Contributions nominally made to US organizations
that serve as mere conduits for transmission of contri-
butions to foreign organizations are
not
deductible.
64
The conduit situation frequently arises at the parish
level, when an international religious worker may
solicit contributions from parishioners under parish
auspices for the benefit of a parish, religious insti-
tute, or charitable organization in his or her home
country. Parishes should not authorize or facilitate
such conduit contribution arrangements and must
not provide charitable contribution substantiation
statements to donors.
65
63 Additional information about permitted and prohibited political
intervention is available on the USCCB website at
www.usccb.org/ogc
under the heading Political Activity Guidelines.
64 IRC § 170(c)(2); Rev. Rul. 63-252, 1963-2 C.B. 101; Rev. Rul.
66-79, 1966-1 C.B. 48; Rev. Rul. 66-79, 1966-1 C.B. 48.
65 Issuance of a false substantiation statement may subject the parish or
other issuing entity or its representative to IRS penalties for aiding
and abetting the understatement of tax liability under section 6701
and, depending on the facts and circumstances, for directly or indi-
rectly promoting an abusive tax shelter under section 6700.
Case Study 2
Father B. was an R-1 visa priest serving in a US par-
ish. The needs of the Church in his country of origin
were great. Father B. approached a wealthy parishio-
ner to request a large contribution to an orphanage
in his home diocese. Although the contribution was
intended for the foreign orphanage, Father B. advised
the parishioner to make her check payable to the US
parish in order to qualify for a tax deduction. Father B.
assured the parishioner that he would personally carry
the funds to the orphanage during his upcoming home
visit and further guaranteed that the parish would issue
the required IRS substantiation statement to enable
the parishioner to deduct the contribution on her tax
return. This contribution, although nominally made to
the US parish, was earmarked for transmission to the
foreign orphanage and is not deductible under section
170 of the Code.
This case illustrates how attempts to circumvent
federal law regarding charitable contribution deduc-
tions can make the parish liable for payment of sub-
stantial IRS penalties. The attempts at circumvention
also risk allowing the funds to be misappropriated for
purposes other than charity or even diverted for ter-
rorist purposes. Additionally, these improper and ille-
gal maneuvers may violate currency restrictions in the
United States or other countries.
Addressing Additional Legal/
Financial Issues
The US legal system is complex and multilayered,
involving laws, rules, and regulations at the fed-
eral, state, and local levels. The income and social
security tax rules relating to international religious
workers constitute a distinct specialty area of tax
practice. If possible, local practitioners with exper-
tise and experience in this area, particularly in the
Catholic context, should be enlisted to assist com-
pliance efforts. In developing policies at the local
level, it is imperative that dioceses, eparchies, reli-
gious orders, and seminaries involve legal counsel
and financial and human resources professionals to
ensure uniformity of practice and coverage of rele-
vant state and local law issues.
In addition to relevant policy documents, initial
orientation, and child protection training provided