PASADENA, Calif. (AP) – With the campaign season in full swing, a liberal church is locked in an escalating dispute with the IRS over an anti-war sermon – delivered two days before the 2004 presidential election – that could cost the congregation its tax-exempt status.

Jessica Boullion
The Rev. Ed Bacon is photographed at All Saints Church in Pasadena, Calif. yesterday. The liberal church is locked in an escalating dispute with the IRS over an anti-war sermon. (AP PHOTO)

Religious leaders on both the right and left are watching closely, afraid the confrontation at All Saints Church in this Los Angeles suburb will compromise their ability to speak out on issues of moral importance such as abortion and gay marriage during the midterm elections.

Under federal tax law, church officials can legally discuss politics, but to retain tax-exempt status, they cannot endorse candidates or parties. Most who do so receive a warning.

According to the IRS, the only church ever to be stripped of its tax-exempt status for partisan politicking was the Church at Pierce Creek near Binghamton, N.Y., which was penalized in 1995 after running full-page ads against President Clinton in USA Today and The Washington Times in 1992 during election season.

Before this fall’s congressional races, the IRS warned that it would be scrutinizing churches and charities – important platforms, particularly for Republicans – for unlawful political activity.

All Saints is an Episcopalian church of about 3,500 – the largest west of the Mississippi – and has long had a reputation for liberal social activism among its largely affluent, Democratic-leaning membership. During World War II, its rector spoke out against the internment of Japanese Americans. The Rev. George Regas, who headed the church for 28 years before retiring in 1995, was well known for opposing the Vietnam War, championing female clergy and supporting gays in the church.

The dispute centers on a sermon titled “If Jesus Debated Senator Kerry and President Bush” that Regas delivered as a guest pastor. Though he did not endorse a candidate, he said Jesus would condemn the Iraq war and Bush’s doctrine of pre-emptive war.

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