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Okay...puzzle this one, Slick.
If a city, county, or state ordinance prohibits demonstrations ie. picketing, within X feet of a funeral or memorial service and Phelps and his band of hate-mongering followers violate the ordinance, can you argue that the "activities" of the said organization were "illegal," (even though the action is but a misdemeanor it is still against the law) and therefore subject to revocation of the organization's tax exempt status and/or prosecution under the IRS?


Left, assuming that Phelps and his band of hate-mongering followers are considered a tax-exempt organization & do violate the law in their demonstrations, then the IRS can revoke their tax-exempt status. From what I have learned in class, because we are in severe debt, the IRS is focusing on compliance & enforcement with a vengeance. However, section 7611 of the Internal Revenue Code imposes special limitations on how and when the IRS may conduct civil tax inquiries and examinations of churches. The IRS may only initiate a church tax inquiry if the Director, Exempt Organizations, Examinations reasonably believes, based on a written statement of the facts and circumstances, that the organization: (a) may not qualify for the exemption; or (b) may not be paying tax on an unrelated business or other taxable activity.