A church is demanding a correction and an apology from the Internal Revenue Service after the IRS closed a two-year examination of its tax-exempt status that had been prompted by a guest sermon delivered on the eve of the 2004 presidential election.

The IRS began investigating All Saints Church of Pasadena, Calif., after it featured a sermon titled "If Jesus Debated President Bush and Senator Kerry" by the church's rector emeritus, Rev. Dr. George F. Regas, on Oct. 31, 2004. The following June, the IRS informed the church that it was being investigated for violating its nonprofit status by intervening in a political campaign. Earlier this month, the IRS told the church that it would be allowed to retain its tax-exempt status, even though there had been a violation.

"Based on the existing record, the church's actions lead us to the conclusion that the church intervened in the 2004 presidential election," said the letter from Marsha A. Ramirez, director of exempt organization examinations, at the IRS. "We note that this appears to be a one-time occurrence and that you have policies in place to ensure that the church complies with the prohibition against intervention in campaigns for public office."

However, All Saints' rector, Rev. J. Edwin Bacon Jr., is concerned about the involvement of Justice Department personnel in the case and is demanding a clarification from the IRS. "This letter is impossible to interpret, and I for one am left wondering whether we will be investigated again the next time I am called to preach about the war, poverty or any other social and moral issues," he said in a statement.

He complained that his church and other houses of worship still needed guidance from the IRS on the rules. In response, the IRS highlighted information in its online newsroom about the ban on political campaign activity by charities and churches.

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