The LA Times reports that All Saints Episcopal Church in Pasadena, California has announced that the Internal Revenue Service (IRS) investigation which began June 2005 has now been closed. The IRS will not revoke the church's tax-exempt status because of a 2004 anti-war, anti-poverty sermon delivered by its former pastor Rev. George F. Regas on the Sunday before the 2004 presidential election, despite the IRS determination that "the Church intervened in the 2004 Presidential election campaign." The letter the IRS sent to All Saints says; "We note 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."

The church has now asked the Treasury Department to investigate if the investigation was politically motivated and whether officials from the Justice Department had become involved in the matter.

The All Saints press release states; "Synagogues, mosques, and churches across America have no more guidance about how the IRS rules now than when we started this process over two long years ago. The impact of the letter leaves a chilling effect cast over the freedom of America's pulpits to preach core moral values. We have no choice but to demand clarification on this matter with the IRS."

BNA Money and Politics ($$) describes the investigation as, "a test case for freedom of the pulpit and a focal point of the debate over free speech in churches."