GAY MARRIAGE BACKERS SEEK CHURCH PROBE; MORMONS TARGETED FOR FUNDING MEASURE.

Byline: Jordan Lite Associated Press 

Some politicians here are trying to get the Mormon church into tax trouble over a fund-raising drive that has helped give a 4-1 cash advantage to a ballot initiative prohibiting gay marriage in California.

The Church of Jesus Christ of Latter-day Saints makes no apologies for urging its members to support the March 2000 ballot measure, authored by state Sen. William J. ``Pete'' Knight, R-Palmdale, which would prevent the state from recognizing gay marriages performed outside California.

Outraged by what they see as an abuse of the church's tax-exempt status, San Francisco supervisors this week asked the IRS to investigate whether the Mormons are breaking federal law prohibiting them from certain political activities.

IRS rules prohibit religious organizations from engaging in ``substantial'' political activity without endangering their tax-exempt status - a requirement that recently forced the Christian Coalition to split into two.

``We need to have a fair and honest debate,'' Supervisor Mark Leno said. ``We can't do that if large sums of tax deductible dollars . . . have involved themselves in a political campaign and completely overrun the entire ballot process.''

``Nonsense,'' Michael Otterson, a spokesman for the Mormon church, said Wednesday.

The Mormons aren't the only religious group supporting the initiative, and the tax laws apply equally to all of them, Otterson said. ``We're not going to have this diverted into an LDS issue,'' he said, and declined further comment.

The IRS can't comment on whether the agency agreed to investigate the Mormon church, said Larry Wright, an agency spokesman in Oakland.

This is the second effort by Knight, a Palmdale Republican whose district includes Santa Clarita, to ban state recognition of gay marriages.

The last was made at the legislative level and failed.

Many religious conservatives fear that if gay marriages are allowed in one state, others would have to recognize their validity. Twenty-nine states have banned gay marriage.

By law, California only issues marriage licenses to heterosexual couples.

The church mounted similar campaigns last year in Hawaii and Alaska that helped pass measures banning gays and lesbians from marrying there.

In Hawaii, the money funded a bombardment of TV ads that ``preyed on the most insidious emotions,'' said David Smith, who oversaw the failed campaign to defeat the measure.

In May, three Mormon church presidents asked California church leaders in a letter to urge their members ``to do all you can by donating your means and time to assure a successful vote.''

Later that month, a second letter from a church elder, also on church letterhead, explained that the donations should not be solicited on church grounds or during church meetings, and that they should not use church stationery.

The only church money spent on the campaign was $50 in postage to send the two letters - the same sort of expenditures made by Roman Catholic and Protestant churches supporting the Protection of Marriage Initiative, said its campaign manager, Rob Stutzman.

Fred Rothman, an attorney and certified public accountant at Loeb & Trouber in New York, said the church probably is in the clear.

The Mormons could run into trouble, he said, if church leaders advocate for or against a particular candidate, use a substantial portion of their tax-deductible funds for political activities, or ask that donations be made directly to the church to support the measure - actions the church says it has avoided.

``A ballot issue would absolutely fall into the category of lobbying as opposed to political intervention,'' Rothman said.

But, he said, ``The grayness gets even grayer in terms of where you draw the line.

It's not easy. It's not a slam dunk in all cases.''

Any IRS decision would hinge on the word ``substantial,'' which the tax code left undefined, Wright explained Thursday.

``What is substantial? Ten percent, 20 percent, what?'' Wright said. ``We have to make a decision based on the specific situation . . . and there are a lot of different ways to measure activity: one is money, one is physical effort, one is use of assets of the exempt organization.

``But once you reach a point where that activity reaches a substantial part of the overall activity, you've violated the tax-exempt rules.''

This summer, the Christian Coalition created a separate political action committee to endorse candidates and collect political contributions in an effort to keep tax-exempt status for its core ``voter education'' functions. And earlier this year, the IRS revoked the tax-exempt status of a church in New York state that ran newspaper ads against President Clinton in 1992.

It's unclear how much money California Mormons have contributed to the campaign, because disclosure reports don't require donors to state their religion. As of June 30, the initiative group had raised about $840,000. Another report is scheduled for release on Tuesday.

That gives Knight's initiative an almost 4-to-1 early fund-raising advantage over the ``No on the Knight'' effort.

Three polls earlier this year showed more Californians would vote for the measure than against it. Gay rights advocates expect to spend $10 million in an uphill battle to urge Californians to change their minds.

Stutzman said his group will match them ``dollar for dollar.''