In a decision kept secret since last year pending the results of an appeal, the IRS has ruled that the Christian Coalition is not entitled to tax-exempt status, reports CBS News Correspondent Christopher Glenn.
The ruling will force the once-vaunted political powerhouse to split into two entities and be "dramatically reshaped," officials close to the group said Thursday.
Mike Russell, spokesman for the organization, would not confirm the IRS ruling first reported by the St. Petersburg Times, but said the organization planned massive changes, forming a Christian Coalition International to engage in partisan activity. He said the group will be more effective than ever at influencing the political debate.
"The new Christian Coalition International will operate much like a for-profit corporation allowed to engage in partisan activity, endorse candidates, give candidate contributions," he said.
He said the new entity could form a political action committee, and would open chapters overseas.
"[The organization is] going to remain a permanent fixture on the political landscape and it's going to do what it's been doing for the past ten years," Russell said.
The IRS had ruled that certain Christian Coalition activities were too partisan for the group to enjoy tax-exempt status.
Russell said the Christian Coalition of Texas, which is currently a tax-exempt group, will be renamed Christian Coalition of America and will limit its activity to nonprofit "voter education."
"After 10 years of fruitless negotiations with the IRS, the Christian Coalition board of directors has decided to withdraw its application for tax-exempt status, and create two new separate organizations," Russell said.
However, the sources said the coalition withdrew its application only after it was clear the IRS would deny it.
"The organization has been dramatically reshaped but its mission statement remains intact and it will continue to do the things it has been doing since it formed, which is recruit pro-family activists, draw people to the polls in record numbers for elections and educate," Russell said.
"Christian Coalition of America will continue to be a force in American politics and will remain a prominent fixture on the political landscape as the nation's number one pro-family, pro-life organization," said Pat Robertson, the group's founder and president.
The IRS decision is a major blow to a lobbying group already waning in influence and experiencing dips in fund-raising. Other religous-focused groups, such as the Family Research Council, hope to emerge as the next powerhouse of the Republican right wing.
Russell said the developments actually increases the group's political might.
"The organization has broadened its ability ... to weight in on political fronts that it's never been able to do before," he said.
The move ends months of internal debate at the coalition. Some advisers to Robertson had urged him last year to form a for-profit political organizations but he balked.
One of those advisers, speaking on condition of anonymity, said the faction had been concerned that losing the IRS appeal would hurt the group's reputation among social conservatives who expected the coalition to abide by the letter and the spirit of the law.
The ruling comes as Robertson has made several moves to assume more authority over the group, including moving executive director Randy Tate from the Chesapeake, Va., headquarters to Washington.
Barry Lynn, a longtime critic of the coalition, said the political implications are enormous.
"The Christian Coalition is a hardball political machine that is masquerading as a religious group. The evidence is overwhelming that this organization has been operating as virtually an arm of the Republican Party," said Lynn, executive director of Americans United for Separation of Church and State.