The surprise came in what followed.

First, the Internal Revenue Service began investigating whether All Saints, one of the largest Episcopal churches in the country, violated the prohibition against tax-exempt organizations intervening in election campaigns by supporting or opposing candidates. The church, which characterizes Regas' sermon as merely a discussion of moral values, found itself in the middle of a potentially expensive legal battle.

Then something even worse happened, at least in the eyes of some of the church's defenders: Some of the very people Regas excoriated took up the church's cause, saying its plight demonstrated why Congress ought to eliminate restrictions on the political activities of churches and other nonprofit organizations.

"This is absolutely an infringement on free speech in our houses of worship," Rep. Walter Jones Jr., R-N.C., a religious conservative, said.

Jones, who has backed the Iraq war and opposes abortion, accused the IRS of trying to intimidate churches with the investigation -- though he says he agrees with none of Regas' positions -- and said the simple solution is having Congress pass a bill he has sponsored, the Houses of Worship Free Speech Restoration Act. The bill, which has languished in committee for three years, would remove most of the restrictions on political involvement by the tax-exempt organizations.

Other prominent religious conservatives, such as Richard Land, a senior official with the Southern Baptist Convention, also have supported All Saints.

"I disagree with about 99 percent of what he said in the sermon, but I support his right to say it," said Land, who said he would favor the IRS dropping the political activities prohibition. "The investigation is an unwarranted intrusion on an assembly of believers. Even if you accept the current regulation, the minister did not endorse a candidate."

All Saints, arguing that the investigation is unlawful, has refused the IRS' demand that it turn over voluminous records on its discussions and activities related to the sermon.

Marcus Owens, the church's attorney and a former head of the IRS division that is conducting the investigation, suggested the dispute might turn into the test case that forces the agency to clarify or change a notoriously fuzzy regulation.

"I think the law is unconstitutional and too subjective," Owens said.

But many at the church and in the liberal religious community chafe at the prospect of killing outright the law prohibiting direct political activity by churches and other nonprofit organizations. They say it would play into the hands of conservative religious organizations that have explicit political agendas, zealous followers and lots of money.

"We are fighting this battle on the narrow grounds that the sermon did not cross the line," said Bob Long, the senior warden -- in effect, the elected head -- of All Saints, which has a congregation of about 3,500.

"It's sad that they're picking on us, because we really respect the IRS regulations. It's a wise policy that churches like ours should not endorse candidates, and we don't want the law changed," he said.

Bob Edgar, a retired Democratic representative from Pennsylvania who is general secretary of the National Council of Churches, said the investigation of All Saints feels to him like an attempt to scare churches away from expressing moral views on political issues, and he argued that many conservative churches are far more blatant in their efforts to sway voters.

But he was adamant that the members of his organization would fight any erosion of the law banning direct political endorsements by churches.

"We believe in the separation of church and state, and this should not be used to let these groups break that down," Edgar said.

The tax law, which prevents so-called direct political intervention by tax-exempt organizations, known as 501(c)(3)s, was first introduced as a little-noticed amendment in 1954 by then-Sen. Lyndon Johnson, D-Texas, who wanted to stop what he considered inappropriate personal attacks against him by some nonprofit groups in his home state.

The rule states that the tax-exempt organizations, such as churches, charities and other nonprofit concerns, "are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office." That includes endorsing political candidates, making financial contributions to political campaigns, or directly getting involved in support of campaigns.

An important court test of the law came after the 1992 presidential campaign, during which an organization called the Church at Pierce Creek, or Branch Ministries, paid for full-page ads in the Washington Times and USA Today opposing the Democratic candidate, Bill Clinton. The ads said Clinton was violating God's laws by supporting abortion on demand, homosexuality and free distribution of condoms in high schools. An appeals court upheld the IRS' revocation of the church's tax-exempt status.

In the All Saints case, there was no explicit endorsement, or rejection, of a candidate. The IRS had to infer a political bias to bring a case, say the agency's critics, who contend that such a conclusion was unwarranted.

Jesse Weller, an IRS spokesman, said the agency will not comment on any case under investigation.

All Saints has long been firm in its support of liberal positions, going back to World War II, when it protested the internment of Japanese Americans. It opposed the Vietnam War, is against the death penalty, and supports abortion rights and same-sex marriage.

In his sermon on Oct. 31, 2004, Regas began by insisting that he was not urging the congregation to vote one way or another. The talk was presented instead as a conversation in which Jesus addressed the presidential candidates, incumbent George W. Bush and Sen. John Kerry.

Citing Jesus' teachings, Regas denounced a range of Bush administration policies, especially the Iraq war, which he characterized as an act of terrorism. "The sin at the heart of this war against Iraq is your belief that an American life is of more value than an Iraqi life," he said.

Regas called Bush's plan to build more nuclear warheads morally indefensible, and he blamed Bush's tax cuts for widening the gap between rich and poor.

"All of that would break Jesus' heart," he said.

"Prophetic Christianity has lost its voice," Regas complained. "The religious right has drowned out everyone else."

The church received a notice from the IRS on June 9, 2005, warning that the sermon might have violated the regulation, and earlier this year the agency sent a letter demanding a range of documents on the church's planning for the Regas sermon and any discussions about its content.

Owens said that, originally, the IRS offered a deal to All Saints under which it would drop the investigation if the church acknowledged it had violated the rule and promised not to do so again.

"We said no. That would involve a rejection of their core beliefs, and they weren't going to do that," Owens said.

Some members of the church said they were concerned about the potential cost and notoriety of the battle, but were not willing to accept infringements on their right to debate important political issues.

"I'd be the first to acknowledge that this sermon got pretty close to the line," Long said. "But this is one sermon. Frankly, it's pretty alarming that they would use one sermon to revoke the tax-exempt status."

Jones, the North Carolina congressman, called the case the best evidence why the law should be scrapped altogether.

"I'm sorry that this is happening to All Saints Church, but it's probably helpful to us," Jones said. Churches and the law

The law governing the political activities of churches and other 501(c)(3)s can be vague, with few bright lines distinguishing acceptable from unacceptable speech.

Churches can't openly campaign for or against candidates, for example, but they can hold voter registration drives. The Internal Revenue Service says the law is not intended to prevent open debate or education on political issues. But political comments can be a problem, especially if they come too close to an election. The IRS does not specify when is too close, though. Some educational comments, it says, can also cross the line, but the line, again, is not specified.

At times, even political endorsements are allowed if the minister makes clear they are personal opinions, rather than the view of the church, but sometimes those personal endorsements can cross the line, depending on where or when they are made. Similarly, a church can lobby for or against specific bills or laws, but sometimes this, too, can cross the line.

"This is just very subjective, and we would like to see the standard clarified," said Marcus Owens, the attorney for All Saints Episcopal Church, who won a similar battle against the IRS when it tried to investigate the NAACP, a tax-exempt organization, for a speech by its chairman in 2004 that was critical of some Bush administration policies.

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