So, the first thing to consider is your relationship with the person. In the end, the question about what to do becomes more about how well you know them. If you don’t know them well, then this is one of those situations where your job is to pray and leave the rest to God, unless they specifically ask you.
However, if you know this couple well, this is a perfect opportunity to share with them, in love, your concerns. Start by asking questions; you and I are assuming that there is sexual activity in their relationship. There is a possibility (though I confess it is slim) that they are living as brother and sister after having discussed it with their spiritual leaders. If that is not the case, you can gently let them know how you feel they are damaging their souls. If it is a money issue, perhaps you can offer to help. Share your experience of marriage and commitment and how living together can undermine that.
In terms of the pastor, he really can’t do much about the couple living together. Canon law is pretty strict concerning a person’s right to a good reputation, and if someone is denied Communion, a lot of folks will ask why. The guideline we were given at seminary was that the sin must be public, persistent and grave in order for us to deny Communion. It is also extremely prudent for the priest to check with his bishop before doing such a thing.
It is always going to be a balancing act for us Christians – keeping an eye on our own sinfulness is a substantial enough job; adding the weight of other people’s sins can be too much. We do run the risk of coming across as self-righteous, and in fact, we run the risk of actually becoming self-righteous. It is important that we pray for God to guide us, and that we balance confrontation, encouragement and self-knowledge.
– Fr. Joseph Krupp