Does 1st Amendment Put Churches Out of Range?

Local prosperity gospeleer Mac Hammond and his Living Word Christian Center (LWCC) are in court for resisting an IRS summons that demanded the church provide it with detailed financial information. Hammond and his lawyers argue "the case is about the First Amendment, separation of church and state and the reach of the government into the actions of religious organizations."

About the same time Hammond was getting the IRS order last March, his mentor Kenneth Copeland was asking the IRS to audit his ministry.

Copeland's ministry had resisted a request for financial information from Sen. Charles Grassley's Senate Finance subcommittee, which was investigating whether high-profile televangelists were taking advantage of their tax exemptions to operate related business entities and enrich the leaders. Copeland took the position that the information should come from the IRS, and in April, he made his show of requesting an IRS audit.

That's a sly PR move, since requesting an audit doesn't mean you'll be audited. Most observers might conclude that meant Copeland had nothing to hide, and he only wanted Grassley "to follow the law" and protect the church's First Amendment rights.

The IRS can only enforce existing law, and unless it finds illegality, the results of its investigation won't be public. Grassley says his committee is not looking to enforce the tax laws, it's trying to determine

whether the law should be changed, such as prohibiting tax-exempt organizations to compare themselves to for-profit corporations when determining reasonable compensation for their executives. Specifically, with respect to churches, I am interested in the lack of information reported to the IRS on transactions with related entities as well as activities overseas. These are things a regular charity has to report on its 990 but a church is exempt from filing. I also wonder whether it makes sense for ministers to completely exclude from income the parsonage and housing allowance they receive. When these exclusions were provided, I doubt that Congress contemplated that a minister would have multiple parsonages across the country and overseas or that a church would deem the majority of its employees "ministers" so that everyone could get these benefits. It is the role of Congress – not the IRS – to consider these questions.

Should an actual audit come, however, Copeland's "bring it on" tactic may change, if Hammond's response is any indication. (Hammond serves on Copeland's Board and Copeland's son John serves on Hammond's. Any investigation uncovering abuse in one ministry could implicate the directors and lead to more scrutiny of how they run their own affairs.)

I'm reminded of a scene from Lonesome Dove in which some bad guys with a buffalo rifle have Gus McRae pinned down. They think they're out of range from his smaller bore rifle, so one genius stands up and does a mocking chicken walk...

Hammond's case is being handled by Walter Pickhardt [the Strib story typos the spelling], the head of Faegre & Benson's tax practice. The legal team also includes Amy Rotenberg, a former VP at PR firm Padilla Spear Beardsley, who heads a firm that provides "strategic communications counsel."

It remains to be seen whether Copeland's and Hammond's respective dances will keep them out of range.

Comments

[Sherry]

They are not out of range. The burden of proof is on the taxpayer, or in this case the entity claiming exemption from paying tax, not on the IRS. If they do not respond they will just be given an extremely large bill. (From both the IRS and their lawyers.)