Senator Grassley and the churches

[Famspear]

A leading U.S. Senator inquires about the churches –-

From: Associated Press
Yahoo News

http://news.yahoo.com/s/ap/20071107/ap_ ... FjpatK2ocA

on 6 November 2007

(excerpted, without immediate comment):

Grassley probes televangelists' finances

By JUSTIN JUOZAPAVICIUS, Associated Press Writer

Acting on tips about preachers who ride in Rolls Royces and have purportedly paid $30,000 for a conference table, the top Republican on the Senate Finance Committee said Tuesday he's investigating the finances of six well-known TV ministers.

Sen. Chuck Grassley of Iowa said those under scrutiny include faith healer Benny Hinn, Georgia megachurch pastor Creflo Dollar and one of the nation's best known female preachers, Joyce Meyer.

Grassley sent letters to the half-dozen Christian media ministries earlier this week requesting answers by Dec. 6 about their expenses, executive compensation and amenities, including use of fancy cars and private jets.

In a statement, Grassley said he was acting on complaints from the public and news coverage of the organizations.

"The allegations involve governing boards that aren't independent and allow generous salaries and housing allowances and amenities such as private jets and Rolls Royces," Grassley said.

"I don't want to conclude that there's a problem, but I have an obligation to donors and the taxpayers to find out more. People who donated should have their money spent as intended and in adherence with the tax code."

Those ministries that responded Tuesday either said they were cooperating or committed to financial transparency and following the law.

[ . . . ]

Grassley's letters went to:

• Kenneth and Gloria Copeland of Kenneth Copeland Ministries of Newark, Texas, a $20 million organization and prosperity gospel pioneer. Questions were raised about the transfer of church assets to a for-profit company, Security Patrol Inc., a $1 million loan from Gloria Copeland to the group, and a "personal gift" of more than $2 million given to Kenneth Copeland to mark the ministry's 40th anniversary.

A Copeland spokeswoman released a statement saying the ministry is working on a response to Grassley's letter, follows all laws and best practices governing churches and religious nonprofit groups, and "will continue to do so."

• Creflo and Taffi Dollar of World Changers Church International and Creflo Dollar Ministries of College Park, Ga. [ . . . ]

• Benny Hinn of World Healing Center Church Inc. and Benny Hinn Ministries of Grapevine, Texas, is asked about use of a private jet, a home in Dana Point, Calif. and "layover trips" while traveling on ministry business. Hinn did not respond to requests for comment.

• Bishop Eddie Long of New Birth Missionary Baptist Church and Bishop Eddie Long Ministries of Lithonia, Ga., was questioned about his salary, a $1.4 million real estate transaction and whether he, and not the board, holds sole authority over the organization. Long plans to fully comply with the Senate's request, and his church has "several safeguards" to ensure transactions comply with laws governing churches, according to a statement from Long's spokesman.

• Joyce and David Meyer of Joyce Meyer Ministries of Fenton, Mo., who were quizzed about receiving donations of money and jewelry and the handling of cash from overseas crusades. They also were asked about expenditures at ministry headquarters, including a $30,000 conference table and a $23,000 "commode with marble top."

The ministry's lawyer released a statement describing the ministry's work and public release of several years' worth of audits. He also said the IRS found in October that the group continues to qualify for tax-exempt status.

• Randy and Paula White of the multiracial Without Walls International Church and Paula White Ministries of Tampa, Fla.

[ . . . ]

In a statement, Randy and Paula White declined to comment on specifics, saying they needed time to review the letter with their lawyers. But the Whites called the Grassley letter "unusual, since the IRS has separate powers to investigate religious organizations if they think it's necessary."

[ . . . ]

The Senate Finance Committee has chided secular nonprofits for governance and compensation problems in the past, but this level of scrutiny for what are basically "non-pulpit churches" is unprecedented, said Ken Behr, president of the Evangelical Council for Financial Accountability.

Because the groups have tax status as churches, they are not required to file tax forms open to public inspection.

[bolding added by Famspear]

[grixit]

After the series of scandals that went through the tv preacher community some years back, an organization called Evangelicals for Financial Accountability (or something like that) was formed. It's a voluntary operation whose member ministries are supposed to produce SEC type reports which are then made available to the general public. But i haven't heard anything about it in years other than a few reports of preachers who've quietly pulled out.

[Cpt Banjo]

But the Whites called the Grassley letter "unusual, since the IRS has separate powers to investigate religious organizations if they think it's necessary."

Uh huh, just like it investigated the Scientologists?

Go get 'em, Grassley!

[grixit]

Ok, my memory was worse than i thought.

It's actually the Evangelical Council for Financial Accountability, http://ecfa.org

[Nikki]

Brace yourselves for a LONG read. The following is one (selected at random with no intent to make ANY judgement on the merits of the church involved) of the six letters Grassley sent out.

Can everyone spell FISHING?
Does Grassley even have the legal authority to enforce these requests -- little things like the 1st Amendment considered?

Kenneth and Gloria Copeland
Kenneth Copeland Ministries
14355 Morris Dido Road
Newark, TX 76071

Dear Mr. and Mrs. Copeland:
The Finance Committee has a long tradition of reviewing tax-exempt organizations. It is important that the Congress and the public have confidence that public charities, which benefit from very significant tax breaks, are operated in a manner that promotes continued trust and that they adhere to guidelines established by the Internal Revenue Service. In addition, every donor has the right to know how each dollar donated is spent. The American public has a long tradition of giving to many religious organizations and for that reason should be assured that all donations are being used for the tax exempt purpose of the organization.

Recent television reports and new articles regarding the possible misuse of donations made to religious organizations have caused some concern for the Finance Committee. Since your organization is not required to File Form 990 with the Internal Revenue Service, we are requesting you answer the following questions and provide the following information for our review.

Please provide the requested information on searchable disks or electronically by December 6, 2007.

General

1. The audited financial statements for Eagle Mountain International Church (EMIC), Kenneth Copeland Ministries (KCM) and any other non-profit entities organized by the Copelands, including, but not limited to, Pitcherman, Inc. for years 2004, 2005 and 2006.
2. The names of all integrated auxiliaries of EMIC.

3. The names and addresses of members of the EMIC and KCM board of directors for years 2004 to present and an explanation of their relationship to Kenneth and Gloria Copeland.

4. Names and addresses of EMIC and KCM compensation committee members for years 2004 to present and an explanation of their relationship to Kenneth and Gloria Copeland.

5. The dates and locations of all board meetings for EMIC and KCM and the names of the persons in attendance from 2003 to present. Provide the total cost associated with conducting each meeting, including, but not limited to, lodging, meals, travel, entertainment and any extracurricular activities.

Executive Compensation

1. A detailed explanation of the compensation paid by EMIC and KCM to Kenneth Copeland, Gloria Copeland and John Copeland, including, but not limited to, cash and non-cash gifts, housing allowances (to include a detailed break-down of expenses paid to maintain housing) and loans (including the terms of the loans and a schedule of repayment) for years 2004 to present.

2. A detailed explanation of the personal use of assets of the tax-exempt organization (i.e. jets, employees, facilities) and an accounting of any repayments made to the tax-exempt entity for the personal use of stated assets for years 2004 to present.

3. Any other payments to Kenneth Copeland, Gloria Copeland and John Copeland including all cash or cash equivalent excluded from income reported to the IRS on Form W-2 or Form 1099 for years 2004 through 2006.

4. A detailed accounting of total housing allowances paid by EMIC, KCM and any other related tax-exempt entity for the purpose of providing housing for Kenneth Copeland, Gloria Copeland, John Copeland and any other related persons for years 2003 to present.

5. A detailed accounting of the total monthly expenses to maintain the personal residence of Kenneth and Gloria Copeland for years 2003 to present. A detailed accounting of all expenses paid by EMIC and KCM to purchase, furnish and maintain all residences used by Kenneth Copeland and Gloria Copeland including, but not limited to, the property located at 6000 Indian Creek in Tarrant County Texas.

6. Credit card statements for all credit cards used by Kenneth Copeland, Gloria Copeland and John Copeland for years 2004 to present for expenses paid by EMIC and KCM. An explanation of all credit card expenses paid by the organization on behalf of Kenneth and Gloria Copeland for years 2004 to present.

7. A detailed accounting of all expense account items for Kenneth Copeland, Gloria Copeland and John Copeland for years 2004 to present.

8. A list of all vehicles (Year, Make and Model) purchased, leased or maintained by EMIC, KCM, or any other tax-exempt entity for the benefit of Kenneth Copeland, Gloria Copeland, John Copeland and any other related person. A detailed accounting of the yearly expense to purchase and maintain each vehicle for years 2000 to present. This accounting should also include date(s) of purchase, purchase amount(s), date(s) of disposition and an explanation of the disposition.

Real and Personal Assets

1. A list of all domestic and overseas bank accounts and investments of EMIC, KCM, and any of its integrated auxiliaries and related tax-exempt entities for years 2004 to present.

2. A list of all real property purchased by EMIC and KCM from ministry inception to present, including the square footage and tax-exempt purpose of each property.

3. Has any of the land or assets tied to the land that was deeded to the church from the estate of Paul H. Pewitt been transferred, conveyed, gifted or otherwise placed in the control or possession of any other entity or person? If so, who, when, for what amount and for what purpose? Provide the names and addresses of all person(s) who made to the decision to relinquish control of the real property.

4. A copy of all mineral leases and division orders related to any portion of land originally deeded to the church by the estate of Paul H. Pewitt.

5. A list of all real property owned or purchased by EMIC, KCM or any related entity, including the square footage and tax-exempt purpose of each property from ministry inception to present.

6. Provide detailed information (Year, Make, Model and Number) of any aircraft owned, used or leased by EMIC, KCM or any related or integrated auxiliary, including amounts paid for the purchase and/ or lease of the aircraft and all maintenance expenses from 2004 to present. Copies of the flight records of any aircraft owned, used or leased by EMIC, KCM or any related or integrated auxiliary from 2004 to present. Copies of Kenneth and Gloria Copeland's itinerary from 2004 to present.

7. On December 15, 1997, EMIC caused the formation of the for-profit company, Security Petrol, Inc. (SPI) by contributing cash and a mineral deed to SPI. This deed caused the 100 percent interest in oil, gas and other minerals once belonging to the church to capitalize this for-profit corporation. Provide the names and addresses of the persons who authorized this use of the church's assets. Provide the value of the mineral deed at the date of this transaction. Provide the amount of cash that was used to form SPI and the original source of this cash. Does Kenneth Copeland, Gloria Copeland or any related parties, officers of EMIC or KCM, or board members of EMIC or KCM currently have any interest in Security Petrol, Inc. or any related subsidiaries? Who are (were) the officers of SPI?

Other

1. Provide a copy of all employment agreements between Kenneth Copeland and EMIC in effect from 2000 to present. Provide a copy of all employment agreements between Gloria Copeland and EMIC in effect from 2000 to present.

2. A detailed list of all cash and/or non-cash payments received by each board and compensation committee member for years 2002 to present. Copies of Form 1099 or Form W-2 issued to these persons.

3. Provide an explanation of the relationship between EMIC, KCM, Kenneth Copeland, Gloria Copeland, John Copeland and the following entities: Pitcherman, Inc., Integrity Media, Inc., Security Petrol, Inc., Victory Eagle Utility Service Y, Inc., Victory Eagle Marketing and Distribution Z, Inc. Provide the names and addresses of the officers of the above-mentioned corporations and each officer's relationship, if any, to Kenneth and/or Gloria Copeland.

4. A list of all for-profit companies operating on the real property of EMIC and the officers of each for-profit. Identify all officers related to or affiliated with Kenneth and Gloria Copeland.

5. El Rancho Fe is a for-profit working ranch owned by Kenneth and John Copeland. Is any of the property used by El Rancho Fe the same property deeded to the church by the estate of Paul H. Pewitt? If so, how is the church compensated for use of this asset and in what amounts for tax years 2002 to present? Who approved the use of this asset? If the Board of Directors approved, provide the names and addresses of the board members.

6. The written contract between Kenneth Copeland and EMIC d/b/a KCM regarding the publishing of his works. If there is no written contract, but a verbal agreement exists, provide the date and the persons who were part of that verbal agreement, the terms of the agreement and the amount to be paid to Kenneth Copeland.

7. The written contract between Gloria Copeland and EMIC d/b/a KCM regarding the publishing of her works. If there is no written contract, but a verbal agreement exists, provide the date and the persons who were part of that verbal agreement, the terms of the agreement and the amount to be paid to Gloria Copeland.

8. The name and address of the person and/or company that prints, audio records and video records Kenneth and Gloria Copeland's material? The name and address of the person and/or company that owns the titles, copyrights, royalties or similar interests in sermons, videotapes, books, CDs, DVDs, or other materials prepared by EMIC and/or KCM. Are any of the ministry's paid employees involved in the printing, publishing, recording and distribution of the books, videotapes, CDs, or DVDs?

9. The names and addresses of the persons who decide how the funds of EMIC and KCM are spent. Are these decisions, both operational and financial, subject to the oversight by any body within the organization? If so, is this body elected or appointed? If appointed, by whom and on what basis are the members of the body appointed? Who has voting rights within EMIC and KCM? How often does the board meet? Provide copies of all board meeting minutes for years 2004 through 2006.

10. Provide a detailed list of all entities operated by related parties that received payment from EMIC and/or KCM. Provide a detailed list of all persons related to Kenneth and Gloria Copeland that received any form of payment or benefit from EMIC or KCM for years 2004 to present.

11. For years 2004 through 2006, provide a detailed list of all payments, including any honorariums and love offerings, paid to visiting ministers, musicians or guests. Include the name and address(es) of each person and copies of Forms 1099 that were issued.

12. In January of 2004, Attorney Dennis G. Brewer, Sr., advised EMIC d/b/a/ KCM that based on proposed IRS amendments, the compensation committee could not have any disqualified person, board member, or other person that depends on the ministry for remuneration on the committee. Did KCM follow the advice of counsel? When? Who was present when these decisions were made? What steps were taken? Did any members of the compensation committee receive payment, cash or non-cash, from January 31, 2004 to present? If so, who and in what amounts?

13. According to documents provided to the Finance Committee, in November 2000, EMIC borrowed $1,000,000 from Gloria Copeland for operation of ministry affairs. In 2002, the EMIC board of directors executed a replacement promissory-note in the amount of $1,083,407.29. Provide the committee with copies of the executed notes and a copy of the board meeting minutes for each date, an explanation of the loan distribution including the original source of the loan (i.e. personal check, cashier's check, wire transfer), names and addresses of the board members present at each meeting and a breakdown of the loan repayments to Gloria Copeland since the inception of the original note. Also explain why the church borrowed money from Gloria Copeland when it owns assets in excess of $20 million dollars.

14. KCM solicited donations through brochures to ministry partners to build "The Revival Capital of the World." This project was to include ministry facilities, a headquarters, a resort hotel, a radio and television center, a kingdom park and a retirement community called Wisdom Heights. What is the current building status of "The Revival Capital of the World?" What is the status of the donations given for this project? Are the funds being held apart from other ministry donations? Have donors been given an update or status report for the ministry project? Is there a relationship between "The Revival Capital of the World" and the land currently being used for El Rancho Fe a/k/a Copeland Cattle Company?

15. The names of all affiliated churches/ministries that have made personal donations and/or gifts to Kenneth and/or Gloria Copeland in years 2004 to present and the amount of each gift or donation. If the donation or gift was a non-cash item, provide a list of the donations/gifts.

16. The names and addresses of speakers paid for their participation in any conferences sponsored by EMIC and/or KCM for years 2004 through 2006. A list of amounts paid to each speaker and copies of Form 1099 issued.

17. Detailed list of all the donations/gifts made to other ministers, ministries/churches from EMIC and KCM, to include the name of each recipient, address and amount of each donation/gift for years 2004 to present.

18. Copies of executive compensation recommendations received by Kenneth and Gloria Copeland and the name and address of any person who provided recommendations.

19. Explain the procedures for handling cash received during crusades, meetings or conferences held outside of the United States, including if bank deposits are made prior to returning to the United States.

20. It has been reported to the committee that in October 2006, the Copelands used the ministry jet for layovers in Maui, the Fiji Islands and Honolulu. Provide an explanation of the tax-exempt purpose of each layover and the names and addresses all ministry personnel who were part of these layovers. Provide a detailed accounting of the cost of each layover to the ministry, including, but not limited to, salary expenses, housing, food, jet fuel, incidentals and any extra curricular activities. What entity paid for these expenses? Who authorized the payment of these expenses?

21. In December 2006, the Copelands used the ministry' jet for trips to Yampa Valley, CO, and the La Fonda Ranch in South Texas. Provide an explanation of the tax-exempt purpose of each trip, the names and addresses of the persons who were part of each trip and the hotel where personnel stayed. Provide a detailed accounting of the cost of each trip, including, but not limited to, salaries, housing, food, jet fuel, incidentals and any extra curricular activities. Which entity paid for these expenses? Who authorized the payment of these expenses?

22. It has been reported to the Finance Committee from several independent sources that in celebration of KCM's 40th anniversary, there was a gathering of ministers from all over the country. It has further been reported that during this celebration, Kenneth Copeland was presented a "personal gift" in excess of $2 million. Please provide the names and addresses of all ministers present at this celebration and the total amount received by the Copelands.

Thank you for your time and attention to this matter.
Sincerely,

Charles Grassley
Ranking Member
United States Senate
Washington D.C.

CC:
The Honorable Max Baucus
Chairman
U.S. Senate Committee on Finance

[Demosthenes]

The First Amendment prevents a Senator on the Senate Finance Committee (and IRS Oversight Subcommittee) from determing whether a for profit entity is hiding under a tax exempt blankie?

Fraud and tax cheating under the cover of religion is still fraud and tax cheating.

[wserra]

Can everyone spell FISHING?

Yes. More fishing of this type is in order.

Does Grassley even have the legal authority to enforce these requests

An individual senator does not have subpoena power. However, a (ahem) "charity" such as these might well feel that ignoring such a request would be hazardous to its tax exemption.

little things like the 1st Amendment considered?

What does the First Amendment have to do with qualifying for a tax break - in other words, making the rest of us help finance their operation? A "church" can make its pastor a millionaire for all I care - but not on my dime.

[Imalawman]

The First Amendment prevents a Senator on the Senate Finance Committee (and IRS Oversight Subcommittee) from determing whether a for profit entity is hiding under a tax exempt blankie?

Fraud and tax cheating under the cover of religion is still fraud and tax cheating.

For this reason, many pastors and churches are considering moving away from exempt status. If they want to be free from government interference, then they shouldn't rely on the Government to finance their operations. I'm split on the issue myself. On one hand, the tax exemptions really do help smaller churches that I've been a member of in the past. (including my father's until he retired). But on the other hand, I don't think megachurches and these faux churches really need or deserve non-profit status.

My proposed solution would be to cap the level at which ANY entity can be a non-profit organization. I think when operating budgets get into the tens of millions of dollars, they should not be allowed the benefits of being a non-profit. But, I know that would take a drastic re-writing of 501 and the regs, as well as enforcement problems. And you know that non-profits would split up to avoid hitting the cap, so you'd have to draft rules dealing with related entities and aggregating those entities. But I just despise these faux churches making a mockery of Christianity all the while sucking on the government teat.

For the record, I'm all for these investigations.

[Colonel_Buck]

Why not get rid of all exemptions, exclusions and deductions. A graduated tax on gross income with lower rates.

[Cpt Banjo]

Why not get rid of all exemptions, exclusions and deductions. A graduated tax on gross income with lower rates.

Which would raise the interesting question whether church offerings and other donations would be gross income or gifts excludable under Section 102.

[Famspear]

Under the religion clauses of the First Amendment, there is no right to a Federal income tax exemption for a church or any other charity.

Senator Grassley does not appear to be claiming any legal authority to enforce his requests for information. They're just friendly little requests [insert applicable visual and sound effects here].

That letter to Kenneth Copeland is pretty detailed. Copeland is, however, free to ignore the letter -- just as I am free to ignore my wife's request that I take out the trash or wash the dishes (at the risk, of course, of my missing a chance for some whoopie later on in the evening).

Copeland would also be free to ignore a similar letter from the Internal Revenue Service. Such a letter could, however, be followed up by a formal administrative summons. Ignoring Senator Grassley's letter could be followed up by Senate hearings.

It's completely all mostly partly somewhat voluntary, you know, kind of, in a way.

[Nikki]

My reference to the 1st Amendment was written regarding some of the specific line items in the "information request," not with regards to the overall tax-exempt status of churches.

However, removing the broad-brush federal income tax exemption for churches would remove a significant rubber bullet from the TP's ammo belt. They'd be much less likely to attempt evasion via mail-order DDivinity degrees and home-based 'churches' with immediate-family-only congregations if that exemption didn't exist.

They'd have to set themselves up as some other form of bogus charitable organization -- which receive much more scrutiny than churches do.

[LPC]

But the Whites called the Grassley letter "unusual, since the IRS has separate powers to investigate religious organizations if they think it's necessary."

The power of the IRS to investigate churches is actually fairly restricted.

The IRS can investigate any other taxpayer without any cause at all, as long as the purpose of the investigation is to determine compliance with the tax laws. In the case of a church, however, the IRS cannot even begin a tax inquiry unless "an appropriate high-level Treasury official reasonably believes (on the basis of facts and circumstances recorded in writing)" that the church might not be exempt or might be carrying on an unrelated trade or business. See IRC section 7611.

And I don't think that "the minister drives a big car" is enough.

But the Senate has the power to investigate to see if (for example) section 7611 might be too restrictive.

And I can't see how any legitimate church could have anything to hide. The finances of a church are usually open to all of its members, so privacy is simply not a concern (as long as the identity of donors is protected).

[Imalawman]

There has actually been a great deal of outcry in the Christian community about these mega-churches that carry on a faux church that is based on speaking, books, and preaching tours. And they are very tight lipped about how the money is spent. Only a few of the bigger names will share any details at all with the general public. The speaking fees alone generate millions for these people. I have a hard time swallowing that royalties from books should be managed by a non-profit "church". Most the funds of these faux churches go straight to the pockets of the managing board and the person around whom the "church" revolves. see supra Joyce Meyer. (whom I particularly despise)

[Disilloosianed]

Does anyone know if these churches are also claiming charity status? I ask only because of the letter's opening. At the state level, public charities are able to get a much greater exemption than religious organizations in some areas. I wouldn't be surprised if they weren't claiming both to cover all the bases.

[grixit]

I have maintained for a long time that religious tax exemptions shoiuld be completely eliminated.

1. To the extent that a church counsels the troubled, feeds the hungery, shelters the homeless, etc, there are already provisions in the code.

2. As it is, exemption currently depends on having the IRS determine who is and is not a legitimate church, which is not an appropriate function for a government agency.

3. Any organization that claims to be religious and cannot function with a tax burden is either

a. Supported by people with insufficient dedication.
b. Not supported by any supernatural agency.

Overall, i think that religious activities should be classified under culture, and not given their own category. That is to say, the First Presbyterian Church of Jesus, Friend of Soccer Moms, would be accorded the same consideration as the Latvian Heritage Society or the Little Athens Community Theater.

[Doktor Avalanche]

I always felt that if the church was going to get themselves involved in the political process they should have their tax-exempt status revoked.

[Judge Roy Bean]

The Senator needs to mind someone else's business - like that of the country.

They should, rightfully, ignore him.

[Nikki]

The Senator needs to mind someone else's business - like that of the country.

They should, rightfully, ignore him.

What do you expect him to do? Something stupid like pass a federal budget or enact tax laws in time for the IRS to print the correct forms or do the necessary reprogramming?

You don't actually expect them to take valuable time away from pandering to their constituents or preening in front of the media, do you?

[Nikki]

FWIW:

The IRS Criminal Investigation division is making a coordinated effort to increase its publicity, according to Marsha Griffith, CI director of field crimes, field operations, and policy.

"The more publicity we can get on our cases deters additional tax fraud and evasion," she said November 7 at the National CPA/IRS Tax Issues Meeting in Washington.

Griffith said 80 percent of CI cases that went to sentencing received some kind of publicity in fiscal 2007, up from 68 percent four years earlier.

Griffith cited several rising CI statistics, saying that overall case initiation is up 8 percent. Legal source cases, typically considered traditional tax cases, represented over half of CI's cases in 2007 for the first time in years, she said. Illegal source cases declined to just 37 percent of the caseload.

Drug cases have increased under pressure from the attorney general, she said. She said CI had been reducing its drug-related cases because it was spending too much time on street-level drug crime while resources were tight. In light of the attorney general's request, CI agents will try to be involved only in the highest-level drug cases, she said.

"Nationwide, our agents are going to be spending some additional time in the narcotics area, but again, looking at it from a financial aspect," she said.

Griffith said CI is doing more work regarding corporate and employment tax fraud. CI initiated 120 corporate cases in 2007, up from just 40 in 2006. Employment tax initiations rose to over 150 in 2007, from under 50 in 2006, she said.

CI continues to crack down on abusive tax schemes, she said, adding that abusive trusts are the most common type of case in that area.

Griffith said she has seen a spike in fraudulent refund claims since she started in 1998, largely driven by identity theft. The IRS is taking an "extremely aggressive stance" toward identity theft, she said, and it is instituting cross-functional processes to handle innocent taxpayers affected by it. She said some preparers are submitting bulk packages of fraudulent refund claims and have been able to slip in as electronic return originators during the IRS's push to increase electronic filing.

"We are looking at additional safeguards in that area," she said.

She said the IRS is also disturbed by phishing scams that create fake Web sites mimicking legitimate tax or tax preparation sites. She said the IRS has considered creating a registration process for legitimate sites.