Senator Grassley and the churches

[Sertsa]

It's such a joy when I come across a huge and obvious charity scam, run by convicted felons, who don't even try to hide their nefarious practices on their Form 990s, and after some poking and prodding, I find out that the charity went through an IRS audit a few months earlier with flying colors.

Six words: qui tam actions instead of TEGE.

[Imalawman]

It's such a joy when I come across a huge and obvious charity scam, run by convicted felons, who don't even try to hide their nefarious practices on their Form 990s, and after some poking and prodding, I find out that the charity went through an IRS audit a few months earlier with flying colors.

Six words: qui tam actions instead of TEGE.

Not that your post is esoteric or anything...

I'm not sure qui tam is really what we want to rely on in terms of proper enforcement of tax laws. That is the job of the regs and procs related to TEGE. Simply because the IRS hasn't been on the ball as of late, isn't reason to excuse them in the performance of their duties. An IRC agent told me that there will be increase audits of non-profits in the next few years, but I doubt it will include many churches.

[wserra]

An IRC agent told me that there will be increase audits of non-profits in the next few years, but I doubt it will include many churches.

Especially not in an atmosphere in which major Presidential candidates pander to cretins who characterize the WTC attack as God's revenge for gay rights and the ACLU.

[Nikki]

Along this line, remember that BS' WTP organization STILL has their 501(c)(3) in place.

[Kimokeo]

So, what happens if they ignore the Congress?
An IRS audit?

Lots of statements about 'we heard something about you'.
Are there any facts to present to back up the rumors?

I think an appeal to the court would suggest that proof had better exist to these allegations than just a bunch of rumors.

[Famspear]

Kimokeo wrote:

So, what happens if they ignore the Congress?
An IRS audit?

Lots of statements about 'we heard something about you'.
Are there any facts to present to back up the rumors?

I think an appeal to the court would suggest that proof had better exist to these allegations than just a bunch of rumors.

You raise some interesting points.

I guess if they ignore the Congress, the Senate Finance Committee could simply subpoena the materials, as well as the individuals, and have them appear before the Committee. Then, if the individuals don't want to answer a particular question or produce a particular document, they could assert any privilege they think might apply, and see what happens. I'm no expert on Congressional investigations, but I would suspect that Congress can pretty much investigate anything it wants in connection with the tax laws, as Congress needs information to help determine whether the laws should be changed.

If the Internal Revenue Service investigates and issues an administrative summons, the individuals might have a hard time defeating the summons in court on the basis of "the IRS should have facts not just rumors." The purpose of the summons would be to obtain information, and the relevancy and other so-called "Powell factors" are usually easy for the government to demonstrate. Here, the individuals could try to assert privileges.

Speaking of privileges: I notice that in the various letters Grassley sent out, some of the requests are fairly general, while others are more specific (e.g., in dealing with a particular piece of property or whatever). The more general the requests, the less likely it would be that the Congress or the IRS would have independent means of establishing the existence, authenticity, and state of custody of the documents. To the extent that the Congress, etc., cannot establish existence, authenticity, and custody of a given document and the production of that document might be construed to have a testimonial aspect by the individual with respect to existence, authenticity, or custody, the individual might successfully defeat a Congressional subpoena (or IRS summons) for that document by asserting the Fifth Amendment privilege against self-incrimination, e.g., with reference to the Act of Production Doctrine. Maybe.

But I am being presumptuous if I assume that anyone has anything to hide.

[Neckbone]

I got a weird memory flash when I read Grassley's question 22 to Copeland:

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.

The meeting the Senator refers to roughly parallels the meeting held exactly 50 years ago in Apalachin, NY. The only difference is that most of the names of the attendees at the Apalachin meeting ended in a vowel.

Neckbone

[Weathervane]

How dare that Senator Grassley try to clean up a pit of multizillionaires living large off taxpayer's money.

Are you refering to congress?

[Demosthenes]

[snicker]

Good one.

[RyanMcC]

I actually applauded when I heard this story on CNN.

Unfortunately I doubt much will be done dispite the fact nearly all those named almost certianly use church funds for private gain and pay no taxes on many of those benefits.

Here is an interesting website I came across that lets you look-up 990 forms for various tax exempt entities:

http://tfcny.fdncenter.org/990s/990search/esearch.php

[Famspear]

Here's another story about a church.

Pastor's wife: Church is a divorce asset

[Associated Press Yahoo News; 16 Nov. 2007]

The estranged wife of a pastor claims her husband blended his professional and personal finances so thoroughly that his church should be counted as an asset in their divorce.

A judge agreed in a decision published this week to hear arguments on the claim, and he ordered a financial appraisal of the church. Lawyers said it could represent the first time anyone in New York state has tried to treat a religious institution as a marital asset.

The wife argues that her husband of 31 years used his Brooklyn church as a "personal piggy bank," setting his own income, spending the congregation's tithes as he pleased and running a catering business from the building, according to the decision by state Supreme Court Judge Arthur M. Diamond. The couple's names were redacted from the decision.

The wife said $50,000 of the couple's money went into starting the church, and that the church property is partly hers.

"That church is no different than any other business he might have opened," said the wife's lawyer, Robert Pollack.

The pastor maintains he is simply a church employee, and the institution's funds should not be considered his, according to Diamond's decision.

"My client can't own the church," said the minister's lawyer, Eleanor Gery.

A message left at the church was not immediately returned early Friday.

http://news.yahoo.com/s/ap/20071116/ap_ ... 01BGNK2ocA

[LPC]

Apparently, Grassley is allowing an extension of time to allow the 6 churches to respond to his inquiries, but he has not withdrawn his requests, even though asked to do so by one of the churches through their lawyers, Caplin & Drysdale(!).

November 27, 2007

VIA FEDERAL EXPRESS

The Honorable Max Baucus
Chairman, Committee on Finance
United States Senate
511 Hart Senate Office Building
Washington, DC 20510

The Honorable Charles E. Grassley
Ranking Member, Committee on Finance
United States Senate
135 Hart Senate Office Building
Washington, DC 20510

Re: World Changers Church International

Dear Sirs:

On behalf of World Changers Church International (the "Church"), I am writing regarding the letter my client received on November 5, 2007 from Senator Grassley inquiring into its religious practices and operations. On the same day that my client received its letter, five other churches received similar letters. We would like to draw your attention to a number of concerns that these letters raise.

Each of the churches that received a letter from Senator Grassley, including World Changers Church International, practices a religious theology involving the "Prosperity Gospel," a deeply held religious belief that God's devout followers and earthly leaders will prosper and be successful in all they do, including in financial matters, as the outward expression of His favor. This belief, like any number of other religious doctrines, is grounded in Scripture.1 These six churches are part of the rich tapestry of religion in America2 and reach a combined audience of several hundred thousand worshipers. While, as is true with most religious beliefs, not all religions or denominations subscribe to the Prosperity Gospel, this country has a long tradition of celebrating -- and protecting -- the diversity of the religious beliefs of its citizens. That long-standing principle of tolerance is even more important in these times of strife triggered by religious differences elsewhere in this world.

To avoid entanglement between particular churches and the government, the founders of our country erected, in the words of Thomas Jefferson, "a wall of separation between Church and State"3 by enacting the free exercise and non-establishment clauses of the First Amendment. In 1984, recognizing the delicate balance between the government's power to examine churches and the expression of religious beliefs, Senator Grassley sponsored legislation that, when ultimately enacted, provided special rules with which the Internal Revenue Service (the "IRS") must comply when examining churches. These rules, the Church Audit Procedures codified in section 7611 of the Internal Revenue Code,4 are designed to permit the IRS to ensure that religious organizations comply with federal tax laws and, at the same time, preserve and protect the ability of citizens to worship in accordance with their religious beliefs without fear of unwarranted government interference. Indeed, in the legislative history underlying section 7611, the Senate Finance Committee Report from 1984 outlined its rationale for the legislation: "the committee is aware of the special problems that arise when the Internal Revenue Service (or any governmental agency) examines the records of a church, including problems of separation of church and state and the special relationship of a church to its members."5

The Church's First Amendment rights and the problems that section 7611 was designed to prevent are implicated by the recent request for information. While we applaud Senator Grassley's dedication to tax law oversight, and we can assure you that the Church is willing to comply with a proper request for information, we believe that the IRS, through the framework of section 7611, is the appropriate governmental body to review these sensitive matters. Therefore, we respectfully request that Senator Grassley, or the full Senate Finance Committee, refer any information regarding federal tax compliance concerns to the IRS for the agency to evaluate. This approach is not without precedent: in the 1980's, the late Representative Jake Pickle, then Chairman of the House Ways & Means Oversight Subcommittee, chose a similar course of action when he asked the IRS to review concerns about television ministries. A referral would permit Senator Grassley and the Senate Finance Committee to discharge their obligation to oversee federal tax administration without running the risk of government entanglement in the Church's religious beliefs and practices. Moreover, in the course of an IRS review, the Church would be guaranteed taxpayer privacy rights in accordance with section 6103 of the Code, further ensuring that the government would not infringe on its members' rights to worship freely.

If Senator Baucus, or the majority of the Senate Finance Committee, believes that it is appropriate for the Church to respond to Senator Grassley's questions, then we respectfully request that the Senate Finance Committee provide an appropriate legal context for the review, as would be reflected by a formal subpoena for the information. Congress has wisely determined that religious organizations should not be subject to the same public filing requirements as other charitable organizations and, likewise, we believe that the religious doctrine and practices of a church should not be held out for the world to evaluate as a result of responding to Congressional inquiries. We are concerned, for example, that some of the information requested would not be in the public domain even if churches were required to comply with these same filing requirements as other charitable organizations. In this regard, we are acutely aware of the potential for some members of the general public to disparage or belittle the Church's sincerely held religious beliefs, and we want to protect the Church and its members from this possibility. If a subpoena were issued, the Church and its members could be afforded certain confidentiality protections, which, like the privacy protections of section 6103, would reduce the likelihood of any public discourse regarding its religious beliefs.

We appreciate your sensitivity to these issues and look forward to hearing from you. If you would like to discuss any of these issues, please do not hesitate to call me.

Sincerely,

Marcus S. Owens
Caplin & Drysdale
Washington, DC

FOOTNOTES

1 For instance, verses frequently cited by proponents of this theological doctrine include Deuteronomy 29:9 and Psalms 1:1-3.

2 Numerous other churches, predominantly Evangelical or Charismatic Christians, also practice their religion in accordance with the Prosperity Gospel.

3 Letter from Thomas Jefferson to Messrs Nehemiah Dodge, Ephraim Robbins, & Stephen S. Nelson, a committee of the Danbury Baptist association in the state of Connecticut (Jan. 1, 1802) available at http://www.loc.gov/loc/lcib/9806/danpre.html.

4 All section references are to the Internal Revenue Code of 1986, as amended (the "Code").

5 S. PRT. 98-169 at 873.

END OF FOOTNOTES

[wserra]

we believe that the religious doctrine and practices of a church should not be held out for the world to evaluate as a result of responding to Congressional inquiries.

(1) No problem. Don't claim tax-exempt status.

(2) One presumes that the word "practices" means in context "financial practices", since that is what Grassley seeks to discover. Under what theory do "religious doctrine" and "[financial] practices" belong in the same sentence?

[Demosthenes]

[Translation]

Option 1: Let the IRS handle it. That way all the abuses they find will never be made public.

Option 2: Get a subpoena. That way all of the abuses you find will never be made public.

[/Translation]

Considering that the abusers' rich living style is funded with the public's money, that's icky.

[Famspear]

The ministry appears to have picked its legal counsel with the problem at hand firmly in mind:

from
http://www.capdale.com/mowens/

Marcus S. Owens is a member in Caplin & Drysdale's Washington, D.C. office. He joined the firm in February 2000. Prior to that, Mr. Owens was employed by the Exempt Organizations Division of the Internal Revenue Service for his entire professional career and served as the division's director for the last ten years. In that capacity, he was the chief decision maker regarding design and implementation of federal tax rulings and enforcement programs for exempt organizations, unrelated business income tax, private foundation excise taxes, hospital reorganizations, college and university guidelines, political organizations, and tax-exempt bonds. He also served as the IRS's primary liaison with other federal agencies, Congress, and state regulators on exempt organizations issues.

Since joining Caplin & Drysdale, Mr. Owens has been representing a broad range of nonprofit organizations including private foundations, charities, U.S. affiliates of foreign charities, and trade associations. The context has ranged from tax planning, the process of formation and application for exemption, through IRS audits including large case or team audits. Particular projects have involved the emerging rules for foreign grant making and organizations interested in public policy but concerned with legislative and political activities. He also is a frequent lecturer on the complex laws affecting exempt organizations.

In 1998, 1999 and 2001, Mr. Owens was selected by the Nonprofit Times as one of the top 50 most influential people in the nonprofit sector. He serves as a Director of the Better Business Bureau Wise Giving Alliance. He also is a recipient of the IRS Commissioner's Award for exemplary service.

(bolding added)

[Famspear]

From the Associated Press - Yahoo news:

Just 2 ministries submit financial data

By ERIC GORSKI, AP Religion Writer

Only two of six Christian ministries under scrutiny for allegations of opulent spending turned over documents to a Senate panel by a Thursday deadline, with others either fighting the request or asking for more time.

A month ago, Iowa Sen. Chuck Grassley sent pointed questions to a half-dozen high-profile ministries asking about salaries, perks and private jets in a quest to determine whether rules governing tax-exempt groups had been broken.

Grassley, the ranking Republican on the Senate Finance Committee, said in an interview he remains confident he will get the ministries' "full cooperation," despite opposition from some.

Grassley's office said it received a package of material Thursday from representatives of Kenneth and Gloria Copeland, who head a ministry in Texas. Joyce Meyer Ministries of Fenton, Mo., run by the inspirational speaker and author, provided documents earlier this week.

Two other ministers — Georgia megachurch pastors Creflo Dollar and Bishop Eddie Long — have issued statements balking at the request, raising questions about constitutional protections given to churches.

Texas-based faith healer Benny Hinn asked for more time to respond, and Grassley's office said a meeting with Hinn's attorneys is set for Friday. Grassley's office said lawyers for preachers Paula and Randy White of Tampa made initial contact with the senator's office Thursday and gave no indication of a further response.

[ . . . ]

In his previous investigations of nonprofits, Grassley sought and received financial records from groups including the Nature Conservancy, the United Way and the Smithsonian Institution. During his tenure on the committee, Grassley said subpoenas were necessary only twice — in the Enron scandal and Jack Abramoff influence-peddling investigations.

[ . . . ]

Attorneys for some of the ministries have said that probing the groups' inner workings amounts to unconstitutional governmental meddling in religion. Grassley has emphasized that he is not investigating doctrine but making sure organizations enjoying the benefits of tax-exempt status are playing by the rules. Grassley dismissed the religious liberty argument.

"Forget it," he said. "They don't have a leg to stand on."

Grassley said that if he had to seek subpoenas, he expects Democrats on the panel to cooperate with him. But Grassley emphasized he didn't think that was necessary at this point.

"I've never had to get a subpoena from a nonprofit organization in the past and I don't expect I'll have to this time," he said. "... All I can say is, I've got a job to do and I've got to do my job."

A spokesman for Long, of New Birth Missionary Baptist Church in Lithonia, Ga., said in a statement Thursday that the senator's request "clearly disregards the privacy protections of the Church under law and appears to cross the line of Constitutional guarantees for churches."

"The Church will fully comply with all laws applicable to churches but will insist upon the preservation of its Constitutional freedoms of religion and Equal Protection under law," the statement said. Grassley's office said it had not received a formal response or material from Long's lawyers before the deadline.

Dollar, an Atlanta-area megachurch preacher, also has refused to answer Grassley's questions. In a letter last week in response to Grassley's demands, Dollar's lawyer asked that the investigation either be referred to the IRS, which would give greater privacy to the churches, or that the Senate committee get a subpoena for the documents.

On referring the whole matter to the IRS, Grassley said Thursday, "I can't tell (the IRS) what to do. I can't refer anything to them unless I know something is wrong. And I won't know if anything's wrong until we get the information."

Hinn also missed the Thursday deadline but has been in touch with Grassley's office and plans to "facilitate a response" by the end of January, a spokesman said in a statement.

The spokesman, Ronn Torossian, declined to say whether Hinn was leaning toward cooperating or fighting the request.

But in a long post about his finances on his Web site, Hinn says that his board of directors is independent and includes no relatives, that he uses the church airplane exclusively for ministry-related travel, and that his U.S. office is audited annually.

Hinn has also posted general financial statements for his work, along with letters from auditors confirming their reviews. But he said his ministry does not make public "itemized annual financials" because "both corporate and ministry financial reports can be manipulated by unscrupulous people with unsavory agendas."

(bolding added)

http://news.yahoo.com/s/ap/20071207/ap_ ... _YusRK2ocA

[wserra]

I understand that this is a pet peeve, but they got a lot of ____ing nerve.

Whatever you're doing, you're doing it in part on my dime. Give up my dime, then zay gezunt. Keep using my dime, I have the right to know how you spend it. You don't agree, kush meer in toches. Not a constitutional issue in sight.

Nothing like Yiddish for strong opinions.

[LPC]

What "privacy" of church finances?

In every church I have ever attended, the finances of the church (including the compensation paid to ministers and other employees) is an open book, reported to every member of the congregation.

Are these "churches" operating differently? That in itself should be enough to trigger an IRS investigation, because the reason that churches get a lower level of government scrutiny is exactly because they are traditionally very open about their finances and are subject to very public scrutiny. A "church" that is not subject to public scrutiny should be subject to greater IRS scrutiny.

[.]

Creflo Dollar

And his cousin Liberty Dollar.

[wserra]

Not to mention their mutual God, Almighty Dollar.