Magazine article Church & State

IRS Moves to Alter Church Investigation and Audit Procedures

Magazine article Church & State

IRS Moves to Alter Church Investigation and Audit Procedures

Article excerpt

The Internal Revenue Service plans to implement new procedures that could make it easier for the tax agency to investigate and audit houses of worship that engage in illegal partisan politicking.

On July 31, the IRS issued proposed new regulations dealing with the conditions that must be met before a church can be audited. Under the proposed rules, the IRS director of exempt organizations would be required to sign off on all church audits.

The IRS is taking the action because of a federal court ruling from last year. In that case, a Minnesota church that was accused of politicking and financial irregularities sued, arguing that the IRS official who initiated its audit was not high ranking enough to approve such an action. A federal court agreed.

A federal law passed in 1984 requires that a high-ranking IRS official approve all church audits. The IRS, which under went an internal reorganization in 1998, says the new rules are needed to bring clarity to the process.

A separate Minnesota congregation, Warroad Community Church, has won a temporary reprieve as the IRS seeks to implement the new policies. The church was being investigated because its pastor, Gus Booth, endorsed U.S. Sen. John McCain in 2008.

But the IRS has since informed the congregation that the matter is on hold.

Last year, Booth took part in a project sponsored by the Alliance Defense Fund (ADF), an Arizona-based Religious Right legal group. The ADF prodded pastors nationwide to openly endorse or oppose candidates from the pulpit, hoping to spark a test case in the courts. …

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