Tuesday, July 22, 2008
Last week, we reported that Senator Charles Grassley had issued a lengthy and detailed memorandum regarding the status of his investigation of certain Megachurches. Kenneth Copeland Ministries recently responded to Grassley's memorandum with its own press release (scroll down one third):
The Church’s position continues to be that it has responded to the request of Senator Grassley in good faith and to the greatest extent possible without compromising the privacy, confidentiality, and freedom of association rights and protections afforded to the Church by the United States Constitution and the Internal Revenue Code (the “Code”). As stated in the Church’s letters of December 6, 2007, and March 31, 2008, to Senators Grassley and Baucus, and in discussions with Committee staff members, the Church continues to believe that the most timely and efficient way for the Committee to obtain the requested confidential information — without compromising the universally recognized fundamental constitutional and statutorily based rights of this Church and all religious institutions — is for the IRS to request and obtain the information through a “church tax inquiry” under section 7611 of the Code. At the completion of the 90-day inquiry period provided by section 7611 of the Code, the IRS would have in its possession and available for disclosure to Senator Grassley all of the confidential information, including financial data, Senator Grassley is seeking from the Church.
In his memorandum, Grassley accused some of the churches of hiring Washington DC law firms to assist them in "foot-dragging". I'm a praying man, but I'm not quite sure at all what to make of the Kenneth Copeland response. On the one hand, I gotta say that the Kenneth Copeland response seems to confirm that allegation. The IRS is extremely loathe to initiate a church tax inquiry and Kenneth Copeland's lawyers probably understand that all too well. And while Grassley sits on a committee that no doubt has the IRS' ear, he cannot simply mandate that the IRS initiate a church tax inquiry under IRC 7611. There is, indeed, a question as to whether the statute is yet applicable. I suspect that if the Service did initiate a church tax inquiry, Kenneth Copeland ministries would argue that the Service does not meet the "reasonable belief" standard required of that statute. The press release does not say that 7611 applies, exactly, but merely that the IRS should "request the information" under that statute. I doubt that the press release will be construed as a waiver of the requirements under that statute, nor will Kenneth Copeland treat it as such.
On the other hand, I agree with Kenneth Copeland when he asserts that houses of worship are a different sort of tax exempt entity and should not be subject to the regular sort of government oversight Grassley asserts:
However, the Church respectfully disagrees with Senator Grassley’s position that churches are no different from any other tax-exempt organization. Any government inquiry into the affairs of a church raises serious constitutional issues that must be carefully balanced against the government’s need to evaluate the effectiveness of the laws of the land. To ensure its constitutional rights are not unnecessarily infringed upon, the Church firmly believes that it must be given the protections from disclosure afforded by the federal tax laws and the benefit of the processes and procedures that apply to inquires of churches made by the IRS. Without such confidentiality and due process of law, the potential exists for the information to be used in an effort to damage or attempt to embarrass the Church, its pastors, and its members. Any such use of the information provided interferes with, and ultimately threatens, the religious liberties of this Church, the thousands of other Pentecostal and Charismatic Churches who preach the “Word of Faith” message, and all other churches — irrespective of their particular doctrine or faith.
Though the religious blogs (like this one) seem on both sides of the issue, those in support of Kenneth Copeland generally assert that the government has no business prying into the finances of houses of worship (see the comments to the blog linked above). They basically state that followers can make their own decisions regarding the extent to which they financially support their religious leaders. Gotta point there.
The Senate Finance Committee, and Grassley in particular, present an interesting context in which to study the effects of the "bully pulpit" on tax exemption jurisprudence. It doesn't yet appear that Grassley will push this to the point of a Congressional subpoena -- IRC 7611 imposes limitations on the Secretary, by the way, not the Congress -- but as with colleges and universities, he is seeking to bring public attention and pressure on houses of worship in an effort to influence their financial affairs. While the effort seems to have resulted in symbolic gestures in the higher education community, I'm not quite sure they have had (or should have) any effect in the religious community. We see through a glass, darkly.