Senate 'Megachurch' Probe Wastes Tax Dollars, Experts Say
July 7, 2008
(CNSNews.com) - The Senate Finance Committee continues to gather the financial records of several so-called "megachurches," despite the fact that other government agencies have enforcement power in cases where non-profits are found to have violated tax laws.
"This is what makes the Senate investigation redundant and unnecessary," Richard Hammar, editor of Church Law & Tax Report, told Cybercast News Service.
The Senate committee says its investigation stems from information provided by "interested third parties, published news reports and television news stories." Sen. Charles Grassley (R-Iowa) said he launched the probe late last year to make sure tax-exempt organizations are accountable to donors.
Hammar noted that the Internal Revenue Service has two potent ways of addressing excessive compensation paid to the officers of tax-exempt groups.
For one, Hammar said, the IRS could revoke the tax-exempt status of a church suspected of breaking tax laws. Moreover, the government could make "disqualified persons" and/or board members who benefit from "excess benefit transaction" pay excise taxes -- a move that usually takes precedent over revoking tax-exempt status, which is rare, according to Hammar.
In November 2007 and again in March 2008, Sen. Grassley, the Finance Committee's ranking member, sent letters to six churches or ministries requesting financial information related to "parsonage allowances, personal use of assets belonging to the tax-exempt organization, the transfer of assets and unreported income."
Those churches or ministries are: Without Walls International Church, Benny Hinn Ministries, Joyce Meyers Ministries, Kenneth Copeland Ministries, New Birth Missionary Baptist Church, and World Changers Church International.
When asked by Cybercast News Service what specific laws the churches or ministries were suspected of breaking, Grassley's staff responded with several statements.
"Sen. Grassley's staff will review all of the documentation received and try to determine if there have been any abuses or possible violations of current tax law that should be referred to the appropriate enforcement agency," one statement said, adding that the committee also will examine the laws regulating nonprofits.
"Until the information is fully reviewed, it's premature to say what laws may have been compromised or what laws may be inadequate," it added.
To date, four of the six churches have complied with Grassley's request. World Changers Church International and Kenneth Copeland Ministries have not responded.
In a December 2007 press release, Grassley explained why he launched the investigation.
"Tax exempt organizations rely on the generosity and goodwill of their contributors to help fill food pantries, clothe the needy and serve the underprivileged," Grassley said.
"Donors of modest means pinch pennies and make sacrifices so others less fortunate may benefit from their collective contributions. It is incumbent upon tax exempt hospitals, humanitarian agencies and faith-based organizations alike to exercise sound stewardship and carry out their mission with financial integrity," he added.
But some experts question why these six institutions were selected for the investigation and whether tax-exempt status precludes high salaries or other benefits for people put in positions of authority and great responsibility.
In its April 4 edition, The Wall Street Journal reported on the growing revenue of non-profit hospitals, including Northwestern Memorial Hospital in Chicago.
"At some non-profits, the good times are reflected in new facilities and rich executive pay," the newspaper reported. "Flush with cash, Northwestern Memorial Hospital in Chicago has rebuilt its entire campus since 1999 at a cost of more than $1 billion.
"In October, it opened a new women's hospital that features marble in the lobby, birthing rooms with flat-screen televisions, 1,000 works of art and a roof topped with 10,000 square feet of gardens. In 2006, Northwestern Memorial's former chief executive officer, Gary Mecklenburg, received a $16.4 million payout," it added.
According to a 2005 study by the Hartford Institute for Religious Research, there are some 1,200 U.S. megachurches, defined by the institute as mostly Protestant congregations with a sustained average weekly attendance of 2,000 or more.
"It's all rather subjective," David Marmon, director of taxexemptstatus.com, told Cybercast News Service about the scrutiny of non-profits by the federal government. "If you want the right people, you might have to pay the right salary."
And, Marmon added, a private jet for a successful pastor with a busy, global ministry might be seen as more practical than luxurious.
There are specific requirements that churches must meet to gain and keep their tax- exempt status, including not engaging in efforts to influence legislation and not to intervene or participate in political campaigns.
As for Grassley, his latest comment on the status of his committee's investigation came in a March 31 press release.
"It's good to see the majority of the ministries offering information," Grassley said. "They receive generous tax breaks as nonprofit organizations. In general, the federal Treasury forgoes billions of tax dollars a year to tax-exempt groups.
"The ministries' sharing of material with the Senate committee in charge of tax policy shows an interest in accountability for their special tax status," Grassley concluded.
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