Can the IRS Forbid Tithe-Paying?

March 11, 2013 | 43 comments
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Recently, the U.S. Tax Court issued an opinion of at least glancing interest to the Mormon community (and, for that matter, any tithe-paying religious community). The plaintiff in the case is the president of Compliance Innovations, Inc. He’s also a life-long Mormon who currently serves as a shift coordinator at the Manhattan temple and a stake scouting coordinator in his New Jersey stake. Also, George has incredible outstanding tax liabilities.

Unpaid Taxes and Penalties

In total, he owed the IRS almost $883,000 in unpaid taxes and penalties (and, though the Tax Court doesn’t say it, probably interest).[fn1] This $883,000 is comprised of at least two parts: in the first instance, he had unpaid income tax liabilities for 1992, 1995, 1996, 1999, and 2000.

The second part is for employment taxes that Compliance Innovations didn’t pay over to the IRS (often called “trust-fund taxes”). Which raises at least two questions: what does it mean that Compliance Innovations didn’t pay its trust-fund taxes? and how can Thompson personally be liable for taxes a corporation didn’t pay?

Unpaid Trust Fund Taxes. When your employer pays you, it withholds some part of your paycheck and pays that withheld amount to the IRS. Essentially, withholding is a compliance mechanism, and a pretty good one at that. Sometimes, though, it breaks down, whether it’s because the company actively decides not to pay it over, the accountant embezzles the money rather than paying it over, or the company is on shaky financial footing and thinks that, if it uses that money, it’ll be able to meet its tax liabilities in the future, and then the future doesn’t turn out as brightly as the company expected.

Personal Liability. In any event, regardless of why a company doesn’t pay over its trust-fund taxes, the Internal Revenue Code provides mechanisms for the IRS to pursue that money. Clearly it can go after the company for the unpaid taxes. But it can also assess a penalty (equal to the amount of unpaid tax) against certain individuals who are responsible for collecting, accounting for, and paying over the tax. Theoretically, the IRS can collect both the unpaid taxes from the employer and the trust-fund taxes from a responsible person, but it generally doesn’t; instead, it uses the penalty to ensure that the trust-fund taxes are paid by somebody.

Installment Agreement

$883,000 is a lot of money. Few of us, I suspect, could rack up a tax liability that big, much less pay it in one shot. So George attempted to enter into a partial payment installment agreement. But to enter into the agreement, the IRS required George to fill out a form that essentially cataloged his income, assets, and expenses. Using that information, the IRS determined how much George could afford to pay every month toward his tax liabilities and penalties.

In some cases, a taxpayer can pay her full outstanding tax liability using a payment plan. George, however, could not. As a result, he requested a partial payment installment agreement. And, in calculating how much a taxpayer can afford to pay when he won’t pay the full amount, the IRS classifies expenses as “necessary” or “conditional.” And “conditional” expenses don’t reduce the amount the IRS requires a taxpayer to pay.

Herein lies the conflict between George and the IRS: George argued that $2,110 of monthly tithing was a necessary expense, and should reduce the amount he could afford to pay each month.[fn2]

So Is Tithing a Necessary Expense?

Apparently, George’s evidence that tithing constituted a necessary expense included a reference to Malachi 3:8-10. To which the Tax Court responded, Matthew 22:21.[fn3] The court continued that, though it was “incapable of determining what belongs to God, we believe that we can, and must, decide what is Caesar’s.” And then it addressed George’s three arguments for why tithing is a necessary expense:

Necessary Expense Test. To be a necessary expense, an expense must either provide for the taxpayer’s health and welfare or her production of income.

Paying tithing, he argues, is necessary for his spiritual health and welfare. And, while that may well be true, the Tax Court rejects that argument. It says he didn’t provide any evidence of specific spiritual benefits that would be affected if he failed to tithe;[fn4] moreover, it said that it would be inappropriate for the IRS to make determinations of what is or is not necessary for a person’s spiritual welfare.

Free Exercise. George also argues that treating tithing as a conditional expense violates the Free Exercise clause of the Constitution. His argument here is that, if he doesn’t pay his tithing, he will no longer be allowed to be a temple shift coordinator and a stake scouting coordinator.[fn5] That, he argues, means that the IRS will determine who can be a minister, contrary to the Supreme Court’s interpretation of the Free Exercise clause (which doesn’t allow the government to interfere with the selection of a minister, with “minister” defined broadly). He even got a letter from his bishop[fn6] saying that, if he didn’t pay his tithing, he’d have to resign his Church positions.

And the Tax Court points out that, no, the IRS doesn’t interfere with the Church’s decision of who will act as a minister (or, for that matter, in any calling). That is, the IRS neither required George to give up his callings, nor did she pressure the Church into making him resign. It concludes that the Church’s requiring somebody to withdraw from a calling is the Church’s decision.

RFRA. Finally, George argues that not including tithing as a necessary expense violates the Religious Freedom and Restoration Act, which holds that the government can only substantially burden an individual’s exercise of religion if it furthers a compelling interest and is the least restrictive means of furthering that interest.

Collecting taxes is unquestionably a compelling government interest. But George argues that it would be less restrictive if he were allowed to reduce the amount he could pay by his tithing (that is, if tithing were considered a necessary expense). Essentially, the Tax Court points out that , while collecting $3,000 a month is less restrictive than collecting $8,000 a month,[fn7] $3,000 a month will not pay his liabilities in a timely manner, and therefore does not meet the government’s compelling interest.

Some Other Things

It’s worth noting that the IRS and the Tax Court did not prohibit George from paying his tithing.[fn8] They just didn’t allow him to reduce the amount he’s able to pay by his tithing.

If he’s serious about paying his tithing, then, how does he do it? If we look at the allowed expenses, the IRS allowed, among other things, a monthly expense of $4,619 a month for housing and utilities. The Court points out that that amount is in excess of the IRS’s national standard guidelines. It allowed $2,680 for food, clothing, and miscellaneous expenses. It allowed $1,538 for transportation. (Not counting taxes and alimony, he’s basically allowed to live on about $10,000 a month.)

By laying out these permitted expenses, I’m not saying that George lives extravagantly, or that he needs to move into a smaller house or eat less. I don’t know, and it’s not my place to judge that. I am saying, though, that we make trade-offs when we budget. And classifying tithing as a conditional expense doesn’t eliminate a person’s ability to shift the budget and continue to pay tithing.

(h/t Julie. For another summary of the case with a slightly different emphasis than mine, see here.)

[fn1] It’s worth noting that George never contested the underlying tax liabilities.

[fn2] He also argued that his kids’ college tuition was a necessary expense, which is a much less interesting question for this post’s purposes. If you’re curious, though, no it’s not.

[fn3] Seriously, so awesome: did you ever imagine you’d see Bible-bashing in a Tax Court opinion?

[fn4] FWIW, I think he necessarily didn’t argue specific benefits. Although we believe the windows of heaven will be opened to the person who pays tithing, we don’t claim that any particular blessing comes as a result of paying our tithing.

[fn5] Technically, it’s not clear to me that he can in any event. The Handbook says that members who refuse to pay their taxes cannot have temple recommends or hold callings of “principal responsibility” (whatever that means). Still, though the Court hints that he’s been openly defiant of the tax law, it never says as much explicitly; there are possible benign explanations for his unpaid taxes.

[fn6] Seriously, he put a letter from his bishop into evidence!

[fn7] Because, remember, tithing is the only amount at issue in this case.

[fn8] That said, I originally wanted to title this post “BREAKING: IRS, TAX COURT PROHIBIT MAN FROM PAYING TITHING.” That, I think, is much catchier, and entirely untrue. But catchier.

43 Responses to Can the IRS Forbid Tithe-Paying?

  1. Adam G. on March 11, 2013 at 2:21 pm

    Did you just call the IRS “she”? I’m putting you in for Misogynist of the Year. ;)

    Methinks, for our good brother, this would be a good time to switch to paying tithing on net income rather than gross. Or is he already? I couldn’t be sure from your description.

  2. The other Brother Jones on March 11, 2013 at 2:23 pm

    I saw this story the other day and my thought was, how can a non-tax payer have a reccomend. I am happy to see that this was brought up in fn5. Pay thy debts and live! And maybe on a little less that 10K per month!

  3. Sam Brunson on March 11, 2013 at 2:29 pm

    Adam, ah, my misogyny! (I’m not going to fix it, because that would ruin your comment, but the examining agent appears to have been a woman, and I appear to have been careless (appalling, I know) in drafting a blog post.)

    I agree that this might be a good time for that shift, if he’s not already paying on net. I really can’t tell; the court doesn’t lay it out, and his income for tax purposes and tithing purposes seem to differ.

  4. Mark B. on March 11, 2013 at 2:36 pm

    Rats. Adam beat me to it. That’s what happens when you start sprinkling “she” at random in reference to an non-sex-specific antecedent.

    And I agree completely with fn3. Must be the high point in a century of Tax Court decisions!

    I remember a related question arising under the Bankruptcy Code–could amounts paid as tithing be considered in determining the amount of income available to pay creditors? But I don’t remember how that was resolved.

    Isn’t it a bit ironic, though, that his company was named “Compliance Innovations”? Obviously, he wasn’t sufficiently innovative in complying with the Internal Revenue Code, which, as we know, is enforced by a harsh taskmistress.

  5. MC on March 11, 2013 at 3:33 pm

    Agree that this is solved by switching to net. Whatever they allow him to live on, tithe on that. Problem solved. And if he claims that LDS teachings require him to pay on gross, he won’t have a leg to stand on.

  6. Lynell on March 11, 2013 at 3:37 pm

    Yeah, I was wondering what was preventing him from paying tithing anyway. I thought maybe he didn’t make that much, and would therefore be unable to live on what the IRS was allowing him to have. Then I saw the numbers given, and I have no pity for the man’s defense. If my small family of four can pay tithing on less than 2000 a month, he can find a way to pay his tithing, if he wants to.

  7. Last Lemming on March 11, 2013 at 3:58 pm

    I’m not sure you even have to switch to net. Because this was a corporate tax liability, what the IRS is doing is attempting to claw back some of the dividends or capital gains George received from the company, which presumably would have been lower if tax obligations had been met. So if he just recalculates his gross income from those years in which it was higher than it should have been, then gives himself a credit for tithing overpaid in those years, he eliminates his current tithing obligation altogether until that credit is exhausted.

    A question you did not address is how to tithe the amount of tax liability that is ultimately forgiven. I expect that most people do not recognize forgiven debt as tithable “increase”, but I think there is a good argument that it does constitute increase.

  8. Sam Brunson on March 11, 2013 at 4:02 pm

    Last Lemming, that is an awesome extension of the question of what constitutes increase.

    I’m curious about the dividends that George may have received; I actually suspect he got mostly salary rather than dividends, if only because salary is deductible and dividends aren’t. (And also because the company was owned by a trust. Which I’m sure George controlled, but the Tax Court doesn’t get into its ownership structure, and I didn’t look any closer than a single Google search to see if I could find its charter.)

  9. ji on March 11, 2013 at 4:31 pm

    See JST Romans 13:6-7 — Pay everyone else first, then pay tithing…

  10. Dean Bender on March 11, 2013 at 5:04 pm

    The person stole over $800,000 from the government over a period of several years. After the case is closed, the Bishop and Stake President should investigate and determine if the person is worthy to pay tithing.
    Detached from this case: a person who steals on such a grand scale over a period of time probably should be disfellowshipped or excommunicated to help them with the repentance process. That would solve the tithing question for a while and preserve the integrity of the Church.
    The interest to the Church should be to teach the members to be honest and obey the laws of the land that they live in. That includes taxing authorities.
    Ji – great verses, JST Romans 13:6-7

  11. MC on March 11, 2013 at 5:32 pm

    Although I’m not prepared to say that Brother Thompson has committed tax fraud, I am prepared to speculate that his absolute spiritual need to pay on gross instead of net corresponds nicely to his desire to reduce the tax bill.

  12. TaxDuck on March 11, 2013 at 7:45 pm

    Last Lemming, this is very different from a capital gain on the disposition of corporate stock or dividends. A trust fund recovery penalty is, as the post notes, the equivalent of the employer’s share of employment taxes. If the corporation does not pay the employment taxes, the government can hold certain individuals personally responsible for not turning over those taxes.

    The real important part of this is that the separation of church and state requires that the government not consider your tithes when determining your expenses. The government cannot put itself into the position of determining which payment to which religious organizations should be considered necessary. The government can recognize 501(c)(3) tax exempt status, but asking the government to wade into these waters of what is “necessary” would invite an awful and unconstitutional quagmire.

  13. wreddyornot on March 11, 2013 at 7:47 pm

    This is a trust fund recovery penalty. The federal government trusted him to oversee payment of those trust funds of the corporation or other entities’ workers. Who knows what the full facts and circumstances are? There well may be others held responsible for the very same amounts and collected from. The government can collect (once only the full amount) from whomever it is easiest to collect from. Possibly this LDS man relied on others also responsible and neglected his ultimate oversight. Neglect is not fraud; it’s not exercising due diligence. He should work out his tithes with God and exercise more diligence doing so than he did wih the federal government.

  14. Sam Brunson on March 11, 2013 at 8:08 pm

    Dean, though I have no patience with tax protestors and tax evaders, I’d be really hesitant to suggest that George should be excommunicated, for a number of reasons. Even though the government went after him civilly, it chose not to pursue him criminally. And the Tax Court, though apparently exasperated by his repeated failings to pay his taxes, doesn’t give any indication that he had any criminal liability in (or for that matter, knowledge of) the failure to pay over the trust fund taxes. As a responsible person, the IRS can go after him whether or not he had any knowledge or part in it (that is, the penalty is a strict liability one).

    Even if he did know, it is abundantly possible that his biggest moral failing was believing that, if he borrowed the money, his business would make it back in time for him to pay over what he owed. That is both dumb and violates the tax law, but I don’t think it’s the same thing as theft (and, for that matter, I don’t know that someone is necessarily excommunicated for theft; I suspect there were few excommunications related to Napster, for example). That doesn’t mean, of course, that he shouldn’t be liable for the trust fund penalty—he clearly should. But Church discipline is a different matter altogether.

    And his personal income tax? Again, he’s self-employed. Maybe he had a bad year, maybe he calculated his tax liability wrong (several times . . .).

    And maybe I’m wrong to give him the benefit of the doubt. Maybe he embezzled the money himself. But I don’t know that, and I’m not in a position that my knowledge, if I had any, would be relevant. For Church purposes, that’s between him and his priesthood leaders.

    Basically, I really don’t want to speak poorly (morally) of the guy. He seems to have made some really bad tax decisions, and is paying for those decisions. As for his non-tax moral rectitude, what does it hurt to assume the best of the guy?

  15. Kevin Barney on March 11, 2013 at 8:12 pm

    Having an excuse to not pay tithing and getting out of a scouting calling seem to me features, not bugs…

  16. Jettboy on March 11, 2013 at 9:59 pm

    “though I have no patience with tax protestors and tax evaders”

    I have lots of patience with them and not much with the IRS even if I do pay my taxes faithfully. The very foundation of the Revolution that brought the Constitution of the United States of America is based on tax protestors and evaders.

  17. Sam Brunson on March 11, 2013 at 10:55 pm

    Jettboy, you have a lot of patience with people who deliberately flout constitutionally-permissible laws passed by a representative government based on weak misreadings of the law and the assumption that they’re above their fellow citizens, while having no patience with an administrative agency that frankly does a great job administering and enforcing fairly a complicated law? I’m afraid I can’t buy into that.

    And, fwiw, despite our (current) national mythos, the Revolution and Constitution were not based upon tax protestors and evaders (or was the Taxing Clause a mistake?). At best, they were a reaction to colonists’ inability to exercise self-government, including in the implementation of taxes (and including tax cuts), though those taxes were primarily excise, not income, taxes.

  18. Charlie on March 11, 2013 at 11:42 pm

    “he put a letter from his bishop into evidence!” Goodness!

    But all George needs to do is take the net income AFTER taxes including the instalment amount and pay 10% of the leftover. No reason to pay on Gross amount always -and if the Bishop complains tell him to go shove it. We, the member, decide what is a full and honest tith, not the Bishop.

    However old George should be released from all callings anyways since he has stolen from the government and is of ‘unfit character’ to serve in church until the process is done with, that is court, debt paid, and fines paid plus saying ‘Im sorry’.

  19. Kent Larsen on March 12, 2013 at 2:18 am

    Charlie, may I suggest that you read the other comments before making yours?

  20. Juliathepoet on March 12, 2013 at 2:27 am

    I guess for me it is the five separate years of tax liability, including some from the 1990s that haven’t been paid. I understand taxes getting mixed up. Last year my husband miscalculated how much to withhold from something he cashed out, and we are on a payment plan, that if our taxes are close this year, will be paid down in a total of 18 months. (A few more or less depending on this year’s returns.) I just don’t understand how you can be “honest in your dealings” and have tax debt that is 15+ years old.

  21. kramer on March 12, 2013 at 4:31 am

    Ex him.

  22. Jenn on March 12, 2013 at 7:16 am

    If I were this man’s bishop (which, as a woman, I would never be), I wouldn’t ALLOW this man to pay tithing until he paid off his debts to the country first- meaning he couldn’t be a temple-going member until he paid off his debts. To me, it’s kind of like how they ask if you owe money in child support and if you’re honest in your dealings. Yes paying tithing is very important, but this man isn’t entitled to the blessings of being a tithe-payer because of the way he mishandled his affairs.
    If this man “needs” to pay tithing for his spiritual welfare, then he should get his affairs in order so he can pay tithing.

  23. Chris Kimball on March 12, 2013 at 7:54 am

    Hard to judge status vis a vis the church. And certainly none of my business. But it’s worth noting that a trust fund penalty means that somebody is stealing, and whether it’s George Thompson or not, he’s responsible — as the law sees it, either he stole or he failed to properly supervise somebody else who stole. Perhaps more significant is that he’s clearly a serial offender. The trust fund penalties relate to 1999, 2000 and also 2004, 2005 and 2007. And personal taxes relate to 1992, 1995, 1996, 1999, 2000. This is not a mix-up over reporting for a once-in-a-lifetime event.

  24. Mark B. on March 12, 2013 at 7:55 am

    I am surprised at people who jump so quickly to conclusions about this man’s moral character. As Sam points out, both in the original post and in #14, there are explanations (other than outright scurrilousness) for how the taxpayer got into this mess, and it seems that we should not be so hasty to judge. I mean, who do you all think you are? Nancy Grace??

  25. IDIAT on March 12, 2013 at 9:12 am

    For those of you encouraging the tax debtor to pay tithing on net — how do you determine what is “net?” Do I include all my household bills, or just government imposed taxes? I have seen the tithing paid by several stake presidents and an area authority seventy because they are from my ward and because I have served in callings that require that I process their tithing. Not to mention I know them personally. They pay on “gross.” And they pay a generous fast offering, too. Sure, members determine their tithing. But the definition in the handbook is pretty simple — you pay on your income. If you make $100k a year, you pay $10K. Doesn’t matter what state you live in, whether you have high or low sales taxes or state income taxes or use taxes or whether you live somewhere where you pay no taxes. If we played the “pay on the net” game, we could dream up all sorts of “deductions” and expenses so that most of us would pay a pittance.

  26. Kevin Barney on March 12, 2013 at 9:27 am

    No. 25 IDIAT, I don’t think it’s quite as simple as you’re portraying it: http://bycommonconsent.com/2010/09/06/tithable-income/

  27. Sam Brunson on March 12, 2013 at 9:33 am

    IDIAT, I wouldn’t dream of trying to determine what constitutes the proper tithing base for any individual except myself. The Church has never prescribed a definition. I’m sure you know people who have paid on their gross, or some approximation of it, which is good and admirable.

    It’s worth noting, though, that even the people you know who pay on gross probably don’t actually. I’m entirely sure they don’t pay tithing on imputed income; I’d be willing to bet most of them don’t pay tithing on unrealized appreciation. Maybe they pay tithing on gifts (but how do they figure out the value of a non-cash gift? fair-market value? how much it’s worth to them?), but I’ll bet most don’t pay tithing on the amount they don’t pay when they eat out with friends and split the bill 50-50. I’m almost entirely sure they don’t pay tithing on their employer’s share of payroll taxes. Maybe they tithe on the value of the fruits and vegetables they grow in their garden (but do they deduct the cost of seeds? then it’s net, not gross), but probably not.

    Which is to say, even people who pay tithing on quote-unquote gross make decisions about what they include in gross (whether those decisions are for administrative convenience or are because they don’t feel like a friend taking them out to dinner constitutes “increase”). There’s nothing unrighteous about that, of course, because those decisions (whether made consciously or not) are a necessary part of our economic and spiritual lives.

  28. Sam Brunson on March 12, 2013 at 9:34 am

    Or, you can just look at Kevin’s list.

  29. Tim on March 12, 2013 at 9:54 am

    Unless they’re paying taxes on what they’re employer pays for their healthcare and (like Sam mentioned) their employer’s share of payroll taxes–which, by the way, are almost always quite significant–they’re not paying tithing on gross.

  30. IDIAT on March 12, 2013 at 10:45 am

    Looked at the list, and all are basically notions of income — not deductions to form some type of net. Yes, we can haggle over the meaning of “income.” Birthday gifts are no more “income” than the dinner you enjoyed because your friend invited you over. We are the arbiters of some notions of income (unearned, appreciation and so forth.) But that all deals with notion of increace not decrease. Some commenters are all for the decrease so they can lower their tithing exposure. Certainly tithing is between the member and the Lord. But trust me on this — when a guy comes to tithing settlement and casually mentions to the bishop that he cleared $500K during the year as a W-2 employee, and only paid $1,000 in tithing, you can bet there will be a discussion about what tithing means.

  31. Sam Brunson on March 12, 2013 at 11:48 am

    IDIAT, there is no Platonic ideal of income. Each of the things Kevin, Tim, and I list constitutes increases in well-being that legitimately can be classified as income. As such, not paying tithing on those items means we’re effectively deducting them from the amount on which we pay our tithes. This post and thread aren’t really about defining the appropriate base on which to tithe, but it’s worth keeping in mind that what you (or I) consider to fall outside the set of “things that are income” means that we’re making a choice about how to classify a benefit; whether taxes fall inside or outside that set is, likewise, a choice that we, as tithe-payers, must make.

  32. CarlH on March 12, 2013 at 1:52 pm

    I think it’s worth noting that tithing (and other charitable contributions) qualify as “conditional expenses” (as opposed to “necessary expenses”) in the IRS Collectiions context and can be taken into consideration in establishing an installment agreement with the IRS IF the liability will be fully paid. The Tax Court opinion also notes that there is greater discretion when the payment period is reasonably short. Neither condition was satisfied for this taxpayer, who had already apparently reneged (for whatever reasons) on a prior installment agreement for personal income taxes.

    There is plenty to wince about in the facts (and the taxpayer’s argument) in this case. Perhaps most egregious, IMO, was his claim that his church positions constituted “employment” with the Church. Bad facts and badly argued law. But I think the Tax Court got it exactly right–and the “render unto Caesar” zinger was richly deserved. Sadly, as with the Forbes article, the nuances tend to tar the Church more than the individual taxpayer–an outcome that, IMO, a “faithful” taxpayer ought to anticipate before allowing his or her lawyers to trot such strained arguments.

  33. Charlie on March 12, 2013 at 7:25 pm

    Kent, never do. Just write useless words to distract myself from work…

  34. Ken on March 12, 2013 at 11:41 pm

    Sam,

    I’ve searched in vain for another reliable way to contact you apart from this site, so I apologize for (very temporarily!) derailing your thread here, but there’s a subject I would love to see you address. There is a certain subset of skeptical Church members who posit that there’s no way anyone can know for certain, without more detailed disclosure by the Church, that tithing money (and/or other charitable contributions) isn’t/aren’t used for the benefit of the Church’s “for-profit” entities (e.g., City Creek Reserve, Property Reserve, Hawai’i Reserve, etc., etc., etc.) If that were happening, I cannot imagine, for the life of me, how the IRS would have been so easily and thoroughly convinced to look the other way for so long, rather than gleefully lowering the boom on this multibillion dollar 501(c)(3).

    Or might the Church simply have a cadre of brilliant accountants, laywers, and other professionals who are exceedingly adept at engaging in the constant shell games that would be necessary to support the distract-and-divert scheme(s) long-term?

    Not, of course, that you have anything else to do, like teaching, grading, writing and publishing for purposes of advancing in the teaching profession, et cetera, but if you were ever so inclined, I’m sure your thoughts would advance the conversation on the subject greatly.

    Thanks! ;-D

  35. Ken on March 12, 2013 at 11:45 pm

    Uuuy! I know how to spell “lawyers”! Ooof!

  36. Charlie on March 13, 2013 at 11:15 am

    Ken,

    I think you write some good things here but also assume some that simply cannot happen. The IRS is full of baptist, jews, evangelicals, catholics and atheists, many of whom have very little patience for Mormonism and especially the Mormon church Inc. If the church did something out of line, they’d be on it quick smart. The gay lobby too doesn’t like Mormon Inc and they, being upset with prop8 and the church’s involvement, digged and digged but all they came up with was one expense account that should’ve been declared which was a minor matter at best.

    The church does have an army of accountants and lawyers to protect itself and also to avoid bankrupcy. It also hires PR firms and have permanent PR people on payroll. The church has been around for a while and has grown with corporate america so they know what they’re doing. So then if tithing money goes to things like City Creek -which they denied repeated claiming the funds are from other church investments not tiths- it will be within acceptable IRS practices so as to avoid problems with them.

    A conspiracy to use tithing funds that tricks the IRS too is highly improbable.

  37. Sam Brunson on March 13, 2013 at 1:18 pm

    Ken, off the top of my head, I can’t think of a tax reason the Church couldn’t invest tithing money into for-profit business. (Remember, though, that this is the top of my head; it’s not an area I spend a lot of time with, and I could be wrong.) If it did, though, it would pay taxes on any income from that for-profit business. In practice, I have no idea if the Church does or not.

    Charlie, I’m not sure what you imply when you say that IRS employees are Jewish, Baptist, Evangelical, Catholic, and atheists (I’d add Mormons, Hindus, Muslims, and others). Are you implying some sort of implicit or explicit bias against the Mormon church? Because my Jewish, Catholic, and atheist friends aren’t biased against me or the Church, nor are the two Evangelicals I know well. (I can’t think of any Baptists I know, but that’s beside the point.) Suggesting that non-Mormons would aggressively pursue the Church is pretty offensive.

    And evinces a huge lack of understanding of how the IRS works. It is intensely bureaucratic and follows layers and layers of rules. And, among those rules are very strict standards for when and how to audit churches. As a result, churches rarely face IRS audits, and are treated abundantly fairly when they are audited. So even if everybody in the IRS hated the Church and actively wanted to bring its downfall, they’d have huge problems doing that.

  38. Ken on March 13, 2013 at 4:02 pm

    It’s been awhile since I’ve seen a Form 990 (what 501(c)(3)s file in lieu of a tax return), and you can fit what I know about tax law in a thimble (which is inside of a bigger thimble which is inside of a bigger thimble). And I’m assuming that churches have to file 990s (or perhaps they’re not covered under 501(c)(3)). But they have to indicate in a pretty detailed fashion where their income for the tax year came from and what they did with it, don’t they? It would seem pretty strange to me if that were not the case. And if the Church were using charitable contributions (or perhaps more than a statutorily defined amount or percentage of such contributions) to support private, for-profit ventures, I can’t imagine why that wouldn’t raise red flags from here to Hoboken.

    Maybe I’m giving the government too much credit! (Excuse me, I have to adjust my tinfoil hat so that the mindreader rays from the black helicopters can’t penetrate …) Ahh, there we go! Tha’s much better! ;D

  39. Sam Brunson on March 13, 2013 at 4:20 pm

    Ken, churches, though exempt under 501(c)(3), are exempted from filing a Form 990. Basically, the IRS gets no financial disclosure from churches qua churches.

  40. Ken on March 13, 2013 at 6:15 pm

    Sam,

    Color me enlightened! (Maybe a little surprised besides, but, color me enlightened!)

    Thanks!

    -Ken

  41. Ken on March 13, 2013 at 6:16 pm

    And I TOLD you you could fit what I know about tax law into a reeeeeeally small thimble! ;D

  42. Ken on March 13, 2013 at 6:21 pm

    I wonder, has the Church ever been audited?

  43. jennifer rueben on June 29, 2013 at 11:53 pm

    42 yes, the church is audited every year and a report is made to the general membership at general conference. a more complete copy of those audit finding are available if you want to go into details. The auditing is done by an independent firm.
    43 what is this?
    (T&S Admin: #43 was a spam comment that made it through the filter and has been deleted.)

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