Latest on the Grassley Investigation (Updated)

Susan Sataline reports that "[f]our televangelists, under investigation for the way they raise and spend money, did not turn over financial information by Thursday, the deadline set by the Senate Finance Committee, including one preacher who challenged the committee to subpoena him."  Here's more from her story:

Sen. Charles Grassley (R., Iowa), who is leading the investigation, said in a statement that he would wait for the ministers to send the information voluntarily. But the refusal and slow responses may force the senator into an uncomfortable choice: should legislators force religious entities to divulge financial details they are not required by law to share, risking the anger of religious voters who are being heavily courted in the walkup to the presidential election?

One minister may force the committee to make that choice: a tax attorney for Creflo Dollar, pastor of World Changers Church Intl. of College Park, Ga., told the Senate Finance Committee leadership that they would have to issue a subpoena to force him to turn over information. In the letter, the attorney, Marcus Owens, of Washington, D.C., said the minister was compelled to share those details only with the Internal Revenue Service, and asked the committee to refer any tax concerns to that agency.

Turning over information through a subpoena would keep the church's information from being released to the public, Mr. Owens said in an interview. "It guarantees you privacy," Mr. Owens said. "Subpoenaed documents cannot be placed on a Web site."

Sen. Grassley said, in a statement, "I'm willing to give ministries more time if that's needed, as long as they're cooperating and in contact with my office," he said. A member of the senator's staff said a subpoena "is an option, but he'd rather not go to that step."

Senate finance committee subpoenas are issued in one of two ways: either jointly by the Democratic and Republican leaders, or by the leader and a majority of committee members. An aide to Sen. Max Baucus (D., Mont.), the committee chairman, said the office had not received any subpoena request from Mr. Grassley. The two leaders last issued a subpoena for lobbyist Jack Abramoff.

Marcus Owens is former director of the IRS's exempt organizations division and has handled other recent high-profile matters involving tax-exempt organizations.  (He served as attorney for All Saints Church in Pasadena, California when the church was investigated by the IRS for alleged violation of the electioneering provisions of the Internal Revene Code, for example.  The IRS recently dropped the investigation.)  The Tampa Tribune quotes from Owens' letter to Grassley on behalf of Dollar's church: "A referral [to the IRS] 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."

Eric Gorski's story suggests that Bishop Eddie Long also has rebuffed Senator Grassley's requests, at least in part.

A spokesman for [Bishop] 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.

Gorski gets some reaction from Senator Grassley to these kinds of arguments.

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." . . .

[Regarding Dollar's request that the investigation either be referred to the IRS or that the Senate committee get a subpoena for the documents,] 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."

I cannot address all of the relevant issues right now, but here are a couple of initial reactions to these latest developments.  First, my guess is that Senator Grassley is underestimating the resolve of Marcus Owens and his client.  I would expect Owens and Dollar to force the fight.  In other words, if Grassley cannot make a referral to the IRS, they will try to force him to issue a subpoena or drop the request.

Second, while I don't have access right now to the full text of the letter Owens sent to Grassley and thus cannot comment on it as a whole, I will say that I share at least some of Owens' concerns about the way this investigation appears to have been conducted thus far.  As I mentioned some time ago, the IRS follows a detailed set of procedures when conducting inquiries and examinations of churches in order to protect their autonomy from the government.  Thus far, I have not seen evidence that Senator Grassley is being attentive to these special concerns that surround governmental examination of church-related matters.  For example, Grassley has said, "Churches are no different to other nonprofit groups -- they have to abide by tax rules."  It is certainly true that churches must abide by the tax rules that apply to them as well as to all other similarly situated non-profits. But it is not true that there is no difference in how the law treats churches and other tax-exempt organizations.  These special protections from the Internal Revenue Code are perhaps the most prominent example indicating that congregations are treated differently to some extent.  These procedures don't prevent the government from enforcing the law across the board, but they are aimed at ensuring that the government does so in ways that respect the separation of church and state and religious freedom.  These procedures only apply to IRS inquiries and examinations, but I think it is a mistake to act as if they don't send a larger message.

How are the other ministries responding to Grassley's request for information?  Here are the details on that score from Gorski's story:

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.

Sataline's story says that "[i]n a statement, a spokesman said Mr. Hinn would be responding to the Senate's request by Jan. 30."  Hinn's message on his website is here.   The Tampa Tribune quotes a Hinn representative as saying  "World Healing Center Church[, Hinn's church,] is in full compliance with government agencies duly authorized to oversee churches and charitable organizations."

The Tampa Tribune also provides more details about the latest response of Randy White, a founder of the Church Without Walls of Tampa, to the probe.  Although White declined to comment to the paper, the paper reports that "[a] defiant Randy White . . . addressed his congregation at the Thursday night service, indicating he was ready for a fight." 

"You hear me, and you hear me well," he said. "When the enemy wants to attack the church, he attacks the character and the finances. The devil is a liar."

White told the congregants there have been "no laws broken and no misappropriation of money" regarding his church.

"We walk in integrity. We have checks and balances, checks and balances," he insisted. Many of his comments were met with applause.

Grassley staff members said the Whites' attorneys contacted their office for the first time on deadline day and promised to be in touch later. They did not specify when.

The story also notes that "[i]n early November, the Whites issued a statement saying they think they comply with all tax laws."

Senator Grassley means well, and he is surely right when he says it would be improper for churches to abuse their tax-exempt status.  But Grassley has not convinced me that he has thought through this investigation as carefully as he should have or handled the legitimate concerns and questions adequately.

UPDATE:  In a press release dated December 6, Senator Grassley's office says that representatives of Bishop Eddie Long of New Missionary Baptist Church have "said publicly that the ministry will cooperate," but that Senator Grassley "has not received any material or contact from the ministry."  I believe Senator Grassley is referring to a statement Long made in early November.   I'll keep my eyes peeled for further responses from Long to the probe.

Comments

[Bruce Gerencser]

Should we not be open, completely open, with how we spend tax exempt contributions?

Churches, by definition are tax exempt. A Church does not have to be 501c3 to be tax exempt. The IRS has a general standard they use to determine a "church is a church."

With tax exemption comes regulation. If you are tax exempt yo have to play by these rules. The rules are the same for everyone who is tax exempt (though some Churches are exempt from filing some forms)

It should be noted that everyone of these targeted Churches are from th e prosperity gospel corner of Christianity. Their excess has made them a target. They only have themselves to blame. Jets, lavish homes, excessive spending.....Red flags to Grassley and I am sure others. I suspect they are balking, not out of principle, but out of fear of being exposed.

I should note that pastors get a special tax break that no other US citizen gets....the housing allowance. I suspect people would be shocked to find out that the money be spent for the lavish lifestyles of these ministers is not taxed.

I understand your concern over Grassley and how he has gone about this. Your concern is warranted.

But.......30 years of ministry has shown me a lot of financial funny business in the name of God.

I think the whole issue of Tax exemption in the country needs to be reexamined and more narrowly defined. Some Churches are involved in businesses that are clearly "for profit" yet because they are "ministry" they are tax exempt.

Bruce

[Melissa Rogers]

Bruce, thanks for your comments. Churches should be accountable for abiding by the relevant legal restrictions. My concerns are not about whether but about how those restrictions are enforced by the government and about the precedent that might be set with this investigation. I do not want to set a precedent, for example, that would allow the government to go on fishing expeditions in church records and otherwise run roughshod over the protections for the religious autonomy of congregations.

(Regarding your comment on churches and their status as tax-exempt entities, those who are interested in learning more about the requirements that apply to churches may want to read the IRS tax guide for churches and other religious organizations http://www.irs.gov/pub/irs-pdf/p1828.pdf
Among many other things, it say that churches that meet the 501(c)(3) requirements are automatically considered tax-exempt and are not required to apply for and obtain recognition of that status from the IRS.)

As for possible reform of law and policy in this area, I'm looking at that issue carefully. I'm not a tax specialist, so I want to make sure that I understand the full implications of any proposed reforms before commenting on various proposals.

I will keep listening to hear what Senator Grassley and his staff have to say on all these issues. There are legitimate competing interests that must be balanced. I'd like to hear more about how those interests are being balanced in the course of this particular investigation and in the discussion of any potential reforms in this field.

And, as I've said before, if these organizations indeed do not belong to non-governmental accountability groups like the Evangelical Council for Financial Accountability, I urge them to join them. Organizations like these play a critical role in correcting problems so that the government does not have to do so. Of course, if they refuse to be accountable in that way, it is likely to create problems that the government then has to solve, and that can trigger other dilemmas. So please do not read my comments as a defense of the way they have conducted their ministries (or of their theology).

Again, thanks for your comments, Bruce. I respect and appreciate your views, and I look forward to continuing the conversation.