IRS Drops Investigation of Minnesota Pastor

August 3, 2009

The Internal Revenue Service has withdrawn its plans to audit Pastor Gus Booth over sermons he preached as part of last September’s Pulpit Initiative, a project of the Alliance Defense Fund (ADF).  Booth sent the tax agency a copy of sermons he preached at Warroad Community Church concerning May and November elections.

After launching an audit of the church in August 2008, the IRS recently sent a letter announcing that it is closing its examination of the sermons — due to a procedural problem.


IRS Drops Inquiry into Minnesota Church
By Steve Karnowski, Associated Press
Minneapolis-St. Paul Star Tribune
July 29, 2009

MINNEAPOLIS - The Internal Revenue Service has halted its investigation into a Minnesota pastor who preached his politics from the pulpit in violation of his church's tax-exempt status, and the minister says he's disappointed because he'd rather fight it out in court. However, the IRS held out the possibility of reopening the matter later, which might give the Rev. Gus Booth of Warroad Community Church another shot at getting an IRS rule declared unconstitutional.

Booth said Wednesday he believes a section of the Internal Revenue Code that prohibits tax-exempt organizations, including churches, from supporting political candidates violates the First Amendment freedoms of speech and religion. He also said he plans to continue preaching about politics. "I just think it's important that a pastor inform their congregation who's the most biblical candidate or officeholder," Booth said by phone from the northwestern Minnesota city of Warroad.

However, the Rev. Barry Lynn, executive director of Americans United for Separation of Church and State, said the IRS rule is "perfectly reasonable" because it applies to all nonprofits, religious and secular, and saves them an enormous amount of money in exchange for their not endorsing candidates. "To eliminate this provision for churches would open up a giant new loophole in legitimate campaign finance rules that include being able to see where money or support for candidates comes from," Lynn said.

Booth was one of six pastors throughout the U.S. who were subjects of complaints filed last September by Americans United. Americans United learned from media reports that the six were part of a national protest organized by the Alliance Defense Fund, a conservative legal group that opposes the rule. Erik Stanley, senior legal counsel for the Arizona-based group, said 33 pastors in 22 states participated in the Sept. 28 Pulpit Freedom Sunday. He said they all sent the IRS copies of their sermons testing the ban. The IRS never went after any of them for those sermons, Stanley said. Booth was investigated instead for a sermon he gave in May 2008 against Democrats Barack Obama and Hillary Clinton. Booth said he sent the IRS and Americans United letters to make sure they knew it about it.

In its letter to Warroad Community Church, the IRS said it was dropping its investigation "because of a pending issue regarding the procedure used to initiate the inquiry." It held out the possibility that it could reopen the case "after it resolves that procedural issue." IRS spokeswoman Nancy Mathis would not comment on why the IRS dropped its investigation of Booth or on the status of the cases against the other pastors. She said federal law precludes the agency from commenting on information about taxpayers.

Booth said he believes the IRS knows it would lose on constitutional grounds. "I just basically believe that they realize that their law is unconstitutional so they don't really want to fight," he said. However, Lynn said he believes the IRS backed off Booth because of a federal judge's ruling in another case involving a different Minnesota pastor.

In that case, Judge Ann Montgomery ruled in January that Living Word Christian Center in Brooklyn Park did not have to comply with an IRS summons for an investigation into whether the church had violated its tax-exempt status through allegedly improper financial dealings with its senior pastor. The judge said that the IRS' investigation had not been authorized by a high-enough official at the Treasury Department. The decision didn't specify who would be the "appropriate high-level Treasury official" required under the Internal Revenue Code. "We're working the issue, and we hope to have it resolved soon," Mathis said of that case.

Alliance Defense Fund Press Release

IRS Withdraws Audit on Minn. Pastor’s Sermons
ADF Attorneys Say Federal Agency Is Leaving Churches in Limbo

Tuesday, July 28, 2009, ADF Media Relations, 480-444-0020

WARROAD, Minn. — The Internal Revenue Service has stopped investigating Pastor Gus Booth of Warroad Community Church over sermons he preached as part of the Alliance Defense Fund’s Pulpit Initiative last year.

Booth originally sent the IRS a copy of a sermon he preached in May 2008 with regard to the primary elections. After participating in the Pulpit Initiative’s Pulpit Freedom Sunday Sept. 28, Booth also sent the agency his sermon regarding the general election. After launching an audit of the church in August 2008, the IRS has now stated in a letter that it is closing its examination of the sermons due to a procedural problem.

“Pastors have a right to speak freely from their pulpits. Something is very wrong in America when free speech is held hostage by bungling bureaucracies,” said ADF Senior Legal Counsel Erik Stanley. “This latest action from the IRS continues to leave churches in limbo when it comes to speaking freely from their pulpits. It illustrates everything that is wrong with the current enforcement of the Johnson Amendment. After an 11-month audit, it is disingenuous for the IRS to simply close the file and walk away as if nothing happened.”

Since the addition of the Johnson Amendment to the Federal Tax Code in 1954, the IRS has issued increasingly vague guidance on the law, which limits the First Amendment rights of pastors speaking from the pulpit, but has continued to launch investigations while avoiding court review of the constitutionality of its actions. Groups such as Americans United for Separation of Church and State have taken advantage of the vagueness of the tax law and have reported churches to the IRS in an attempt to remove their tax-exempt status.

“The IRS apparently has no desire to clarify the law for churches and has studiously avoided a court confrontation over this issue for years,” Stanley explained. “They continue to vaguely interpret the law, leave churches guessing as to what the law actually means, and enforce the Johnson Amendment through fear and intimidation.”

ADF attorneys believe the IRS could have continued its investigation of Warroad Community Church and reached a conclusion on the merits of the case, which they argue is the unconstitutionality of the Johnson Amendment.

“Instead of standing and fighting in court, the IRS prefers to run the other way,” said Stanley. “ADF would likely have waived any complaint about procedural concerns involved in the investigation stage of the audit in order to reach the merits of the case and clarify the law. Once a federal court has an opportunity to review the Johnson Amendment, we believe it will not take long for the court to strike it down as unconstitutional. Pastors have the right to preach from their pulpits on all issues, including candidates and elections. No pastor should fear the IRS.”

Procedural Glitch Causes IRS to Halt Investigation of a Pulpit Freedom Sunday Church
by Professor Lloyd H. Mayer, Nonprofit Law Prof Blog, July 30, 2009

The Minneapolis-St. Paul Star Tribune reports that the IRS has halted its investigation of Warroad Community Church in Warroad, Minnesota because of a procedural glitch. The church was one of the more than 30 participants in "Pulpit Freedom Sunday," an Alliance Defense Fund organized challenge to the Internal Revenue Code section 501(c)(3) political campaign intervention prohibition. According to the article, the IRS investigation was not, however, based on the September 2008 sermon delivered as part of that effort but instead was based on a May 2008 sermon that criticized both Barack Obama and Hillary Clinton.

The procedural problem that IRS cited as the reason for dropping the investigation is almost certainly the Minnesota federal district court decision earlier this year that the IRS had delegated the authority to begin church inquiries to an IRS employee who was too low down in the IRS hierarchy, as we previously blogged about. As the government has apparently chosen not to appeal that decision (ending an investigation into Living Word Christian Center of Brooklyn Park), it is binding for all Minnesota federal district courts. It is not yet clear, however, whether the IRS is halting investigations of churches located outside of Minnesota even if they were authorized by the same IRS employee. Also, the IRS explicitly reserved the right to re-open the investigation of Warroad Community Church, presumably if the new investigation is authorized by a sufficiently senior IRS employee under the Living Word Christian Center decision.
Source:  EP News, July 31, 2009 and EO Tax Journal, July 31, 2009

Source: EP News

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