IRS May Be Auditing Churches, Even Without Final Regulations

June 20, 2017

For several years now, the Internal Revenue Service has been without final regulations on the proper protocol for initiating church tax audits. But according to a recent federal course case, the lack of approved guidelines may not be stopping the agency from continuing its audits of churches.

In an article reporting on the Bible Study Time, Inc. vs. United States case,[1] Attorney Bruce Hopkins observes that the IRS Director of Exempt Organizations approved an audit of the organization in question, even though the Director of EO has not been confirmed in final regulations to be sufficiently high ranking to initiate an audit under the protections of the Church Audit Procedures Act (IRC Section 7611).

Although the IRS eventually pursued a different strategy (bank third-party summonses) to gather information about the organization’s finances, the case still raises interesting questions about whether the agency has been attempting to initiate other church tax audits despite no final regulations on who within the Treasury Department has the proper authority to do so.   

For prior ECFA coverage, see Federal Government Has “No Comment” on Church Tax Audit Regulations and Heightened Procedures Now Apply to Church Employment Tax Audits.



[1] Bruce R. Hopkins, What Is Going on With Church Audits?, NonprofitCounsel (June 2017).

 


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


Follow @ecfa