Wednesday, April 06, 2005

IRS to target religious nonprofit "ministries" - part 1

Last year Christian Headlines reported that the IRS had launched an investigation into 2000 nonprofit organizations. This week Internal Revenue Commissioner Mark W. Everson addressed the Senate Finance Committe about about his organization's findings. He also presented the committee with a 14-page letter presenting an overview of the investigation.

From the letter (emphasis added):
A corporation sole is an entity authorized under certain state laws to allow religious leaders to hold property and conduct business for the benefit of a religious entity. The leader may incorporate under state law in his capacity as a religious official.
A corporation sole may own property and enter into contracts as a natural person, but only for the purposes of the religious entity. Title in property that vests in the officeholder as a corporation sole passes to the successors in office, and not to the officeholder's heirs. The purpose of a corporation sole is to ensure continuity of ownership of property dedicated to the use of a religious organization.

The corporation sole form of organization serves a valid function for legitimate religious entities. However, some promoters are urging use of corporation sole statutes for tax evasion. Individuals incorporate under the pretext of being a "bishop" of a religious organization or society. The idea being promoted is that the arrangement entitles the individual to exemption from Federal income taxes as a nonprofit, religious organization described in section 501(c)(3). The position is utterly without merit."

Stayed tuned. This week Christian Headlines will have more news to report on several televangelists and excessive compensation practices.

posted by Christian Headlines at 7:43 AM  

It appears GREED has gotten the best of many ministries. Truth is, the only benefit of getting a 501C3 for a ministry is for the sole purpose of walking into a department store to buy items tax free. (most do so illegally by buying items not ministry specific) That greed forced MANY to "incorporate" their ministries WITH THE STATE to get that tax free status and save a few dollars. Problem is, by "incorporating" they have now allowed the state to do as the "law" allows. Anyone care to venture a guesss as to how many ministries will not only be shut down, but forced to pay back taxes and massive penalties?

Let's say you've been a ministry 20 years. The Vatican controlled IRS doesn't much care for your "message." So the IRS now feels you broke the agreement and therefore no longer a tax free entity. What's worse, they will go back to the date of the 501C3 conception, calculate what they feel you "should" have paid in taxes durign those years, and then add penalties along side excise taxes. That can, and usually does amount to millions sufficiently ending that ministry and silencing that voice.

So I ask, was it worth worth using deception to illegally get tax free toys over the years? Now do you understand how a foothold can become a VERY destructive force?

For a recent horror story on this topic. Click here

The Presents of God ministry