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IRS, Tax Court Don’t Always Agree on What Makes a Church With PM-IRS-Churches Bjt

June 19, 1987

WASHINGTON (AP) _ Although Congress has never defined ″church″ for purposes of tax law, the Internal Revenue Service has some guidelines - even though they are not necessarily accepted by the U.S. Tax Court.

In 1978, Jerome Kurtz, then commissioner of the IRS, made a speech listing 14 criteria to help the agency determine whether an organization was a church. The IRS has adopted those points as policy in deciding whether to revoke a tax exemption claimed by a church.

The criteria require that a church have: a distinct legal existence; a recognized creed and form of worship; a distinct ecclesiastical government; a formal code of doctrine and discipline; a distinct religious history; a membership not associated with any other church; and an organization of ordained ministers.

Also, a church must have: ministers who are selected after completing prescribed studies; a literature of its own; established places of worship; regular congregations; regular religious services; Sunday schools for religious instruction of the young; and schools for preparation of its ministers.

Several federal courts have relied on the guidelines to decide cases, while specifying that few churches could meet all 14. The Tax Court has in certain cases disagreed with the IRS, most recently in a case involving the Foundation of Human Understanding, headquartered in Los Angeles.

The IRS had recognized the foundation as a tax-exempt religious organization but had refused to grant preferential status as a church. (A church does not have to file annual reports to the IRS; a religious organization does. There also are different standards for deductibility of contributions.)

The foundation, whose beliefs were built around the idea that ″through meditation and faith in Christ, it is possible for man to gain control of his emotions,″ regularly conducted services in Los Angeles. It eventually expanded into Oregon, and later into a broad-based ministry with a magazine and a radio broadcast with an audience of 2 million.

In 1983, the IRS determined that ″the primary purpose and function of your organization are to evangelize and promulgate your teachings and doctrines through a religious broadcasting service and a religious publications operation. While you are a religious and educational organization, you are ... not a church as that term is commonly understood.″

The ruling was based on the conclusion that the foundation reached far more people through radio and publications than through direct association with them.

Last month, a majority of the Tax Court disagreed. ″Despite the breadth of ... (the foundation’s) broadcasting and publishing efforts, its associational aspects are much more than incidental,″ and the foundation qualifies as a church, the court concluded.

In a dissent endorsed by Chief Judge Samuel Sterrett, Judge Charles Simpson wrote that Congress intended the most preferential tax treatment for those traditional churches that, because they serve and are monitored closely by the local community, need not be supervised by the IRS.

The foundation’s ″broadcasts were the principal means of spreading its beliefs; they were not merely broadcasts of services conducted for its members,″ the dissenters wrote, and the organization ″is not a church for tax purposes.″

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