March 2009 Church & State | People & Events

The Internal Revenue Service continues to experience setbacks in its efforts to audit a Minnesota church accused of financial improprieties and pulpit-based politicking.

U.S. District Judge Ann D. Montgomery ruled recently that the Living Word Christian Center in Brooklyn Park does not have to comply with an IRS demand for information because the request was issued by an agency official of insufficient rank, reported The Chronicle of Philanthropy.

IRS officials began investigating the church after allegations were raised that its pastor, Mac Hammon, had endorsed U.S. Rep. Michele Bachmann (R-Minn.) in October of 2006. (Americans United filed a formal complaint with the IRS over the matter.)

IRS agents, while looking into the complaint about politicking, uncovered evidence of possible financial improprieties. The church is accused of leasing airplanes owned by Hammond and giving the pastor a loan, a portion of which was later forgiven. The IRS believes these actions may have benefited Hammon personally, in violation of the tax code.

In April of 2007, the IRS wrote to the church requesting more information about its finances. The letter was signed by the IRS’s director of exempt organizations for examinations. The church refused to provide the information, contending that the request violated the Church Audit Procedures Act of 1984.

The 1984 legislation requires that church audits be initiated by a high-ranking IRS official. The official who signed the letter to Living Word, the church maintained, was of insufficient rank.

The IRS countered that the agency was reorganized in 1998 and that the IRS has since delegated church audits to the director of exempt organizations for examinations.

Montgomery said that was not enough. Her ruling supports an earlier decision issued by U.S. Magistrate Judge Jeffrey J. Keyes, who also sided with the church.

It was unclear if the IRS will appeal the ruling or attempt to start the audit over again under the guidance of a higher-ranking official.