September 2018 Chuch & State Magazine - September 2018

Audit Act Does Not Protect Individual Pastors, Court Says

  Rokia Hassanein

A federal court affirmed that the special rules that re­strict the Internal Revenue Service’s ability to audit houses of worship do not apply to individual pastors.

Herbert H. Rowe and his wife Carol G. Rowe, who are pas­tors at the Upperroom Bible Church in New Orleans, argued that the rules in a federal law known as the Church Audit Act protecting churches from most audits should apply to them as well.

The Rowes didn’t file federal income tax returns between 1996 and 2010. After they were put under investigation by the IRS, they filed a tax return in 2011.  This led to the IRS requesting records that correlated to church bank accounts, which the Rowes protested.  

The U.S. District Court for the Eastern District of Louisi­ana denied the Rowes’ petition to quash the IRS’ request of records. “Non-Profit Law Prof Blog” reported, “The court concluded that the plain language of section 7611 meant that section did not apply to investigations relating to the tax liability of parties other than the church itself and cited a number of decisions reaching that conclusion with respect to summons directed at church financial records.” (Rowe v. United States)

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