Minnesota Church Battles IRS Audit Over Politicking And Questionable Expenditures

A Minnesota church is locked in a battle with the Internal Revenue Service over allegations of improper expenditures – a spat that grew out of complaints over partisan politicking.

The IRS has requested financial records and notes from board meetings from Living Word Christian Center in Brooklyn Park, reported The Chronicle of Philanthropy. The IRS wants to audit the church, but congregational leaders are fighting the move in court.

The IRS noticed red flags about the church’s finances while it was investigating allegations that the tax-exempt religious organization may have illegally intervened in a 2006 congressional race.

Americans United reported the church to the IRS on Oct. 31, 2006, after news media accounts noted that Pastor Mac Hammond endorsed Republican House of Representatives candidate Michelle Bachmann from the pulpit.

Hammond introduced Bachmann to the congregation, remarking, “[W]e can’t publicly endorse as a church and would not for any candidate, but I can tell you personally that I’m going to vote for Michelle Bachmann. Because, you know, I’ve come to know her, what she stands for and I want her to share her testimony with you tonight.”

Bachmann went on to discuss her campaign during her remarks, asserting that she had been called by God to run for public office.

While investigating that possible infraction, IRS agents uncovered evidence that the church may have engaged in financial transactions that personally benefited Hammond. The congregation leased planes owned by Hammond and allowed him to borrow money, later forgiving some of the debt.

Under IRS rules, leaders of non-profits are not permitted to use those groups to enrich themselves. The church responded to some IRS requests for information but then refused to provide more. It then sued the federal tax agency to stave off an IRS audit.

The IRS lost round one when a U.S. magistrate judge ruled against the federal tax agency. Magistrate Judge Jeffrey J. Keyes said that under the terms of a 1984 federal law, church audits can only be initiated after being approved by a high-ranking IRS official. Keyes agreed with the church that the IRS official who approved the audit held insufficient rank. The audit, the court said, should have been approved by a regional commissioner.

The IRS is expected to appeal the U.S. v. Living Word Christian Center ruling.