Editorial: Government Intervention Needed to Curb Religious Financial Fraud

Senator Charles Grassley, the former ranking Republican on the Senate Finance Committee, has completed a five-year investigation of religious financial fraud that uncovered weaknesses in the United States tax code which allow churches to become tax shelters. The investigation revealed how televangelists exploit love offerings and housing allowances as nontaxable income and operate companies from their churches. Unfortunately two mistakes crippled the investigation:

1. No subpoenas were issued and this resulted in an incomplete investigation.
2. Questionable activities by televangelists Benny Hinn and Joyce Meyer were overlooked after they cooperated in the investigation.

In response to these mistakes Christian Headlines is calling for the IRS to audit the six TV ministries and complete the investigation. Christian Headlines is also endorsing legislative proposals from the Senate and supporting whistleblower protections for nonprofit organizations. And lastly, Christian Headlines is recommending that the Evangelical Council for Financial Accountability (ECFA) adopt compensation limits and revise its membership application to obtain additional information regarding church nondisclosure agreements and self dealing.

IRS Should Complete the Investigation by Performing Audits

Senate Finance Committee attorney Lynda Simmons authored four reports describing questionable activities uncovered in the ministries of Kenneth and Gloria Copeland, Creflo and Taffi Dollar, Eddie Long, and Paula and Randy White. These reports list companies and questionable integrated auxiliaries that televangelists have operated from church properties. When someone operates both a nonprofit organization and for-profit corporation and these entities do business with each other, it can be illegal to excessively profit from these self dealing transactions. ₁

An IRS audit should examine at least seven issues:

1. Did church employees provide free labor for the televangelists’ companies?
2. Did these companies obtain free office space from the churches or did they pay rent? If more than $1,000 was paid in rent during the year, a 990-T form for unrelated business income should have been filed with the IRS. No 990-T forms were listed as sources in the Senate reports. An IRS audit would determine if any of these forms were required and if they were filed.
3. Did the churches purchase products and services from these companies? If so, did the churches pay for these products and services at fair market value? For example, if Paula White Enterprises sold Paula Whites’ books to Without Walls International Church at full retail price rather than wholesale, then an illegal transaction took place and Paula White received excessive compensation from the transaction.
4. Did Long receive any income from New Birth Missionary Baptist Church (NBMBC) besides a love offering? Did attendees of NBMBC receive tax receipts for giving to love offerings taken for Long? ₂
5. Is Kenneth Copeland operating secret foreign bank accounts? Copeland did not provide to the Senate Finance Committee any information about money collected at conventions held in Fiji, Nigeria, and Singapore. ₃ 
6. Did Creflo Dollar pay a gift tax when he gave almost $1 million to Kenneth and Gloria Copeland? ₄
7. Did each televangelist reimburse their church for use of the church-owned jet when used for personal trips?

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