Mac and Lynne Hammond; Source: LWCC.org

Pastor Mac Hammond announced Sunday that he has been asked to join Michele Bachmann’s presidential campaign as the chairman of her national Faith and Family Council. Hammond made headlines after endorsing Bachmann’s congressional bid from the pulpit in 2006, spurring a complaint to the IRS.

“Michele Bachmann has considered me her pastor for a while,” Hammond said of Bachmann during his Sunday sermon. “Her concern has to do with what her political opposition might do with us as a ministry because the political opposition she faces is very poisonous, no doubt about it.”

Bachmann spoke at Hammond’s church in 2006, calling herself a “fool for Christ.”

“Everybody needs a pastor and she has asked me to be the chairman of her National Faith and Family Council…actually that’s not a settled fact yet because of the possible legal ramifications of my becoming a part of her political campaign staff,” he said. “But whatever the case may be, Lynne and I are going to travel with her to different states that she will be campaigning in.”

He said he traveled with Bachmann to Tennessee to introduce her at a campaign event.

“I got an opportunity to talk about the vital importance of the church rising up and taking this nation back,” he said. ”She is a sister in the Lord that is as committed to his word as any of you in here are.”

Hammond said he wouldn’t be using church resources or endorse her from the pulpit.

In 2006, the Minnesota Independent first reported about Hammond endorsing Bachmann from the pulpit. That reporting generated a complaint to the IRS and an informant inside the church sent MnIndy documents outlining potentially illegal financial arrangements.

The IRS investigated and Hammond’s Living Word Christian Center sued arguing that due to IRS restructuring, the agency could not appropriately investigate the church. A judge ruled in LWCC’s favor and the IRS began a process to restructure itself in order to comply with the law.

On Sunday, Hammond said that churches should be able to endorse candidates and praised efforts by conservative Christian groups to have rules barring politicking overturned.

“For centuries, politicking was done in the local church,” he said. “And pastors and ministers had the responsibility of illuminating which candidates were most closely aligned with God’s word.”

Rep. Michele Bachmann made Citizens for Responsibility and Ethics in Washington’s 2010 Most Embarrassing Re-elects list, along with 10 other members of Congress. The rankings, released Monday, include an even split between Democrats and Republicans who, according to CREW, have violated the public trust.

“Most Americans would be fired if they were caught patronizing a prostitute or abusing their positions for personal gain, but members of Congress aren’t most Americans,” CREW Executive Director Melanie Sloan said in a statement. “Instead, these lawmakers are headed back to Washington where they are expected to police themselves, which is about as likely as the Grinch actually stealing Christmas.”

Bachmann makes the cut along with: Rep. Joe Barton (R-TX), Rep. Vern Buchanan (R-FL), Rep. Eddie Bernice Johnson (D-TX), Rep. Charles Rangel (D-NY), Rep. Laura Richardson (D-CA), Rep. Peter Visclosky (D-IN), Rep. Maxine Waters (D-CA), Rep. Joe Wilson (R-SC), Rep. Don Young (R-AK) and Sen. David Vitter (R-LA)

Bachmann was selected by CREW because she “used her official congressional website to organize a rally against health care reform, and called for an investigation into the ‘anti-American’ views of fellow members of Congress.”

The group filed a complaint with the Office of Congressional Ethics in Nov. 2009 after Bachmann used her official website to organize her “House Call” rally against health care reform efforts. CREW also notes that Bachmann did not get the proper permit for the rally.

House rules restrict members from using their websites to engage in “grassroots lobbying” or to solicit support for a member’s position,” wrote CREW. “Rep. Bachmann’s website urged people to come to the Capitol rally ‘and tell their Representatives to vote no’ on the health care reform bill.”

Bachmann also made CREW’s list in 2008. Along with Rangel and Young, she is one of three repeat offenders for CREW.

Prior to her election to Congress, CREW was keeping an eye on Bachmann. In 2006, the group went after the Living Word Christian Center after its pastor, Mac Hammond, endorsed her from the pulpit.

“Unfortunately you didn’t have information before you went to press with your story which is important,” said Amy Rotenberg on Tuesday. “Living Word Christian Center actually sold that property to another entity and has had no continuing interest in it since 2006.”

She said that TCF Bank had released LWCC from the mortgage at that time.

The Minnesota Independent checked with Hennepin County officials on Monday for information about the sheriff’s office foreclosure notice, which lists LWCC as the holder of the defaulted mortgage.

Lisa Kiava, public information office for the sheriff’s office, said, “The document listed online is the extent of the information that the sheriff’s office has. We don’t have any addition information than what you see online.”

Rotenberg passed along a document dated June 15, 2010 (PDF), that describes a transaction in 2005 with HMW-Brooklyn LLC.

She told CityPages this morning that the Hennepin County listing was “misleading.”

Mac and Lynne Hammond. Photo: LWCC.org

Updated: Property owned by Living Word Christian Center has gone into foreclosure, according to the Hennepin County Sheriff’s office. On July 28, four parcels of land owned by the Brooklyn Park mega-church was bought at a sheriff’s sale for $5.1 million. Pastor Mac Hammond, who preaches a “prosperity gospel,” has been plagued by financial problems over the last few years. The church took millions from a man who was later convicted of fraud, and the IRS opened an investigation into the church’s finances stemming from favorable financial dealings between the church and Hammond.

County records show that TCF National Bank, which is also the mortgage lender to LWCC, bought the property. Per Minnesota law, Living Word has until July 28, 2011, to redeem the property by securing new financing. The church bought property in 1995 for $3.5 million. It’s unclear from county records whether the foreclosed property is the land on which the church itself sits; Living Word has not responded to the Minnesota Independent’s request for comment on the foreclosure or the church’s financial future.

Update: LWCC told the Minnesota Independent on Tuesday that they sold the property in 2006 and that Hennepin County records are misleading. Said Amy Rotenberg, “Living Word Christian Center actually sold that property to another entity and has had no continuing interest in it since 2006.” We’ll update this story should those records be modified.

Also, according to Rotenberg, “The church is not currently facing any financial issues.” She said, “We won our battle with the IRS” and that the church’s defense of the $2.2 million donated before Gerard Cellette was convicted of fraud should not be seen as a “financial problem.”

In early 2008, the church began to fall behind on its budget by $40,000 to $70,000, prompting Hammond to sell off his jet and forcing the church to cut its hour-long television broadcast to a half hour.

In May, the church was served with papers demanding the return of $2.2 million in money it received from Gerard Cellette, who had been convicted of fraud. Cellette ran a Ponzi scheme and lawyers for the victims were attempting to collect the money from Living Word for remuneration.

The church said in a statement in May that it felt it shouldn’t have to give the money back to the victims because of its status as a church. “This lawsuit, on behalf of Mr. Cellette’s investors, to take back the funds from LWCC and repay the investors is unfair. Our church is essentially being asked to be the guarantor to principally out-of-state, sophisticated investors that made bad investments with Mr. Cellette.”

It’s not the first time the church has invoked religious privilege following questions about its finances.

In 2007, the Minnesota Independent reported that Living Word had arranged favorable loans for Hammond and that Hammond had bought a stunt plane from the church and then leased it back to the church. That reporting led to an IRS investigation, and in 2008 the church sued to block the IRS from investigating.

The IRS wanted a look at Hammond’s and Living Word’s financial books, but Hammond invoked religious privilege.

“This case is about the First Amendment, the free exercise of religion and separation of church and state,” Walter Pickhardt, attorney for the church, said at the time. “Living Word did cooperate but the IRS didn’t follow correct procedures. It was an overbroad request.”

A judge ruled that the IRS did not follow the proper procedures in its investigation and the agency dropped its investigation.

In 2006, the church gained notoriety when Hammond took to the pulpit to endorse Rep. Michele Bachmann for her first election to Congress. Hammond’s backing prompted complaints to the IRS and raised eyebrows, since Hammond didn’t live in Bachmann’s district.

Hammond’s financial troubles come after years of financial growth for the church and for Hammond personally. The “prosperity gospel” Hammond preaches asserts that financial gain is a sign of God’s love. The church has several prayers about becoming debt-free.

“We, the body of Believers of Living Word Christian Center, declare we have been carved out for an end-time expression of El Shaddai, the God of abundance and no lack,” reads one such prayer on the church’s website. “We are taught how to live independent of this world system and how to have dominion over it, therefore, in Jesus’ name, we declare we are debt-free! The spirit of debt is destroyed over our lives and over this local church because of the anointing. We are the lender and not the borrower, the head and not the tail.”

Hammond isn’t the only prosperity preacher to have faced money troubles. As Christianity Today reporter Bobby Ross, Jr., notes, more than a few such figures are now struggling financially.

Pastor Mac Hammond of LWCC

Living Word Christian Center (LWCC), a Brooklyn Park megachurch, released a statement following the controversy over  statements made by Bradlee Dean, front man of You Can Run But You Cannot Hide, Intl., Inc. In recent weeks, Dean has spoken in support of countries that imprison and execute gays and lesbians. LWCC acknowledged hosting the group at its church, but said it does not believe in “condemnation or judgment.”

LWCC sent the statement to ex-gay ministry Exodus International, of which LWCC is an affiliate.

Living Word Christian Center (LWCC) did host You Can Run But You Cannot Hide Ministries on March 25, 2009 in our Senior High School Youth department. The speaker was Jacob MacAulay the chief operations manager of their ministry, his topic was on the influences of pop culture in our society. LWCC does not support financially or in any other manner, nor is an affiliate ministry of You Can Run But You Cannot Hide Ministries. Our faith community at LWCC believes it is the love of God who draws all men (people) to Him, not condemnation or judgment.

On his May 15 radio show, Dean said, “Muslims are calling for the executions of homosexuals in America. This just shows you they themselves are upholding the laws that are even in the Bible of the Judeo-Christian God, but they seem to be more moral than even the American Christians do, because these people are livid about enforcing their laws. They know homosexuality is an abomination.” On his May 22 radio show he downplayed the rhetoric slightly, stating that sending gays and lesbians to prison is the right and moral thing to do.

These opinions — and GOP-endorsed gubernatorial candidate Tom Emmer’s close ties with the group — sparked a response from the Council on American-Islamic Relations. Lori Saroya, head of the group’s Minnesota chapter, told the Minnesota Independent that CAIR-MN “strongly opposes any kind of violence or discrimination against any group,” and called on Minnesota Republicans to speak out against Dean’s statement.

“The YCR representative makes at least three outrageous and incorrect claims in the radio interview,” she stated in an email. “That ‘Muslims are calling for the executions of homosexuals in America,’ that executing homosexuals is ‘moral,’ and that Muslims are a ‘foreign enemy.’ Statements like this show the level of ignorance and bigotry that exists in our country.”

“We urge the GOP to repudiate and distance themselves from such rhetoric and hate speech,” she added.

Living Word Christian Center is not without it’s share of political controversy. In 2006, Pastor Mac Hammond endorsed Rep. Michele Bachmann from the pulpit, which triggered a series of investigations including the church’s purchase of a stunt plane for the pastor.

Paul Schmelzer contributed to this report.

Image: Ben McLeod

Americans United for the Separation of Church and State is urging the Internal Revenue Service to fix problems with its enforcement of laws against churches endorsing political candidates. In January, a Minnesota District Court judge ruled that the IRS did not have the proper procedures in place to investigate Living Word Christian Center, an investigation involving controversial church finances first reported by the Minnesota Independent in 2007.

“Given the pervasiveness of church politicking violations, as well as efforts by some organizations in recent years to encourage houses of worship to blatantly violate federal law,” the AU wrote to the IRS, “having a clear and valid enforcement regime is absolutely essential for the ongoing protection of religious liberty.”

Besides LWCC — whose pastor, Mac Hammond, endorsed Rep. Michele Bachmann from the pulpit in 2006 — another Minnesota church has been under investigation, but that probe was dropped this year due to enforcement problems.

Warroad Community Church pastor Gus Booth twice endorsed Sen. John McCain in 2008. Because the IRS did not have proper standing, the agency was forced to cease its investigation.

Americans United’s letter told the IRS that the ability to investigate churches for unlawful politicking is vital to the health of religion in the United States:

Americans United has long recognized that religion flourishes best when the wall between church and state is vigilantly maintained. Church politicking embroils houses of worship in divisive battles, pitting congregants against each other and their clergy.

The IRS limitation on partisan politicking is an important legal requirement that ensures that houses of worship, like all other non-profit organizations, do not embroil themselves in partisan disputes.

Image: Ben McLeod

The Internal Revenue Service’s investigations into alleged tax violations by two Minnesota-based churches, Living Word Christian Center (LWCC) and Warroad Community Church, have been thwarted by internal procedural problems.

These cases highlight the special tax-exempt status churches receive by law, but they also underscore problems at the IRS. In effect, the IRS has been unsuccessful in investigating allegations of tax violations by churches because years of conflicting congressional action have made it impossible for the IRS to follow its own rules.

And while the IRS has undertaken the potentially months-long process to reform its broken system, the religious right is seeking to exploit it by encouraging churches to flout the law and endorse candidates from the pulpit next month.

During the 2008 election, Warroad Community Church pastor Gus Booth, a Republican activist, apparently broke tax laws that prohibit electioneering by tax-exempt churches when he endorsed John McCain for president and trashed Barack Obama and Hillary Clinton from the pulpit. Last month the IRS suspended its investigation into the church, citing “a pending issue regarding the procedure used to initiate the case.”

In a similar case, the Minnesota Independent (then the Minnesota Monitor) identified questionable accounting practices by the Brooklyn Park–based Living Word Christian Center in 2007, which eventually led to an IRS investigation. But in January of this year, a U.S. District Court judge in Minneapolis also rejected an IRS summons to Living Word Christian Center because of procedural errors.

In both cases conflicting congressional actions prevented the agency from following its own rules.

In 1984, Congress passed the Church Audit Procedures Act to make it harder for the IRS to investigate church abuse of tax law. Among its provisions: An IRS official making a case against a church must hold a rank “no lower than that of a principal Internal Revenue officer for an internal revenue region.”

But thanks to a 1998 act of Congress, the Internal Revenue Service Restructuring and Reform Act, internal revenue regions (and their principal officers) were abolished, and the IRS was divided into sections servicing different categories of taxpayers, including individuals, businesses, and tax-exempt organizations like churches.

This change directly benefited Living Word Christian Center: It won its case in January because the IRS official charged with investigating the allegations wasn’t legally authorized to do so. Similarly, with no one on staff to legally investigate Warroad Community Church, the IRS suspended its investigation.

Reforms proposed by the IRS, entered into the Federal Register in early August, would clear up the contradiction, making the agency’s Director of Exempt Organizations the primary authority for investigating possible violations of tax law by churches. But the process of adopting those changes will be lengthy, involving a public comment period and hearings.

In the meantime, a group of churches plans to violate the law while there’s no one at the IRS to investigate.

On Sunday Sept. 27, the Alliance Defense Fund, a Focus on the Family–affiliated legal group, is encouraging pastors to endorse candidates from the pulpit. This year will be the second year of ADF’s “Pulpit Initiative.” Last year 33 churches participated, including Warroad Community Church.

The ADF’s Eric Stanley said that the campaign “is really part of a long, sustained campaign” to get a court challenge to IRS laws governing electioneering.

“We feel very confident that when we do, it will not take long for a federal judge to strike down this unconstitutional restriction on churches’ rights.”

Rob Boston, communications director of Americans United for the Separation of Church and State, writes that the new IRS rules should give churches participating in Pulpit Freedom Sunday a reason to pause.

“The fact that the IRS has issued these new rules is a sign that it wants to have a mechanism in place that will enable it to investigate churches that openly flout the law by endorsing or opposing candidates,” he wrote on the group’s blog. “Far from rolling over, it looks to me like the IRS is girding for battle. Churches that choose to follow the ADF down this misguided path can’t say they weren’t warned.”

She told WorldNetDaily:

“If I felt that’s what the Lord was calling me to do, I would do it,” she answered. “When I have sensed that the Lord is calling me to do something, I’ve said yes to it. But I will not seek a higher office if God is not calling me to do it. That’s really my standard.

“If I am called to serve in that realm I would serve,” she concluded, “but if I am not called, I wouldn’t do it.”

And in 2006 she said:

God then called me to run for the United States Congress, and I thought ‘What in the world will that be for?’ and my husband said ‘You need to do this,’ and I wasn’t so sure, and we took 3 days and we fasted and we prayed and we said, ‘Lord. Is this what you want? Is this your will?’ and after long about the afternoon of day two, he made that calling sure. And its been now 22 months that I’ve been running for United States Congress. Who in their right mind would spend 2 years to run for a job that lasts 2 years? You’d have to be absolutely a fool to do that. You are now looking at a fool for Christ. This is a fool for Christ.

Here, presented for the first time, is Bachmann’s complete six-minute speech from that night. Captured by Ken Avidor of Dump Bachmann — the king of the Bachmann documentarians in the blogosphere — it offers a remarkable portrait of the Minnesota congressional representative who has been thrust into the spotlight in the past week by her assertion that Barack Obama and numerous unnamed members of Congress were “anti-American.”

In a church setting, Bachmann is extremely candid about the right-religious basis of her politics and her political career.  A full transcript of her remarks is reproduced below; here are some highlights:

It’s the job of Christians to wage war on ‘radical Islam’ in God’s name: “We are sitting right now at a time in our history when we’re going to be dealing with some of the most important issues of our time. Number one being, which your pastor is going to be talking about in the next few weeks, radical Islam. How will our nation deal with this threat of radical Islam? There’s so much at stake, but we listen to the Lord and we decide we’re going to suit up, we’re going to sign up, we’re going to be hot for God, and we’re going to do what He is calling us to do! And we’re going to watch out and see what He is going to perform in our midst.”

God told Bachmann to get into politics, and later to run for Congress: “Twenty-two months ago, He called me to run for United States Congress. And my husband thought, you need to do this. This is a big deal to do something like this. So we set aside three days where we fasted and we prayed, and long about the afternoon of day two, we knew. We knew that we knew that we knew. This was it. And so we jumped in, and little did we know that out of 435 seats for Congress, this race would turn in to being one of the top three in the country.”

God wants you to be hot: “I’m 50 years old. I came to know Him when I was 16. For 34 years, I’ve been hot! And you want to be hot! Because when you are hot for Jesus Christ, there is nothing that is like that life! It is the most exciting life! When you are praying in the spirit, when you are meditating on his word, when you are fellowshipping with white-hot believers, He turns your life around. And it isn’t just for you. It’s for the world! He changes the world through hot people!”

Transcript
… So many of you share that love with me. You know, you see of all these video games that are out there now, and DVDs, and it’s all about virtual reality. You know, one thing that’s so great about being in Living Word is we know what real reality is. Real reality is the life in the spirit, and Christ Jesus. That’s what we experience every day. Who needs virtual reality when you’ve got real reality, when you’re in the spirit of God?

And that’s what I’m here to tell you about. It’s His sure calling. Pastor Mac has an awesome sermon, and I want to give testimony to the sermon you’ll be hearing today. Because he’ll start out talking to you about how God doesn’t want us to be lukewarm. Amen? He says be hot or cold. Can you imagine, he would tell the world to be cold before being lukewarm? Imagine that.

When He gave me His calling, when I received Jesus when I was 16, the one thing that I knew that I knew that I knew is the difference between not knowing Him, being cold and being hot. And you know, today if you watch TV, you’ll see young people on TV, and they’ll say “she’s hot.” Or they’ll say “he’s hot.” And what are they talking about? They’re talking about the outward, about how someone looks on the outside. What does God say when He looks at you, or when He looks at me? He wants to say: “She’s hot!” “He’s hot!” Because we are hot for Him! On the inside! Amen!?

I’ll tell you one thing, just from experience. I’m 50 years old. I came to know Him when I was 16. For 34 years, I’ve been hot! And you want to be hot! Because when you are hot for Jesus Christ, there is nothing that is like that life! It is the most exciting life! When you are praying in the spirit, when you are meditating on his word, when you are fellowshipping with white-hot believers, He turns your life around. And it isn’t just for you. It’s for the world! He changes the world through hot people! And He will continue to use you to change the world.

He’s done that for me. He will do it for you. I tell you what — the Lord has changed me just by allowing me to surrender to His will. I didn’t want to go to law school. I had no desire to go to law school. And He said to me one night in college, He said, Michele, if you will be steadfast and diligent, I will take you to law school. Oh, okay, Lord. All right.

And so I went to law school. The first Christian law school in the United States, Oral Roberts University down in Tulsa, Oklahoma. Now Regent Law School. I went there. And the Lord brought me to my husband. My girlfriend and I were praying one night in college, and all of a sudden the Lord gave each one of us, as we were praying, the same vision — which is odd — at the same time. And the vision was of me getting married in a farm valley to a guy sitting here in the front row.

And I thought to myself, Oooh. I don’t even like this guy. What’s this about? And so, put that vision on the shelf. At the same time, the Lord gave him a vision. He was a farmboy. He was out fixing a fence on the farm, and the Lord gave him a vision of marrying me out in that same valley on the farm. And he thought, Oooh, I’m 22. I don’t want to get married. I don’t think I even like her. And so he put that vision on the shelf.

And so we decided we’d just obey God. And so we obeyed God and we honored Him in our relationship. And pretty soon some romantic things started happening. And then we got married. And now it’s been 28 years, and I think it might work out. What do you think?

He put a calling on our heart. He put a calling on Marcus’s heart to meet people’s needs. He has a Christian counseling clinic here in the Twin Cities. Bachmann and Associates Christian Counseling. That’s his calling, to meet people’s needs on an emotional level.

He’s put a call on my heart to be involved in the law. But a few years ago, he put a call on our heart to have me go into politics. Politics? Why would I — five kids, 23 foster kids, counseling clinic, I’ve got a law career. What is that all about? Well, we were faithful and we said okay and we jumped in. He’s used me in a few different ways.

Twenty-two months ago, He called me to run for United States Congress. And my husband thought, you need to do this. This is a big deal to do something like this. So we set aside three days where we fasted and we prayed, and long about the afternoon of day two, we knew. We knew that we knew that we knew. This was it. And so we jumped in, and little did we know that out of 435 seats for Congress, this race would turn in to being one of the top three in the country. And that how this race turns will probably determine what majority is in Congress this fall. [sic]

We are sitting right now at a time in our history when we’re going to be dealing with some of the most important issues of our time. Number one being, which your pastor is going to be talking about in the next few weeks, radical Islam. How will our nation deal with this threat of radical Islam? There’s so much at stake, but we listen to the Lord and we decide we’re going to suit up, we’re going to sign up, we’re going to be hot for God, and we’re going to do what He is calling us to do! And we’re going to watch out and see what He is going to perform in our midst.

And that’s what it’s all about when He makes our calling sure. It isn’t about us. It’s about Him. And it’s about freeing each one of us up to do His will for His glory so that He will be magnified! And that’s His calling. It’s sure. I commend to you to listen carefully to the truth of His word that He will bless you with as your pastor comes and speaks to you this morning.

Thank you for giving me this opportunity to fellowship with each one of you today. Thank you.

Specifically, the IRS is looking for detailed information regarding favorable loans the church made to Hammond of almost $2 million and payments the church made to Hammond to rent a hangar for the church’s jet.

An IRS court filing said: “LWCC’s response confirmed that LWCC leases planes owned by Hammond, and pays Hammond to hangar these planes,” the filing said. “LWCC’s response also indicated that it had loaned money to Rev. Hammond, and subsequently forgave portions of this debt. The IRS concluded this leasing arrangement and these loans warranted further examination.”

Also at issue, according to Living Word’s attorneys, are significant changes to the structure of the IRS since the early 1980s relating to churches. Living Word contends that the IRS did not follow appropriate procedures related to IRS investigations of churches. Judge Jeffrey Keyes said, “I see this as a case that could be moving up through the courts.”

While Living Word complied with some aspects of the investigation, it has declined to provide the IRS information pertinent to the case. The IRS served Living Word a summons in March and the church did not comply. A magistrate judge ordered the church’s attorneys to appear in court Thursday and argue their case.

“This case is about the First Amendment, the free exercise of religion and separation of church and state,” said Walter Pickhardt, attorney for the church. “Living Word did cooperate but the IRS didn’t follow correct procedures. It was an overbroad request.”

Pickhardt also pointed out that the requested documents would expose church donors to government intrusion.

Pickhardt recounted the background behind the investigation — that a speech by U.S. Rep. Michele Bachmann at the church, and Hammond’s endorsement of her, triggered an initial investigation. Subsequent media investigations then highlighted the financial practices of the church (which were originally reported by the Minnesota Independent).

The lawyer for Living Word argued that, thanks to a series of legal changes, including an important one in 1984, churches have special rights in IRS investigations.

In 1984, Congress changed the structure of IRS enforcement to include a two-level process for investigating possible infractions by churches. The IRS must first conduct an inquiry, asking individuals and entities to produce certain information, and then, based on that information, could carry out an examination of church records, otherwise known as an audit. The law change was made to minimize government intrusion into religion and religious organizations.

The change also said that examinations, and the related demands for information from churches, needed to be issued by someone with a high-level of authority within the IRS, such as a regional commissioner.

Of the change, the IRS said (PDF):

Congress, when it enacted IRC 7611, tried to minimize the potential for church-state confrontations in Service examinations of churches by adopting detailed procedures to be followed whenever the Service was involved in what the statute characterized as a “church tax inquiry.” These procedures emphasized the need for a speedy determination of a church’s tax liabilities without unnecessary examination of church records.

Another change in 1998 restructured the IRS from a system of regional commissioners to a categorical system of taxpayer directors. For instance, previous to 1998, the Midwestern states would have had a commissioner who would have looked into a variety of cases. After 1998, there were directors responsible for enforcement for each type of taxpayer. In this case, the director of exempt organizations oversees tax compliance for all churches in the nation. There’s another director for large and medium businesses, another for wages and investments, and so on.

Living Word argued that the director who issued the summons for church financial statements did not have a high enough level of authority to issue the summons and that’s why the church did not comply. It was the director of exempt organization examinations who issued the summons, and that position is fourth in line on the IRS chain of command.

“Our argument is that [authority] wasn’t delegated correctly” since the IRS restructuring and that the summons should have gone to a higher level for review, said Pickhardt.

The attorney for the IRS, Robert Fay, said that isn’t the case. Courts have recognized that government agencies have deference in how to implement statutes, and the IRS restructuring in 1998 effectively replaced the commissioner system with a system of directors who wield the same level of authority as commissioners once did.

Judge Keyes noted that there is virtually no case law governing this issue. “I’m surprised that in the last 10 years this issue hasn’t been raised before.”

The judge gave lawyers for both sides two weeks to submit a statement about the issue of authority before he issues a judgment on whether Living Word will be required to comply with the summons.