Kenneth Copeland Ministries Would Rather Have A Tax Audit? Why?

April 22, 2008

Over the course of the past six months, I’ve had the privilege of watching one of the most interesting battles take place between a powerful Senator and a popular Minister – Grassley vs. Copeland. I am doubtful that many reading this are not fully aware of the background so I won’t spend much time reviewing that – (however, I will, toward the end of this blog point out some of the more interesting questions asked by Grassley of the Copeland Ministries).

While many of the six ministries have complied in one form or another, Copeland’s ministries have been blatant about their refusal to comply completely. A letter dated March 31, 2008 was sent to Senators Max Baucus and Charles Grassley outlining the Kenneth Copeland Ministries position. The full letter can be found here.

Here are some excerpts to expedite the process:

The Church provided a complete response to six out of 42 questions, and provided a substantially complete response to eleven out of the remaining 36 questions. Where the Church did not provide a complete answer, the Church determined that the question raises constitutionally and statutorily based privacy, confidentiality, and freedom of association issues with respect to the Church and other parties (including, for example, the Church’s officers, directors, pastors, ministers, and members).

Your March 11th letter indicates that your intent in seeking the requested information from the Church is to allow the Committee “to conduct oversight into matters related to legislation enacted by Congress … to determine how well a particular agency of the executive branch is administering legislation enacted by Congress, if a particular law or section of the law is being administered in a manner consistent with the intent of Congress and what changes might be required to a law to improve and enhance it.” In addition, your letter states that, in order to exercise “oversight over the administration of the federal tax revenue system by the Internal Revenue Service to make sure that its rules and procedures meet the purpose and the intent of the revenue code, including those rules applicable to non-profit organizations … the Committee needs to understand clearly and specifically how non-profit organizations are structured and operated.” In the Church’s view, all of these purposes could be accomplished just as effectively by the Committee asking the Internal Revenue Service to provide all of the information Senator Grassley is seeking through a request pursuant to section 6103 of the Code. Section 6103 of the Code does not limit what the Committee can request from the Internal Revenue Service. It only limits the Committee’s ability to make that information public.

Now here I’m confused. Baucus and Grassley state, per the Copeland response, that they are requesting information “to conduct oversight into matters related to legislation enacted by Congress … to determine how well a particular agency of the executive branch is administering legislation enacted by Congress, if a particular law or section of the law is being administered in a manner consistent with the intent of Congress and what changes might be required to a law to improve and enhance it.” Yet Copeland wants the agency that Baucus and Grassley oversee to do the work to make sure that the IRS does what they are supposed to do. That’s bizarre!

Let me state that again, Grassley wants to make sure “how well” a particular agency (hum…must be the IRS) is administering the law. Yet, Copeland wants the agency in question to do an audit so that Grassley can take those finding to determine if they are doing their job. That will make you head wobble if you think about it.

Your March 11th letter states that “the Committee recognizes the concerns regarding privacy and confidentiality of certain records and has offered to work with [the Church] to protect any proprietary or confidential information.” In discussions with members of both of your staffs, however, it was made clear that the Committee was not willing to provide the types of confidentiality protections afforded by section 6103 of the Code, but rather was willing only to protect a very limited type of information such as social security numbers. However, any confidentiality protections short of those afforded by section 6103 of the Code are simply inadequate to address the Church’s concerns regarding the potential use and public dissemination of any information produced by the Church. In light of the Church’s view that the Committee’s oversight-related purposes could be accomplished notwithstanding the application of section 6103 of the Code to the information sought, the Church is deeply concerned that the information Senator Grassley is seeking could be used to subject the Church and its members to public stigma, scorn, and obloquy.

So the Senators say we will give you protections. The ministry says, we have better from the Internal Revenue Code. The Senators are trying to evaluate just how well the agency is administering the Code. The Ministry thumbs their nose at the Senators and says – not good enough – we don’t trust you. Well, it’s a free country and we enjoy freedom of speech so fair enough. But, as I’ve stated before, that’s playing with fire.

The six ministries under investigation all share a common theology based on the sincerely held religious belief that God wants His children to be spiritually, physically, and financially blessed and that prosperity in all areas of one’s life is an outward sign of the fulfillment of God’s promises contained in the Bible. The Church believes that the targeting of these ministries, and these ministries alone, violates a fundamental tenet of the First Amendment: that the government should not single out any religion for disparate treatment because of its beliefs. With respect to religion, the Constitution requires that the government be neutral, preferring no beliefs above others. The selective investigation only of churches that preach the “Word of Faith” message raises significant concerns as to whether the inquiry is aimed at publicly questioning the religious beliefs of the targeted churches, their preachers, and their members.

Keep in mind, it is just an opinion, but Copeland is way too egotistical here. There are way more than six ministries that believe that prosperity is a God given right and that anyone can claim that. Most new thought churches have believed that for years. In the movie and subsequent book, “The Secret” those same principles were espoused. In my home town of Dallas – Bishop T. D. Jakes has a massive ministry and certainly he believes in prosperity and preaches it as well. Yet, he was not “targeted.”

The Church continues to believe that the most timely and efficient manner for the Committee to obtain the requested information without compromising the Church’s constitutional and statutorily based rights is for the Internal Revenue Service to obtain the requested information from the Church through a church tax inquiry conducted pursuant to section 7611 of the Code. As you know, this Code section, which was part of the Church Audit Procedures Act that Senator Grassley himself introduced in l983, was enacted in recognition of the of the unique issues raised by the government inquiries into the financial and other operations of churches, including the need for the separation of church and state, and the special relationship of a church to its members. At the conclusion of a properly conducted church tax inquiry, the Committee could obtain the information Senator Grassley is seeking from the Internal Revenue Service through a request pursuant to section 6103 of the Code.

That is a fair statement and request as it is characterized in accordance with a piece of legislation that Senator Grassley introduced. I have long espoused that if you want to fight the government, do it in a way that is not emotional and focuses are potentially effective secular arguments. To put back in Grassley’s face the Church Audit Procedures Act makes sense.

Below are some of the items that Grassley expressly asked for in his first request:

  • A detailed explanation of the personal use of assets of the tax-exempt organization (i.e., jets, employees, facilities) and an accounting of any repayments made to the tax-exempt entity for the personal use of stated assets for years 2004 to present.
  • Credit card statements for all credit cards used by Kenneth Copeland, Gloria Copeland and John Copeland for the years 2004 to present for expenses paid by EMIC and KCM. An explanation of all credit card expenses paid by the organization on behalf of Kenneth and Gloria Copeland for years 2004 to present.
  • Has any of the land or assets tied to the land that was deeded to the church from th estate of Paul H. Pewitt been transferred conveyed, gifted or otherwise placed in the control or possession of any other entity or person? If so, who, when , for what amount and for what purpose? Provide the names and addresses of all person(s) who made the decision to relinquish control of the real property.
  • Provide detailed information (Year, Make, Model and Number) of any aircraft owned, used or leased by EMIC, KCM or any related or integrated auxiliary, including amounts paid for the purchase and/or lease of the aircraft and all maintenance expenses form 2004 to present. Copies of the flight records of any aircraft owned, used or leased by EMIC, KCM or any related or integrated auxiliary from 2004 to present. Copies of Kenneth and Gloria Copeland’s itinerary from 2004 to present.
  • El Rancho Fe is a for-profit working ranch owned by Kenneth and John Copeland. Is any of the property used by El Rancho Fe the same property deeded to the church by the estate of Paul H. Pewitt? If so, how is the church compensated for use of this asset and in what amounts for tax years 2002 to present? Who approved the use of this asset? If the Board of Directors approved, provide the names and addresses of the board members.
  • The name and address of the person and/or company that prints, audio records and video records Kenneth and Gloria Copeland’s material? The name and address of the person and/or company that owns the titles, copyrights, royalties or similar interests in sermons, videotapes, books, CD’s, DVD’s, or other materials prepared by EMIC and/or KCM. Are any of the ministry’s paid employees involved in the printing, publishing, recording and distribution of the books, videotapes, CD’s, or DVD’s?
  • According to documents provided to the Finance Committee, in November 2000, (ouch…the precedent has already been established that Copeland has provided documentation to the Senate Finance Committee without having to have an IRS Audit) EMIC borrowed $1,000,000 from Gloria Copeland for operation of ministry affairs. In 2002, the EMIC board of directors executed a replacement promissory note in the amount of $1,083,407.29. Provide the committee with copies of the executed notes and a copy of the board meeting minutes for each date, an explanation of the loan distribution including the original source of the loan (i.e. personal check, cashier’s check, wire transfer), names and addresses of the board members present at each meeting and a breakdown of the loan repayments to Gloria Copeland since the inception of the original note. Also explain why the church borrowed money from Gloria Copeland when it owns assets in excess fo $20 million dollars.

And the list goes own. For the full six page detailed request go here.

When you look at the study of ethics (which I do as an ethics speaker) you generally go into a discussion of morals. In Wikipedia a statement is made: “People who have moral responsibility for an action are usually called moral agents. Agents are creatures that are capable of reflecting on their situation, forming intentions about how they will act, and then carrying out that action.”

So as I conclude this rather long blog entry, I suppose that both Copeland and Grassley are moral agents. Grassley is a moral agent for watchdogging the enforcement of accountability as it relates to potential abuse by religious organizations in their tax-exempt mission. (Keep in mind, if they weren’t tax-exempt this would go away – there would be no issue!) Copeland, on the other hand, is a moral agent for making sure that people in power in our government play by the rules and don’t over step their bounds or abuse their power.

Either way…asking (in effect) for a tax audit is gutsy. It will be interesting to see what the outcome is…

Business ethics speaker – Chuck Gallagher -signing off…