Court Puts Halt to IRS Audit of Church

The Minnesota federal district court last month decided that current IRS procedures for opening tax investigations of churches does not comply with legal requirements for pre-approval by a high-level Treasury official. Currently, the head of the IRS exempt organizations exam division approves all church audits. But the court said that the law requires approval from a higher-level official. The IRS opened its investigation of Living Word Christian Center in Brooklyn Park, Minnesota in early 2007 after a public watchdog group, Citizens for Responsibility in Ethics, made allegations concerning the church’s financial transactions with its pastor. The ruling by the district court puts a halt to the IRS audit, although the IRS may appeal the decision. We will be watching the development of this case, as it could significantly change the way the IRS conducts its church audits.