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Senator Grassley Investigates Six Tele-Evangelists for Income Tax Fraud—Is it Legal? December 11, 2007

Posted by Daniel Downs in 16th Amendment, Chuck Grassley, church, Constitution, income tax, IRS, lawlessness, news, politics, Senate Finance Committee.

On November 5, Senator Chuck Grassley, ranking member of the Senate Committee on Finance, wrote a letter to six media-based ministries for information regarding expenses, executive compensation, amenities given to executives, and board governance. The inquiry is part of Grassley’s long-standing interest in making sure tax-exempt organizations are accountable to donors and to the taxpayers as a whole.

Grassley gave Kenneth Copeland Ministries, World Changers Church International pastured by Creflo Dollar, Benny Hinn Ministries, Bishop Eddie Long pastor of New Birth Missionary Baptist Church, Joyce Meyer Ministries, and Paula and Randy White and their Without Walls International Church thirty days to provide the Committee with a long list of financial information. Thus far, only Kenneth Copeland and Joyce Meyers has complied, according to the Minneapolis Star-Ttribune.

The letter sent by Grassley mentioned complaints by news media about the ministries opulent lifestyles. Grassley has taken it upon himself to do the job of the IRS. Because Grassley has investigated other non-profits, he believes he has a right to investigate any, but does he or the Committee have such a right? The short answer is Yes. According to the IRS, anyone can request a copy of the annual return of any non-profit organization’s and expect it within 30 days. The longer answer is NO. Senator Grassley does not have the right to investigate these ministries for two reasons:

(1) As demonstrated in a recent Christian Post article, the IRS already audits these ministries for compliance with tax laws. Ministries are required to submit an annual financial return. The IRS allows ministries keep their exempt status as long as they comply with the law. Moreover, the IRS is already investigating and correcting abuses such as excessive executive compensation, supporting organization issues, and other issues making Grassley’s investigation redundant and unnecessary.

(2) An even more important reason why Grassley has no genuine authority to investigate those six ministries is the proven fact that the 16th amendment to the Constitution was never ratified. It has been researched and proven that three-fourth of the states did not ratify it. Some authors claim conspiracy theorists argue it was not ratified because of grammatical discrepancies of state and federal texts of the amendment. According to a World Net Daily article, the primary reason is sound evidence showing that 15 states never ratified it, 5 states violated procedural rules, and only 3 consisted of grammatical discrepancies. The amendment required 36 ratifying states for it to pass; there were only 33 at best. Therefore, the current tax law the six ministries may be breaking is itself illegal. The existence of the IRS is also illegal. What is really heinous is that lawmakers know it was never ratified. I suspect Grassley and the Finance Committee does as well.

A work every American should read is “The Law That Never Was” by Bill Benson, a former Criminal Investigator for the Illinois Department of Revenue. The above facts are published in his book.

Another important source of information about the illegality of the 16th Amendment and legal work against its continuance can be found at We the People Congress. They have initiated a case seeking redress of grievances concerning the government’s income tax fraud and other issues that is scheduled to be heard by the Supreme Court. (Feel free to sign the petition at We the People website.)

The real tax fraud perpetrated in America is by the federal government not wealthy ministries. Grassley investigation is just one more act of lawmakers’ long history of violations against the Constitution. If Americans fail to join in the struggle against their violation of the Constitution, the warnings of judges like Andrew Napolitano, Robert Bork, and Robert Dierker will become the final reality; Americans will have no rights.

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1. SS - December 11, 2007

A well kept secret, until a while ago?

2. Anonymous - December 19, 2007

not from a church… there is no 990 to request from them because they do not have to fill one out… nothing is sent in to IRS…

do your homework buddy!!! ha

3. Daniel Downs - December 20, 2007

Yes, I messed up. Church’s are exempt from filling the 990. The question is why?

The original idea of separation of church and state was that the two institutions–both necessary for a good society to exist–and their authorities required separation as proved by atrocities perpetrated by church-run states and state-controlled churches. Around the Revolutionary period, it was agreed that churches and their leaders should no longer receive tax-funded support. That would solve the problem favoritism–not all states agreed though. As exemplified in education funding, churches are proscribed from controlling public funds. Because states give churches no money and given the long history of separation of the two vital institutional authorities, the finances of churches is no business of government.

It is especially so concerning Grassley’s attempt to regulate the wealth church-based ministries. Besides, IRS does audit them to ensure they are compliant with the law–that is, the law that actually does not exist because it was never actually ratified, according to IRS agent Benson.

By the way, the liberal-secularists since the 1860s have been telling America that a strict wall of Separation is part of the meaning of the 1st Amendment. If that was true, why did they attempt to pass an amendment twice in order add a separation clause to that amendment. Me thinks they lie too much then and now. The real tragedy is that many Americans seem to prefer the lie, including federal judges.

It is truth that makes people free, not lies. It is one important reason for the Freedom of Religion, Speech, Press, and Assembly.

4. AAyres - January 21, 2008

I think that this is exclusively between These men/women of God, and the Almighty God himself. They stand as representatives of God. No mortal man has any right to intefere. Only the God of Abraham, Isaac and Jacob is their vindicator be they righteous or unrighteous.

Victor Conedy - May 21, 2009

Based on what you are saying, they should not apply for non-profit status at all, right?

5. Victor Conedy - January 30, 2008

I have been sending this to various blogs on the net and the actual ministries that have received your letter. I am VERY interested in getting their responses.

I think that the issue is being skewed by emotion and tradition. My question, do you actually believe that a member of the Senate Finance Committee has “no right” to look into the finances of a 501c such as yours?

Wow! I REALLY, REALLY need some help on this issue. PLEASE, somebody please respond to this post soon and tell me how the REAL issue keeps getting overlooked? Let me make it simple: You cannot start a church (no matter what the philosophy) and have the church publish your book, distribute your book and then pay you royalties IF you have a tax-exempt 501c. Is that simple enough? It doesn’t matter if that book is the greatest book ever written and saves the lives of millions of people, you still can’t use your non-profit 501c to sell it and pay your royalties. You CAN donate the same book to that same non-profit organization and let the non-profit sell it and keep the money to be used for other projects. CAN YOU SEE THE DIFFERENCE?????? Read below for a more detailed explanation.

Most of the comments are based on pure emotion, either for or against. Are you aware that tax-exempt status is given to an organization from the US Government? Therefore, the US Government has a right to see that an organization continues to adhere to the rules that were used to determine the tax-exempt status. An organization gets a 501c BECAUSE it files paperwork and asks for the tax-exempt status. The paperwork states that among other things, that the organization will exist for the purpose of some community benefit and not for the benefit of an individual. Unfortunately, there are no hard and fast numbers which would indicate what constitutes “existing for the benefit of an individual”. In the 1990’s for example, the president of the Red Cross was receiving a salary of about $436,000 per year. Excessive? Maybe, considering that the President of the U.S. wasn’t making that much at the time. In that case, the salary went up for review and it was determined that it may have been a little much for the circumstances. Those who pointed this out were not against the work that was being done by the Red Cross, but in order to maintain a status of “non-profit” the organizations main focus needs to be to the needs of a group of otherwise disenfranchised persons. Same situation here concerning the church that has applied for and enjoys the tax-exemption. No one is questioning that any of these churches are benefiting the community by feeding the homeless or by providing spiritual relief. The problem is, since there are no clear cut numbers or percentages which would reveal malfeasance, simple “appearances” is all one can go on. Lavish lifestyles of heads of non-profits are in fact a violation of the tenets and purpose for granting the tax-exemption. Taking this as an attack on God’s people or God’s work is naive and ignores the real issue. Also, gladly calling them all charlatans is equally juvenile. Thank You, Victor Conedy

6. Daniel Downs - January 31, 2008

Victor, you make same very good points. Congress claims it passed a law and gave the authority to the issues exemptions, regularly assess organizations compliance with the law, and investigate any questionable issues. Grassley has no legitimate reason for doing the IRS’s job which is has done to all six ministries in question. My other point valid legal research shows the 16th amendment was not actually ratified, which it all income tax issues, including collections, illegal.

7. Victor Conedy - February 3, 2008

David, the legality of TAXES aside, these organizations ASKED for authorization to NOT pay taxes on a the basis of special circumstances. One of the major ones being, that the organization itself CANNOT exist for the benefit of an individual. Certainly a secretary making 35K a year working for any non-profit would not be viewed as benefiting personally from the existence of that corporation. However, a person “employed” by the organization who gets his or her books published (over and over again) by that organization might at least be worthy of looking into, right? Think about it, as hard as it is to publish a book, do you think that the secretary I mentioned before has the same chance of having her book published by the non-profit? Certainly AFTER the books sold by Joel Osteen and T.D. Jakes have proven themselves, the regular publishers are lining up to publish those books. But, wouldn’t those same books have been denied by regular publishers if the did not already have a track record of sales? Of course they would. I think is disingenuous for leaders of those type of non-profits to misuse the organization in such a way. Again, these are rules that were is place prior to the existence of Creflo Dollar Ministries, they are not new rules put in place to attack the good work or name of any of these individuals. When people defend the organizations right to break such statutes, they sound ridiculous. It truly does not matter that a non-profit is helping millions and millions of people, it still cannot buy a jet plane and ONLY use it for the leader and his family. If they want to do so, they simply can give up their non-profit status and pay taxes. As to the right of Grassley to investigate, the IRS rules are completely different when it comes to reporting income and taxes. An organization only has to report income and expenses to the IRS. They DO NOT have to justify salaries, compensation or other expenditures. In actuality, the board of directors (too many family members) are supposed to oversee those things, if the board is not doing a good job, then the membership is supposed to request the information and be given a chance to vote the board out that authorized payments that they do not agree with. In the real world, that does not happen. In the real world, there is usually only 2 or 3 members who might protest that the non-profit NOT pay a monthly housing allowance AND buy the leader a house. They are usually drowned out or called blasphemers by the rest of the membership. Normally, the 2 or 3 members just give up and go to another church. Sometimes, a member might write a letter to Congress and ask for help. Which, surprisingly Congress sometimes responds. Based on the nature and specifics in the letters by Grassley, it sounds like they have some inside information. I don’t think that Grassley cruises around the country looking for malfeasance on the part of religious organizations, but he has shown himself to a person who understands the frustration of a well-meaning member who might disagree with his own board of directors. Certainly you don’t think any non-profit has a God-given right to NOT pay takes , do you?

8. Daniel Downs - February 5, 2008

I see your point. However, your argument may not hold water. For one thing, those ministers are not likely to be dumb enough–seeing they have lawyers to advise them–to write books under the church’s incorporation. They more than likely either have created a publishing corporation with similar name, or they submit the proceeds to the corporation. The corporation in turn pays them a large salary and benefits in return for the large revenues people give for services, books, tapes, and for the benefit of information. Some of those questionable non-profits employ a large number of people as well. Because millions of people nationally and internationally like and support these non-profits, the leaders are not supposed to live average lifestyles because that is the view imposed by whoever.

If such leaders book bring in millions to the non-profit and the biggest majority of those millions go to funding additional non-profit services and other people salaries and benefits, such leaders should be rewarded as well. Reviewing one of those non-profits financial statements, the $250k salary plus perks is no more than many public servants in the non-profit government.

It’s true boards and leaders can abuse the system. An IRS audit will tell as much if not more than a independent audit conduct by certified accounts. For the sake of argument, let say the salary perks of the above mentioned non-profit leader amounts to half a million. That amount would be 2-3% of all salaries paid. That is not alot when that leaders books and tapes brought in a little over 10 million.

That same non-profit paid about 1.5 million in payroll taxes as well.

An international ministry having its own plane for its leader, family, and employees is about as necessary as many CEOs and government leaders. Owning a Rolles Royce is another matter. I don’t see how the religious purpose of owning such a prestigious toy. If they save up their own income to buy it or is given as a gift, so what. Yes, I will doubt their humbleness and what they are really about, but I do not see no crime in it.

If all such leaders were doing enjoying the lion’s share of the revenues, then they should be stopped. That does not appear to be the case. Some are living as well as many non-profit government officials and its is not liked. Yet, the fact that most of the money goes to others rather than themselves, and Grassley is still full of it.

9. Ted Bethune - March 27, 2008

It’s high time the I.R.S. look into these churches and their crooked

10. Daniel Downs - March 27, 2008

How do you know they are crooked? The IRS does audit churches.

11. JeannetteR - June 30, 2008

whatever these ministers are doing, I hope they don’t forget that God’s wrath is coming, I guess they are not scared enough. I woudln’t want to be in their shoes.

I feel sorry for the many many blind people that follow these crooked ministers. They are so naive and so gullible. You know what ?it’s part of their fault, if they werent so blind, these ministers woudlnt be so rich today!

12. Victor Conedy - July 5, 2008

Daniel – In order to keep and maintain an entity’s non-profit status, certain rules MUST be followed. If you ever have time, google the “Baptist Foundation of Arizona” and you will see a string of malfeasance that was perpetrated in the name of doing God’s work that will make your head spin. If you read enough about it you will see that many in the membership questioned the motives and the methods of the organization and they were rebuffed as being against God. It amazes me that God is against an organization paying taxes in the minds of some people. In any case, a non-profit can accept donations of any kind and that person can deduct the cost off of their taxes. You can “donate” your written book to a non-profit, have the sell it and then pay you some kind of royalties because the church made 10 Million dollars from the sale. Try that at your church, donate your house to them, have them sell it and then give you half the money back. Do you see the problem? The REAL problem is that non-profits are supposed to be self governing in that the board is supposed to act ONLY in the best interest of the corporation, not the director of the corporation. For instance what is better for the corporation, to keep ALL the money from book sales or to have to pay 10% to the author? Additionally, the state expects that the board will have some kind of way for its members to redress issues and have impartial votes for their elections. What I am getting at is that it is very, very difficult to find someone in the state government to assist the membership when they have problems with their board. Believe me, I speak from experience. The only way to address a board that refuses to adhere to its own rules is for a member to sue the board, and that costs money and there is no way to get that money back even if you win the case. So I think it is good of Grassley to stick his nose in and see what is going on. It is so easy to make a mistake as a non-profit when making decisions. Believe it or not, many board members never read their own by-laws and do not know their responsibilities or restraints. Since no other organization is overlooking their shoulder then why not pay a housing allowance to the founder for housing AND let him live in the company owned house free of charge? It is after all a pittance compared to the 11 Million dollars a year brought in by his or her other endeavors. It seems like a logical way to compensate that person. The ONLY problem I have with that is a business that is supposed to act in the best interest of the public should not be paying large amounts of salary and or compensation to anyone. But a tax-paying business can do that! And again I say, in the “real world” a person who did not have the position and influence could not publish a book on his or her own, and in doing so, the appearance of malfeasance rears its ugly head. Surely, you can see that, right? I wrote a book and it is available on my website (www.cafepress.com/conedy), but for some reason millions of people are not buying my book. Why do you think that is?

13. Daniel Downs - July 5, 2008

Victor, your liberal view is a very old one. On that was rejected. Most of founding generation agreed that government could not fund the salaries of all ministers and maintain the necessary institutional separation of government and church authorities. Therefore, it only made sense that they could not be taxed either without violating the same principle. Thus, they through government gave their support to the church, its authorities, and its public moral influence by acknowledging its co-authority in society, which ideals were part of their English and early colonial legal and religious heritage.

Viewed by its history, tax exemption of the church and its clergy is very reasonable. It is even more reasonable when it is understood that they did not believe in the wall of Separation forced on us by the Supreme Court, and they rejected the idea of taxing one’s income or fruit of labor probably because they upheld natural law.

Your argument about book publishing is not sound either. The Constitution never guaranteed equality of outcome. If you want to make money from your golf book, create a tv program or get into the pro circuits. Why deny those who already have a public following. Besides, what business is it of yours or mine if a bunch of church-goers gives lots of their money to get the personal inspirational benefits of ministers. iIf they didn’t like this or that minister, they would not donate their money or buy any books. Why shouldn’t a minster benefit from his or her greater productivity. If he or she attracts many people to come to listen, what’s it to you or the government if people give lots of money by which a board is justified in paying a higher salary. What’s it to you or the government if ministers speak beyond the church and make even more money. What’s it to you or the government is they write books and make even more money. The government still has no right to tax the productivity or public influence of ministers. Rather than being taxed for it, people are free to donate as much money as they want for the beneficial service.

A fascist government will never deserve any part of the great or small wealth of the publicly beloved clergy.

14. Daniel Downs - July 5, 2008

Jeannette: Is God only Lord of poor or middle income people or is He also Lord of the rich as well. God didn’t have a problem with people he called have great wealth. Abraham, his sons, Job, David, Solomon, Jesus, all had varying amounts of much wealth. God did judge them because of possessing great wealth but because of the immoral behavior.

God’s judgment is not going to come upon ministers because lots of people freely have chosen to give it to them.

The reason our government does not tax all of us to pay all of the clergy a good salary is because of the necessary separation of the two social institutions and their respective public authority and influence. Consequently, the church and clergy have always been exempt from taxation. Citizen were given the right to voluntarily attend church and voluntarily pay as much money to the church and/or preacher as they chose. It is not a crime for preachers to make millions of dollars from providing their public services by preaching and writing books.

The secular fascism you support may inspire God to judge you.

15. Victor Conedy - July 8, 2008

Wow! I still don’t think I am being clear enough for you Daniel. Let me try to break it down…what I am trying to say is this; Let’s say a person starts a church with 30 members. The incorporate and do all the proper paperwork. The church grows to about 200 members. One day the founder decides to create a little booklet espousing his philosophy. The booklet is copied a the expense of the church and distributed free to members and anyone who visits the church. Someone suggest that the founder/pastor should expand his writing into an actual book, he does so. The board pays for the reproduction and begins to sell the book for a nominal donation. As the church grows to a thousand members, the book becomes a hot item and now friends of members want their own copies. They come to the church and want to have the founder autograph their copies it is a big hit. So far, nothing wrong has happened. The church is using a donated item to further its own purpose. Now, the founder wants to cash in on the success of the book. He writes another book…this time HE must pay for reproduction and distribution just like any other person. He cannot get that second book published at the expense of the non-profit and gain even one penny. Is this clear? Just like my book, I cannot volunteer to work at a non-profit and give them my book to reproduce and disseminate and pay me anything. That is the simple concept I am trying to get across. In one of your letters you state you are sure that lawyers aside them to do the right thing. If that were true, then no one would be in jail behind the actions of that Baptist Foundation of Arizona I was talking about before. If anything, a lawyer is going to advise a way to get around a law, not to simply comply with it. The Grassley investigation hangs only on that one simple principle, is an INDIVIDUAL profiting more than the organization or the people they promised to serve. You cannot go by percentages and say that only 2% of the budget is being used improperly. When an entity applies for non-profit status, it can be denied for many reasons, one is if the proposed board of directors has too many family members on it, another is if the salary of the paid staff is over 50% of the total budget. Once an organization gets the non-profit status, no one monitors if these things are still in place! The idea is that the board will self-govern and or the membership will question the activities of the board, assuming that the members even know what the rules are. Most don’t. It is only a few “voices in the wilderness” that cry out when they perceive a wrong. What is always surprising is the resistance to simple questions on the part of those in charge. Why do questions make them so reactionary?

16. Victor Conedy - July 20, 2008

Hey Daniel Downs
Here is a addendum to my note #15 straight from the IRS booklet #557:

1. The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc.) specified in the introduction to this chapter.
2. No part of the organization’s net earnings will inure to the benefit of private share-holders or individuals. You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator’s family, shareholders of the organization, other designated individuals or persons controlled directly or indirectly by such private interests.

Seems like this MIGHT be part of the infraction that Grasssley is looking into. From my perspective, the creators and family members of some of these organizations are individually profiting enormously from the activity of their non-profit. I don’t right the laws, but it seems really odd that so many people think it has something to do with God’s work.

17. Victor Conedy - August 11, 2008

More to Daniel Downs:

Let me lay out another example for you. Suppose Joel Osteen opened a Hamburger stand. His hamburgers are good, good, Godly good. So due to his popularity in Houston people would go by and try them. No problem. As long as Joel used his own money to build and operate the stand. The problem would only be IF Joel used church funds to start and run the hamburger stand and or did not pay taxes claiming a non-profit exemption. Nothing wrong with using your celebrity status to promote a product, but to use tax-exemption for your personal endeavor is where an organization runs afoul of the law. The only real way to find this out is to have someone check. IRS audits will not reveal such malfeasance because an audit does not ask the right questions. Membership is blocked from seeing actual church records (I know from experience) and the Board of Directors are usually just a rubber stamp to what the founder wants to do. It is a messy world out there, Daniel. Churches do not follow the rule of law as dictated by man because they believe they have a holy right to tax-exemption. Unless that little command was chiseled off of the 10 commandants I have never heard the words “Thou shalt not pay taxes” written anywhere. Additionally, think about this…Why would God care if a church pays income tax or not? He does nothing to prevent a church from paying its electricity bill or water bill. Answer: Some things are man-made and we are responsible for the consequences, not God.

18. Daniel Downs - August 11, 2008

Why are you obsessed with churches or ministries paying taxes? Could it be that you are really a true secular believer who has a personal problem with God or ministry or something? Yesterday, I heard that Grassley was no longer on the committee. Could it be that Victor Conedy is an alias.

Even if not, Jesus said his disciples were tax exempt. He said, “The sons are exempt.” (Matthew 17:26). The context was a question put to the disciples by tax collectors about whether Jesus paid taxes. (v. 24). When they met up with Jesus, Jesus asked them from whom do kings collect taxes, from sons or strangers? (v. 25). The answer: strangers. (v. 26) The sons of the kingdom of God are therefore exempt. (v. 26) But, Jesus didn’t stop there. He paid the tax but not from income or assets but from a fish with the money in its mouth. (v. 27)

Besides, Congress has a right to attempt to pass law giving the IRS authority to thoroughly evaluate non-profit financials. A Congressional committee has no such valid authority. Legally, no organization has any legal obligation to submit any info to such a committee. A Constitutional democracy is supposedly based on the rule of law passed by a majority of appointed representatives. No arbitrary authority exists giving committees any powers. If Congress gave Grassley’s committee such authority, the IRS needs to be dismantled and the illegal income tax never actually ratified according to procedural law should be removed from the Constitution.

The rule of law appears to be a term used by arrogant people in government to do whatever they please. As long as its sounds good and many people believe, it is okay.

19. Pat, Boston - November 18, 2010

Giving tax exemption for hoaxes and fraud is simply downright stupid, but how stupid can Americans be?

The government spoils system created by Jackson has become the government welfare program for civil service employees, while the needy despair, and government employees secure their share.

The nation used to put people in jail for these kinds of thefts and deceptions; now they are so popular as to be admired. Go figure!

The only problem America has is one of attitude, and moral turpitude.

20. noneya - December 27, 2010


Daniel Downs - December 29, 2010

Horsecrap is good when used to fertilize wheaty criticism.

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