By Richard R. Hammar, J.D., LL.M., CPA
© Copyright 1988, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m15 m71 c0188
Two religious organizations recently lost
their tax-exempt status. First, the Tax Court revoked the
exempt status of the "Ecclesiastical Order of the Ism of Am" since
the organization was not operated exclusively for exempt purposes.
In particular, the organization counseled individuals on the
purported tax benefits available to ministers of the Ism of Am
under federal tax law. The court concluded that the organization
was "nothing more than a commercial tax service, albeit in a narrow
range of matters of interest to its members, operating under the
cover of a professed religious purpose. That religious belief may
be the body of the automobile but its engine and the gasoline on
which it runs consist of tax information and advice as to methods
of tax avoidance, if not downright tax evasion." Similarly, the
Court of Claims revoked the tax-emempt status of the Universal Life
Church on the basis that the supplying of tax advice and
information by the church constituted a substantial nonexempt
purpose. Baustert v. Commissioner, T.C.Memo. 1987-488 (1987);
Universal Life Church v. Commissioner.