By: A.J. Cook


In the beginning was the Indianapolis Baptist Temple.

And the temple became "Not a Church, Inc." Then, two years later it fancied ending its ties to the secular world by abandoning its name and charter.

Always alert, the Internal Revenue Service noticed it hadn't received employment tax forms for six years. Its inquiry to the church was returned to the IRS with an irreverent message: "federal venue denied."

Venue or not, the agency demanded Social Security taxes and income tax withholding, with penalties and interest totaling $3.5 million.

The church prayed to a higher authority —the courts. It challenged the IRS, mainly on Constitutional grounds. Its theories and the court's answers follow:

• The Church: The employment tax violates the Free Exercise Clause by requiring the church to act inconsistent with its beliefs. Filing the returns requires it to recognize government sovereignty over the church.
  

The Court : Neutral laws of general application that burden religion aren't unconstitutional because they weren't enacted to burden religion.

• The Church: Tax laws inject the government into the internal affairs of the church, a practice prohibited by the First Amendment.
  

The Court: That's an incorrect interpretation of the Amendment. It prohibits government sponsorship or financial support of religious activities; total separation of church and state is not required. If a law has a secular purpose and its primary effect neither advances nor inhibits religion, it's acceptable.

• The Church: Federal tax laws don't apply to a New Testament Church.
  

The Court: It doesn't matter what sort of entity the Church is, it still must comply with employment tax laws.

• The Church: The IRS used the wrong employer identification number for the church in its legal documents.
  

The judge lost his patience. "The Temple believes it can evade tax law....

Although the Temple's tactics may have so confused the IRS it used an incorrect number, this does not save the Temple..."

He allowed federal marshals to seize the Temple's property.

The Temple pastor, Rev. Greg A. Dixon, said: "They can take our church. They cannot take our convictions."

The Moral: A taxpayer who believes something religiously can have a taxing revelation.


A.J. Cook is a lawyer and CPA. His tax column appears weekly in numerous newspapers. Why isn't it published in your hometown newspaper? Ask its Business Editor to subscribe.

Copyright © 1987-2001 A.J. Cook All Rights Reserved
This information is not intended for use without professional advise.
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Released 1-15-01