Judge Denies IRS Attempt to Audit Minn. Church

A U.S. District Court judge has rejected an effort by the Internal Revenue Service to force a Minnesota Church to comply with an audit, ruling that the agency violated a 1984 law that raises the bar for examining churches.

The tax agency was trying to get the federal court to enforce a summons, issued in March, against Living Word Christian Center, in Brooklyn Park, Minn., a suburb of Minneapolis, after the church refused to turn over documents about its financial operations and governance.

The tax agency began investigating the center in 2007, following reports that the church may have been involved in improper political activities, according to court documents.

Instead the IRS said it found financial transactions that may have benefited the organization’s pastor, the Rev. James M. Hammond. Living Word leased planes owned by Mr. Hammond, and the pastor borrowed money from the organization, which eventually forgave a portion of his debt, according to the case history.

But the judge ruled that the federal agency had not properly followed the Church Audit Procedures Act of 1984, enacted to give churches greater protection in audits. Among other things, that law dictates that only certain high-level officials within the IRS are allowed to initiate an examination.

The person who signed off on Living Word’s audit, the director of examinations for the exempt organization department at the IRS, was too low-ranking to have that authority, the judge said in his report.