Rev. Hagee, in fact, reorganized his TV station (Global Evangelism Television) as a church (Grace Church of San Antonio Churches) to shelter those records, after the San Antonio Express-News revealed his income exceeded $1 million in 2001. All of his assets -- including an 8,000-or-so acre ranch -- are now sheltered in the Cornerstone Church.
Then I wondered why Congress decided that these financial statements don't have to be public. That's when I stumbled upon an even bigger shocker:
Uncovering the root of terrorist financing has become one of the biggest challenges facing the United States in the aftermath of the September 11, 2001, terrorist attacks.
-- US Treasury, 21 May 2007 (pdf)
Wow! Who knew? Bigger than Iraq and social security and the federal deficit? Really?
As a taxpayer and an advocate of crowd-sourcing and "the more eyeballs the merrier" -- I think that the solution to this problem (if it is, indeed, a problem) is to make all that information public. Your organization tax-exempt? Prove it to all of us by filing electronically into a database not unlike the government contracts database. Can't file electronically? Then you pay someone to do it for you (Hey! It's private enterprise, right?)
The Taxpayer Bill of Rights requires that Section 501(c) organizations do something close: they must publicly disclose, on the web:
- Copies of the application for tax exemption (for those organizations which filed before July 15, 1987, this requirement only applies if the organization has a copy of the application on July 15, 1987); and
- Copies of the organization’s three most recent annual information returns.
The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
Churches are not 501(c)3s, and they have their own categorization and are exempt from even filing annual reports. (They've been exempt from federal taxes since 1913) Via the IRS (pdf), which, by the way, doesn't provide a legal definition of "church" (neither does Congress):
Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS....
Under the Internal Revenue Code, all IRC section 501(c)(3) organizations, including churches and religious organizations, are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office...
For example, certain voter education activities (including the presentation of public forums and the publication of voter education guides) conducted in a non-partisan manner do not constitute prohibited political campaign activity...
[R]eligious leaders cannot make partisan comments in official organization publications or at official church functions... religious leaders who speak or write in their individual capacity are encouraged to clearly indicate that their comments are personal and not intended to represent the views of the organization. (Aside, but when the organization is the leader, such as in the case of Rev. Hagee and many other tele-evangelists...?)...
Fascinating, isn't it? And there's more. Congress has specifically tied the hands of The Executive Branch (one wonders about the reported IRS investigation into Rev. Wright's church, given this bit from the IRS guide to church taxes, emphasis added):
Congress has imposed special limitations, found in IRC section 7611, on how and when the IRS may conduct civil tax inquiries and examinations of churches. The IRS may only initiate a church tax inquiry if the Director, Exempt Organizations, Examinations reasonably believes, based on a written statement of the facts and circumstances, that the organization: (a) may not qualify for the exemption; or (b) may not be paying tax on an unrelated business or other taxable activity.
This may be the coup de grâce: ministers of every faith are "[exempt] from federal taxes for most of the money they spend on housing ... [as well as] exempt from income tax withholding and can opt out of Social Security."
Current  Congressional budget records show that the exemption has cost the government as much as $500 million in tax revenue a year, shifting that much of the national tax burden onto other taxpayers.
Puts tele-evangelism as a career into a new light, doesn't it?
Who's for asking presidential, senatorial and house candidates their viewpoints on putting churches on the same footing as other charitable organizations, like The Red Cross or The Salvation Army -- requiring that churches file the same annual tax reports as other "chartiable and religious" organizations? Would this really be a violation of the First Amendment?
But there is an even bigger question: should churches -- and other charitable organizations -- be exempt from paying income tax? In 1913, when the 16th Amendment authorized the income tax, the government was funded by taxes on goods (a regressive tax), including import tariffs. Bert B. argues that such tax exemption is in effect a government subsidy:
Let's say you give $1000 to your local church over the course of a year. At the end of the year, when you prepare tax return, you can deduct that contribution from your taxable income if you itemize deductions. If you are in the 30% tax bracket, that means that the government does not get $300 in tax revenue that they would have collected if you had not made that donation. In effect, you are giving your church $700, and the government is giving them $300. How does this differ from the Oil Depletion Allowance subsidy offered to oil companies or the huge payments to agribusiness for not growing crops? There is no difference.
What do you think?