FFRF IRS Form 990 Lawsuit

FFRF NEWS RELEASE

FFRF wins standing to sue IRS over Form 990

August 26, 2013

The Freedom From Religion Foundation, which has three historic lawsuits in federal district court over preferential treatment of churches and ministers by the Internal Revenue Service, says it now has “three bases loaded.”

For the second time within three days, a federal judge has ruled in favor of allowing FFRF to pursue IRS inequities favoring churches over FFRF.

On Aug. 19, U.S. District Judge Lynn Adelman ruled that FFRF’s case against church electioneering may proceed.

U.S. District Barbara Crabb, in the Western District of Wisconsin, ruled Aug. 22 that the national state/church watchdog, based in Madison, Wis., has standing to pursue its lawsuit against the IRS for exempting churches from annual accountability requirements.

FFRF was previously given standing and is awaiting a decision over its challenge of the 1954 federal “parish exemption” law — uniquely gifting “ministers of the gospel” with the right to deduct church “housing allowances” from taxable income. This case is also before Judge Crabb.

In her Form 990 ruling, Crabb wrote that the plaintiffs — FFRF and Triangle FFRF, its chapter in Raleigh, N.C. — have been injured because “the government is relieving an ongoing burden from some taxpayers on the basis of religious affiliation.”

She added, “it is not plaintiffs’ ‘belief’ that gives them standing. Rather, it is their status as organizations that are burdened with requirements not imposed on churches.”

In exchange for the significant advantage of retaining tax exemption, all 501(c)(3) organizations except churches must file an annual, onerous Form 990 with the IRS. These forms are available to the public, and reputable charities now place 990 forms on their websites for easy access.

Tax-exempts report to the public on what they do with donations, financial oversight policies, salaries of top employees, how much of the income is used for fundraising versus mission or management, etc.

Most active nonprofits, such as FFRF, hire a certified public accountant to prepare the form, incurring significant accounting.

“Don’t get us wrong. We think the cost and transparency is worth it,” says FFRF co-founder Annie Laurie Gaylor. “We’re grateful for the privilege of the government designating donations to FFRF as deductible for income-tax purposes. But since we began filing these forms in 1978, we’ve been acutely aware that churches don’t play by the same rules, yet get equal or better privileges.”

Dan Barker, FFRF co-president, asks, “What do churches have to hide? Why don’t they want to be accountable to the public?”

“Look at Jonestown, Guyana, to see can happen when tax-exempt churches are not accountable to the government, or necessarily to anyone,” Gaylor added. “Had Rev. Jim Jones had to account to the government for the wealth, armory and even the foster children he and his church amassed, I believe that heinous slaughter in 1978 would have been averted.”

FFRF’s parish exemption challenge has received national exposure in the last week due to a bizarre legal twist.

The federal government, seeking to get FFRF’s challenge dismissed, claims FFRF’s co-presidents should qualify for a clergy tax break for leading an atheist organization.

They are saying, “No thanks.” “We are having to tell the government the obvious — we’re not ministers and FFRF isn’t a church!” Gaylor said.

FFRF’s Form 990 lawsuit also challenges the expensive filing fees which all groups seeking 501(c)(3) tax exemption must file — except churches. Crabb ruled that FFRF and its chapter have already paid the fees, and likely won’t incur more. Crabb asked FFRF to “show just cause why that claim should not be dismissed.