Chapter 4

Untaxed and Unaudited

Abstract

Federal law excepts churches from applying for IRS recognition of exemption and from filing the annual Form 990, and the Church Audit Procedures Act of 1984 sets conditions on any IRS inquiry into a church. Every rule in this chapter is a United States federal rule that applies to churches of every tradition. The enforcement and disclosure records cited here concern three groups: The Church of Jesus Christ of Latter-day Saints (an SEC order of 21 February 2023), six media-based Christian ministries (a 2011 Senate Finance staff memo) and two voluntary bodies, the Evangelical Council for Financial Accountability and the U.S. Conference of Catholic Bishops. The records cited here contain no primary record of finances or tax enforcement for Jewish, Muslim, Hindu, Buddhist, Orthodox, Southern Baptist or mainline Protestant bodies, and the chapter does not generalize from one institution's record to a faith. The SEC order imposed penalties of $4,000,000 and $1,000,000 in a settlement without admission or denial. In July 2025 the IRS joined a motion on political speech from the pulpit, and the court dismissed the case in March 2026 without reaching the merits. The estimate of the exemption's value cited here is a 2012 magazine estimate with stated limits.

4.1 What the Code excepts

Finding REL-4.1Primary record

Federal law excepts churches, their integrated auxiliaries, and conventions or associations of churches from the notice requirement for applying for IRS recognition of exemption (26 U.S.C. § 508(c)(1)(A)) and from filing the annual information return, Form 990 (26 U.S.C. § 6033(a)(3)(A)(i)).

Evidence: Exhibit 413, Exhibit 414

§4.1.1

Section 508(a) requires a new section 501(c)(3) organization to give notice that it applies for recognition of exemption. Subsection (c)(1)(A) states that subsections (a) and (b) "shall not apply to" churches, their integrated auxiliaries, and conventions or associations of churches. The same subsection excepts any organization other than a private foundation with normal gross receipts of $5,000 or less.

§4.1.2

Section 6033(a)(3)(A) lists three mandatory exceptions from the annual return: churches, their integrated auxiliaries and conventions or associations of churches; organizations with normal gross receipts of $5,000 or less; and the exclusively religious activities of any religious order. Subsection (a)(3)(B) gives the Secretary discretion to excuse other organizations. A church that applies for recognition or files a return does so voluntarily.

§4.1.3

The exceptions reach related entities that qualify as integrated auxiliaries. The SEC order discussed in sections 4.3 to 4.5 states that the Church created Ensign Peak Advisors in 1997 as an integrated auxiliary.

§4.1.4

The statutes apply to churches of every tradition. The records of enforcement and disclosure cited here concern only the groups named in the abstract, and no conclusion about any faith or its members follows from them.

Exhibit 413 · Statute

26 U.S.C. § 508 (special rules for section 501(c)(3) organizations)

Subsections (a) and (b) shall not apply to— (A) churches, their integrated auxiliaries, and conventions or associations of churches, or

New 501(c)(3) organizations must give notice that they apply for recognition (§508(a)). Subsection (c)(1) excepts churches, their integrated auxiliaries, and conventions or associations of churches, and any non-foundation with normal gross receipts of $5,000 or less. Text read at the Cornell LII copy of the U.S. Code.

Source: United States Congress (Internal Revenue Code)
Date: as in force 2026
Quoted from: 26 U.S.C. § 508(c)(1)(A)
Grade: Primary record
Document: https://www.law.cornell.edu/uscode/text/26/508
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 414 · Statute

26 U.S.C. § 6033 (returns by exempt organizations)

Paragraph (1) shall not apply to— (i) churches, their integrated auxiliaries, and conventions or associations of churches,

Subsection (a)(3)(A) lists mandatory exceptions from the annual information return: churches and their integrated auxiliaries and conventions or associations of churches; non-foundations with normal gross receipts of $5,000 or less; and the exclusively religious activities of any religious order. (a)(3)(B) gives the Secretary discretion to excuse other organizations. Text read at the Cornell LII copy.

Source: United States Congress (Internal Revenue Code)
Date: as in force 2026
Quoted from: 26 U.S.C. § 6033(a)(3)(A)(i)
Grade: Primary record
Document: https://www.law.cornell.edu/uscode/text/26/6033
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.2 The Church Audit Procedures Act

Finding REL-4.2Primary record

The Church Audit Procedures Act of 1984 (26 U.S.C. § 7611) permits the IRS to begin a church tax inquiry only on a written reasonable belief held by an appropriate high-level Treasury official and written notice to the church, and requires written approval of regional counsel before a revocation, deficiency notice or assessment. Congress enacted it after a 1983 Senate hearing at which the chairman cited constitutional entanglement and the harm of extended examinations to small congregations.

Evidence: Exhibit 415, Exhibit 419, Exhibit 420, Exhibit 417, Exhibit 418

§4.2.1

Section 7611 was added by Pub. L. 98-369, section 1033, on 18 July 1984. Subsection (a) allows a church tax inquiry only if the reasonable-belief requirements and the notice requirements have been met. Subsection (b) limits examination of church records to what is necessary to determine tax liability, with 15 days' notice and an offered conference. Subsection (c)(1) requires completion within two years of the examination notice, or 90 days for an inquiry with no examination. Subsection (d)(1) requires written approval of regional counsel for a revocation, deficiency notice or assessment. Subsection (i) excludes criminal investigations and willful evasion.

§4.2.2

The Senate Finance Subcommittee on Oversight of the Internal Revenue Service, chaired by Senator Charles Grassley, heard S. 1262 on 30 September 1983. Grassley said the bill aimed "to clarify and expedite" audits of religious organizations "and minimize potential constitutional entanglements." He described a church audit that ended in exoneration: "I was struck by how quickly the integrity, character, and moral foundation of small congregations could be undermined by innuendo, rumor, and press coverage during extended I.R.S. examinations." He also said that "some tax evaders have sought refuge in alleged religious organizations to avoid paying taxes."

§4.2.3

The conference report of 23 June 1984 (H. Rept. 98-861) states the law before the Act: "No special requirements are imposed before commencing an investigation or inquiry regarding church tax liabilities." The conference agreement allowed an inquiry to begin only if a regional commissioner or higher official reasonably believed, on facts recorded in writing, that a tax liability existed. It also provided that information from informants used for this purpose "must not be known to be unreliable."

§4.2.4

The IRS Commissioner testified at the hearing that the Service has an obligation to enforce the federal tax law for all taxpayers, including churches. Treasury testified in support of several of the bill's changes. Witnesses included the Evangelical Council for Financial Accountability, the National Council of Churches and a Church of Scientology committee.

§4.2.5

Two Supreme Court opinions state the Court's reasoning on exemption. In Walz v. Tax Commission (4 May 1970) the Court upheld New York's property tax exemption for houses of worship. It noted that the exemption covered a class of "hospitals, libraries, playgrounds, scientific, professional, historical, and patriotic groups," and stated that "Elimination of exemption would tend to expand the involvement of government by giving rise to tax valuation of church property, tax liens, tax foreclosures, and the direct confrontations and conflicts that follow." Chief Justice Burger wrote for the Court, and Justice Douglas dissented.

§4.2.6

In Bob Jones University v. United States (24 May 1983) the Court stated the general rationale for charitable exemption: "Charitable exemptions are justified on the basis that the exempt entity confers a public benefit." It held that a school with racially discriminatory policies, including a policy based on religious belief, did not qualify as charitable under section 501(c)(3), and that denying the exemption did not violate the Religion Clauses. Justice Rehnquist dissented.

Exhibit 415 · Statute

26 U.S.C. § 7611 (restrictions on church tax inquiries and examinations; Church Audit Procedures Act)

The Secretary may begin a church tax inquiry only if— (A) the reasonable belief requirements of paragraph (2), and (B) the notice requirements of paragraph (3), have been met.

Conditions for a church tax inquiry: a written reasonable belief by an appropriate high-level Treasury official (a)(2) and written notice stating the concerns (a)(3). Examination of church records only as necessary to determine tax liability, with 15 days notice and an offered conference (b). Completion within 2 years of the examination notice, or 90 days for an inquiry with no examination (c)(1). Revocation, deficiency notice or assessment requires written approval of regional counsel (d)(1). Section 7611(i) excludes criminal investigations and willful evasion. Text read at the Cornell LII copy.

Source: United States Congress (Internal Revenue Code; added by Pub. L. 98-369 § 1033, 18 July 1984)
Date: 1984; as in force 2026
Quoted from: 26 U.S.C. § 7611(a)(1)
Grade: Primary record
Document: https://www.law.cornell.edu/uscode/text/26/7611
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 419 · Hearing

Church Audit Procedures Act, hearing on S. 1262 before the Subcommittee on Oversight of the Internal Revenue Service, Committee on Finance, S. Hrg. 98-481

The audit resulted in exoneration, but I was struck by how quickly the integrity, character, and moral foundation of small congregations could be undermined by innuendo, rumor, and press coverage during extended I.R.S. examinations.

Hearing on the bill that became §7611. Chairman Grassley said the bill was to "clarify and expedite" church audits and "minimize potential constitutional entanglements"; Treasury and the IRS Commissioner testified; witnesses included the Evangelical Council for Financial Accountability and the National Council of Churches.

Source: U.S. Senate Committee on Finance
Date: 30 September 1983
Quoted from: Opening statement of Sen. Grassley, pp. 1-2
Grade: Primary record
Document: https://www.finance.senate.gov/imo/media/doc/HRG98-481.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 420 · Conference report

Deficit Reduction Act of 1984, Conference Report, H. Rept. 98-861 (church audits, title X, sec. 1033)

No special requirements are imposed before commencing an investigation or inquiry regarding church tax liabilities.

The explanation of the church-audit provisions that became §7611: reasonable belief of a regional commissioner or higher official recorded in writing, written inquiry notice, examination limits. States that informant information "must not be known to be unreliable."

Source: U.S. House of Representatives, Committee of Conference
Date: 23 June 1984
Quoted from: H. Rept. 98-861, p. 1102 (present-law statement, item 6, "Church audits")
Grade: Primary record
Document: https://www.finance.senate.gov/imo/media/doc/Conf-98-861.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 417 · Court opinion

Walz v. Tax Commission of the City of New York, 397 U.S. 664

The State has an affirmative policy that considers these groups as beneficial and stabilizing influences in community life and finds this classification useful, desirable, and in the public interest.

Upheld New York City property tax exemption for houses of worship. Rationale: the exemption covers a broad class of nonprofit properties; legislative purpose is not to establish religion; and either taxing churches or exempting them involves some contact, with exemption involving less. Chief Justice Burger for the Court.

Source: Supreme Court of the United States
Date: 4 May 1970
Quoted from: 397 U.S. at 673 (Part V)
Grade: Primary record
Document: https://tile.loc.gov/storage-services/service/ll/usrep/usrep397/usrep397664/usrep397664.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 418 · Court opinion

Bob Jones University v. United States, 461 U.S. 574

Charitable exemptions are justified on the basis that the exempt entity confers a public benefit—a benefit which the society or the community may not itself choose or be able to provide, or which supplements and advances the work of public institutions already supported by tax revenues.

Held that a school with racially discriminatory policies, including one based on religious belief, did not qualify as charitable under §501(c)(3), and that denial of the exemption did not violate the Religion Clauses because of the government interest in eradicating racial discrimination in education. Chief Justice Burger for the Court; Justice Rehnquist dissented. The opinion states the general rationale for charitable exemption.

Source: Supreme Court of the United States
Date: 24 May 1983
Quoted from: 461 U.S. 574, 591 (Part II-A; pages 585-592 per syllabus)
Grade: Primary record
Document: https://tile.loc.gov/storage-services/service/ll/usrep/usrep461/usrep461574/usrep461574.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.3 Ensign Peak and the thirteen LLCs

Finding REL-4.3Primary record

The SEC found that from 1997 through 2019 Ensign Peak Advisors, an integrated auxiliary of The Church of Jesus Christ of Latter-day Saints, did not file Forms 13F in its own name. The Church and Ensign Peak created thirteen LLCs for the sole purpose of filing the forms and preventing public disclosure of the Church's equity holdings, and the Church's senior leadership approved the approach.

Evidence: Exhibit 421, Exhibit 422

Mechanism: The filtered record

§4.3.1

The SEC issued its order in the matter of Ensign Peak Advisors, Inc. and The Church of Jesus Christ of Latter-day Saints on 21 February 2023 (Exchange Act Release No. 96951, File No. 3-21306). Ensign Peak was created in 1997 and held about $7 billion at inception. Form 13F is the quarterly report of equity holdings that an institutional investment manager above the reporting threshold files with the SEC. The SEC's press release of the same day states that the requirement applies to all institutional investment managers, including non-profit and charitable organizations.

§4.3.2

The order's summary states: "the Church and Ensign Peak created thirteen limited liability corporations (“LLCs”), including twelve similar LLCs (the “Clone LLCs”) with addresses located throughout the U.S., for the sole purpose of filing Forms 13F and preventing public disclosure by Ensign Peak of the Church's equity securities holdings." The first Form 13F in the name of an LLC was filed on 26 February 2003 for the year ended 2002.

§4.3.3

The order dates the approvals. On 21 March and 1 December 2005 the Church's leadership approved a new reporting entity so that neither "the 'Street' nor the media" could connect it to Ensign Peak, and a second LLC was formed. On 19 May 2011 and 6 November 2015 leadership approved cloning that LLC, and the clones reached twelve.

§4.3.4

The order states the reason it found: "The Church was concerned that disclosure of the assets in the name of Ensign Peak, a known Church affiliate, would lead to negative consequences in light of the size of the Church's portfolio." It states that the Church's First Presidency approved the approach and that unanimous approval was needed to deviate from it. It states that the LLCs' business managers were chosen partly because they had "common names and a limited presence on social media." The order names no individual except by role.

§4.3.5

The respondents settled without admitting or denying the findings, and the order states that its findings "are not binding on any other person or entity." It concerns equity securities held and disclosed on Forms 13F. It makes no finding about the Church's tax status or the use of its funds.

Exhibit 421 · Administrative order

In the Matter of Ensign Peak Advisors, Inc. and The Church of Jesus Christ of Latter-day Saints, Exchange Act Release No. 96951, File No. 3-21306

the Church and Ensign Peak created thirteen limited liability corporations (“LLCs”), including twelve similar LLCs (the “Clone LLCs”) with addresses located throughout the U.S., for the sole purpose of filing Forms 13F and preventing public disclosure by Ensign Peak of the Church’s equity securities holdings.

Settled cease-and-desist order (respondents neither admitted nor denied the findings). Finds Ensign Peak failed to file Forms 13F in its own name from 1997 through 2019 and filed them under thirteen LLCs that misstated investment discretion; the Church approved the approach and caused the violations. Penalties: $4,000,000 (Ensign Peak) and $1,000,000 (Church). First consolidated Form 13F filed 14 February 2020 listing 1,659 securities worth about $37.8 billion.

Source: U.S. Securities and Exchange Commission
Date: 21 February 2023
Quoted from: Order, Part III, Summary (p. 2)
Grade: Primary record
Document: https://www.sec.gov/litigation/admin/2023/34-96951.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.4 The order's further findings

Finding REL-4.4Primary record

The SEC found that the LLCs' forms misstated that the LLCs had sole investment and voting discretion, and that the Church's audit department highlighted in 2014 and 2017 the risk that the SEC might disagree with the structure. The practice ended with a consolidated Form 13F filed on 14 February 2020 that listed 1,659 securities worth about $37.8 billion.

Evidence: Exhibit 421

Mechanism: Known inside, disclosed late

§4.4.1

The order finds that the LLC filings misstated that each LLC had sole investment and voting discretion over the securities it reported. It finds that Church Audit Department reviews of the structure in 2014 and 2017 "highlighted the risk that the SEC might disagree."

Dates in the SEC order and the Church's statement of 21 February 2023
Date	Event	Source
1997	Ensign Peak created; Form 13F obligation begins	Order
26 Feb 2003	First Form 13F filed in the name of an LLC	Order
2014; 2017	Church audit reviews highlight the SEC risk	Order
May 2018	A public website reports about $32 billion in 13F holdings tied to the Church	Order
June 2019	SEC first expresses concern	Church statement
14 Feb 2020	First consolidated Form 13F: 1,659 securities, about $37.8 billion	Order
21 Feb 2023	SEC order and Church statement	Order; statement

§4.4.2

The order's own figures are about $32 billion for the May 2018 public report and about $37.8 billion for the first consolidated filing. Both concern equity securities reportable on Form 13F.

4.5 Penalties and the Church's statements

Finding REL-4.5Primary record

On 21 February 2023 the SEC ordered Ensign Peak Advisors to pay $4,000,000 and the Church $1,000,000 and ordered both to cease and desist, in a settlement in which neither admitted nor denied the findings. The Church's statement of the same day says Ensign Peak "received and relied upon legal counsel" and that "We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed"; its statement of 17 December 2019 says "The Church complies with all applicable law governing our donations, investments, taxes, and reserves."

Evidence: Exhibit 421, Exhibit 425, Exhibit 424, Exhibit 423

§4.5.1

The order directs Ensign Peak to pay $4,000,000 and the Church $1,000,000 and directs both to cease and desist from violating Section 13(f) of the Exchange Act and Rule 13f-1. The SEC published press release 2023-35 the same day. On 30 March 2023 the SEC listed the matter as Notice of Covered Action 2023-036, open to whistleblower award claims. The notice does not state whether any person supplied information or whether an award was made.

§4.5.2

The Church's newsroom statement of 21 February 2023 states: "Since 2000, Ensign Peak received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio." It states: "Ensign Peak and the Church believe that all securities required to be reported were included in the filings by the separate companies." It states: "In June 2019, the SEC first expressed concern about Ensign Peak's reporting approach."

§4.5.3

The accompanying questions and answers state: "The Church's senior leadership received and relied upon legal counsel when it approved of the use of the external companies to make the filings. Ensign Peak handled the mechanics of the filing process. The Church's senior leadership never prepared or filed the specific reports at issue." They state: "The investment returns of the Church will be used to pay the settlement."

§4.5.4

The First Presidency statement of 17 December 2019 followed a press report of the whistleblower complaint described in section 4.6. It states: "The Church complies with all applicable law governing our donations, investments, taxes, and reserves." It states: "Claims being currently circulated are based on a narrow perspective and limited information." It states: "All Church funds exist for no other reason than to support the Church's divinely appointed mission."

Exhibit 425 · Institution statement

Church Issues Statement on SEC Settlement

We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed.

The Church's response to the SEC order. Says Ensign Peak "received and relied upon legal counsel," that the SEC first expressed concern in June 2019, that Ensign Peak then filed a single aggregated report, and that the Church's senior leadership "never prepared or filed the specific reports at issue."

Source: The Church of Jesus Christ of Latter-day Saints
Date: 21 February 2023
Quoted from: Statement, final paragraph
Grade: Primary record
Document: https://newsroom.churchofjesuschrist.org/article/church-issues-statement-on-sec-settlement
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 424 · Institution statement

First Presidency Statement on Church Finances

The Church complies with all applicable law governing our donations, investments, taxes, and reserves.

The Church's response to media reports of the Nielsen whistleblower complaint. States that a portion of funds is "methodically safeguarded" as a reserve and that claims in circulation are "based on a narrow perspective and limited information."

Source: The Church of Jesus Christ of Latter-day Saints
Date: 17 December 2019
Quoted from: Statement, paragraph 2
Grade: Primary record
Document: https://newsroom.churchofjesuschrist.org/article/first-presidency-statement-church-finances
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 423 · Agency notice

SEC Whistleblower Program, Notice of Covered Action 2023-036 (Ensign Peak Advisors / the Church)

Lists File No. 3-21306 (filed 21 February 2023) as a covered action open to whistleblower award claims. It does not say who, if anyone, supplied information or that an award was made.

Source: U.S. Securities and Exchange Commission
Date: 30 March 2023
Grade: Primary record
Document: https://www.sec.gov/enforcement-litigation/whistleblower-program/notice-covered-actions/award-claim-2023-036
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.6 The whistleblower complaint

Finding REL-4.6Reported

Religion Unplugged reported on 30 March 2021 that a former Ensign Peak employee prepared a 74-page complaint to send to the IRS whistleblower program, and that an IRS spokesman in Utah could not confirm any investigation. No public IRS outcome has been found. By the Church's own account the SEC first expressed concern about Ensign Peak's reporting in June 2019.

A former Ensign Peak portfolio manager sent a complaint to the IRS whistleblower program in November 2019, first reported publicly on 17 December 2019, and no public IRS outcome has been found. By the Church's own account the SEC first expressed concern about Ensign Peak's reporting in June 2019, before the complaint.

Evidence: Exhibit 426, Exhibit 425, Exhibit 423

§4.6.1

Religion Unplugged reported on 30 March 2021 that a former Ensign Peak employee, who resigned in 2019, prepared a 74-page complaint with his brother to send to the IRS whistleblower program, and that an IRS spokesman in Utah could not confirm any investigation. The article states that the Washington Post and Religion Unplugged reported on the complaint in 2019.

§4.6.2

The Church's statement places the first SEC concern in June 2019. The SEC's Notice of Covered Action does not identify any source of information. No cited record shows what prompted the SEC inquiry.

Exhibit 426 · News report

A Cloud Of Mystery Remains Over Whistleblower Complaint Against LDS Church

He prepared a 74-page complaint with his twin brother, Lars, to send to the IRS whistleblower program.

Reports that a former Ensign Peak employee, who resigned in 2019, prepared a 74-page complaint with his twin brother to send to the IRS whistleblower program, and that an IRS spokesman in Utah could not confirm any investigation. The article states that the Washington Post and Religion Unplugged reported on the complaint in 2019.

Source: Religion Unplugged
Date: 30 March 2021
Quoted from: Article, paragraph beginning "The whistleblower identified as David A. Nielsen"
Grade: Reported
Document: https://religionunplugged.com/news/2021/3/30/a-cloud-of-mystery-remains-over-whistleblower-complaint-against-lds-church
Accessed: 2026-11-09
Cited by: Findings citing this exhibit
Note: Secondhand. A primary document would be the complaint itself or an IRS response. The article does not give the date the complaint was sent, the author's job title or the date of the first report.

4.7 The Senate Finance staff memo

Finding REL-4.7Primary record

In a staff memorandum to Senator Grassley dated 6 January 2011, Senate Finance Committee staff reported that six media-based ministries classify themselves as churches and that, with very limited exception, staff found no Form 990 for them or their related organizations. Staff recommended against requiring every church to file Form 990.

In a staff memorandum to Senator Grassley dated 6 January 2011, Senate Finance Committee staff reported that six media-based ministries classify themselves as churches and that, with very limited exception, staff found no Form 990 for them or their related organizations. Staff did not subpoena and recommended against requiring every church to file Form 990.

Evidence: Exhibit 427, Exhibit 428

§4.7.1

The memorandum is a 61-page staff document, released with a press release by Senator Grassley on 6 January 2011, at the end of an inquiry that began with letters to six ministries in November 2007. Chapter 5 documents the inquiry itself: the letters, each ministry's response, the absence of subpoenas and the memorandum's status as a staff document (Chapter 5, Ministry as Business).

§4.7.2

The staff wrote that each of the six "classifies itself as a 'church.' As a result, they did not have to file a Form 1023 ... and do not have to file a Form 990." They wrote: "With very limited exception, we did not find a Form 990 for any of the churches or their related organizations." The memorandum makes no finding of a tax violation.

§4.7.3

The memorandum states that anyone can set up an organization, call it a church and solicit tax-deductible contributions, and that unless the organization applies for recognition or files returns voluntarily "that organization will be invisible to the IRS and operate virtually without government oversight because no state requires religious organizations to register and file annual financial reports with the state attorney general."

§4.7.4

The staff recommended against ending the church exception to the filing requirement: "Congress sent a strong signal with the enactment of section 7611, also known as the Church Audit Procedures Act ... that it expects minimal interference in church operations from the IRS. As a result, we do not recommend completely eliminating the church exception to the filing requirements." It cited the 2002 amendments to the parsonage allowance alongside section 7611 as signals of that expectation and stated that the constitutional analysis was beyond staff expertise. The memorandum also stated that "requiring churches to abide by the same filing rules as other tax-exempt organizations is less likely to result in government entanglement than carving out an exception for churches." It raised options that included an e-postcard filing and an exemption for churches accountable to another body.

Exhibit 427 · Congressional staff report

Review of Tax Issues Raised by Media-Based Ministries (staff memorandum to Sen. Grassley, 61 pp.)

that organization will be invisible to the IRS and operate virtually without government oversight because no state requires religious organizations to register and file annual financial reports with the state attorney general.

Result of a three-year inquiry begun by Grassley letters of November 2007 to six media-based ministries. Staff found no Form 990 for the churches or, with very limited exception, their related organizations; did not subpoena; and recommended against requiring every church to file Form 990. Raises options: IRS advisory committee, e-postcard, exemption for churches accountable to another body. Makes no finding of tax violation.

Source: U.S. Senate Committee on Finance, minority staff
Date: 6 January 2011
Quoted from: Staff memo, p. 20 (section on church exception to filing)
Grade: Primary record
Document: https://www.finance.senate.gov/imo/media/doc/SFC%20Staff%20Memo%20to%20Grassley%20re%20Ministries%2001-06-11%20FINAL.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 428 · Press release

Grassley Releases Review of Tax Issues Raised by Media-based Ministries (press release)

The challenge is to encourage good governance and best practices and so preserve confidence in the tax-exempt sector without imposing regulations that inhibit religious freedom or are functionally ineffective

Records which ministries responded. Joyce Meyer Ministries and Benny Hinn's World Healing Center Church answered fully; Randy and Paula White, Eddie Long and Kenneth and Gloria Copeland gave incomplete responses; Creflo and Taffi Dollar declined to provide any requested information. Asks ECFA to lead a sector discussion.

Source: U.S. Senate Committee on Finance
Date: 6 January 2011
Quoted from: Press release, quotation of Sen. Grassley, paragraph 6
Grade: Primary record
Document: https://www.finance.senate.gov/ranking-members-news/grassley-releases-review-of-tax-issues-raised-by-media-based-ministries
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.8 Political speech and the Johnson Amendment

Finding REL-4.8Primary record

On 7 July 2025 the IRS and the plaintiffs in National Religious Broadcasters v. Long jointly asked a federal court to declare that a house of worship speaking to its congregation through its customary channels on matters of faith, in connection with religious services, does not participate or intervene in a political campaign under 26 U.S.C. § 501(c)(3). On 31 March 2026 the court dismissed the case without prejudice for lack of subject-matter jurisdiction, without reaching the merits, and the plaintiffs noticed an appeal on 22 April 2026.

Evidence: Exhibit 416, Exhibit 435, Exhibit 436, Exhibit 437

§4.8.1

Congress added the campaign clause to section 501(c)(3) in 1954. It provides that an exempt organization "does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." The clause applies to churches and every other section 501(c)(3) organization.

§4.8.2

In Branch Ministries v. Rossotti (D.C. Cir., 12 May 2000) the court reviewed the IRS revocation of the exemption of the Church at Pierce Creek after the church placed full-page newspaper advertisements before the 1992 election urging Christians not to vote for Bill Clinton. The opinion describes the revocation in these words: "for the first time in its history, it revoked a bona fide church's tax-exempt status because of its involvement in politics." The court upheld the revocation. It rejected the church's selective-enforcement claim, which pointed to reported endorsements of Democratic candidates from pulpits.

§4.8.3

The joint motion for entry of a consent judgment (ECF 35) was filed on 7 July 2025 by two churches, two organizations and the IRS. Paragraph 7 states: "When a house of worship in good faith speaks to its congregation, through its customary channels of communication on matters of faith in connection with religious services, concerning electoral politics viewed through the lens of religious faith, it neither “participate[s]” nor “intervene[s]” in a “political campaign,” within the ordinary meaning of those words." The motion states that the IRS generally has not enforced the clause against houses of worship for such speech. The proposed order would enjoin enforcement only against the two plaintiff churches, Sand Springs Church and First Baptist Church Waskom.

§4.8.4

Americans United sought to intervene on 10 July 2025, and the court denied the motion on 12 December 2025 and kept it as amicus. Judge J. Campbell Barker issued the opinion on 31 March 2026. It holds that the Tax Anti-Injunction Act and the tax bar in the Declaratory Judgment Act deprive the court of jurisdiction to enter the relief, even by consent, and states: "this case is dismissed without prejudice for lack of subject-matter jurisdiction." The opinion notes that "Under a new administration, defendants answered and then joined plaintiffs in moving for entry of a consent judgment." Plaintiffs filed a notice of appeal on 22 April 2026 (ECF 108).

Exhibit 416 · Statute

26 U.S.C. § 501(c)(3) (exemption; political campaign clause, "Johnson Amendment")

does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office

The campaign-intervention clause of §501(c)(3), added in 1954 (100 Cong. Rec. 9604, as cited in the district court opinion in NRB v. Bessent). It applies to churches and other 501(c)(3) organizations alike.

Source: United States Congress (Internal Revenue Code; clause added 1954)
Date: as in force 2026
Quoted from: 26 U.S.C. § 501(c)(3)
Grade: Primary record
Document: https://www.law.cornell.edu/uscode/text/26/501
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 437 · Court opinion

Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir.)

for the first time in its history, it revoked a bona fide church's tax-exempt status because of its involvement in politics.

Upheld the IRS revocation of the Church at Pierce Creek's exemption after it placed full-page newspaper advertisements before the 1992 election urging Christians not to vote for Bill Clinton. Describes the Church Audit Procedures Act as special restrictions on investigating churches. Rejected the church's selective-enforcement claim, which pointed to reports of pulpit endorsements of Democratic candidates.

Source: U.S. Court of Appeals for the D.C. Circuit
Date: 12 May 2000
Quoted from: Slip op., introduction
Grade: Primary record
Document: https://www.gpo.gov/fdsys/pkg/USCOURTS-caDC-99-05097/pdf/USCOURTS-caDC-99-05097-0.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 435 · Court filing

National Religious Broadcasters v. Long, No. 6:24-cv-00311 (E.D. Tex.), Joint Motion for Entry of Consent Judgment (ECF 35) with proposed order (ECF 35-1)

When a house of worship in good faith speaks to its congregation, through its customary channels of communication on matters of faith in connection with religious services, concerning electoral politics viewed through the lens of religious faith, it neither “participate[s]” nor “intervene[s]” in a “political campaign,” within the ordinary meaning of those words.

Joint motion by the plaintiffs (two churches and two organizations) and the IRS asking the court to enter a consent judgment that the Johnson Amendment does not reach a house of worship's speech to its congregation in connection with religious services through customary channels, and to enjoin enforcement against the two plaintiff churches only (ECF 35-1 para. 7). Says the IRS "generally has not enforced" the clause against houses of worship for such speech (para. 8).

Source: Plaintiffs and Defendants (IRS), U.S. District Court, Eastern District of Texas
Date: 7 July 2025
Quoted from: ECF 35, para. 7 (repeated in ECF 35-1, para. 3)
Grade: Primary record
Document: https://storage.courtlistener.com/recap/gov.uscourts.txed.232590/gov.uscourts.txed.232590.35.0.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 436 · Court opinion

National Religious Broadcasters v. Bessent, No. 6:24-cv-00311 (E.D. Tex.), Opinion and Order (ECF 106)

this case is dismissed without prejudice for lack of subject-matter jurisdiction.

Held the Tax Anti-Injunction Act and the tax bar in the Declaratory Judgment Act deprive the court of jurisdiction to enter the proposed relief, even by consent. Did not reach the merits. Plaintiffs filed a notice of appeal on 22 April 2026 (ECF 108). The order of 12 December 2025 (ECF 102) denied Americans United's motion to intervene and kept it as amicus.

Source: U.S. District Court, Eastern District of Texas (Judge J. Campbell Barker)
Date: 31 March 2026
Quoted from: Opinion, p. 9
Grade: Primary record
Document: https://storage.courtlistener.com/recap/gov.uscourts.txed.232590/gov.uscourts.txed.232590.106.0.pdf
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.9 Voluntary standards

Finding REL-4.9Primary record

The Evangelical Council for Financial Accountability, founded in 1979, accredits more than 2,700 member churches and ministries that join voluntarily, affirm an evangelical Christian statement of faith and have an independent CPA audit, review or compile their financial statements, and it states that it is not an auditor. The U.S. Conference of Catholic Bishops has a voluntary diocesan financial reporting resolution under which each suffragan bishop sends his metropolitan archbishop a letter stating that his finance council reviewed audited statements.

Evidence: Exhibit 429, Exhibit 430, Exhibit 431, Exhibit 432, Exhibit 433

§4.9.1

ECFA states that in the late 1970s Senator Mark Hatfield challenged key Christian leaders "to police their own mission agencies as a 'Christian Better Business Bureau' or face the potential of government intervention." ECFA was founded in 1979. It states that about 35 percent of applicants are accepted on their first application.

§4.9.2

ECFA's seven standards require a written statement of faith "clearly affirming a commitment to the evangelical Christian faith," a board with an independent majority, and financial statements audited, reviewed or compiled by an independent CPA. Standard 5 states: "Every organization shall provide a copy of its current financial statements upon written request." ECFA states: "ECFA does not offer financial audits or other professional services for members." Compliance rests on application review, an annual renewal affirmation, periodic check-ins and complaint-driven reviews, and the sanction is suspension or termination of membership.

§4.9.3

ECFA states that its standards "are set at an appropriately high level" but "do not address every potential issue." The IRS has recognized ECFA as an association of churches exempt from the annual Form 990, and ECFA states that "we choose to voluntarily prepare the form." Its members are evangelical Christian organizations, and its standards say nothing about other traditions.

§4.9.4

The U.S. Conference of Catholic Bishops approved a resolution on diocesan financial reporting in November 2000 and renewed it through November 2026. The resolution "encourages the adoption of a voluntary financial reporting system." Each suffragan bishop is asked to send his metropolitan archbishop a letter naming the finance council members and stating that they reviewed the audited statements. The resolution does not require a public filing.

§4.9.5

The 2011 Senate staff memo stated that the lack of IRS oversight "is not as worrisome when there is oversight by an independent third party, such as the ECFA, or even denominational oversight." The SEC order in section 4.4 records that the Church's own audit department reviewed the Ensign Peak structure in 2014 and 2017. That is one institution's record and states nothing about denominational oversight generally.

Exhibit 431 · Organization history

ECFA History

challenged them to police their own mission agencies as a "Christian Better Business Bureau" or face the potential of government intervention.

ECFA's account of its founding in 1979 after Senator Mark Hatfield challenged evangelical leaders to police their own organizations.

Source: Evangelical Council for Financial Accountability
Date: read 9 November 2026
Quoted from: ECFA History, paragraph 3
Grade: Primary record
Document: https://www.ecfa.org/Content/GeneralBackground
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 429 · Voluntary accreditation standards

Seven Standards of Responsible Stewardship

Every organization shall provide a copy of its current financial statements upon written request and shall provide other disclosures as the law may require.

Seven pass-fail standards for members: doctrinal statement affirming the evangelical Christian faith; board of five or more with an independent majority; financial oversight with an independent CPA; use of resources and legal compliance; transparency; compensation and related-party transactions; and stewardship of gifts. Membership is voluntary and limited to organizations affirming evangelical Christian faith.

Source: Evangelical Council for Financial Accountability
Date: read 9 November 2026
Quoted from: Standard 5 (Transparency)
Grade: Primary record
Document: https://www.ecfa.org/Content/Standards
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 430 · Organization FAQ

FAQs: How Does ECFA Accreditation and Member Accountability Work?

ECFA does not offer financial audits or other professional services for members.

States ECFA has "over 2,700" accredited churches and ministries, that membership is voluntary, that about 35 percent of applicants are accepted on first application, that members must have annual statements "audited, reviewed, or compiled by an independent CPA," and that compliance rests on application review, annual renewal affirmation, periodic check-ins and complaint-driven reviews. Says ECFA is not an auditor.

Source: Evangelical Council for Financial Accountability
Date: read 9 November 2026
Quoted from: FAQ, "Is ECFA an auditor or fraud examiner?"
Grade: Primary record
Document: https://www.ecfa.org/Content/FAQs-How-Does-ECFA-Accreditation-and-MemberAccountability-Work
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 432 · Organization page

ECFA Form 990 (page)

Although the IRS has recognized ECFA’s legal status as an association of churches exempt from the annual Form 990 filing requirements, we choose to voluntarily prepare the form

ECFA states that the IRS recognizes it as an association of churches exempt from the annual Form 990 and that it files voluntarily.

Source: Evangelical Council for Financial Accountability
Date: read 9 November 2026
Quoted from: ECFA Form 990 page, paragraph 1
Grade: Primary record
Document: https://www.ecfa.org/Content/Form990
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

Exhibit 433 · Voluntary reporting resolution

Resolution on Diocesan Financial Reporting (approved November 2000; renewed through November 2026)

encourages the adoption of a voluntary financial reporting system

A voluntary reporting system. Each suffragan bishop is asked to send his metropolitan archbishop a letter naming the finance council members and stating that they reviewed the audited statements. The resolution does not require public filing.

Source: United States Conference of Catholic Bishops
Date: 2000; renewed 2021
Quoted from: Preamble
Grade: Primary record
Document: https://www.usccb.org/about/financial-reporting/diocesan-financial-reporting
Accessed: 2026-11-09
Cited by: Findings citing this exhibit

4.10 One estimate of the exemption's value

Finding REL-4.10Reported

A 2012 article in Free Inquiry estimates government subsidy to religion in the United States at about $71 billion a year. Its authors state that they did not estimate local government subsidies, the donor deduction, sales tax or the SECA exemption, and its largest component applies the top federal corporate tax rate to all religious giving.

Evidence: Exhibit 434

§4.10.1

Ryan Cragun, Stephanie Yeager and Desmond Vega published "How Secular Humanists (and Everyone Else) Subsidize Religion in the United States" in Free Inquiry 32(4), June/July 2012, pages 39 to 46. Free Inquiry is the magazine of the Council for Secular Humanism, and the article was not peer reviewed. The figure is the authors' estimate.

Components of the estimate, Table 1 (p. 43)
Component	Amount
Federal income tax	$35.3 billion
State income tax	$6.1 billion
Property tax	$26.2 billion
Investment tax	$41 million
Parsonage allowance	$1.2 billion
Faith-Based Initiatives	$2.2 billion
Total	$71 billion

§4.10.2

The authors state that for the federal figure "we assumed that religions would be taxed at the maximum federal corporate tax rate" on religious giving of $100.95 billion. For property they multiplied 335,000 congregations by an average value of $1.7 million, taken from 47 churches of six denominations in Tampa, which gives about $600 billion in property.

§4.10.3

The authors state that they were "unable to come up with an accurate estimate of the subsidy from local governments," did not estimate the subsidy to donors through tax deductions or from sales taxes, and did not estimate the SECA exemption. They state: "we are fairly confident that our estimates are on the conservative end of the subsidies provided to religions by governments in the United States."

Exhibit 434 · Magazine research report

Research Report: How Secular Humanists (and Everyone Else) Subsidize Religion in the United States

we are fairly confident that our estimates are on the conservative end of the subsidies provided to religions by governments in the United States.

Estimates about $71 billion a year in government subsidy to religion: federal income tax $35.3 billion; state income tax $6.1 billion; property tax $26.2 billion; investment tax $41 million; parsonage $1.2 billion; Faith-Based Initiatives $2.2 billion. Method assumes top federal corporate rate on religious giving, 335,000 congregations at an average $1.7 million property value from a 47-church Tampa sample. Authors say they could not estimate local taxes, the donor deduction, sales tax, the SECA exemption or related business income. Not peer reviewed; published by a secular humanist council.

Source: Cragun, Yeager and Vega, Free Inquiry 32(4), pp. 39-46
Date: June/July 2012
Quoted from: p. 43
Grade: Reported
Document: https://www.ryantcragun.com/?p=158
Accessed: 2026-11-09
Cited by: Findings citing this exhibit
Note: Published in Free Inquiry, the magazine of the Council for Secular Humanism; not peer reviewed.

4.11 What remains open

§4.11.1

The Fifth Circuit's disposition of the appeal in National Religious Broadcasters v. Long is not in the record. The IRS's response to the whistleblower complaint, the complaint's text, and whether any person also gave the SEC information are not in the record.

§4.11.3

The record contains no primary SEC or IRS action against the finances of a religious body other than the Church of Jesus Christ of Latter-day Saints, and no primary record of finances or tax enforcement for Jewish, Muslim, Hindu, Buddhist, Orthodox, Southern Baptist or mainline Protestant bodies.

Key findings

Federal law excepts churches from applying for recognition of exemption and from filing Form 990 (4.1).
The Church Audit Procedures Act of 1984 conditions any IRS church inquiry on written belief, notice and counsel approval (4.2).
The SEC found that Ensign Peak used thirteen LLCs to file Forms 13F from 1997 through 2019 (4.3).
The order records misstated discretion, internal audit warnings in 2014 and 2017, and a consolidated filing in 2020 (4.4).
The penalties were $4,000,000 and $1,000,000, settled without admission or denial, and the Church's statements are recorded (4.5).
A whistleblower complaint was reported in 2019, and the Church says the SEC raised concern in June 2019 (4.6).
Senate Finance staff found no Forms 990 for six ministries and recommended against universal filing (4.7).
The IRS joined a 2025 motion on pulpit speech, and the court dismissed it in 2026 without reaching the merits (4.8).
ECFA and the Catholic bishops' conference maintain voluntary standards (4.9).
One magazine estimate puts the subsidy at about $71 billion, with stated limits (4.10).

Version 0.1. Last updated 9 November 2026. Report an error.