Alliance Defending Freedom’s senior counsel Erik Stanley posted a blog on The Christian Post website asking the question, “Has the IRS given up on auditing churches?” The question stems from a recent remark by an IRS official that, despite the complaints received about churches violating the tax code during this election season, the IRS was “holding any potential church audits in abeyance.”
According to Stanley’s explanation, in 1984 Congress passed the Church Audit Procedures Act (CAPA) to protect the rights of churches during IRS audits. One of CAPA’s requirements was that a high-level official of the IRS at the level of Regional Commissioner or above approve the audit first. But in 1998, the IRS was reorganized by constituency instead of region, so the position of Regional Commissioner vanished.
In 2009, a Minnesota church challenged the audit procedures, saying the IRS did not have a high-enough ranking official approving the proceedings. The courts agreed, and the audit was stopped. Since then, the IRS ceased its ongoing audits, citing “a pending issue regarding the procedure used to initiate the inquiry.” The IRS has proposed new regulations to designate the proper official to approve the audits, but they haven’t yet finalized them.
Stanley warns, however, that the IRS maintains its ability to audit churches, and it can enforce the tax code retroactively to violations occurring duing the period of abeyance. Churches who would like more information about the tax code enforcement and their rights can click here.