In a showdown with the Internal Revenue Service, a controversial Brooklyn Park megachurch appears to have won the most recent round with the federal government.
A U.S. district magistrate judge's recommendation, issued Tuesday, sides with the Living Word Christian Center. The church had argued that it didn't have to provide detailed financial information focusing on the compensation of its founder and senior pastor, James (Mac) Hammond, requested by the IRS.
Earlier this year, the IRS petitioned the U.S. District Court to force the church to answer its demand for information. The church argued that the request wasn't made by a "high-ranking official" as required by law, and the magistrate judge agreed.
A U.S. District Court judge will decide whether to follow that recommendation.
The IRS and an attorney representing the government couldn't be reached for comment late Tuesday.
Amy Rotenberg, an attorney and spokeswoman for the church, said Hammond and other church officials are pleased with the magistrate's recommendation.
"We recognize that churches must abide by the tax laws of the United States, and we have," she said. "But Congress intended ... that government needs to tread very carefully when it's going to enforce the Internal Revenue Code with regard to churches because of the sensitivity in the relationship between government and churches."
The IRS didn't meet the threshold that Congress set, she said.
"It's important that all of those hoops that Congress wanted the IRS to jump through be actually jumped through," Rotenberg said. "And that protects all of us, all people of all faiths. All faith communities will benefit by the structure that Congress put in place, which was to recognize the necessity of separating church and state."
The case could have national implications because Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee, has asked six media-based ministries for information regarding their finances to make sure the tax-exempt organizations are accountable to donors.
At first blush, the magistrate judge's recommendation seems to rest on a mere technicality: The IRS official who made the determination to start the tax inquiry wasn't ranked high enough in the agency to make that decision.
According to law, a decision to examine church records "must be made by an official whose experience and level of political accountability will make it more likely that there will not be undue government intrusion into religious affairs,'' according the magistrate's report and recommendation.
"Due to concerns about the separation of church and state and the inherent tension in church-state relations, Congress clearly wanted the decision to investigate a church to be approved by a high-level Executive Branch official," the report stated.
Hammond is a proponent of the so-called "prosperity gospel," which teaches that a life dedicated to Christ will result in spiritual and material riches for its members. He owns homes and property worth millions of dollars.
He originally drew public attention by endorsing U.S. Rep. Michele Bachmann, R-Minn., from the pulpit, which violates IRS rules for tax-exempt organizations. He later apologized.
The IRS decided it wasn't necessary to continue the inquiry into the church's political activities.
But it was interested in Hammond's compensation. The IRS also wanted the details of a relationship in which the church bought a jet for Hammond, which he then leased back to the church at a profit. That deal was questioned by a Washington, D.C., watchdog group.
What's next is unclear
Rotenberg said she has no way of knowing whether a higher-ranking IRS official could restart the tax investigation into the church.
"It's always within the IRS's purview to initiate an inquiry of any church," she said. "But in order to do so, they are going to have to meet a specific threshold of evidence that would allow a high enough level official to decide such inquiry is appropriate. ...
"They didn't meet that threshold now, and we don't believe they will if they go forward."
Staff writer Jim Adams contributed to this report. Mary Lynn Smith • 612-673-4788