July 14 1997

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Following complaints that the IRS is unfairly singling out for audits conservative groups and politically active churches, a congressional committee has launched a special inquiry into the tax agency's policies and practices.

The Congressional Joint Committee on Taxation is expected, by mid-September, to issue a report on whether politics is playing a role in determining whom the IRS audits.

"There is absolutely no doubt that the Internal Revenue Service has targeted conservative churches and conservative organizations for special treatment," says attorney Jay Sekulow of the American Center for Law and Justice (ACLJ) in Virginia Beach. The ACLJ is defending the Church at Pierce Creek in Conklin, New York, which is appealing its loss of tax exemption after its 1992 newspaper ads declared that voting for Clinton would be a sin.

Intense controversy has developed in connection with the IRS practice of initiating tax audits on the basis of third-party allegations—from media reports, watchdog groups, or whistleblowers. IRS commissioner Margaret Milner Richardson rebutted, in a letter to Congress, the allegations against the agency, calling them "inaccurate and misleading."

CONDUIT GIVING? Meanwhile, among religious groups, fresh concerns about IRS practices have surfaced within the past year.

In 1996, the IRS initially denied tax-exempt status to Great Commission Ministries (GCM), setting off alarm bells throughout the Christian parachurch community. Based in the Columbus, Ohio, area, GCM has about 120 staff ministering in 34 college communities.

At issue was the common practice known as deputation, by which missionaries raise support. During deputation, individuals solicit financial pledges, which are paid to a nonprofit corporation, ...