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A Federal Appeals Court Addressed the Significant Issue of IRS Authority to Demand Disclosure of Church Records

An IRS agent became convinced that a church official was soliciting donations of depressed real estate to his church at grossly inflated values, with the church thereafter selling the properties at their substantially lower market values. For example, one property donated to the church and valued at $2.3 million was later sold by the church for only $250,000. Another property valued at $622,500 was sold for $50,000. An advertisement in the Wall Street Journal and New York Times read: "Hard to sell, distressed and other real estate accepted by religious corporation. Will structure contribution of real estate to meet need of donor."

The IRS, convinced that "the administration of the income tax laws regarding charitable contributions" was being impeded, served summons on church attorneys demanding production of all church records associated with real estate transactions. ...

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Posted:
  • July 1, 1988

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