Key point. The tax code provides several protections available to churches in the event the IRS serves notice of a "church tax inquiry" or "church tax examination."

A federal district court in South Carolina rejected an attempt by a religious corporation to block an IRS summons seeking the production of the corporation's bank records at eight banks. A religious corporation (the "plaintiff") was incorporated as a nonprofit entity in 1972. In its early years, the plaintiff's primary function was to produce and broadcast a weekly radio program. At some point, the plaintiff began a weekly faith-based television program. In 2015, the plaintiff was informed by the IRS that it had been selected for audit and that the IRS would be seeking access to its bank records. The plaintiff's accountant informed the IRS agent in charge of the audit that the plaintiff was claiming church status and all the protections of the Church Audit Procedures Act (section 7611 of the tax code). In response, the IRS sent the plaintiff a "notice of church tax inquiry" listing the following areas of concern:

• Whether the plaintiff had engaged in excess benefit transactions with disqualified persons. The IRS noted that the plaintiff's chief officer was paid $371,445 in "reportable compensation" plus an additional $48,000 in "other compensation," described as a parsonage allowance. The next highest paid employee received compensation of $125,596, consisting of a base salary and "commission income based on a fixed percentage of broadcast placement revenue."