Legal Developments

Donor Cannot “Assign” Income Prior to Receipt to a Church and Thereby Avoid Including It In Gross Income

Attempts by lottery and sweepstakes winners to assign their earnings to churches present legal as

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Charitable Contributions

Attempts by lottery and sweepstakes winners to assign their earnings to churches present legal as well as ethical issues. To illustrate, the Tax Court was asked to determine whether the winner of a $50,000 sweepstakes prize could claim a charitable contribution deduction for his assignment of the prize to a church. The taxpayer had attempted to donate the $50,000 to his church prior to receiving it by instructing the sweepstakes sponsor to pay the prize directly to the church.

In denying a charitable contribution deduction, the court noted that the $50,000 had not yet been distributed. And, even if the $50,000 had been distributed directly to the church pursuant to the taxpayer's instructions, the taxpayer "would be required to report that amount as income before claiming a charitable contribution …. A subsequent attempt to assign the winnings to his church would not avoid taxation of the proceeds to him."

Further, the court pointed out that if the taxpayer had received and reported the $50,000 as income and then donated it to his church," his deduction for the year would still be limited in accordance with section 170(b) [of the Internal Revenue Code] to 50% of his adjusted gross income."

In summary, it is not possible for a donor to "assign" income prior to receipt and thereby avoid including it in gross income. This is so even if the attempted assignment is to a church. Taxpayers who assign earned but undistributed income to a church (or any other charity) must include the assigned income in their gross income. Only then are they eligible to claim a charitable contribution deduction (assuming that they otherwise qualify). Neal v. Commissioner, 55 T.C.M. 532 (1988)

Legal Developments

Court Ruled Taxpayer Could Not Deduct a Charitable Contribution Made to His Local Branch of the “Universal Life Church”

The Tax Court ruled that a taxpayer could not deduct an alleged charitable contribution made

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Charitable Contributions

The Tax Court ruled that a taxpayer could not deduct an alleged charitable contribution made to his local branch of the "Universal Life Church."

The taxpayer, an airline pilot, established a local "chapter" of the Universal Life Church in his home, and established a church "checking account" at a local bank. The taxpayer and his family apparently were the only members of the church, and a number of checks were drawn on the church's account to pay for personal expenses of members of the taxpayer's family.

In denying a deduction for contributions made to the "church," the court observed that the taxpayer had failed to establish that his church qualified as a tax-exempt organization under federal law, and that he never parted with control over the alleged contributions.

Labeling the taxpayer's allegations "ludicrous" and "frivolous," the court awarded the government $5,000 in damages besides the additions to tax. Dunn v. Commissioner, T.C. Memo. 1988-45 (1988)

Legal Developments

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

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Charitable Contributions, 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. The church claimed that the IRS summonses were invalid since they violated both the constitutional guaranty of religious freedom and the "Church Audit Procedures Act." With regard to its constitutional claim, the church contended that the IRS summonses would dissuade donors from making contributions to the church, thereby restricting the church's exercise of its religion.

A federal district court rejected the church's arguments and ruled in favor of the IRS. A federal appeals court affirmed this decision. The appeals court denied that the Church Audit Procedures Act applied in this case, since that Act was not intended to apply to IRS investigations of donor contributions.

With regard to the church's claim that the IRS summonses violated its constitutional right of religious freedom, the court observed: "Even assuming, however, that the IRS investigation has dissuaded some donors from contributing property to [the church], due to their fears that their names will be publicized or they will face potential investigation by the IRS … the claimed impact on free exercise is incidental; contribution to the church is not forbidden, and the summonses do not directly impinge upon any practice central to the religious beliefs of church contributors or members.

To the extent that some donors may be dissuaded from donating property appraised at unjustifiably inflated values and from taking corresponding charitable deductions, we need simply note that such action … is not immunized from governmental investigation."

Furthermore, the court observed that "any incidental burden on the free exercise rights of the church … must be balanced against the government's interest in enforcing the summonses …. A compelling governmental interest exists here—that of enforcing the tax laws." St. German of Alaska Eastern Orthodox Catholic Church v. United States, 840 F.2d 1087 (2nd Cir. 1988)

Legal Developments

Estates Are Permitted to Claim Charitable Contribution Deductions Under Certain Conditions

Section 2055 of the Internal Revenue Code provides that no charitable contribution is deductible (with

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Charitable Contributions

Section 2055 of the Internal Revenue Code provides that no charitable contribution is deductible (with a few exceptions) if an interest in property passes from a decedent to a charity and a partial interest in the same property passes to a noncharitable beneficiary for less than fair value.

In a private letter ruling, the IRS held that the estate of a deceased farmer, which left an entire farm to a charitable organization, was entitled to a charitable contribution deduction despite the fact that the will also required the charity to lease the farm to two of the farmer's relatives for a period of five years at which time they would have an option to purchase the land.

The IRS ruling was conditioned on the assumption that the annual rental payments (and option purchase price) would be fair and reasonable. In determining whether the annual lease payments are fair and reasonable, they must be compared with "rentals paid for comparable properties." Similarly, the reasonableness of the option purchase price would be based on an evaluation of purchase prices of comparable properties in the same area. IRS Letter Ruling 8812003.

Legal Developments

Tax Freedom Day

Administration

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Payroll Tax Reporting

Tax freedom day is the day on which taxpayers stop working to pay federal, state, and local taxes and begin working for themselves. Tax freedom day was May 4 in 1987, April 28 in 1970, and February 13 in 1930.

Legal Developments

Social Security – Part 1

Church Law and Tax 1988-07-01 Recent Developments Social Security Richard R. Hammar, J.D., LL.M., CPA

Richard R. Hammar, Attorney, CPA

Bio

State: Federal

Church Law and Tax 1988-07-01 Recent Developments

Social Security

Richard R. Hammar, J.D., LL.M., CPA

• The United States Supreme Court has let stand a federal appeals court ruling that rejected a challenge to the treatment of churches under the social security program. As noted in the November-December 1987 issue of Church Law & Tax Report, churches are free to exempt themselves from the employer’s share of social security (FICA) taxes by filing a timely exemption application (Form 8274), but only at the cost of significantly increasing the tax liability of their nonminister employees who are thereafter treated as self-employed for social security purposes. Many churches that waived their liability for the employer’s share of FICA taxes have had to increase the compensation of their nonminister employees in order to offset the significant increase in taxes that such persons experience because of the church’s election (i.e., an increase from 7.51% of wages to 13.02%). This dilemma, argued a Baptist church in Pennsylvania, unconstitutionally restricts the religious freedom of churches by forcing them (contrary to their religious convictions) to divert church resources away from religious and charitable functions in order to enable employees to pay the increased tax liability. A federal district court and a federal appeals court both rejected the church’s claim, and the church appealed the case to the Supreme Court. On March 22, 1988, the Court refused to hear the case, thereby letting stand the federal appeals court’s ruling.

© Copyright 1988, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m68 0488

Legal Developments

Asbestos Hazard Emergency Response Act (AHERA)

On October 22, 1986, President Reagan signed into law the Asbestos Hazard Emergency Response Act

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Schools

On October 22, 1986, President Reagan signed into law the Asbestos Hazard Emergency Response Act (AHERA).

The law required the Environmental Protection Agency (EPA) to develop regulations providing a comprehensive framework for addressing asbestos problems in public and private elementary and secondary schools. On October 30, 1987, EPA published the Asbestos-Containing Materials in Schools Rule. This new rule requires all public and private elementary and secondary schools to inspect for friable and non-friable asbestos, develop asbestos management plans that address asbestos hazards in school buildings, and implement response actions in a timely fashion.

Schools must use accredited persons to carry out activities involving inspections, management plans, and response actions. By October 12, 1988, public and private (including church-operated) elementary and secondary schools have the following obligations: (1) have an accredited inspector complete an initial inspection to locate all asbestos-containing building materials (ACBM), and (2) have an accredited management planner develop and submit to a state agency (designated by the governor) an asbestos management plan that includes the results of the inspection. No later than July 9, 1989, schools must begin to implement their management plan.

In addition, schools have certain obligations immediately, including having custodial and maintenance staff members receive training prior to conducting activities that may disturb asbestos, and posting warning labels in maintenance areas where asbestos was previously identified.

A bill has been introduced in the United States Senate (S.2024) that would postpone the implementation deadline of July 9, 1989 to July 9, 1990. Churches having elementary or secondary schools should contact the nearest EPA office (or call the EPA hotline at 1-202-554-1404) and obtain the helpful book entitled "Asbestos-in-Schools: A Guide to New Federal Requirements for Local Education Agencies." This book provides very clear guidance as to the responsibilities of public and private schools under the new law. Note that the penalty for failure to conduct an inspection by an accredited inspector by October 12, 1988, or to develop and submit to the appropriate state agency an asbestos management plan by the same date, is potentially $5,000 per day per violation.

Some church-operated schools are having a staff member become accredited to conduct the initial inspection and to prepare and submit the management plan. In some cases, associations or groups of schools are designating one individual to become accredited as an inspector and management planner, with the understanding that this person will then assist all of the schools in the group in complying with the October 12, 1988 requirements. You may contact your regional asbestos coordinator to obtain a current list of EPA-approved training courses in your area (regional asbestos coordinators are identified in EPA book described above .

Legal Developments

A State Unconstitutionally Burdens the Free Exercise of Religion Whenever it “Forces a Worker to Choose Between Fidelity to Religious Belief or Cessation of Work”

A federal district court ruled that the denial of unemployment benefits by the state of

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion

A federal district court ruled that the denial of unemployment benefits by the state of Virginia to a woman who quit her job to accompany her husband to another community in order to care for his aging mother violated her constitutional right to freely exercise her religion.

Specifically, the woman argued that the tenets of the Holiness religion required her to respect her husband's decision to move, to live with her husband, to care for her mother-in-law, and to raise her children in conjunction with her husband.

The state denied unemployment benefits on the basis of a law denying benefits to anyone who voluntarily quits work "to accompany or join his or her spouse in a new locality." The court concluded that a state unconstitutionally burdens the free exercise of religion whenever it "forces a worker to choose between fidelity to religious belief or cessation of work." Austin v. Berryman, 670 F. Supp. 672 (W.D. Va. 1987)

Legal Developments

Legislation

Church Law and Tax 1988-03-01 Recent Developments Legislation Richard R. Hammar, J.D., LL.M., CPA •

Richard R. Hammar, Attorney, CPA

Bio

State: Federal

Church Law and Tax 1988-03-01 Recent Developments

Legislation

Richard R. Hammar, J.D., LL.M., CPA

• “U.S. taxpayer credit card statements” are being promoted in a bill recently introduced in Congress by Rep. Joseph DioGuardi (R-NY). The bill would require the IRS to enclose “taxpayer credit card statements” with the tax package sent to each taxpayer. The statement, which would be designed to resemble monthly statements issued by major credit card companies, would show taxpayers what their tax dollars purchased, the remaining balances on their purchases, and how much of a finance charge they were assessed. Rep. DioGuardi, who estimates that each taxpayer’s share of the federal deficit in 1988 is $18,569, believes that his proposal would “wake up” voters to the reality of the deficit and motivate Congress to do something about it.

© Copyright 1988, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m52 c0288

Legal Developments

Court Rejected Truck Driver’s Claim that His Earnings Were Exempt Because He Was a Church

A federal district court in Pennsylvania rejected a truck driver's contention that his earnings were

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Tax Exemption

A federal district court in Pennsylvania rejected a truck driver's contention that his earnings were exempt from federal taxes because he was a church.

The taxpayer had established a church (that had been denied tax-exempt status by the IRS), and signed a vow of poverty which provided "I hereby make an irrevocable gift of all my possessions … and all my income whatsoever, regardless of the form of the income, to the church. Outside employment income is not personal income, but rather gift income to the church, and not of the individual."

The taxpayer established a checking account in the church's name into which all his secular earnings were deposited. Checks thereafter were drawn on the church account to pay for the personal expenses of the taxpayer. No taxable income was reported and no tax returns were filed.

In rejecting the taxpayer's claim, the court reaffirmed the "basic rule of tax law that an assignment of income by a taxpayer of compensation for services is ineffectual to relieve the taxpayer of tax liability regardless of the motivation behind the assignment." In addition, the alleged "vow of poverty" did not relieve the taxpayer of tax liability since "the manner in which he conducted his financial affairs was the same as it was before he was ordained."

The court also rejected the taxpayer's argument that subjecting him to income taxes violated his right to exercise his religion. The taxpayer, noted the court, was still free to operate his church and deposit his secular earnings in the church account. He simply could not avoid taxes through such a scheme. The court found the taxpayer guilty of three counts of income tax evasion. U.S. v. Washington, 672 F. Supp. 167 (M.D. Pa. 1987)

Legal Developments

A Donor Who Contributes Property Valued at More than $5,000 to a Church Could Be Selected for Examination by the IRS If No Form 8282 is Filed by the Church

Donors who make contributions of noncash property valued at more than $500 to churches (or

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Charitable Contributions

Donors who make contributions of noncash property valued at more than $500 to churches (or other charities) must attach a Form 8283 to their federal income tax return (Form 1040) on which the charitable contribution deduction is claimed.

In addition, if the claimed charitable contribution deduction is for more than $5,000, the donor must obtain a "qualified appraisal" and complete the appraisal summary portion of the Form 8283. A church must file a Form 8282 (donee information return) with the IRS and with the donor if it sells or otherwise disposes of donated property valued by the donor at more than $5,000 within two years of the date of the contribution.

A new provision in the Internal Revenue Manual (section 4175.2) states that the tax return of any donor who contributes property valued at more than $5,000 to a church should be selected for examination by the IRS if no Form 8282 is filed by the church.

Obviously, it is now more important than ever for churches to comply with this important reporting obligation. If your church receives donated property that may have a fair market value in excess of $5,000, be sure to apprise the donor of the qualified appraisal requirement and the need to attach a qualified appraisal summary (Form 8283) to the tax return on which the deduction is claimed.

Then, if the church sells or in any manner disposes of the donated property within two years of the date of contribution, be certain that a Form 8282 is submitted to the IRS (within 90 days of the disposition) and a copy is provided to the donor. This will reduce the likelihood that the donor's tax return will be selected for examination by the IRS. For a complete discussion of these requirements, see Chapter 5 of Richard Hammar's Church & Clergy Tax Guide.

Source: CLTR, Marc/April 1988

Legal Developments

Court Rules on Right of Students to Meet on School Property for Prayer, Bible Study, and Evangelism

A question of continuing controversy is the constitutional right of public high school students to

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion, Schools

A question of continuing controversy is the constitutional right of public high school students to meet on school property during non-instructional hours for prayer, Bible study, and evangelism.

This important question was addressed in a recent federal district court ruling in Texas. A group of students, that originally had met on school property for collective prayer and Bible study, became much more evangelistic in its mission. The group's leader preached loudly (sometimes using a bullhorn) to attract the attention of other students, and group members distributed tracts to other students urging them to dedicate their lives to Jesus Christ.

The school administration prohibited the group from conducting further meetings on school property, and the group sued the school district for an alleged violation of the constitutional guaranty of religious freedom.

The court concluded that: (1) The use of bullhorns and loud preaching was not protected by the constitutional guaranty of religious freedom since "the students' right of expression must be balanced against the school's countervailing interest in protecting the privacy of unwilling student listeners." (2) Students have a "limited free exercise right" to engage in "small, informal meetings, centered on communication between group members and not disrupting the comings and goings of other students by proselytizing," since such meetings are "appropriate to the nature of the forum." However, this limited right is superseded by the first amendment's nonestablishment of religion clause and accordingly a school can constitutionally prohibit any religious meetings on school property. The court rejected the contention that it was impermissibly "inhibiting" the exercise of religion, since students were free to meet on nearby private property. (3) Individual students cannot be denied the right to "discuss religion and pray discreetly with others." (4) Large, organized religious meetings enjoy no constitutional protection and can be prohibited since they are "inconsistent with the intended use of school property."

Finally, the court acknowledged that its ruling was inconsistent with Equal Access Act enacted by Congress in 1985. The Equal Access Act generally permits public high school students to meet on school property during non-instructional hours for religious purposes if the school permits other groups to use school facilities for meetings.

The court concluded that the Equal Access Act is unconstitutional and therefore invalid. This ruling will doubtless be appealed to the fifth circuit court of appeals—a court that ruled in 1982 that the first amendment's nonestablishment of religion clause prohibits organized meetings on public high school property. For now, the constitutionality of the Equal Access Act is in doubt in the fifth federal circuit (consisting of the states of Alabama, Florida, Georgia, Louisiana, Mississippi, Texas).

Source: CLTR, March/April 1988

Legal Developments

Political Activities

Impact on Tax-exempt Status

Richard R. Hammar, Attorney, CPA

Bio

State: Federal

Can churches engage in political activities without jeopardizing their tax-exempt status? That is the issue in a lawsuit brought by several abortion rights groups challenging the tax-exempt status of the Roman Catholic Church on the basis of its alleged anti-abortion legislative and political activities.

The lawsuit is based on the language of section 501(c)(3) of the Internal Revenue Code, which defines a tax-exempt organization as one "which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office."

The lawsuit alleges various activities undertaken by the Roman Catholic Church that constitute "intervention in political campaigns to further the Church's religious belief that no one should be able to obtain an abortion in the United States." These activities, undertaken without loss of the Church's tax-exempt status, are alleged to have injured the abortion rights groups in several ways. In particular, the groups are "disadvantaged in the political arena with respect to political activity on behalf of their pro-abortion or pro-choice candidates because they abide by the political action prohibition of section 501(c)(3) while the Church allegedly does not."

Some of the groups also alleged that a tax exemption for a religious organization engaging in political activity constitutes a government expenditure to establish a religion. In order to determine whether the Church was in violation of the prohibition of political activity, the groups (and the federal government) issued subpoenas in 1983 seeking various documents in the possession of the Church.

For a variety of reasons, the Church never responded to the subpoenas. Accordingly, in 1986 the Church was held to be in contempt of court, and was assessed a fine of $50,000 for each day (following May 12, 1986) that it refused to comply with the subpoenas. The Church appealed the contempt order and fine on the ground that the court lacked jurisdiction over the case on account of the plaintiff organizations' lack of "standing" (i.e., actual or threatened injury).

A federal appeals court affirmed the contempt order, and the Church petitioned the United States Supreme Court for review. Recently, the Court agreed to hear the case. While the issue before it will be the narrow one of the propriety of the lower court's contempt order, such a ruling will be directly relevant to the underlying issue of the Church's exempt status.

Church Law & Tax will review the Court's decision, the ultimate disposition of this significant case, and the significant question of a church's right to engage in political or legislative activities. In re U.S. Catholic Conference.

Legal Developments

Constitution Bars Civil Courts from Resolving Disputes over Rules Set by Religious Organizations

Civil court barred from resolving a dispute over a parliamentary ruling made at the 1985 Southern Baptist Convention.

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion

A federal appeals court ruled that the United States Constitution bars the civil courts from resolving a dispute over a parliamentary ruling made at the 1985 Southern Baptist Convention.

Noting that the contested parliamentary action had been reviewed and upheld by the highest Southern Baptist tribunal, the court concluded that "where religious organizations establish rules for their internal discipline and governance, and tribunals for adjudicating disputes over these matters, the Constitution requires that civil courts accept their decisions as binding upon them." Crowder v. Southern Baptist Convention, 828 F.2d 718 (11th Cir. 1987)

Legal Developments

Public School Impermissibly Violated Church School’s Religious Freedom

A federal court in Massachusetts ruled that a state law requiring private schools to be

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion, Schools

A federal court in Massachusetts ruled that a state law requiring private schools to be "approved" by a public school committee impermissibly violated the religious freedom of a church school.

The court observed that "when, as here, there is a conflict between an individual's constitutional rights to the free exercise of their [sic] religious beliefs and the state's compelling interest in assuring that children are educated adequately, the government must show that it is using the least restrictive means possible to satisfy its interest."

The court concluded that reliance on standardized test scores and individual follow-up in appropriate cases "is a less restrictive, effective means of assuring that students are adequately educated." Since a less restrictive means of accomplishing the state's interest existed, the "approval" requirement was unconstitutional. New Life Baptist Church Academy v. East Longmeadow, 666 F. Supp. 293 (D. Mass. 1987)

Legal Developments

Court Struck Down Zoning Ordinance Used to Prohibit Religious Meetings in Private Residences

A federal court in Connecticut struck down a zoning ordinance that was used to prohibit

Richard R. Hammar, Attorney, CPA

Bio

State: Connecticut
Categories: Freedom of Religion, Zoning

A federal court in Connecticut struck down a zoning ordinance that was used to prohibit religious meetings in private residences.

An individual conducted three meetings each week in his home, which were attended by about ten persons. In response to a neighbor's complaint, the city notified the homeowner that no further religious meetings could be conducted in his home unless he received city approval. The city cited a zoning ordinance that required city approval of any use of property for religious purposes. No standards were set forth in the ordinance to guide the city's exercise of its discretion.

The court held that the ordinance was void on account of "vagueness." In particular, it did not "assure with certainty whether one may hold Passover Seder in his home, whether he may light a Hannakuh Menorah, meet with a group of youths in one's home to prepare them for the reception of the sacraments of confirmation or communion, or gather with friends to discuss the Bible."

This lack of clarity, and the absence of standards to guide the city in the exercise of its discretion, rendered the ordinance unconstitutional: "The regulation under review, is one which gives an administrative official discretionary power to control in advance the right of citizens to exercise constitutionally protected activities—specifically the free exercise of religion and the right to freely associate with others—and as such it is clearly invalid as a prior restraint on the exercise of such activities." Nichols v. Planning and Zoning Commission, 667 F. Supp. 72 (D. Conn. 1987)

Legal Developments

Court Reversed Ruling Books Constituted an Impermissible Establishment of the “Religion of Secular Humanism”

A federal appeals court reversed a lower court ruling on books used in the Alabama public schools.

Richard R. Hammar, Attorney, CPA

Bio

State: Alabama
Categories: Freedom of Religion, Schools

A federal appeals court reversed a lower court ruling that 44 books used in the Alabama public schools constituted an impermissible establishment of the "religion of secular humanism."

The court observed that

"examination of the contents of these textbooks … reveals that the message conveyed is not one of endorsment of secular humanism or any religion. Rather, the message conveyed is one of a governmental attempt to instill in Alabama public school children such values as independent thought, tolerance of diverse views, self-respect, maturity, self-reliance, and logical decision-making. This is an entirely appropriate secular effect."

The message conveyed by the textbooks was one of neutrality

"the textbooks neither endorse theistic religion as a system of belief, nor discredit it." Further, "if we are to eliminate everything that is objectionable to any of these warring sects or inconsistent with any of their doctrines, we will leave public education in shreds."

Smith v. Board of School Commissioners, 827 F.2d 684 (11th Cir. 1987)

Legal Developments

FLSA Applied to Contractor Used by Church Vocational Program

A local church had established a vocational training program allegedly to further its religious mission,

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Fair Labor Standards Acts

A local church had established a vocational training program allegedly to further its religious mission, and used a commercial construction company to implement the program. The church argued that the Fair Labor Standards Act could not be enforced against the church, even though members of the church allowed their children to be employed by a commercial enterprise in violation of the prohibitions against child labor, minimum wage, and overtime compensation, because the children were participating in a vocational training program established by a church which was constitutionally protected by the guaranty of religious freedom.

The court concluded that the Fair Labor Standards Act did apply to a commercial contractor used by a church as part of its vocational training program. The court added that "the FLSA is a reasonable, nondiscriminatory regulation by an act of Congress, one purpose being to prevent the exploitation of children in the labor force, and its enforcement (even as to employees of a church engaged in commercial activity no matter what their religious conviction) does not violate the constitutional provisions guaranteeing the free exercise of religion." Shiloh True Light Church of Christ v. Brock, 670 F. Supp. 158 (W.D.N.C. 1987)

Legal Developments

Court Rejected Claim that Employment of Chaplain at a Public Hospital Violated the First Amendment

A federal court in Iowa rejected the claim that the employment of a full-time chaplain

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion

A federal court in Iowa rejected the claim that the employment of a full-time chaplain at a public hospital violated the first amendment's nonestablishment of religion clause.

The court acknowledged that a public hospital's employment of a chaplain violated the nonestablishment of religion clause, but concluded that such a practice was validated by the first amendment's other religion clause (guaranteeing the free exercise of religion). The court referred to decisions upholding the constitutionality of military and prison chaplains. Like military personnel and prison inmates, hospital patients often are isolated and restricted in the exercise of their religion.

The provision of a chaplain in all of these cases , concluded the court, is necessary to ensure that the constitutional right to freely exercise one's religion is protected. However, the court cautioned that the hospital chaplain's activities could not be unrestricted. The court held that the chaplain could not actively proselytize; counsel with employees, outpatients, or families not in the hospital for emergencies or "death-bed watches"; or have access to patients' medical records without the express approval of the patient or a guardian. Carter v. Broadlawn Medical Center, 667 F. Supp. 1269 (S.D. Iowa 1987)

Legal Developments

Court Lacked Jurisdiction to Resolve the Claims of Parishioners

A Michigan state appeals court held that it lacked jurisdiction to resolve the claims of

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Church Members, First Amendment

A Michigan state appeals court held that it lacked jurisdiction to resolve the claims of parishioners that they had suffered intentional infliction of emotional distress as a result of their priest's actions.

Several parishioners withheld their financial support from the church because of their opposition to certain changes that a new priest had initiated. In response to this action, the priest refused to give communion to certain dissident members in the presence of the entire congregation, and verbally criticized others during services.

The court observed that "it is well settled that courts, both federal and state, are severely circumscribed by [the state and federal constitutions] in the resolution of disputes between a church and its members. Such jurisdiction is limited to property rights which can be resolved by application of civil law."

In rejecting the members claim that the church had intentionally caused them emotional distress, the court remarked: "This is quite a modern tort not yet recognized by the highest court in this state. Hopefully, it never will be. The awesome flood of litigation has already risen to the gunnels. If the courts were to offer to extract money from everyone who intentionally makes someone else mad, we would surely go under." Maciejewski v. Breitenbeck, 413 N.W.2d 65 (Mich. App. 1987)