Onscreen But Out Of Sight, TV Preachers Avoid Tax Scrutiny

The IRS has not audited a church in five years. Some televangelists are taking advantage of that inaction to shield millions of dollars from public scrutiny.

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel in Washington.

MELISSA BLOCK, HOST:

And I'm Melissa Block, coming to you this week from member station KERA in Dallas.

This week, we're bringing you two special reports that delve into the hidden finances of televangelists. Yesterday, we featured an investigation into Daystar Television, headquartered in Dallas-Fort Worth. Daystar describes itself as the fastest growing Christian TV network in the world. The IRS classifies it as a church.

SIEGEL: Today, part two of our series and the finding that any religious organization can call itself a church. As a church, they can start preaching and passing the collection plate while remaining invisible to the IRS and keeping their finances private.

As NPR's John Burnett reports, no other nonprofits in America - much less corporations - are allowed to generate so much cash with so little accountability.

JOHN BURNETT, BYLINE: Because of a quirk in rules by the Internal Revenue Service, the agency has effectively stopped auditing churches for the past five years. Marcus Owens is a private tax attorney in Washington, who used to lead the Exempt Organizations section at the IRS.

MARCUS OWENS: As of now, and in fact since 2009, the IRS has not, to the best of my knowledge, and, in fact, I don't believe can conduct an audit of a church.

BURNETT: A church is the only type of nonprofit that enjoys special protection from an IRS audit. The Church Audit Procedures Act says a high-ranking Treasury official must sign off if the IRS demands a church's records. But the IRS has not specified who that official should be. Here's the catch: Until that happens, there's no one in the government to authorize a church audit.

NPR repeatedly asked for an explanation from the IRS about the hiatus in church audits, but it declined to comment. Paul Streckfus, a tax attorney who edits the Exempt Organization Tax Journal, believes the IRS actually likes having an excuse for not bothering churches.

PAUL STRECKFUS: Why the IRS doesn't like to audit churches? The churches don't like it. They can scream and yell quite loudly and get members of Congress' attention. And so the IRS not only doesn't like the churches to be mad at them, but doesn't like Congress to be mad at them.

(SOUNDBITE OF CHURCH BELLS)

BURNETT: Of all nonprofits, churches face the least scrutiny and oversight. They don't have to pay federal or local taxes. They don't have to worry about being audited. And they don't have to report anything to anybody. It's reasonable to ask, then, what happens with large TV ministries that are classified as churches? They take in tens of millions of dollars in revenue. They're as rich as large corporations, yet many of them are answerable to no one outside of the organization.

Again, Paul Streckfus.

STRECKFUS: Some of us feel that, you know, some of these televangelists have taken advantage of the fact that churches have little regulation by government and few reporting requirements.

BURNETT: Even before church audits stopped, Congress was concerned that televangelists were misbehaving. Seven years ago, the Senate Finance Committee started investigating six high-flying ministries. They all preach a prosperity gospel, which holds that wealth - the more the better - is evidence of God's blessings. Two of them cooperated with the committee; four provided incomplete records or refused altogether, citing church privacy rules.

BISHOP EDDIE LONG: Don't let anybody tell you what God can't do.

(SOUNDBITE OF CHEERING)

BURNETT: The committee looked at Atlanta megachurch pastor Bishop Eddie Long, and noted that he made trips in a church-leased jet to Las Vegas and Caribbean resort islands, and had a Rolls Royce and a Bentley.

PAULA WHITE: Called the king of kings, what are you talking about, Pastor Paula? I'm telling you that there is the three-phase plan of redemption...

BURNETT: Investigators looked at the three-and-a-half-million dollar Trump Tower condo and the Bentley convertible purchased by televangelists Paula and Randy White.

CREFLO DOLLAR: If the devil throws lemons at you, God will turn it into lemonade.

BURNETT: The investigation examined Georgia-based televangelist Creflo Dollar and his wife, Taffi, who also drove Rolls Royces and had numerous subsidiaries connected to their church.

The probe was launched by Senator Charles Grassley, then head of the Finance Committee and a practicing Christian.

SEN. CHARLES GRASSLEY: Before the Crucifixion, Jesus rode into Jerusalem on the back of an ass. And to see people traveling around in Bentleys seems to be a waste of the resources that could be used to help people in need and to win converts.

BURNETT: In an interview with NPR, Grassley expressed dismay at the findings of his staff.

GRASSLEY: There was abuse. But I don't want to say because there was abuse by, you know, a handful of televangelists that that's spread among all the churches of America.

BURNETT: The Grassley committee devoted its longest, most detailed report to televangelist Kenneth Copeland and his Eagle Mountain International Church near Fort Worth.

KENNETH COPELAND: I mean listen. Let me tell you something. By the time this service is over with tonight, you're going to be eating nails and drinking gunpowder soup. I can tell right now. Whoa. With some tiger meat sprinkled in it. Hebrews, Chapter 2.

BURNETT: Copeland is a 77-year-old Pentecostal evangelist from West Texas, renowned for his folksy sermons and extensive personal property. We decided to take our own look at his assets.

Last August, I drove to his ministry complex with Pete Evans, who investigates religious groups for the Dallas-based Trinity Foundation.

So we're sitting in an air-conditioned minivan on a Sunday morning in the middle of Kenneth Copeland's empire here, about 20 miles north of Fort Worth. And surrounding us are all the properties that the local appraisal district has taken off the tax rolls. The church and the ministry building together are valued at about three and a half million dollars. Kenneth Copeland's airport in front of us here is valued at $8.8 million.

PETE EVANS: The property we're looking at, the hangar, houses two jets: one Cessna Citation, one of the fastest private jets in the world, currently valued at about $10 million. And then they have another jet worth a couple million stored in that same hangar that we're looking at.

BURNETT: The most impressive building of all is the $6.3 million residence of Kenneth and Gloria Copeland, which is exempt from property taxes because it's listed as a parsonage. Since it's gated from public view, a private pilot offers to take Pete Evans and me up for a bird's eye view.

(SOUNDBITE OF AIR TRAFFIC CONTROL)

BURNETT: About a half-hour later, as we approach the sparkling waters of Eagle Mountain Lake we see it.

This is his house here?

EVANS: Yeah, this is his house. We're up here at a thousand feet above the Copeland Ministries' 18,000-square-foot parsonage. And we're looking at an impressive pink and white mansion with tennis courts, a large boathouse, and what appears to be a garage at either end of the mansion. Looks like a small hotel down there.

BURNETT: The Grassley committee made special note of Copeland's related entities. It questioned whether church status is being gamed to shield certain activities from public scrutiny. Current records at the Texas Secretary of State's office showed 13 assumed names for Eagle Mountain International Church, including five music and book companies. The state comptroller's office lists for-profit companies in real estate, fuel, fitness, and cattle that are connected to the church or to the Copeland family.

James Tito, executive director of Kenneth Copeland Ministries, said in an email the ministry has more than 500,000 members and supports worthy causes in 120 countries. He said the church's 13 assumed business names are all related to its religious mission and are therefore non-taxable. And he said all of the church's for-profit companies file federal income tax returns as required by the IRS.

But who's watching? The IRS stopped auditing churches. So I put the question to Jeff Law, chief appraiser for Tarrant County, where Copeland's ministry is located.

So all this is leading to, where's the oversight? What is to prevent these very wealthy ministry owners from using more and more of their church property to bring in profit?

JEFF LAW: I don't know where there's oversight. I mean the legislature doesn't give us oversight.

BURNETT: In all, Tarrant County exempts $30 million of Kenneth Copeland's property from the local tax rolls. This excused him from paying about $660,000 in property taxes last year. I asked Tarrant County Tax Assessor collector Ron Wright about how many pastors have a tax-free chateau and private airport?

RON WRIGHT: You know, I'm Catholic. I don't know any priest who lives that lavishly. But government should not be determining if a minister is living too lavishly. It's not for the government to determine if someone really needs an airplane for their ministry. That's just not something government should be getting into.

BURNETT: Now back to the finale of the Grassley investigation. The Finance Committee staff released a hard-hitting report in 2011, but it received scant attention. The report concluded the lack of accountability among these six ministries was, quote, "troubling considering that churches can reach the size of large taxable corporations, control numerous subsidiaries and bestow Wall Street-sized benefits on their ministers."

The report recommended tightening IRS rules on church status and strengthening laws against self-dealing and excessive compensation. Then what happened? Observers familiar with the investigation say influential church leaders cried religious persecution. Instead of calling for tougher IRS rules, Senator Grassley turned to the Evangelical Council For Financial Accountability.

The ECFA is an industry best practices group with close ties to powerful Christian broadcasters. To no one's surprise, the ECFA recommended greater self-policing by ministry executives. In the interview, Grassley said he was satisfied.

GRASSLEY: Now we hope that this will cure itself through self-regulation.

BURNETT: Of the 30 leading television ministries in America, according to a list compiled by the Trinity Foundation, only five of them are accredited by the ECFA. To advocates for reform of the televangelism industry, the Grassley investigation ended the last best hope for change.

RUSTY LEONARD: He had it within his grasp and he punted. He just let it go.

BURNETT: Rusty Leonard is a Christian investment counselor who runs a donor advocate website called MinistryWatch.com.

LEONARD: And so all the bad behavior that has gone on in the past can continue to go on and it'll probably expand as a result of the government getting so close to making legitimate and great changes and then walking away from that. And it's quite a big disappointment.

BURNETT: To many it was not a surprise. In America, the roots of religious freedom run deep. Churches are regarded as inviolable. There's great skepticism that government should oversee any aspect of religious life, regardless how extravagant the parson lives.

DAVID MIDDLEBROOK: There is a long held tradition in our country that church activities are private.

BURNETT: David Middlebrook is a noted church lawyer in Texas who counts Kenneth Copeland among his clients.

MIDDLEBROOK: From a very practical standpoint, the people that choose to attend a church have the ultimate veto power over their activities. It's the veto power of shutting their wallet and walking out the door.

BURNETT: Some within the evangelical community had been calling for greater openness by TV ministries for years. One of them is Lee Grady, a pastor and a columnist for the Christian magazine Charisma. He agrees the government should not have to step in to monitor preachers.

LEE GRADY: Christian ministries should be the best examples of ethical behavior. So my disappointment is more that we, as a Christian community, don't police ourselves better.

BURNETT: It's in the Bible. The apostle Paul said this about transparency: providing for honest things, not only in the sight of the Lord, but also in the sight of men. John Burnett, NPR News.

SIEGEL: And you can listen to the first part of this series, John Burnett's unprecedented look inside the finances of one television ministry, Daystar Television, at NPR.org.

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