TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, August 18, 2010

Court: Internet Church Is Not a 'Church' for Tax Purposes

The U.S. Court of Appeals for the Federal Circuit on Monday ruled that the Foundation of Human Understanding, a 47 year old  § 501(c)(3) nonprofit church that conducts weekly Internet and radio services, is not a church for § 170 purposes.  Foundation of Human Understanding v. United States, No. 2009-5129 (Fed. Cir. Aug. 16, 2010):

The Foundation asserts that its members regularly assembled to worship as a “virtual congregation” by listening to sermons broadcast over the radio and the Internet at set times, referred to as “appointments to listen.” However, disseminating religious information, whether through print or broadcast media, does not fulfill the associational role required to qualify as a “church” under § 170. The fact that all the listeners simultaneously received the Foundation’s message over the radio or the Internet does not mean that those members associated with each other and worshiped communally. As the trial court observed, “[t]here is no evidence . . . that [the Foundation’s] adherents regard their experience while listening to [the Foundation’s] broadcasts as a shared experience with other . . . follow-ers, or as a communal experience in any way.”

The Foundation argues that it satisfied the associational test because its electronic ministry included a “call-in” show that enabled individuals to call and interact with the Foundation’s clergy over the telephone. Those conversations, according to the Foundation, were broadcast to listening congregants and subsequently transcribed for distribution. However, a call-in show, like other forms of broadcast ministry, does not provide individual congregants with the opportunity to interact and associate with each other in worship, and it therefore does not provide a basis for concluding that the Foundation’s religious activi-ties satisfied the associational test.

The Foundation relies on Purnell v. Commissioner, 63 T.C.M. (CCH) 3037 (1992), for the proposition that its broadcasting activities qualified it as a “church without walls.” In Purnell, however, the court found that the organization in question had regular congregations and served an irregular congregation by operating in part as a “street church” did not diminish its standing as a church under § 170. Under Purnell, if an organization holds regular services with a regular congregation, it satisfies the associational test even if it also undertakes other activities, such as broadcasting, that would not qualify under the associational test if considered alone. In this case, by contrast, the Foundation has not established that it held regular services with a regular congregation. Purnell therefore provides no support for the Foundation’s argument

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I went to the church's web site, and it appears on the surface to be a legitimate church organization set up to provide religious instruction. With technology and the internet allowing people to communicate realtime from distant points, interpretations as to what constitutes churches and workplaces are going to have to become more accomodating.

Posted by: Woody | Aug 18, 2010 1:58:29 PM

When they came for the professors teaching online courses, there were no online ministers left to support them . . .

Posted by: Bob | Aug 18, 2010 10:25:10 PM