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Mormon Tithing Not A Necessary Expense - Tax Court Ruling


sjdawg

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There is no such thing as Mormon Tithing, it is just Tithing. This is not a doctrine unique to only Mormons.

Fair enough. I was just quoting from the title of the article. Are there other religions where failure to pay tithing would preclude one from serving in the church? (The gentleman at the center of this court case is apparently a temple worker)

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Fair enough. I was just quoting from the title of the article. Are there other religions where failure to pay tithing would preclude one from serving in the church? (The gentleman at the center of this court case is apparently a temple worker)

I think failure to pay his taxes would likely be a greater issue with his church callings, depending on why he failed.
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If I calculate it correctly, he was paying $3000 a month on his kid's college and $2000 on tithing. Both were disallowed, leaving him with $10,000 a month in income.

It would appear without having the actual numbers that he was paying on some sort of gross income. There is no reason why he could not switch to net income ($1000 instead of the $2000) by paying on what the government allowed him to take home or even only on expenses he had personal control over.

I don't see the bishop being so uptight just about tithing as to pull him from temple work etc. if he was sincerely tithing to the best of his ability. Now he might have a problem with why he got into trouble in the first place...depends on whether or not it was intentional or a mistake.

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I would think so too but apparently he currently remains a temple worker.

They may be waiting until the court decides to avoid influencing outcome (I have heard this may sometimes happen in civil cases).

He may not have told his bishop he was in trouble in this way also, perhaps the first church leadership has heard about it is through the news.

I find it very hard to believe that if the nonpayment of taxes was a sincere mistake (we didn't realize we had to pay taxes on some money we got in the US when we were residents of Canada...Canadian tax laws were different about foreign money and we assumed the US's were the same) that the bishop wouldn't be willing to work with the man in order to ensure he could keep his callings in good faith. A willingness to pay tithing is much, much, much more important than the actual amount.

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There was a number of good comments, including this excellent summary of the Church's position imo:

First, all contributions whether they be tithes or other offerings are well accounted for via computer entry per donor. There is no ‘plate’ passed around during Sunday service. To make a donation you take a donation slip and envelope (which is in an open box on the wall in the hall way) and fill out the form. After which you enclose the cash or check and then give the envelope to a Bishopric member. The information of the donor and amount donated for each category is recorded in the computer and the money is deposited in the bank each week. Each local unit then transmits to Salt Lake via Internet all the figures for the week.

The Church does not fool around with tax laws.

They are followed exactly.

At the end of the year each donor goes to tithing settlement (if they choose). There is no requirement to do so. The main purpose of tithing settlement is to make sure your records and the church’s record of your donations for the year are in order. The Bishop signs off an annual donation statement for each donor who wants to use their donation as a deduction when filing their tax returns. This signed statement is required by the IRS (or so I am told).

Going to the Temple requires that a person is living some of the basic principles of the Gospel.

One of those principles is paying your tithing. (There are other principles too, such as being chaste, honest in your business dealings, paying court ordered child support and so on, that must be observed).

Temple worthiness is determined in an interview with the Bishop.

The interview is held bi-annually and only if the church member wants to be able to attend the temple.

Tithing is not a fixed amount, it is a fixed percentage: 10 percent of ones annual increase.

It is up to the individual to determine what is annual increase.

I know people who pay $50,000 a year in tithing and others who pay nothing a year.

They both can go to the temple because they are obeying the law of the tithe and thereby living the basic laws of the Gospel (if they are doing the other requirements as well).

In the news story about the fellow who was being watched like a hawk by his Bishop on whether or not he is making his donations is absolutely NOT the norm.

Most Bishops would never be so intrusive excepting under very particular circumstances.

In the case of a fellow who is doing everything he is suppose to be able to attend the temple, except paying all his tithes, the Bishop and the individual may make an arrangement of how often he donates as a sign of good faith.

If the donor does not follow through with the verbal agreement then the Bishop may revoke the individuals right to attend the temple.

I should mention that going to the temple is not the same as weekly Sunday church meetings. You can still attend church if you don’t pay tithes.

Most people donate when they get paid from their work, some people donate quarterly and annually. The case cited in the story is very unusual.

I have donated weekly some years and annually in other years. No Bishop ever questioned my worthiness to attend the temple between interviews.

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I am thinking that, if those comments are accurate, and if the installment agreement is designed to limit a delinquent taxpayer’s ability to have an “annual increase”, then Mr. Thompson could forego tithing because he’s been put in a position, theoretically, of having no “annual increase”.

On a side note, I don’t think is any sustainable merit in arguing a 1st Amendment right to pay tithes in lieu of taxes.

If that worked, Kent Hovind would have never gone to federal prison.

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There is this comment:

Thompson had an earlier accepted partial payment agreement that was defaulted since the non-compliance was found to continue.

Then he kept at it and wound up before the Tax Court; still trying to beat the Government out of large part of the money he owed.

And what did he, effectively, do with the money he cheated the Government out of?

He gave it to the LDS Church....

That is, the trust fund monies Thompson used to finance his business and high-flyin’ lifestyle was not his to use for anything accept satisfying the tax bill resulting from his withholding from employee wages. It was never his money to do otherwise.

Using the money for other purposes and then whining about not being able to pay is equivalent to theft; maybe not criminally, but it could be.

If I missed something in my analysis, I would hope someone would correct me.

It does seem to me that, regardless of the details, Thompson has been beating the Government for years and is set up to ultimately prevail in reducing his outstanding legal liability by a substantial amount.

If I were his bishop, I would be asking him if he would like to come in and talk about what he was trying to do in regards to paying the government according to the agreement he made with them and why he hadn't complied with the agreement up to that point. Then once that was resolved, I would ask him if he wants to discuss with me ways that he could be considered a full tithe payer...that may require some sacrifices of his current living style and see how committed he was there.

However, I have never been a bishop so don't know if that would be crossing the lines or not.

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Another good comment:

Obviously the man is not following Mormon teachings if he’s not paying his due taxes; submitting to governments and laws (“obeying, honoring, and sustaining the law”) is one of the 13 foundational articles of faith in Mormonism.

That said, as a Mormon I would point out a few things about the article and the case that I found interesting and perhaps confusing to someone without a background. First off, church leaders/pastors/bishops don’t verify your tithing or income (or taxes, for that matter). In tithing interviews, once a year, they simply ask “are you a full tithe payer” and you can respond “yes I am”, “I am a partial tithe payer”, or “No”. It’s the individual, not the bishop, who determines what goes on the record, except in extreme circumstances. For instance, if someone was a celebrity and their salary was public information, and there declaration seemed off by 2 factors of 10, the bishop might ask further questions. But ultimately tithing is very personal, the bishop and the church don’t really care how you pay so long as you are being honest before God. There is no official direction on whether, for instance, stock options count as income or should be tithed at disbursement, vesting, sale, etc; whether tithing is on gross or net income, whether alimony or business expenses are part of income for tithing purposes if they aren’t for the IRS’s AGI calculation, etc. No good bishop would get involved in trying to figure out whether someone was paying a full tithe, beyond simply asking them and following the honor system. That’s the way the church is run. So saying “the bishop will mark you as a full tithe payer – or not” is true, but in reality you are declaring YOURSELF as a full tithe payer or not, and they are just marking your response.

Sometimes tithing is portrayed as some sort of “let’s make sure we’re milking this guy for the full 10%, he looks rich”, or “he pays less than me, he has no honor” or whatnot, the reality is the opposite. The bishop gets exactly ZERO personal gain from tithing, and an unemployed person who pays $.05 of tithing in a year is considered in the church the exact same as someone like bygone candidate Mitt Romney, who apparently tithes 10% of his millions. Tithing is for the individual, it teaches sacrifice and putting God first; the church is ok with or without your tithing and beyond your own spiritual condition the bishop doesn’t care how much you do or don’t tithe. If you declare yourself a full tithe payer and the bishop has no obvious concrete reason to know that you are lying, it’s assumed that you are telling the truth and there is no investigation involved.

At the end of the article, it says “I asked him if he thought it made sense for somebody to hold back on paying back taxes to be able to tithe. He wrote that he didn’t think tithing should affect somebody’s bill to the government.”. I would agree fully that tithing should not negate someone’s lawful bill to the government, or to another business or person to whom they are in debt. In this case though, the man seems to be asking to pay the debt back over a longer time, rather than pay a smaller sum back. He isn’t asking to shrink the bill, only to elongate the term of the payments. That’s important; he’s not trying to get out of taxes, (which he was apparently shamefully doing in the 90s), he’s contesting his ability to pay back the debt as quickly, because he considers tithing to be part of his regular life expenses.

It sounds like the petitioner is going to lose the case, in which case he may have to take out a loan if his expenses really are already 10,000 a month. I doubt he will find very many willing banks though. One would think that the IRS has no immediate need of the man’s money, sooner is the same as later if some interest is included, in which case the humanist thing to do would be to let the man determine whether religious practices are a necessity to him or not.

The whole case makes me grateful, especially as a tax accountant, that God’s laws are so much simpler than the IRS’s. God says “be grateful for the 100% I give you, and remember it by giving 10% willingly. I will bless you if you do”. A 1-line tax code, as it were, compared to thousands of pages for the IRS.

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A comment that lists something from the lawyers:

http: // www . lindabury.com/news/news.asp

LINDABURY DEFENDS FIRST AMENDMENT RELIGIOUS CLAUSES IN TAX CASE

May 7, 2012

Lindabury attorneys, Robert S. Schwartz, Peter M. Burke and Monica Vir, are engaged in United States Tax Court collection due process litigation with the Internal Revenue Service in a case implicating the First Amendment right of churches to choose their ministers, ministers rights to freely practice their church duties, and the relationship of the Religious Freedom Restoration Act (the “RFRA”) to these constitutionally protected aspects of citizenry. The case involves a controversy over a taxpayer’s proposed payment plan for liabilities admittedly owed to the IRS. The taxpayer is seeking to make monthly payments without having to sacrifice the tithe he is required to pay in order to serve as a church minister.

In dispute is whether the IRS’s rejection of the payment schedule proposed by the taxpayer allowing for his tithing expense contravenes the requirement that the IRS collect by the least restrictive means available. Among other arguments, Lindabury seeks to establish as a factual predicate that sacrificing the payment of the tithe would force the taxpayer to resign from his ministerial positions because ministerial tithing is a requirement of the denomination in question. Additionally, Lindabury argues the RFRA precludes the IRS from unduly burdening a minister’s free exercise of religion, in the furtherance of the compelling government interest in collecting taxes. Lindabury further argues that the IRS can collect by employing the least restrictive means available because Congress has allowed it to collect taxes by means of a partial payment plan since 2004.

After nearly three years of court action, post-trial briefs have been recently filed by both sides with United States Tax Court Judge Robert Ruwe. The parties are awaiting a final decision.

Lindabury attorney Robert S. Schwartz comments, “While a tax controversy, this case presents issues within the mainstream of recent First Amendment Religious Clause jurisprudence as represented by recent Supreme Court decisions in Hosanna-Tabor Evangelical Church and School v. EEOC, ___ U.S. ___ (Jan. 11, 2012) and Arizona Christian School Tuition Organization v. Winn et al. ___ U.S. ___ (April 4, 2011).”

This argument about him being a "minister" makes me uncomfortable, his church positions are not essential to his standing as a member. I don't think his calling should be used as all in the argument, it is irrelevant to his standing in full fellowship. The only argument that might be used it wanting to have the advantages to fully practice his religious faith by temple attendance.
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From the lawyer in response to the comments:

I am Lindabury, McCormick, Estabrook & Cooper attorney, Robert S. Schwartz. I was engaged in the United States Tax Court collection due process litigation with the Internal Revenue Service in the George Thompson v. Commissioner, (140 T.C. No.4. ) case.

As you all generally know the case implicated the First Amendment right of churches to choose their ministers, ministers rights to freely practice their church duties, and the relationship of the Religious Freedom Restoration Act (the “RFRA”) to these constitutionally protected aspects of citizenry. The case, precisely, involves a controversy over a taxpayer’s proposed payment plan for liabilities admittedly owed to the IRS. The taxpayer sought to make monthly payments without having to sacrifice the tithe he believes is required to pay in order to serve as an unpaid church minister. As per the RFRA, in dispute was whether the IRS’s rejection of the payment schedule proposed by the taxpayer allowing for his tithing ran afoul of the RFRA requirement that the IRS collect by the “least restrictive means available”. Among other arguments, Lindabury sought to establish as a factual predicate that sacrificing the payment of the tithe would force the taxpayer to resign from his ministerial positions because ministerial tithing is a requirement of his denomination. Additionally, Lindabury argued the RFRA precludes the IRS from unduly burdening a minister’s free exercise of religion, in the furtherance of the admittedly compelling government interest in collecting taxes. His payment plan proposal called for less of a monthly payment than that sought by the IRS, and in favor of tithing. With the exception of college tuition, all of the other taxpayer monthly expenses and the taxpayer’s monthly income were stipulated to.

So at issue was tithing verses paying more to the IRS. The opinion for its own purposes perhaps does not make that point that clear. Lindabury further argued that the IRS can collect by employing the least restrictive means available, the lesser monthly payment proposed by the taxpayer, because Congress has allowed the IRS to collect taxes by means of partial payment plans since 2004. That is, agreements pursuant to which the IRS knows or believes it will not collect in full from the get go.

We believed this 2004 tax law change could be viewed by the TC as dovetailing with the RFRA, which had been enacted in the early 90′s to reverse Supreme Court cases like Lee and Hernandez. The TC was not prepared to see such a legal compatibility. It appears to me to have read the RFRA narrowly, arguably too narrowly. The case is one of first impression.

While a tax controversy, the case presented issues within the mainstream of recent First Amendment Religious Clause jurisprudence as represented by recent Supreme Court decisions in Hosanna-Tabor Evangelical Church and School v. EEOC, ___ U.S. ___ (Jan. 11, 2012) and Arizona Christian School Tuition Organization v. Winn et al. ___ U.S. ___ (April 4, 2011).”

Taxpayer is unsure about appealing. A lot of time and effort went into the Tax Court case.

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Among other arguments, Lindabury sought to establish as a factual predicate that sacrificing the payment of the tithe would force the taxpayer to resign from his ministerial positions because ministerial tithing is a requirement of his denomination.
I would like to see his bishop testify on this point as to whether or not this was a given.
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If I calculate it correctly, he was paying $3000 a month on his kid's college and $2000 on tithing. Both were disallowed, leaving him with $10,000 a month in income.

It would appear without having the actual numbers that he was paying on some sort of gross income. There is no reason why he could not switch to net income ($1000 instead of the $2000) by paying on what the government allowed him to take home or even only on expenses he had personal control over.

I don't see the bishop being so uptight just about tithing as to pull him from temple work etc. if he was sincerely tithing to the best of his ability. Now he might have a problem with why he got into trouble in the first place...depends on whether or not it was intentional or a mistake.

Im not seeing where you get the $10,000. If he is paying $2,000 on tithing a month, wouldn't that give him $20,000 a month? That's not a bad income, im curious what he is speding it all on if he isn't paying his taxes... but then it's none of my business.

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From the lawyer in response to the comments:

If that's the argument, I think the lawyer is correct. I am curious why it's unreasonable for him to pay a lower payment plan to the government.

Then again, Im curious what other obligations he has. What is stopping him from still paying the tithing and paying taxes?

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There is this comment:

If I were his bishop, I would be asking him if he would like to come in and talk about what he was trying to do in regards to paying the government according to the agreement he made with them and why he hadn't complied with the agreement up to that point. Then once that was resolved, I would ask him if he wants to discuss with me ways that he could be considered a full tithe payer...that may require some sacrifices of his current living style and see how committed he was there.

However, I have never been a bishop so don't know if that would be crossing the lines or not.

This information raises another question in the temple recommend interview: Are you honest in your dealings with your fellow man?

Thankfully, I am not in a position to have to judge this matter on that question.

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Im not seeing where you get the $10,000. If he is paying $2,000 on tithing a month, wouldn't that give him $20,000 a month? That's not a bad income, im curious what he is speding it all on if he isn't paying his taxes... but then it's none of my business.

IIRC, he stated he needed $15000 a month to live on, they disallowed $5000 including his kid's private college expenses and tithing. That leaves$10000 needed monthly income in the IRS's view.
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Respecting the negotiation over what is to be considered necessary expenses, I have no problem with the IRS (also known as the Gadianton Robbers) saying that his tithing is not a necessary expense. Their job, whether I like it or not, is to get what he owes paid for, and as soon as reasonable and possible. I am reasonably certain that were the IRS/GR to allow tithing as a necessary expense in this negotiation, they would be in violation of the doctrine of separation of church and state, as it is presently understood.

The brother needs to pay his tithing out of what is left after the IRS/GR's determination of his valid expenses.

I happen to be one of those who believes that income tax is a cost of doing business, and is no more tithable than the cost of goods sold would be for a retail business. You cannot work without part of your pay going for income tax. It is therefore NOT part of your increase.

As to his temple worthiness, it is not important how much tax you're paying, it is that you are in obedience to the law. The tax laws can be incredibly hard to understand and comply with, especially when it comes to large business operations. I may believe I am paying what I am required to pay, but the IRS/GR are entitled to not agree with me, and they can come down and charge me with any arbitrary settlement they wish to charge. When a Temple Recommend holder arrives at the point that he or she fails to comply with a tax court ruling, only then is the recommend in jeopardy. Until then, it is a matter of litigation, and until it is adjudicated the question is undecided. It's like Schroedinger's Cat in the famous thought experiment. You don't know whether the cat is dead until you open the box and observe the situation (in the original experiment, not only do you not know, the cat is neither dead nor alive until you open the box and collapse the state vector).

Darn you, Quantum Physics!

The current Handbook of Instructions, Book 2 (which is a reprise of Book 1's policy statement), has this to say:

21.1.21 Income Taxes

Church members are obligated by the twelfth article of faith to obey the tax laws of the nation where they reside (see also D&C 134:5). Members who disapprove of tax laws may try to have them changed by legislation or constitutional amendment. Members who have well-founded legal objections may challenge tax laws in the courts.

Church members who refuse to file a tax return, pay required income taxes, or comply with a final judgment in a tax case are in direct conflict with the law and with the teachings of the Church. Such members may be ineligible for a temple recommend and should not be called to positions of principal responsibility in the Church. Members who are convicted of willfully violating tax laws are subject to Church discipline to the extent warranted by the circumstances.

It appears this brother hasn't yet reached the point where he is in violation of this policy.

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It's not really surprising. If you apply for government assistance, they don't factor in tithing either. It's important to pay the tax you owe so you don't end up in a situation where you might not have the blessing of paying tithing for a while because you're trying to stay out of jail.

And $15,000 a month?! I would do some major downsizing so I could still pay my tithing. My family of 6 lives on less than $4,000 a month.

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If that's the argument, I think the lawyer is correct. I am curious why it's unreasonable for him to pay a lower payment plan to the government.

Then again, Im curious what other obligations he has. What is stopping him from still paying the tithing and paying taxes?

My understanding from the discussion in the comments is that there is a time limit of 10 years where the government can demand repayment. If he lowers his payment, then he gets to pay less during that time period and at the end of it the government has to forgive the rest of the unpaid debt.

But I may have misunderstood the issue.

From memory...so I may be totally screwing it up....he owes about 900,000 total (less about a 150,000 now, I think his lawyer stated). The IRS was asking for about 8000 a month, meaning about 96,000 a year (this would include the interest required) or paid off in about ten years. If he paid $3000 (less the $5000 he said he needed), that would be 36,000 a year or 25 years...or if he only had to pay for 10 years, he would save about $60,000.

It would be nice if someone familiar with the law would correct me if I totally misread what they were saying about the 10 year repayment limit.

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Found this: http://www.pappasontaxes.com/index.php/2009/04/07/the-10-year-statute-of-limitations-on-collection-of-an-irs-debt/

The IRS has ten (10) years from the date of a tax assessment to collect a debt from the taxpayer.

The date the collection statute expires is called the Collection Statute Expiration Date or CSED.

When this date passes, the IRS is barred from attempting to collect your tax debt unless you waive the enforcement of the statute.

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IIRC, he stated he needed $15000 a month to live on, they disallowed $5000 including his kid's private college expenses and tithing. That leaves$10000 needed monthly income in the IRS's view.

Why would anyone need 15,000 to live on? And if that is his increase, why would he be paying $2000?

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Just thinking out loud here...

If he previously kept $900,000 (that wasn't his) and paid tithes on it. Wouldn't he be "exempt" from paying tithes on the $900,000 of income that he is giving back to the US Govt?

I think he should pay on net income AFTER writing the monthly check to the gov't.

p.s. Yes, I know it's a net/gross decision that, within the church, is left entirely to the individual to decide, I'm only offering my opinion here due to the nature of the article.

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