Thursday, December 13, 2018

Liberty Counsel IRS Referral

Hate group leader Mad Mat Staver (Liberty Counsel)
Image via YouTube/Fox News
In 2006, hate group leader Mad Mat Staver managed to have Liberty Counsel recognized as an Integrated Auxiliary of a Church. Then controlling organization is supposed to be Thomas Road Baptist Church. The following information has been transmitted as a referral to the Exempt Organizations Division of the Internal Revenue Service:

Re: Liberty Counsel, EIN 592986294. Reference is made to a letter dated December 11, 2006 from Liberty Counsel's auditors; Batts, Morrison, Wales & Lee to the Internal Revenue Service, EP/EO, Cincinnati, OH.

The letter is signed by Michael E. Batts. Therein, in order for the organization to be treated as a church auxiliary, Mr. Batts asserted:
Since early 2005, the organization's main litigation office is located in a building owned by the church which is attached to the church.
According to the Commonwealth of Virginia, regarding Liberty Counsel:
SCC ID: F1589649
Entity Type: Foreign Corporation
Jurisdiction of Formation: FL
Date of Formation/Registration: 6/3/2004
Principal Office
Registered Agent/Registered Office
PO BOX 11108
Status: Active

Thomas Road Baptist Church (Liberty Baptist Fellowship - EIN 472639446) is located at 1 Mountain View Rd, Lynchburg, VA 24502. Mr. Mast, who is employed by Liberty Counsel as an attorney, seems to be operating out of an office that is about a mile from the church. It is not attached and it certainly is not “the organization's main litigation office.” That is in Maitland, FL, a suburb of Orlando.

Note their letterhead:

The Virginia address, a post office box, has an Orlando, FL phone number.

I have also reviewed Liberty Counsel's activities in federal court. I cannot find any brief indicating anything with a Lynchburg, VA street address. Nor, for that matter, can I find a brief that does not provide the Orlando address.

Then there are financial matters. Mr. Batts relied on financial requirements that do not apply to the requirements for an integrated church auxiliary. In his letter he acknowledged that Liberty Counsel receives more than half of its support from the general public. Batts claimed that the IRS regulation does not apply because Liberty Counsel does not offer goods or services for sale to the general public.

According to the tax code, an integrated church auxiliary must: “Receive financial support primarily from internal church sources as opposed to public or governmental sources.”

According to the tax code only “men's and women's organizations, seminaries, mission societies and youth groups” are exempt from the primary support requirement. Liberty Counsel does not meet that criteria. It fails to meet the requirements for a church auxiliary.

Liberty Counsel voluntarily filed a 990 for calendar year 2015. That includes some troubling information regarding controlled entities.

Four of those are 501(c)4 organizations that engage in political activity. An additional entity is a 527 — Liberty Action Pac. In 2016, according to the Florida Secretary of State, it changed its name to LCAction PAC. I have to wonder if they were trying to obfuscate the relationship.

I would note that neither Liberty Action PAC nor its successor, LCAction PAC, have filed a form 8871 as is seemingly required to be tax-exempt. It is part of a pattern of obfuscation and deceit.

Neither a 501(c)4 nor a 527 seem to be appropriate controlled entities for a church auxiliary. Furthermore, the organization reported three related organizations which are taxable as trusts (all located in Orlando) and it filed a 990-T to report unrelated business income.

In summary:
  • I cannot find evidence to support the proposition that Liberty Counsel has the required affiliation with Thomas Road Baptist Church. Whatever affiliation it might have had no longer exists.
  • By their own admission, Liberty Counsel receives more than half its support from the general public which does not meet the requirements for treatment as a church auxiliary.
  • Liberty Counsel has controlled entities that should be impermissible for a church auxiliary.
  • The public has a right to know about the finances of an organization that is subsidized with tax-deducted contributions. These donations have nothing to do with anything associated with a house of worship.

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