A long legal battle shows why the IRS infrequently revokes the tax-exempt status of churches and ministries operating in defiance of the United States tax code.
In December 2018, the IRS secretly revoked the tax-exemption of Community Worship Fellowship, a church Lester Goddard founded in Portland, Oregon, in 1998.
Following the revocation, the IRS failed to disclose the revocation in its weekly news bulletin or in the IRS exempt organizations database.
The IRS claimed the church “failed to operate exclusively for an exempt purpose because it operated for the benefit of individual church members, and because its net earnings inured to the benefit of private individuals.” That quote from an IRS revocation letter was disclosed in the church’s lawsuit filed against the IRS.
In March 2019, Community Worship Fellowship (CWF) sued the IRS to regain its tax-exemption. On October 23, 2025, the United States Court of Federal Claims rejected the church’s legal arguments and upheld the revocation.
The CWF case dragged on for six years because on 18 occasions the parties requested additional time for discovery.
Understanding the Law on Inurement
In her court order, Judge Molly R. Silfen listed undisputed facts in the case:
“CWF paid family members unsubstantiated salaries. It also paid for family members’ Prada handbags, jewelry, furs, Chanel fragrances, and private boat payments; paid for cruises and trips to Disneyland, Hawaii, and Paris; paid for golf outings, spa visits, dining out, and event tickets; paid for home improvements for family members; and disbursed money to family members as ‘gifts,’ ‘reimbursements,’ ‘loans,’ checks for ‘taxes,’ and ‘benevolence.'”
The judge’s order also reveals: “CWF ‘received its revenue solely from tithes and offerings’—tax-exempt donations from its members—and then disbursed that revenue back to its members for their personal benefit and private use … Over the four years, CWF received $1,093,560 in net deposits … CWF spent $1,083,688 of that money. Of that, approximately $950,000 was traceable as checks to individuals … Of the $950,000 in checks, approximately $933,000, or 98 percent, was disbursed to the Goddard family: Lester and Laura Goddard, their children and children’s families, and Berit Homes, Ryan Goddard’s for-profit construction business.”
The United States tax code section 501(c)(4) prohibits non-profit organizations from operating for the personal, financial benefit of their leaders or members.
When a pastor receives compensation and other perks exceeding the value of what he provides the church, this compensation is an excess benefit transaction. While regular non-profits are required to pay an excise tax on excess benefit transactions, pastors are exempted from this tax.
The IRS can penalize a secular non-profit with Intermediate Sanctions if it repeatedly overcompensates its executives. However, the IRS lacks this option for punishing churches that provide excess benefit transactions to their directors and board members (sometimes referred to as disqualified persons). Instead, the IRS may revoke the church’s tax exemption for committing inurement.
Churches Rarely Disciplined for Financial Crimes, New Appeals Process for Churches Being Developed
While America has more than 350,000 religious non-profit organizations, less than five reportedly lost their tax-exemption in 2023 due to abusing their tax exemptions, and none of those were churches.
Since 1980, more than 30 religious non-profits have filed appeals in the United States Tax Court in response to IRS enforcement actions.
In March 2025, the IRS proposed an expanded appeals process so that more conflicts with the IRS can be resolved without expensive litigation.
If this proposal had been enacted before 2019, CWF’s dispute could have been resolved outside the courtroom.
According to the new proposal, “restrictions on church tax inquiries and examinations, revocation of the exempt or church status of an organization that is listed as, or claims to be, a church” would be subject to the appeals process.
The Strategy of Defiant Religious Nonprofits: When Caught, Shutdown and Reincorporate
In anticipation of the IRS revoking the church’s tax-exemption, church leaders dissolved the CWF corporation registered in Oregon and then re-incorporated in Hawaii.
This is a common technique of televangelists, disgraced megachurches and ethically challenged ministries. James Eugene Ewing, whom Trinity Foundation founder Ole Anthony nicknamed God’s Ghostwriter, may have pioneered the practice.
During his legal battles with the IRS, Ewing’s ministry repeatedly changed its name with the creation of different legal entities and amendments to articles of incorporation.
In 1971, Ewing’s Camp Meeting Revivals became Church of Compassion which later became Cathedral of Compassion. In 1977, Ewing’s church filed for bankruptcy, replaced by Reverend Ewing Evangelistic Ministry. In 1978, Ewing created Church by Mail. And that is only a partial list of ministry names. Ewing’s ministry is now known as Saint Matthews Churches.
Other religious leaders Trinity Foundation have investigated that employed the “when caught, shutdown and reincorporate” strategy include televangelist Robert Tilton and The Word Network founder Kevin Adell.
After ABC News reported on prayer request cards sent to Pastor Tilton being discovered in a bank trash dumpster before Tilton could pray for them, upset donors sued Tilton’s church. Tilton dissolved his church corporation in Texas, only to rapidly replace it with a new non-profit church corporation.
After the IRS launched an audit of World Religious Relief, the parent organization of The Word Network, Adell created Church of the Word, Inc. to replace World Religious Relief.
The IRS audited World Religious Relief after reviewing the organization’s 990s which showed Adell personally benefiting from a self-dealing business arrangement. His companies provided services to the network for which Adell received $15.7 million in compensation in three years.
The reincorporation strategy worked for Adell. His new ministry doesn’t file 990s, allowing Adell to operate with financial secrecy.
Lack of IRS Transparency
When the IRS revokes the tax-exemption of a non-profit organization in a disciplinary action, it normally sends the organization a revocation letter, announces the revocation in the weekly Internal Revenue Bulletin, and notes the revocation in the IRS Tax Exempt Organization Search, and the latter two methods of disclosing revocations are searchable on the IRS website.
However, this process was only partially followed when the IRS revoked CWF’s tax-exemption in 2018.
Revocation letters, like the one sent to CWF, are protected by the 1974 Privacy Act and are unobtainable with a Freedom of Information Act request. Therefore, journalists and concerned donors have no access to this information. Tax penalties levied against ex-non-profit organizations are treated as secret even though they are paid off with donor funds.
Congress has the power to revise the 1974 Privacy Act to make revocation letters available in the public interest.
Meanwhile, there is no mention of CWF on the IRS website, which raises a troubling question: How frequently does the IRS revoke the tax-exemption of a church or ministry and not publicly disclose it?
How can church and ministry supporters make informed donor decisions when key information is withheld from them?