Church accountants sometimes scare pastors with stories of IRS audits. The church accounting firm Chitwood & Chitwood warns, “There have been many small Churches that have encountered the wrath of the IRS. Don’t be one of them.”
However, that claim is false. Very few churches, large or small, are audited or criminally investigated by the IRS.
How frequent are church audits? The Wagenmaker & Oberly law firm reports that 2-years between October 1, 2020, to September 30, 2022, the IRS launched 14 church tax examinations. Compare with over 400,000 churches in the U.S. and we here at Trinity Foundation frequently receive calls from informants and victims complaining about fraud and embezzlement in their churches.
In fact, no churches lost their tax-exempt status in 2023 due to IRS disciplinary actions resulting from church audits.
Church audits are few because of a massive reduction in the IRS workforce. According to an IRS report, “The IRS lost more than 29,618 full time positions between [fiscal year] 2010 and [fiscal year] 2019.”
Also, the Church Audit Procedures Act limits the time of a church audit to three years. Often church financial crimes are discovered after the statute of limitations has expired.
Moreover, churches rarely ever lose their tax-exemption for fraud or tax evasion by church employees. If an IRS church audit discovers taxes owed, the church or pastor is given the opportunity to pay, and the fines are secret because of the 1974 Privacy Act.
In 2008, a court ruling blocked the IRS from auditing televangelist Mac Hammond’s Living Word Christian Center. Following the court ruling, the IRS stopped performing church audits.
In 2015, the Government Accountability Office reported:
“EO [Exempt Organizations Division of the IRS] initiated one examination on a church in fiscal year 2014, and two in fiscal year 2013.
EO officials told us they suspended new church examinations from 2009 to January 2013 after a 2009 district court case, which ruled that, at the time, the designated official was not the ‘appropriate high-level Treasury official’ envisioned by Congress.”
List of Non-Profits Whose Tax Exemption Was Revoked in 2023
Throughout the year the weekly Internal Revenue Bulletins of the IRS announce when the government agency revokes the tax-exempt status of a non-profit organization following an audit or investigation.
The following list of revocations does not include non-profit organizations that lose their tax-exempt status for failing to file a Form 990 information return for three consecutive years. Churches, synagogues, and mosques are exempt from filing the Form 990.
Ministries Discretionary Urban Initiative Inc. – Milwaukee, WI
Mama Friends of Earth – Phoenixville, PA
APHA Zone 5 Coordinating Committee – Altoona, IA
Neilia LaValle Philanthropies – Huntington Beach, CA
Teachers Organizing Property Inc – Greenville, MS
Next Level Foundation – Las Vegas, NV
LWL Foundation – Danville, CA
Maxcess Foundation Inc – Boca Raton, FL
Matthew Kull Foundation for Healing – New Milford, CT
A 2nd Cup – Houston, TX
Atchafalaya Bit & Bridle Club Inc – Houston, TX
FCPA Community Outreach – Shelton, CT
FL-AL Toy Breeds Inc – Theodore, AL
Goff Moll Post Building Association – Brentwood, MO
Hawaii Coral Reef and Garden – Sparks, NV
Sarah and Mary’s Helping Hands – Orland Park, IL
Little People Christian Day Care – Maywood, IL
Foundation for Better Health – Costa Mesa, CA
New Life Ministries, Inc. – San Marcos, CA
Project Transition USA, Inc. – St. Petersburg, FL
Family Office Foundation – Costa Mesa, CA
American Cancer of Society Florida – New York, NY (Not a typo. Name in IRS Bulletin.)
American Cancer Society of Washington – New York, NY
American Cancer Society of Massachusetts – New York, NY
American Cancer Society of Baltimore – New York, NY
American Cancer Society of Cinncinati – New York, NY (Name misspelled in IRS Bulletin.)
American Cancer PF of Georgia – New York, NY
American Cancer Society of Maryland – New York, NY
American Cancer Society of Ohio – New York, NY
Children’s Cancer Society of Texas – New York, NY
Taxes for a Cause Inc – Rockville Center, NY
United Way of New York – New York, NY
Step Up Youth Corp – Denver, CO
National Waterfowl Alliances – Oak Forest, IL
Hockey Hall Inc – Tulsa, OK
American Cancer Foundation of Atlanta Inc – Staten Island, NY
American Cancer Foundation of Boston Inc – Staten Island, NY
American Cancer Foundation of Wisconsin Inc – Staten Island, NY
American Cancer Foundation of San Francisco Inc – Staten Island, NY
American Cancer Foundation of San Bernardino Inc – Staten Island, NY
American Cancer Foundation of San Antonio Inc – Staten Island, NY
American Cancer Foundation of Riverside – Staten Island, NY
American Cancer Foundation of Pittsburgh Inc – Staten Island, NY
American Cancer Foundation of Philadelphia Inc – Staten Island, NY
American Cancer Foundation of San Diego Inc – Staten Island, NY
American Cancer Foundation of North Dakota Inc – New York, NY
American Cancer Foundation of Pennsylvania Inc – New York, NY
American Cancer Foundation of Staten Island Inc – New York, NY
American Cancer Foundation of Wisconsin – New York, NY
Children Cancer Society of America – New York, NY
United Way of New York Inc – New York, NY
United Way of Los Angeles Inc. – New York, NY
United Way of Michigan Inc – New York, NY
United Way of San Francisco Inc. – New York, NY
American Cancer Society for Children of North Dakota Inc – Staten Island, NY
American Cancer Foundation of Michigan Inc – Staten Island, New York
American Cancer Foundation of Texas Inc – Staten Island, New York
American Cancer Foundation of Houston Inc – Staten Island, New York
American Cancer Foundation of Long Beach – Staten Island, New York
Amercan Cancer Society of Adults Inc – Staten Island, New York (Name misspelling in IRS bulletin.)
Amercan Cancer Society of New York Inc – Staten Island, New York (Name misspelling in IRS bulletin.)
American Cancer Foundation of Madison Inc – Staten Island, New York
American Cancer Society of Bismark Inc – Staten Island, New York
American Cancer Foundation of Manhattan Inc – Staten Island, New York
American Cancer Foundation of United States Inc – Staten Island, New York
American Cancer Society of Michigan – Staten Island, New York
American Cancer Foundation of Massachetts Inc – Staten Island, New York (Name misspelling in IRS bulletin.)
American Cancer Foundation of Detroit Inc – Staten Island, New York
American Cancer Foundation of Ohio – Staten Island, New York
Institute for Community Wellness – Bronx, NY
American Cancer Foundation of Grand Rapids, Inc – Staten Island, NY
American Cancer Foundation of Green Bay, Inc – Staten Island, NY
American Cancer Foundation of Lansing – Staten Island, NY
American Cancer Foundation of Milwaukee – Staten Island, NY
American Cancer Foundation of New York – Staten Island, NY
American Cancer Foundation of Oakland – Staten Island, NY
American Cancer Foundation of Pennsylvania, Inc – Staten Island, NY
Margaret B. Gilfillan Charitable Trust – Pittsburgh, PA
Alpine Country Club – Alpine, TX
United Way Detroit – New York, NY
American Cancer Foundation of Ohio – Staten Island, NY
American Cancer Society for Adults – Staten Island, NY
American Cancer Foundation of Arlington – Staten Island, NY
American Cancer Foundation of Corpus Christi – Staten Island, NY
American Cancer Foundation for Children Inc. – Staten Island, NY
American Cancer Foundation of Philadelphia – Staten Island, NY
American Cancer Foundation of Pittsburgh – Staten Island, NY
United Way of San Diego – Staten Island, NY
Shenandale Gun Club – Staunton, VA
Firm Foundation Academy – Clearwater, FL
Rural Advancement Institute – Pittsboro, NC
Project Second Chance – Sioux Falls, SD
St. Johns House Learning and Development Center Inc – Huntington, WV
Villagers for Trump Inc – The Village, FL
Unison Duet Music Production Inc – Glendale, CA
Guatemala Institute for Biblical Evangelism Inc. – Belton, TX
Cambridgeport Teacher Organization Inc – Cambridge, MA
Harmon County Healthcare Authority – Hollis, OK
Dogs Days Ranch and Rescue – Winona, TX
Brighter Day Foundation – Los Angeles
James C. Wilbourn Washington and Lee Endowment Trust – Meridians, MS
Jackson County 4-H Foundation – Springs, MO
Robert Saah Massaquoi Foundation – San Diego, CA