Friday, August 7, 2009

New Proposed Regulations for Church Audit Procedures

On August 5, 2009 the IRS issued proposed changes to the regulations relating to church tax inquiries and examinations. The proposed regulations replace references to positions that were abolished by the Internal Revenue Service Restructuring and Reform Act of 1998 with references that are consistent both with the statute and the IRS's current organizational structure. The proposed regulations follow upon recent litigation in which a federal judge held that the IRS did not comply with the church audit regulations requiring approval by an appropriate high-level Treasury official before commencing the church examination. The Internal Revenue Service halted its investigation of a Minnesota church whose pastor preached against presidential candidates during a sermon in May 2008, reported by the AP last week.

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