By Julie Foster, WorldNetDaily.com
Ministers and members of the Indianapolis Baptist Temple have occupied their church property 24-hours-a-day for more than three weeks in anticipation of seizure by U.S. marshals, as ordered by the U.S. Circuit Court in Chicago. What chain of events could have led to this bizarre set of circumstances? It's a 50-year history that, according to the United States government, can simply be reduced to the fact that a church did not pay federal employment taxes. But, from the perspective of dozens of church ministers and the congregation, their path is one of repentance that now involves taking a stand for what they believe is the original intent of America's founding fathers and, more importantly, the sovereignty of God.
The legal battle began in 1994 when the Internal Revenue Service filed suit in the U.S. District Court for the southern district of Indiana against the church for not paying employment taxes. On Jan. 19, 1999, Chief Judge Sarah Evans Barker ruled against the church and ordered it to pay $3.6 million for taxes owed between 1987 and 1993. The church appealed to the 7th Circuit but lost and has now filed an emergency motion in the U.S. Supreme Court. In the meantime, Barker ordered U.S. marshals to seize the church's property for foreclosure to pay the taxes in question. Occupants of the property now await action by law enforcement.
But why didn't the church pay the taxes -- and how could their reasoning lead to such a dramatic, groundbreaking case?
Indianapolis Baptist Temple was founded in March 1950 by Pastor Greg J. Dixon. In October of that year, the church incorporated as a 501(c)(3) not-for-profit organization, as many churches do in America. Churches are not required to incorporate as not-for-profits, but many choose to do so as it streamlines the process of obtaining tax exemptions. As a 501(c)(3), a church must comply with federal employment taxes -- it must match the employees' taxes for Social Security and Medicare and it must withhold the employees' contributions to those programs as well as normal income taxes. Such churches -- and all 501(c)(3) organizations -- are liable for both the taxes imposed directly on them and the taxes they are required to withhold from employees. Churches not incorporated under the statute are known as "unincorporated religious societies" and are still required by the IRS to pay applicable employment taxes.
IBT, as the church is referred to in court documents, complied with the regulations applying to its not-for-profit corporation status until 1983 -- a pivotal year in the case. At that time, said IBT's attorney Al Cunningham, church members "got down on our knees and repented" for placing the church under the authority of a civic government, which it had done by incorporating as a 501(c)(3) organization.
"When you form a legal entity, what you are actually doing is establishing an entity under the law. And when you do that, you place yourself under the law. So you have two entities that exist simultaneously. You have the Church and the legal entity," Cunningham explained. "The Church is authenticated by the holy Bible," not civic laws, he added
"The Church is established under Jesus Christ, and he is sovereign," he continued. By allowing IBT to be subject to any kind of taxation or government regulation, the church was separating itself from Jesus Christ, he said. "The purpose of the First Amendment is to deny government that access to religion."
So, in 1983, the church repented of its actions and began operating as a "New Testament church." It also rejected the characterization of being an "unincorporated religious society," since that term carries legal significance. Cunningham describes the switch in operation as a "divorce" of sorts. The not-for-profit corporation and the Church are separate entities, but the church had not made the distinction between itself and the corporation, he said.
"It's like divorce. A man and wife are two individuals, but there's a union," Cunningham illustrated. That union was renounced by IBT.
Cunningham also claimed the church's beliefs are consistent with the First Amendment.
"Our forefathers recognized in the First Amendment that God is sovereign over man and that man cannot tax God," he said. "If you say now that government can tax a church, you're saying that government has placed itself as a sovereign over a church. ... That's the rub here."
The attorney pointed out that while he believes government does not have the right to regulate churches, it does have the right to regulate legally incorporated entities.
"The government has the authority, and I will acknowledge this, that government has the authority to tax and to regulate a legal entity," he said. Being a 501(c )(3) "means they're getting a government subsidy -- the Supreme Court said so. Since the government is subsidizing that entity, they have the right to regulate it," he explained.
IBT then limited the use of its 501(c)(3), renamed after 1983 to "Not a Church, Inc.," to handle financial obligations and legal responsibilities not assumed by the church until the corporation was administratively dissolved by Indiana's secretary of state in July of 1989.
But while the church focuses on making the distinction between itself and the corporation, the district court ruled the difference between a "New Testament church" and religious organizations subject to specific taxes is "a distinction without a difference."
Indeed, in the 7th Circuit's ruling of IBT's appeal, the court rejected the church's argument that the First Amendment excludes it from taxation and other forms of government regulation.
"The Free Exercise Clause absolutely protects the freedom to believe and profess whatever religious doctrine one desires," wrote Judge Ann Williams. "It also provides considerable, though not absolute, protection for the ability to practice (through the performance or non-performance of certain actions) one's religion."
Williams cites a 1990 Supreme Court case -- Employment Division, Department of Human Resources v. Smith -- in which the nation's highest tribunal ruled that "neutral laws of general application that burden religious practices do not run afoul of the Free Exercise Clause."
In other words, imposing employment taxes that apply to all employers, regardless of employers' religious beliefs or purposes, is an acceptable government practice under the First Amendment.
Williams also rejected IBT's claim to protection under the federal Religious Freedom Restoration Act, which says laws that substantially burden the free exercise of religion cannot be enforced unless the burden furthers a compelling government interest and is the least restrictive means of furthering that interest. Since IBT's religious tenets preclude the church as a whole from paying taxes to a civic government, Cunningham cited RFRA in IBT's defense.
The court disagreed, emphasizing RFRA's exception for "compelling government interests."
"The Supreme Court and various courts of appeals concluded both that maintaining a sound and efficient tax system is a compelling government interest and that the difficulties inherent in administering a tax system riddled with judicial exceptions for religious employers make a uniformly applicable tax system the least restrictive means of furthering that interest," the circuit court wrote. "We find this authority persuasive and see no reason to reach a different conclusion" than the lower district court, the ruling continues.
The circuit court's ruling affirmed the district court's decision by Barker, who also shut down the church's First Amendment argument based on the Establishment Clause. Barker noted that tax systems "must have a secular legislative purpose, its primary purpose must neither advance nor inhibit religion, and it must not foster an excessive entanglement with religion."
Barker also referenced the Supreme Court case "Jimmy Swaggart Ministries v. Board of Equalization of California," in which the court held "it is undeniable that a generally applicable tax has a secular purpose and neither advances nor inhibits religion." Another important aspect of the Swaggart case was the court's observance that "carving out an exception to account for conflicting religious beliefs would result in the very entanglement that IBT seeks to prevent, since it would necessarily require the IRS to examine the sincerity of a person's religious beliefs."
U.S. Attorney Douglas Snoeyenbos could not comment on the case, nor could the Justice Department's office of public affairs. However, a 47-page brief filed by U.S. attorneys to the appeals court outlines the government's case against the church, including Barker's case references previously mentioned.
"The district court was correct when it stated that prior Supreme Court precedent makes resolution of this case rather straightforward," said U.S. Attorney Robert Metzler at the May 11 appeal proceeding. According to a transcript of the proceeding made by the church from a court-provided audio recording, Metzler stated, " ... the position of Indianapolis Baptist Temple which, as we understand it, basically says that it allows no government regulation unless it voluntarily submits to it, is simply an untenable position in society."
The circuit court agreed with Metzler on Aug. 14. As a result, IBT was required to comply with Barker's earlier ruling. The church again refused to pay based on its religious convictions and, on Nov. 14, Barker entered judgment against IBT, awarding the United States $5.3 million plus interest and penalties and ordering foreclosure and sale of two parcels of real estate owned by the church.
IBT asked for a stay of the order all the way up to the Supreme Court, but it was denied by each jurisdiction, including by Chief Justice William Rehnquist, said Cunningham. The church is attempting to appeal to the Supreme Court, but Cunningham admits, "It'll be there for a while."
On Nov. 14, the same day Barker issued final judgment, the parsonage of Pastor Emeritus Greg J. Dixon was seized. The parsonage sits on IBT's 22 acres, which includes a sanctuary capable of seating 2,000, a cafeteria and gymnasium, a baseball diamond, soccer field, maintenance garages, a two-story school building and other structures. Dixon now lives in the basement of the senior pastor's home -- one of three parsonages on the estate. Dixon's son, Greg A. Dixon, is the current senior pastor.
Penalties on such a judgment can be up to 25 percent of the amount awarded. Combined with interest, the total amount owed could end up being more than double the $5.3 million. But the church stands by its convictions, saying the property belongs only to God. However, what individuals choose to do with the money they receive from the church is their own decision, Cunningham indicated.
The church's lawyer said the IRS audited approximately 60 of the church's ministers and found they had all filed their own tax forms and paid all taxes due, including the total amount of their FICA taxes. Therefore, the taxes in question had already been paid, the church claims. Nevertheless, IBT says the IRS sent half of the FICA taxes back, saying the church should have collected and remitted them instead of the individuals who paid them.
"The church isn't taxed, but individuals are," Cunningham conceded. "So some people go ahead and pay it."
So, what happens now? Today marks 25 days the church has been occupied by ministers, members and sympathizers from around the country. They are waiting for U.S. marshals to come seize the property, though they do not know when a seizure will take place.
U.S. Marshal Frank Anderson was quoted in the Indianapolis Star as saying he respects the church's beliefs but he must do what the law tells him to do. He did not indicate when the next seizure would take place.
While the church waits, anywhere from 40 to 60 people camp out on the carpeted auditorium floor and many more people occupy the church during the day. Church membership is around 3,000, and teachers at the 500-student school for children from kindergarten through high school continue to teach.
Cunningham and Pastor Emeritus Dixon say the church is standing for religious liberty.
"We are in the same place in America as our forefathers were before the First Amendment was adopted," Cunningham remarked. "The religious liberties of every individual in America are at stake right now."
"There's only one lawgiver," added Dixon, "and the biblical nature of the church has to coincide with the legal nature of the church. They're saying that our belief system can be biblical, but our practice must be legal as they determine legality."
Dixon says the issue is one of control. Since the taxes have been paid by individuals, there was no financial reason for the IRS to target the church.
IBT's demand of the government, as Cunningham puts it, is simple: "You just get out and let us worship our God in peace."
Julie Foster is a staff reporter for WorldNetDaily