Religious Organization Petitions Supreme Court to Review Denial of Church Status

2. To the extent that a church must possess an associational element by which its followers are brought together to worship, can radio and/or Internet broadcasts, during which followers can call in or otherwise communicate with clergy, satisfy, in whole or in part, this associational element?

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Previously-articulated tests advanced by the IRS and the courts pose constitutional concerns and have resulted in inconsistent conclusions. Furthermore, it is unclear which, if any, of these tests is appropriate to apply. In this case the Court of Appeals adopted the so-called "associational test" for determining church status, which requires that "a church's principal means of accomplishing its religious purposes must be to assemble regularly a group of individuals related by common worship and faith." See App., infra 82a, quoting Church of Eternal Life & Liberty, Inc. v. Comm'r, 86 T.C. 916, 924 (1986).

In applying this associational test, the Court of Appeals discounted completely the fact that, in addition to more traditional in-person religious services at the Foundation's Tall Timber Ranch near Selma, Oregon and elsewhere, during which the Foundation's congregants physically assembled, the Foundation also engaged in an extensive electronic ministry. That electronic ministry enabled followers to regularly gather around radios and the Internet to receive the Foundation's religious message and interact by telephone with the Foundation's clergy. The Court of Appeals ruled, as a matter of law, that such a "broadcast" ministry "does not provide individual congregants with the opportunity to interact and associate with each other in worship, and it therefore does not provide a basis for concluding that the Foundation's religious activities satisfied the associational test." App, infra 86a. Thus, despite the Foundation's conduct of in-person religious services along with its electronic ministry, the Court of Appeals held that the Foundation did not qualify as a church. Id.

The Court of Appeals' opinion that a "broadcast" ministry cannot be associational betrays a preference for traditional "brick and mortar" churches, while ignoring modern technological advances and the expanding efforts by many recognized churches to utilize technology, including the Internet, to reach, interact with, and minister to their followers. Rather than discounting a religious organization's efforts and activities to communicate with its congregants through modern means, and focusing on more familiar in-person services during which congregants physically assemble, this Court should instead adopt a "totality of the circumstances" test for determining church status that focuses on the religious organization's dissemination of its religious message and the acceptance of that message by followers who receive and acknowledge it as being relevant to their spiritual development.

Application of such a test rigorously protects First Amendment religious values by eliminating governmental tendencies to engage in culturally biased inquiries into a religious organization's religious beliefs, customs and practices based on archetypal views of how a "traditional" church should worship or disseminate its message. Such a test appropriately considers all means by which a church and its followers communicate and worship, including those provided by modern technology, and avoids a cramped and restrictive view which only values stereotypical images of religious activity.

In 1970 the Foundation filed with the IRS Treasury Form 4653, "Notification Concerning Foundation Status," in which it gave notice that it was not a private foundation but was rather a "church" under 26 U.S.C. §§ 509(a)(1) and 170(b)(1)(A)(i) and "[a]n organization that normally receives no more than 1/3 of its support from gross investment income and more than 1/3 of its support from contributions, membership fees, and gross receipts from activities related to its exempt funds" under 26 U.S.C. § 509(a)(2). Foundation of Human Understanding v. Comm'r, 88 T.C. 1341, 1343 (1987) ("Foundation I"). By letter dated October 20, 1970, the IRS notified the Foundation that it was not considered a "private foundation," but the IRS failed to state whether this status was based upon an administrative determination that the Foundation was a church under Section 509(a)(1) or a publicly supported organization under Section 509(a)(2). Id. at 1343.

On May 15, 1972, the Foundation amended the "purpose" clause contained in its articles of incorporation to unequivocally state that, in fact, it was a church. F.C. App. 3606. The Foundation's articles of incorporation have been amended several times since and have continuously stated that the Foundation is a church. F.C. App. 310-319.

The IRS resisted the Foundation's entitlement to church status and, on February 23, 1983, issued its final determination letter stating that, while the Foundation was a "religious and educational organization," it was "not a church as that term is commonly understood." F.C. App. 3606-07. In response to that determination, the Foundation filed a declaratory judgment action in the United States Tax Court (the "Tax Court") seeking a judicial determination of its status as a church under the Code. F.C. App. 3607.

On May 19, 1987, the Tax Court issued its decision in Foundation I, holding that the Foundation qualified as a church for the tax years in question within the meaning of 26 U.S.C. § 170(b)(1)(A)(i). Foundation I, 88 T.C. at 1361. The Tax Court found that the Foundation had, since its inception, spread its religious message through radio presentations. Id. at 1345. After its incorporation in 1963, the Foundation began conducting a live radio show hosted by Roy Masters "using a call-in format whereby listeners telephone Masters with their questions, concerns, and problems, and he responds with counseling in keeping with his doctrine and teachings." Id. The Tax Court found that, at one point, these radio presentations, including taped replays, were broadcast five or six days a week over numerous radio stations with an estimated audience of "approximately 2 million with a regular following of 30,000." Id. at 1346. The Tax Court also noted the Foundation's significant publishing activities, which included the distribution of pamphlets, books, taped recordings of its live call-in radio shows, and a magazine which had 5,200 subscribers and an estimated readership of 15,000. Id.

In addition to its radio and publishing activities, the Tax Court found that the Foundation conducted regular religious services at two of its locations. The Foundation conducted services three or four times a week which were open to the public at a building that it owned in Los Angeles, California. Id. at 1347. Additionally, the Foundation owned a building in Grants Pass, Oregon, in which religious services were also conducted. "Attendance at services at both Grants Pass and Los Angeles ranges from 50 to 350 people." Id. at 1348. The Tax Court also found that the Foundation operated a school for children that included both general education and religious instruction. Id. Additionally, the Foundation operated the Tall Timber Ranch in Selma, Oregon, at which it conducted various meetings and seminars. Id.

In determining whether these facts supported the conclusion that the Foundation was a church, the Tax Court first noted the absence of any "guidance by Congress" or any "meaningful regulatory definition" of the term. Id. at 1356. The Tax Court also recognized that interpreting the term "in light of the generally accepted meaning and usage of the word" was unacceptable "given the plurality of religious beliefs in this country." Id. In this regard, the Tax Court stated:

In its effort to determine whether the Foundation in fact qualified as a church under this standard, the Tax Court discussed, but expressly did not adopt as a legal test, fourteen criteria which the IRS had informally announced for determining church status. These criteria were (1) a distinct legal existence; (2) a recognized creed and form of worship; (3) a definite and distinct ecclesiastical government; (4) a formal code of doctrine and discipline; (5) a distinct religious history; (6) a membership not associated with any other church or denomination; (7) an organization of ordained ministers; (8) ordained ministers selected after completing prescribed studies; (9) a literature of its own; (10) established places of worship; (11) regular congregations; (12) regular religious services; (13) Sunday schools for religious instruction of the young; and (14) schools for the preparation of its ministers. Id. at 1357-59. See Internal Revenue Manual 7(10)69, Exempt Organizations Examination Guidelines Handbook 321.3(3) (Apr. 5, 1982). Significantly, these criteria have never been adopted by statute or regulation, and no court considering the issue has ever acknowledged them as being authoritative on the issue of church status.

Nonetheless, citing these factors as helpful to its analysis, the Tax Court found that the Foundation had a distinct religious history of more than twenty years and "possess[ed] most of the [IRS] criteria to some degree." Id. at 1360. The Foundation had a distinct legal existence and its Judeo-Christian principles, which emphasized "emotional self-control through a specific type of meditation as the key to salvation" set it "apart from other recognized religions." Id. at 1359. The Tax Court also concluded that the Foundation conducted "regular meetings of regular congregations at established places of worship" which were open to the public and which were conducted by its ordained ministers. Id.

The Tax Court acknowledged that the Foundation reached "far more people with its message of emotional self control through its radio broadcasts, books, pamphlets, and magazine" than it did with its in-person services, 30,000 to 2 million people through the former as opposed to 50 to 350 people through the latter. Id. at 1360. However, the Tax Court stated:

As a result of the Tax Court's decision in Foundation I, the IRS issued a Determination Letter to the Foundation on October 22, 1987, stating that, for periods after February 23, 1982, the Foundation qualified as a church under 26 U.S.C. §§ 509(a)(1) and 170(b)(1)(A)(i).

The audit of the Foundation culminated in the issuance by the IRS of a Technical Advice Memorandum dated June 8, 2004, in which the IRS concluded that the Foundation was a publicly-supported charity that was exempt from taxation as an organization described in 26 U.S.C. § 501(c)(3), but was not a church under 26 U.S.C. §§ 509(a)(1) and 170(b)(1)(A)(i) for the tax years at issue. F.C. App. 1523-1576. The IRS revoked the Foundation's church status, retroactive to January 1, 1998. F.C. App. 1576.

As a result of this determination, the Foundation commenced this action pursuant to 26 U.S.C. § 7428 in the Court of Federal Claims ("the trial court"), seeking a declaratory judgment that, during the tax years in issue, 1998, 1999, and 2000, it retained its status as a church under the Code. F.C. App. 57. Both the Foundation and the United States ("Respondent") filed cross-motions for summary judgment pursuant to Rule 56 of the Rules of the Court of Federal Claims ("RCFC"). F.C. App. 3610 et seq. and 6380 et seq. The trial court, sua sponte, decided to consider the parties' cross-motions for summary judgment as motions for judgment on the administrative record under RCFC 52.1(c). App., infra 4a.

On July 21, 2009, the trial court issued its opinion denying the Foundation's motion and granting Respondent's motion and holding that, for each of the three tax years at issue, the Foundation did not qualify as a church within the relevant portions of the Code. App., infra 3a. The trial court reached its legal conclusion despite the fact that the Foundation produced extensive evidence regarding its religious ministry and the manner in which that ministry was accepted and viewed by its followers.

Many of the facts presented by the Foundation were expressly adopted by the trial court, which found that the Foundation met nine of the fourteen criteria under the IRS test.² Thus, the trial court concluded it was uncontested that the Foundation had an independent legal existence and a recognized creed and form of religious worship. App., infra 45a. The trial court further concluded that the Foundation had a distinct religious history; used a variety of methods to spread its religious beliefs including radio broadcasts, written publications and phone-based religious counseling; and had thousands of followers who practiced its meditation techniques, attended seminars, read its publications and felt an affinity with the Foundation and its religious message. App., infra 46a.

The trial court also found that the Foundation had a distinct religious literature of its own; had a definite and distinct ecclesiastical government; and a formal code of religious doctrine and discipline. App., infra 47a, 49a-51a. Importantly, the trial court also concluded that, during the tax years in issue, the Foundation had an established place of worship, the Tall Timber Ranch in Selma, Oregon. App., infra 47a. Although the Foundation sold its Los Angeles and Grants Pass properties in 1994, the trial court found that the Foundation's ministers conducted personal counseling, instruction in meditation techniques and self-awareness and otherwise presented and discussed the teachings of the Foundation at the Tall Timber Ranch during the tax years at issue. App., infra 47a-49a. The trial court also found that the Foundation had, during the tax years at issue, an organization of ordained ministers who were selected after completing a prescribed course of study that ranged between a few months and several years. App., infra 52a-53a.

However, the trial court found that five of the fourteen criteria developed by the IRS were not met. Some of these findings were non-controversial. For example, the Foundation conceded that it did not have formal membership and did not require its followers to reject or abandon affiliation with other churches or faiths. App., infra 45a. Similarly, the Foundation conceded that it did not have schools for the preparation of its ministers and that the Brighton Academy, a school it had previously operated to provide general education as well as religious instruction to children, had been separately incorporated in 1991 and was no longer directly operated by the Foundation. App., infra 52a, 54a.

However, the trial court's conclusions that the Foundation did not have a regular congregation and did not conduct regular religious services were based on conflicting evidence. For example, the Foundation presented evidence that, since 1979 and continuing thereafter, including during the tax years at issue, it conducted services and seminars, referred to as "meetings," at the Tall Timber Ranch. F.C. App 3659. Similar meetings were held at other locations as well. F.C. App. 1264-1265. Although these meetings occurred less frequently during the tax years at issue because of a period of Roy Masters' physical illness, the trial court nonetheless determined that twenty-one meetings had, in fact, occurred, albeit at irregular intervals, during this time period and that their content was religious, i.e., that a minister of the Foundation preached to a group of between ten and thirty individuals about meditation practices, good and evil, Adam and Eve and a wide variety of other religious subjects. App., infra 56a, 64a, n. 23.

The Foundation also produced approximately one thousand letters, emails, and declarations from various individuals, including approximately three hundred incarcerated persons, many of which contained statements that these individuals viewed the Foundation as their church, gained spiritual benefit from its teachings, and participated in the Foundation's services. App., infra 59a-61a. The trial court viewed "these letters, emails, and declarations as evidence that plaintiff has an established group of followers." App., infra 61a. Moreover, the trial court acknowledged that the government stipulated that the Foundation has thousands of followers "who practice the meditation techniques, attend seminars, [and] read the Foundation publications." App., infra 62a.

Nonetheless, the trial court concluded that "[a] group of followers, however, is not synonymous with a 'regular congregation.'" App., infra 61a. The trial court ruled that the letters, emails and declarations submitted by the Foundation did not "show a group of followers that regularly congregates in any form -- whether virtually or in one another's physical presence." App., infra 62a. And although there was evidence of various in-person meetings at the Tall Timber Ranch and elsewhere during the tax years at issue, the trial court concluded that this fact did not establish that the Foundation had a regular congregation because, in its view, there was insufficient evidence concerning "the regularity, if any, with which" the Foundation's congregants assembled together to worship. App., infra 56a.

Having ruled that the thousands of Foundation followers did not constitute a regular congregation for purposes of the IRS criteria for church status, the trial court also found that the Foundation did not conduct regular services. In support, the trial court first found that the Foundation's "services in the form of Sunday meetings, weddings, and seminars, are not frequent enough to be characterized as 'regular.'" App., infra 65a. Second, the trial court found that the Foundation's radio and Internet broadcasts did not qualify as religious services. Id.

Despite the fact that the Foundation's radio call-in show was transmitted on more than 130 radio stations and over the Internet as well, the trial court declined to accept the Foundation's contention that its adherents "assemble" to receive its spiritual message and that this message is "no less heard by the congregation than [it] would be if [it] were delivered in a room with a pulpit." App., infra 66a. Instead, the trial court found that the Foundation had not adequately demonstrated that its adherents "regard their experience while listening to plaintiff's broadcasts as a shared experience with other of plaintiff's followers, or as a communal experience in any way" and concluded that "radio and internet broadcasts lack critical associational aspects characteristic of religious services." App., infra 66a-67a. As a result, the trial court held that, although the Foundation met nine of the fourteen IRS criteria and the case presented "a close question," the IRS test for determining church status was not met. App., infra 67a.

The trial court then proceeded to analyze the Foundation's church status under the alternative "associational test" articulated in American Guidance Foundation v. United States, 490 F. Supp. 304, 306 (D.C. 1980). Under this test, a church, "[a]t a minimum" must include a "body of believers or communicants that assembles regularly in order to worship" and, "[u]nless the organization is reasonably available to the public in its conduct of worship, its educational instruction, and its promulgation of doctrine, it cannot fulfill this associational role." Id. at 306.

Applying this associational test, the trial court found, largely because the Foundation no longer held services at its Los Angeles and Grants Pass facilities, that it "no longer provides religious services to an established congregation." App., infra 69a. Notwithstanding its finding that, during the tax years at issue the Foundation conducted not less than twenty-one services at the Tall Timber Ranch and elsewhere, the trial court concluded that the Foundation's "primary activities are internet and radio broadcasting," which were not associational in nature, and that these activities were "no longer supplemented by the Foundation's associational activities in existence at the time of the Tax Court's decision in Foundation I." Id. As a result, the trial court concluded that the Foundation no longer qualified as a church under either the IRS criteria or the "associational" test. App., infra 72a-73a.

In upholding the trial court's determination that the Foundation did not hold regular services with a regular congregation during the tax years at issue, the Court of Appeals first addressed "the Foundation's in-person services." App., infra 83a. While acknowledging that the Foundation held twenty-one services, five at the Tall Timber Ranch and sixteen at other locations, during this time period, the Court of Appeals found that "attendance of groups of people at occasional seminars in cities scattered across the country does not constitute a regular assembly of a cohesive group of people for worship." Id. With regards to the five services held at the Tall Timber Ranch, the Court of Appeals stated that they did not enable "congregants to establish a community of worship." Id.

Although recognizing that "the associational test does not demand that religious gatherings be held with a particular frequency or on a particular schedule," the Court of Appeals concluded that the test "does require gatherings that, by virtue of their nature and frequency, provide the opportunity for members to form a religious fellowship through communal worship." App., infra 83a-84a. Discounting the communications from numerous individuals "stating that they had received the Foundation's teachings and considered the Foundation to be their church," the Court of Appeals found that there was insufficient evidence that these individuals had attended in-person services as opposed to "receiv[ing] the Foundation's teachings through its electronic ministry." App., infra 84a.

The Court of Appeals next addressed that electronic ministry. The Court of Appeals rejected the Foundation's argument that "its members regularly assembled to worship as a 'virtual congregation' by listening to sermons broadcast over the radio and the Internet at set times, referred to as 'appointments to listen,'" and instead held that such activity could not be associational because simultaneous receipt of the Foundation's message "does not mean that those members associated with each other and worshipped communally." App., infra 85a. The Court of Appeals also rejected the Foundation's argument that "it satisfied the associational test because its electronic ministry included a 'call-in' show that enabled individuals to call and interact with the Foundation's clergy over the telephone," interactions which were then "broadcast to listening congregants and subsequently transcribed for distribution." App., infra 85a-86a. In response to this argument, the Court of Appeals broadly stated: "However, a call-in show, like other forms of broadcast ministry, does not provide individual congregants with the opportunity to interact and associate with each other in worship, and it therefore does not provide a basis for concluding that the Foundation's religious activities satisfied the associational test." App., infra 86a. Based largely on this conclusion, the Court of Appeals affirmed the trial court's holding that the Foundation did not constitute a church for purposes of federal tax law. Id.

But despite these important and far-reaching distinctions by which churches are afforded protections not extended to other religious organizations, Congress has offered no statutory definition of the term "church" and the IRS has promulgated no regulations offering either the courts or the public any guidance as to the term's meaning. See App., infra 79a (the Court of Appeals noted that "[n]either Congress nor the IRS has provided much guidance as to the meaning of the term 'church' in I.R.C. § 170 or what is required for an institution to qualify for that designation" because, "[a]s the trial court observed, neither the statute nor any IRS regulation defines that statutory term").

Similarly, this Court's precedents offer little substantive interpretation of the term. See St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 784 n.15 (1981) (while defining the term church in a federal unemployment tax case as the "congregation or the hierarchy itself, that is, the church authorities" rather than "a physical building that is a house of worship," the Court specifically stated that it "disavow[ed] any intimations in this case defining or limiting what constitutes a church under FUTA or under any other provision of the Internal Revenue Code").

This definitional and interpretive void has led lower courts to either apply the "common understanding of the word" as the applicable legal test, De La Salle Institute v. United States, 195 F. Supp. 891, 903 (N.D. Cal. 1961), a wholly unsatisfactory and ad hoc inquiry, or to apply tests that place controlling weight upon traditional, often Christian-centric notions of what churches should be, notions that focus on religious services being conducted in discrete physical locations where, despite the tenets of the religious faith involved, congregants must physically assemble to engage in communal worship. See App., infra 81-82a (the Court of Appeals noted that, under either the "14 criteria test" or the associational test, to be considered a church, a religious organization "must create, as part of its religious activities, the opportunity for members to develop a fellowship by worshipping together").

The legal tests for "church" status being currently applied are unacceptable for two major reasons. First, as found by the trial court, the "14 criteria" test applied by the IRS "reflect[s] institutional characteristics that no longer capture the variety of American religions and religious institutions in the twenty-first century" and appear to "favor some forms of religious expression over others in a manner in which, if not inconsistent with the letter of the Constitution, [is] troubling when considered in light of the constitutional protections of the Establishment and Free Exercise Clauses." App., infra 31a. The associational test's adoption of certain of the IRS criteria, with its apparent preference for "brick and mortar" churches and a group of followers engaged in communal worship, suffers from many of these same deficiencies.

The current legal tests also are unsatisfactory because they ignore technological advances that permit church followers to participate in church services in multiple ways: through interactive radio or television presentations, the Internet, or other means as yet undiscovered or even unimagined. The current legal tests, including the associational test adopted by the Court of Appeals, give "short shrift" to such contemporary means of worship by adhering to an outmoded view that a church denotes, in most cases, a building with walls.

This Court should grant the petition to decide the important questions of federal law presented herein and to bring clarity and legal certainty to the current distinction drawn by Congress between churches and other religious organizations. Supreme Court Rule 10(c).

Dictionary definitions and common usages of the word "church" are similarly unhelpful because they either focus on the physical structure in which worship takes place or upon organizations of Christians. See, e.g., Webster's Third New International Dictionary (defining "church" variously as "a building set apart for public especially Christian worship" or as "the organization of Christianity or of an association of Christians"). The former definition was previously rejected by this Court for purposes of the unemployment tax in St. Martin Evangelical Lutheran Church, 451 U.S. at 784. The latter definition would almost certainly offend the First Amendment's Establishment Clause. See Larson v. Valente, 456 U.S. 228, 244 (1982) ("The clearest command of the Establishment Clause is that one religious denomination cannot be officially preferred over another.").

Thus, the lower courts have had little or nothing to guide them in formulating an acceptable belief-neutral definition. The fourteen criteria applied by the IRS had their genesis in a speech given by then-Commissioner Jerome Kurtz at a 1978 continuing legal education event. Remarks of IRS Comm'r, Jerome Kurtz, PLI Seventh Biennial Conference on Tax Planning (1/9/78), reprinted in FED Taxes (P-H) 54,820 (1978). Although the IRS reprinted these criteria in its internal written instructions to its employees,³ they have never been adopted as part of the Treasury Regulations, do not have the force of law and may, at the most, be looked at by the courts for guidance. See Fed. Express, v. Holowecki, 552 U.S. 389, 397-99 (2008) (while statements in an agency's interpretive manual may be given a "measure of respect" under certain circumstances, they are not to be given the full deference afforded to an agency's interpretation of its own regulations).

Some courts have, in fact, applied the IRS criteria as a helpful guide to determining church status without expressing concern about their application. See, e.g., United States v. Jeffries, 854 F.2d 254, 258 (7th Cir. 1988) (the Seventh Circuit applied the fourteen criteria as a "guide" to determining church status); Lutheran Social Service of Minnesota v. United States, 758 F.2d 1283, 1287 (8th Cir. 1985) (in deciding that the plaintiff was a social services agency and not a church, the Eighth Circuit applied the fourteen criteria).

But others courts, including the courts below, have refused to adopt the IRS test, often due to First Amendment concerns raised by their application. Thus, the Tax Court in Foundation I expressly declined to adopt the IRS test. Foundation I, 88 T.C. at 1358. Similarly, the trial court here did not adopt the IRS test and instead expressed concern that it "appears to favor some forms of religious expression over others," App., infra 31a, and the Court of Appeals stated that it "share[d] the concerns expressed by the trial court" in this regard. App., infra 80a. See also Reka Potgeiter Hoff, The Financial Accountability of Churches For Federal Income Tax Purposes: Establishment or Free Exercise, 11 Va. Tax Rev. 71, 104 (1991-92) ("The problem is that the criteria fail to take into account the fact that many of the most active churches in America are unorthodox groups which reject the Judeo-Christian world view of the mainline churches and whose activities do not come within any of these criteria."). This Court should grant this petition in part to make it clear that the IRS test is an inappropriate and hidebound vehicle to determine church status.

However, the "associational test" adopted by some courts, including the courts below, does not eliminate the infirmities present in the IRS test and should also be rejected. The associational test finds its roots in a concurring opinion in a decision of the Tax Court, Chapman v. Comm'r, 48 T.C. 358, 367 (1967), which stated:

The "associational test" thus requires that a religious organization have a regular and cohesive congregation of individuals that regularly come together to engage in regular and communal religious worship. See, e.g., First Church of In Theo v. Comm'r, 56 T.C. Memo 1989-16, *21, 56 T.C.M. (CCH) 1045 (1989) (a religious organization must "satisfy the threshold criteria of communal activity" to be a church). In essence, courts adopting the associational test have isolated two of the fourteen IRS criteria, "regular congregations" and "regular religious services," as controlling. See, e.g., Spiritual Outreach Society v. Comm'r, 927 F.2d 335, 339 (8th Cir. 1991) (the existence of an established congregation served by an organized ministry during regular religious services is "of central importance").

This view is most evident in the decision below in which the Court of Appeals stated that "a religious organization must create, as part of its religious activities, the opportunity for members to develop a fellowship by worshipping together." App., infra 81a-82a. The Court of Appeals thus created a hard and fast rule that, unless a regular group of "cohesive" followers participate in regular services in which they worship communally, the organization simply cannot be a church. App., infra 84a.⁴ However, the Court of Appeals offers no guidance as to how "regular" or "cohesive" the group of followers must be or how often religious services must take place. For example, had the Foundation conducted twenty-five or thirty services during the tax years at issue, rather than twenty-one, would that have been sufficient to retain church status? The Court of Appeals' decision offers no answer.

Aside from being vague and incapable of precise definition, the Court of Appeals' application of the eleventh and twelfth IRS criteria, "regular congregations" and "regular religious services," as controlling factors, without which a church cannot exist, also favors some forms of religious expression over others. For example, the criterion of "regular religious services" is not satisfied by many well-established Eastern religions. See Reka Potgeiter Hoff, The Financial Accountability of Churches For Federal Income Tax Purposes: Establishment or Free Exercise, 11 Va. Tax Rev. 71, 105 (1991-92) ("the sixth criterion of exclusive religious affiliation and the eleventh criterion of regular religious services, would not apply to most Japanese, Chinese, or Asian Indians who commonly treat Confucianism, Buddhism and Taoism as virtually one religion and for which mystical contemplation and meditation constitute a religious service").

Because the associational test suffers from many of the same infirmities as the IRS test, this Court should accept the unique opportunity offered here to articulate a uniform test of church status for tax purposes that does not provide significant protections to religious organizations based on an ethnocentric view of religious expression. A proper test focuses not on historically familiar and comfortable notions of what a traditional Christian church looks like, notions that animate the IRS test. Nor does it focus almost entirely on the existence of communal worship during regularly conducted in-person services, as does the associational test. The associational test, like the IRS test, relies for the most part on traditional notions regarding church status, for example, that a consistent group of individuals and families who show up regularly each Sunday at a building with a steeple constitute a church.

This case affords the Court an opportunity to apply a definition of "church" that focuses on the existence of an organization that promulgates a religious ministry to a group of believers who, whether they congregate in a traditional way and on a regular basis sufficient to satisfy traditional views of a "church," nevertheless seek out the teachings of the organization and express or acknowledge a personal affiliation with its religious tenets. See American Guidance Foundation, 490 F. Supp. at 307 (in order to be a church, an organization "must employ recognized, accessible channels of instruction and worship"). Such a "totality of the circumstances" test has the salutary effect of weeding out "family churches" formed primarily for tax avoidance purposes while permitting organizations satisfying the test to enjoy unchallenged the protections of "church" status. See, e.g., Church of the Visible Intelligence that Governs the Universe v. United States, 4 Cl. Ct. 55, 65 (1983) (where membership of an organization did not extend beyond founder's immediate family, the organization was "engaged in a private religious exercise, rather than a church"); American Guidance Foundation, 490 F. Supp. at 307 (recognition as a church of a group which includes only family members would "encourage sham representations to the IRS and result in adverse tax consequences to the public at large").

Here, there can be no question that the Foundation has conducted in-person sacerdotal activities at its facility in Oregon and elsewhere during the tax years at issue which, combined with its extensive written publications and radio and Internet ministry, reached thousands of followers who sought and participated in its ministry. Under these circumstances, the Court of Appeals' finding that the Foundation's in-person services are not sufficiently frequent or that the persons who attend those services do not do so on a consistent enough basis should not, as a matter of law, be sufficient to deny the Foundation church status.

This constricted view of religious activity ignores expanding efforts by many churches to reach their followers through various modern technological means. Similarly, it ignores efforts by many followers of various religious faiths to observe and participate in religious services through the use of technology. This Court should grant the petition in this case to make clear that the use of technology to disseminate a religious message is not inconsistent with church status. Therefore, if the use of that technology arguably outstrips in frequency or breadth traditional in-person religious services, a religious organization does not risk, as in this case, losing its recognized status as a church.

The issues presented in this case are of critical importance because many religious organizations are increasingly resorting to the use of technology to reach their followers and to spread their religious messages. While only a few years ago the use of podcasts and blogging by churches to reach their members was considered innovative, today many churches have adopted these as effective means to create online campuses. See Tony Morgan, 2008 America's Most Innovative Churches, Outreach Magazine, Jan. 2008 (Outreach Magazine, a journal for evangelical Christian churches, stated: "In our first annual report on innovative churches, we called podcasts and blogging innovative. In less than a year, the times have changed dramatically.").

Many churches utilize their Internet presence as a central means of expanding their following and providing their followers with an opportunity to participate in their services. Thus, the Flamingo Road Church (now known as the Potential Church) has set a goal of "fifty churches worldwide, 100,000 members and a $150-million-a-year budget." Alexander Alter, Inspired by Starbucks, Wall St. J., June 13, 2008, at W1. To facilitate its growth, that church uses closed circuit television and satellite feeds to spread its teachings across the United States and South America. In addition, it notifies followers on its website that it presents regular religious services at six locations, five physical locations and one Internet location. See http://potentialchurch.com/locations.

Furthermore, even highly traditional churches such as the Catholic Church recognize the value and powerful effect of advancing communications technology, including the Internet. See, e.g., Pontifical Council for Social Communications, The Church and Internet, Feb. 22, 2002, II(5) (the Internet serves as a vehicle for evangelization, "offers people direct and immediate access to important religious and spiritual resources" and "has a remarkable capacity to overcome distance and isolation, bringing people into contact with like-minded persons of good will who join in virtual communities of faith to encourage and support one another.").⁵

While the Internet has become a useful means by which churches can spread their message and bring religious services into the homes of countless individuals, it has also become an important and convenient means by which the followers of these churches can attend such services and receive the church's message when they are unable or unwilling to travel to the church's physical facility. See Elizabeth Berstein, More Prayer, Less Hassle, Wall St. J., June 27, 2003, at W1. Again, the Catholic Church has recognized the Internet's impact in this regard: "[The Internet] also provides the Church with a means for communicating with particular groups -- young people and young adults, the elderly and home-bound, persons living in remote areas, the members of other religious bodies -- who otherwise may be difficult to reach." Pontifical Council for Social Communications, The Church and Internet, Feb. 22, 2002, II(5).

Thus, far from being wholly irrelevant to a church's associational role, as the Court of Appeals decided, the use of electronic means to deliver its ministry can further in significant ways a religious organization's fundamental purposes and, in addition, provide a significant means of communication and interaction amongst the organization's followers and between those followers and the organization itself.

This is precisely the case here. The Foundation, through its radio and Internet services, is able to reach thousands of individuals who may be unable to travel to its facility in Selma, Oregon, including numerous incarcerated individuals who regularly listen to its radio services. Additionally, the services themselves are interactive in the sense that the Foundation's followers may call in and speak directly to the Foundation's clergy. These communications are themselves disseminated as a part of the radio programming so that other followers of the Foundation may share in the communications. This feature of the Foundation's electronic ministry brings people together in a manner which is clearly consistent with church status.

Despite these uncontradicted facts, the Court of Appeals held that the Foundation's radio and Internet ministries could not be deemed in any manner "associational." App., infra 86a. According to the Court of Appeals, despite the Foundation's electronic ministry, the fact that its in-person religious services became less frequent during the tax years at issue because of its founder's physical illness caused the loss of the Foundation's status as a church. App., infra 84a.

This proposition is dubious for several reasons. First, it punishes a church for its successful use of television, radio and/or Internet ministries. Under the Court of Appeals' decision, if a church reaches thousands, or hundreds of thousands, of followers through these means, it risks loss of church status if, at the same time, it reaches only a few hundred followers during in-person religious services. According to the Court of Appeals, under those circumstances, the church's in-person services become "merely incidental to the Foundation's "primary purposes" of reaching followers through its "electronic ministry." App., infra 84a-85a.

Second, the Court of Appeals' holding appears to ignore any interaction between followers other than interaction that occurs while they are physically present in the same room. In light of continuing advancements in communications technology in the twenty-first century, there is no justification for the Court of Appeals' insistence that religious communication and association be frozen in time to include only direct interpersonal interaction.

Indeed, through expanded use of convenient and inexpensive modes of videoconferencing, such as made available by services such as Skype, interactive attendance at religious services without physical presence is likely to become more frequent in the future. The courts below ignore the interactive element of the Foundation's radio and Internet services, choosing instead to view them as a "broadcast" ministry by which there is merely a broad, non-directed "blast" of information directed at anyone who might hear it, regardless of their interest or intent to participate in a religious service. But the record demonstrates that, in fact, the Foundation's followers regularly and frequently gather with intent and purpose around radios and over the Internet at appointed times to participate in these services and interact with the Foundation's clergy. F.C. App. 3660-3661. The fact that they may not assemble weekly at a building with a steeple does not change the fact that they are participating in a "church" service.

The Court of Appeals' insistence that a religious organization can be a church only if its followers regularly congregate at regular times to communally worship in person also favors established churches and is Christian-centric. Many religions such as Buddhism and Taoism do not place the same emphasis on communal worship that Christianity does. To say that a religious organization cannot be a church unless it promotes religious values furthered by communal worship poses serious First Amendment concerns.

Under an appropriate test for church status the Foundation achieved, and should have retained, church status because of the nature of its religious ministry and the fact that it has widespread and numerous congregants who seek out its religious message, hold it as their own, and acknowledge the Foundation to be their church. The Foundation's use of radio and the Internet is simply a means, in conjunction with its in-person services, to more widely disseminate its Judeo-Christian beliefs. There is no rule or logic which dictates that the Foundation's in-person services are separate and apart from its radio and Internet presentations.. Rather, they facilitate each other as parts of the same ministry. Each is entirely consistent with the religious ministry for which the Foundation was organized and which it continues to pursue, a ministry which has successfully reached thousands of followers who find meaning and spiritual guidance in the Foundation's teachings.

November 12, 2010

² Although the trial court used the IRS criteria as a guide to determining church status under the Code, it noted that the criteria "bear a striking similarity" to inquiries into religious beliefs and practices included in the 1906 Census of Religious Beliefs, inquiries which had raised concerns that the government was infringing on religious liberty and invading the privacy of citizens. App., infra 31a. The trial court stated that the resemblance of the fourteen IRS criteria to the 1906 Census "strongly suggests that defendant's criteria are time-conditioned and reflect institutional characteristics that no longer capture the variety of American religions and religious institutions in the twenty-first century." Id. The trial court thus concluded that the IRS "regime appears to favor some forms of religious expression over others in a manner in which, if not inconsistent with the letter of the Constitution, the court finds troubling when considered in light of the constitutional protections of the Establishment and Free Exercise Clauses." Id.

³See Internal Revenue Manual 7(10)69, Exempt Organizations Examination Guidelines Handbook 321.3(3) (Apr. 5, 1982).

⁴ The Foundation has claimed throughout this litigation that it does, in fact, have a "regular congregation" and holds "regular services" sufficient to establish that these IRS criteria have been met. For example, the various services held at the Tall Timber Ranch and other locations, in coordination with the Foundation's regular radio and Internet services, meet these aspects of the IRS test. See Purnell v. Comm'r, T.C. Memo 1992-289, *8, 63 T.C.M. (CCH) 3037 (1992) (finding that a religious organization held weekly services for small groups in rented spaces and acted as "a street church" with the minister preaching to "anyone he [could] interest in his message," the Tax Court concluded that the religious organization acted to bring people together in a manner consistent with church status).

⁵ While the Catholic Church teaches that "the virtual reality of cyberspace cannot substitute for real interpersonal community, the incarnational reality of the sacraments and the liturgy, or the immediate and direct proclamation of the gospel, it can complement them, attract people to a fuller experience of the life of faith, and enrich the religious lives of users." Pontifical Council for Social Communications, The Church and Internet, Feb. 22, 2002, II(5).