Preachers, private planes and tax-exemptions
Updated: May 2, 2022
By Dane Buckhout
Kenneth Copeland's G550 pictured with a quote from the Bible in a promotional video released by his ministry.
The doors of a brand-new Cadillac Escalade open after it pulls up to the hangar at the private airport near his Texas mansion, and out walks a sharply dressed man in a designer suit, followed by his wife, adorned from head to toe in designer clothing and jewelry.
They walk onto the Gulfstream V private jet, formerly owned by actor and director Tyler Perry, powered by two Rolls Royce engines, and settle into the Italian leather seats as their pilot tells them they will be wheels-up shortly.
Who could these lucky people be? Kim Kardashian? Mark Cuban? Jeff Bezos? While that may be who is expected to live so lavishly, the reality is a bit more unexpected.
Televangelist Kenneth Copeland, and his third wife, Gloria, are the ones stepping out of the convoy of Cadillacs to travel around the globe in style.
In a 2015 television broadcast of his show Believer’s Voice of Victory, Copeland and fellow televangelist Jesse Duplanits discuss why they choose to fly private over commercial.
At one point Copeland said to Duplantis, “You can’t manage that today, in this dope-filled world, get in a long tube with a bunch of demons.”
To clarify, Copeland is claiming that commercial airlines aren’t able to accommodate his busy travel schedule, so in order to preach at peak efficiency, the solution is to own a fleet of private planes. What Copeland means by demons can be left up to interpretation.
Reporter Lisa Guerrero questions Copeland about his reasoning for flying private in a 2019 Inside Edition interview where he tells her that his planes provide a sanctuary to talk with God.
It seems that his congregation would agree since their donations to the ministry made purchasing the Gulfstream jet possible, completely tax free. Copeland purchased the jet through Kenneth Copeland Ministries, a 501(c)(3) non-profit organization, on the grounds that they are a religious, faith-based organization.
Religious organizations have been enjoying these benefits since 1913, when the federal government determined that they are exempt from federal tax code. While this was originally intended to protect religious organizations and provide them with the ability to practice religion freely, there have been many cases that walk a fine line between protecting religion and allowing abuse for personal gain.
Modern tax code provides a substantial array of exemptions for churches and religious organizations. There are a handful of revenue acts passed by Congress that established the modern tax code that we use today, including the Revenue act of 1954 established section 501(c)(3) which is the section that outlines tax-exemptions for churches and religious organizations.
Many non-profit entities like churches and religious organizations do great things for the world. They provide aid to those in need, disaster relief, food, shelter, education, healthcare, to name a few. Having tax-exemptions allows these entities to have the financial resources to do things for the common good that the government can’t do or won’t do.
The unfortunate reality is that 22 years into the 21st century, we are living in a completely changed world to the one where these laws were established. The United States has become increasingly politically divisive.
“The share of Americans with ideologically consistent values has increased over this time and these political values also have become more strongly associated with partisanship,” according to a 2017 report from the Pew Research Center.
Religion is a driving force behind people’s morals and their political leanings - particularly on hot-button social issues like abortion rights, gender roles, and LGBTQ+ rights. The problem is that the influence on beliefs often merges into advice on policy making around those issues.
The First Amendment to the Constitution, which includes the establishment clause and the free exercise clause for freedom of religion – better known as the separation of church and state.
While the free exercise clause allows individuals to hold any religious beliefs they choose, the establishment clause essentially prohibits the government from establishing a national religion or showing any favor to one religion over another or any religion at all.
Protecting religious freedom is integral in a democratic society, though, overprotecting it to the detriment of other freedoms, such as freedom from discrimination can drain the life out of a democracy.
For example, Bob Jones University, an evangelical liberal arts college in Greenville, South Carolina, was sued in 1982 for violations of public policy. The university is well-known for its conservative religious and cultural beliefs, which students were expected to adhere to. But some of those beliefs included racially discriminatory policies by prohibiting interracial relationships for factuly and students.
The IRS tax guide for churches and religious organizations states, “the organization’s purposes and activities may not be illegal or violate fundamental public policy.”
Unfortunately, Bob Jones University was operating outside the law for 12 years until someone brought suit in 1982.
In Bob Jones University v. United States (1983), the Supreme Court upheld the appeals court in agreeing that the school’s racially discriminatory policies did not “serve a legitimate public purpose” and therefore precluded tax-exempt status.
The ruling helped define a policy ruling the IRS had issued in 1971 in which nonprofit private universities that enforce racially discriminatory admission standards on the basis of religious doctrine would not qualify as tax-exempt organizations.
Photo: Greenville Journal
“Basically, someone has to sue them to get the government involved in a particular case,” said David Hinton, political science professor at the College of Charleston.
The IRS revoked Bob Jones’ tax-exempt status in 1983, which it regained in 2017. Though the religious university may still may be in jeopardy as they face accusations of discriminatory practices against the LGBTQ+ population.
As stated in their 2021-2022 Student Handbook, “One of the primary ways we pursue holiness is through moral purity…This means honoring God’s design for sex, celebrating and practicing it only within the marriage relationship between one man and one woman for a lifetime.”
The administration was careful in choosing its words, though, the meaning is clear that same-sex relationships are not tolerated. If the university continues to preach and practice these discriminatory policies, it might find itself at risk of losing its tax exempt status yet again.
In fact, a Bob Jones graduate has recently joined a lawsuit with 32 other religious university graduates against the U.S. Department of Education claiming a section of Title IX that allows religious exemptions is unconstitutional. Although there is no mention of the tax exempt status of these universities, if the plaintiffs win the suit, support for denying BJU its tax exempt status would be easy as discriminatory practices would be clear.
Remarkably easy to acquire tax-exempt status
It’s fairly simple for charitable organizations to acquire tax-exempt status. It’s a matter of filling out some forms and filing first with the IRS and then with the state where the organization is registered.
“So, the point is that you must have a tax-exempt purpose that ultimately is approved by two sets,” says Certified Public Accountant Brian Sosner. “First is an IRS approval, where you simply apply, and you get a tax ID number. That's a process of just filling out a form. Once you get your tax ID number and you fill out your forms, you just have to provide them to your state.”
For religious organizations, the process is similar to traditional charities and nonprofits. However, for churches to gain this status, it’s effortless— in fact, it’s automatic. Interestingly, the IRS does not specifically define “church” anywhere in the tax code. Instead, it is used as a general term to describe any house of worship.
“The term church is found, but not specifically defined, in the Internal Revenue Code,” according to irs.gov, though, there are some “attributes” the IRS uses to help organizations decide if it qualifies as a church or not. A few of the attributes include having a recognized creed and form of worship, formal code of doctrine and discipline, established places of worship, regular congregations, organization of ordained ministers, and literature of its own.
These are not requirements that must be met, merely suggestions.
“The IRS makes no attempt to evaluate the content of whatever doctrine a particular organization claims is religious, provided the particular beliefs of the organization are truly and sincerely held by those professing them and the practices and rites associated with the organization’s belief or creed are not illegal or contrary to clearly defined public policy,” according to the IRS Tax Guide.
Essentially, a group of friends that meet on Thursdays for wine night could be deemed a “church,” according to the current tax guide.
Churches and religious organizations operate within a vast legal gray area
Recently TV talk show host and comedian John Oliver proved just how easy and absurd this is by creating his own church. In fact, his purpose was to actually show how easy it is for religious groups - specifically televangelists - to manipulate vague tax policy for personal gain.
And it was televangelist Kenneth Copeland whom Oliver was specifically targeting.
Copeland had asked his followers to support his mission efforts by helping to buy a $20 million jet. A local news crew did a little investigating and found that instead of being used for church business, he used it for ski trips and an exotic hunting adventure. Even if the TV preacher reimburses the church for those trips, he was still able to buy a plane and pay no taxes on it.
Oliver also pointed out how relatively little attention the IRS pays to churches.
And not only does the tax code not strictly define what is a church,the agency doesn’t even check the church's doctrine to see if it's real before offering the tax-exempt status. Once an entity is classified as a “church” and gets the tax exemption, the owner can buy million-dollar jets tax free.
A 2015 Government Accountability Office report pointed out that in fiscal year 2014, the IRS audited one church. The year before, it had audited just two.
To prove the absurdity, Oliver established his own church and received tax-exempt status from the IRS. Now “Our Lady of Perpetual Exemption” is receiving donations tax free (and upon its dissolution, all donations are going to Doctors Without Borders).
This legal gray area so perfectly portrayed by Oliver can be observed across the country with American televangelists.
But the tax exemption problems don’t just lie with wealthy televangelists. They also wreak havoc in American democracy by allowing interference with the separation of church and state foundation of the U.S. Constitution.
One of the tax-exempt status violations prohibits 501(c)(3) organizations from participating in or intervening in “any political campaign on behalf of (or in opposition to) any candidate for public office.”
For example, in the months leading up to Donald Trump’s 2016 Presidential election campaign, Michael Cohen, Trump’s personal attorney at the time, sought out the services of an IT consulting firm, which was owned by John Gauger, a high-ranking Liberty University employee.
Liberty University, one the largest evangelical Christian universities in the world, was founded by televangelist Jerry Falwell in 1971. When Falwell passed away in 2007, his son Jerry Falwell Jr. took over as president. In keeping the business in the family, Falwell Jr. installed his son Trey as one of the vice presidents of the university.
Pictured above Donald Trump (left) and Jerry Falwell Jr. (right) in January of 2016. Photo: Bloomberg News
When it came time to collect payment, Gauger flew to New York City to meet Cohen, taking Trey Falwell along with him. The Wall Street Journal reported that Gauger claims he met Cohen at his Trump Organization office in 2015 where he was handed a Walmart bag with about $12,000 in cash.
“During that trip,Trey posted a now-deleted photo to Instagram of around $12,000 in cash spread on a hotel bed, raising questions about his knowledge of Gauger’s poll-rigging work,” according to a 2019 Politico article.
While this wasn’t challenged in court for a potential tax code violation, the political influence - and possibly financial support - from a tax-exempt religious institution is highly probable.
Last fall, however, Liberty University found itself in perhaps greater danger of losing its tax exempt status when audio emerged with current president Jerry Prevo telling a top Liberty official that he wanted the school to become a bigger political player and better influence political elections - two things that would be a direct violation of the tax code provision that 501(c)(3) organizations cannot directly participate in political campaigns.
Copleand has provided another example of this line that so often gets blurred.
During a sermon Nov. 9, 2020, Copeland can be heard saying, “The Associated Press said that Joe Biden is President” as he maniacally laughs at his congregation.
Hinton notes that this sort of political talk from the pulpit happens a lot.
“There's a lot of that ‘vote for such and such a person’ going on right now,” Hinton said. “Eventually that sort of discourse can be addressed by the court.”
“In general, no organization, including a church, may qualify for IRC Section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). An IRC Section 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status,” according to the IRS tax code.
“The court hasn't really weighed in very deeply on this, but they need to take a stance,” Hinton added. “Not only can the government not establish a church, but churches shouldn't become so partisan and that's what they're doing at the moment.”
While many churches and organizations do insurmountable good for their communities and the world at large, there also exists a vocal minority who use their platforms to serve their own agendas. This has, in turn, affected the public’s perception of clergy as a whole.
Megachurches and religious organizations like Kenneth Copeland Ministries and Liberty University garner a lot of media attention due to the nature of their “business.”
There are many preachers out there like Copeland who live lavish lifestyles in the name of their lord. Preaching the prosperity gospel where if you “sow” your seed then by some divine intervention you will eventually reap the benefits. This is a reality for many in the United States. They get taken advantage of by a handful of religious elites.
Laura Parrish, a pastor at First United Methodist on Isle of Palms, South Carolina, has felt the reverberations of public opinion herself.
“Unfortunately, you hear all the time of pastors who make moral failures, whether that's with issues of finance, or infidelity, or whatever the case might be. But I think it's an unhealthy approach to the gospel when you're preaching prosperity gospel, and you're asking people to give directly to you or, quote unquote, your ministry and unfortunately, we saw some negative examples and issues with that, especially in the 80s and 90s,” said Parrish.
Parrish noted a study she read reported that the general trust of clergy in general “has now fallen below car salesmen.”
As a result, there are unintended consequences of having these vague laws and lack of oversight when it comes to religious organizations and churches. The actions of the few reflect poorly on the many.
To put it into perspective the tithing collected by First United Methodist goes to mission work with local charities. The tithing collected by Kenneth Copeland Ministries goes to fuel his fleet of jets so he can burn a median household income on avoiding flying in a tube with a bunch of “demons.”