Baptist temple fights IRS over past-due taxes

Friday, May 26, 2000

Indianapolis Baptist Temple members...
Members of the Indianapolis Baptist Temple and supporters protest against a federal judge and the Internal Revenue Service, who have threatened to confiscate the church property for unpaid taxes.

A federal appeals court must deal with an Indiana Baptist church that refuses to hand over past-due taxes to the Internal Revenue Service. The IRS says the religious group must adhere to tax law, while the church claims the First Amendment protects it from government intrusion.

The Indianapolis Baptist Temple has refused to pay Social Security, Medicare and income taxes for its employees. Last spring, the U.S. Justice Department sued the church in federal court seeking $6 million in back taxes, interest and penalties. Greg Dixon, the church’s pastor, has claimed the church is not an employer and therefore cannot be taxed by the government.

“The Indianapolis Baptist Temple is a New Testament Church,” Dixon wrote in a piece that appears on the Web site of the American Coalition of Unregistered Churches, of which he is the chairman. “It is not a religious organization operating as a not-for-profit charity” under the tax code. “A true New Testament Church is not an employer nor does it have employees. Neither is it a taxpayer. Those who serve the church are ministers exercising their gifts by the Holy Spirit. They receive love gifts, not wages.”

On June 29, 1999, U.S. District Judge Sarah Evans Baker “flatly rejected” Dixon’s argument.

“While Defendant, of course, has the right to be a New Testament Church, it does not have the right to foreclose the government from taxing it,” Baker wrote in U.S. v. Indianapolis Baptist Temple. “Defendant apparently believes it can evade federal tax law by metamorphosing into various different forms of entity. On this, it is sadly mistaken. The record is clear that Defendant has failed to pay its tax liabilities and owes the United States $5,319,750.27 plus interest and other additions pursuant to law accruing after July 27, 1998.”

Baker also concluded that it was “undisputed” that the temple’s property is now owned by the federal government and that the “government is entitled to take the necessary and appropriate steps to collect on its judgment.”

Dixon and the temple appealed Baker’s ruling to the 7th U.S. Circuit Court of Appeals. In mid May, a three-judge panel of the court heard arguments in the case. If the church fails in its appeal, the government could start foreclosure proceedings on the property.

Robert Metzler, a D.C.-attorney representing the Justice Department, told the appellate panel that the IRS was not trying to monitor or undermine the temple’s religious practices.

Dixon, however, says that if the IRS prevails, an official church would be created “that must totally surrender the sovereignty of the Lord’s church to the IRS.”

“The Czar of Religion (cults) in Washington, D.C., will replace the Lord Jesus Christ as the Head of His church,” Dixon continues in a statement issued last year shortly after Baker’s ruling.

The U.S. Supreme Court has held several times that churches’ adherence to tax law does not unconstitutionally entangle church and state. In 1982, the high court found that an Amish group in Pennsylvania could not avoid paying Social Security taxes for its employees because it had religious objections to the Social Security system. The Amish argued that it would be sinful for them not to provide for their own elderly and needy, and therefore they opposed having the government do so.

“The tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief,” wrote Chief Justice Warren Burger for a unanimous court in U.S. v. Lee. “Because the broad public interest in maintaining a sound tax system is of such high order, religious belief in conflict with the payment of taxes affords no basis for resisting the tax.”