Is Episcopal Church USA In Real Danger Of Losing It's Tax Exemption

Back to Episcopal News.!!

I post on this subject often. The issue of the legal war that is occurring within Episcopal Church is sad no doubt. However no matter what side you are on this involves some real interesting theological and historical issues. It also involves some legal issues that are well pretty fascinating since so much of it involves history which relates to the theology.

Anglican Curmudgeon has done a series of posts over the years on all these issues. Now you might disagree with him on some things but I think this very well educated Lawyer is right is saying Episcopal Church USA is flirting with fire here. Read his whole post to get the context of what is going on here at The Constitutional Crisis in ECUSA (Part II): Unconstitutional Acts in High Places . However what I wanted to focus on was this part:

That is not to say that the Presiding Bishop and her Chancellor will not try to make up the law in South Carolina, as well. But given the decision of that State's Supreme Court, and given the chaotic state of ECUSA's various accession clauses, I do not rank their chances of persuading South Carolina courts to agree with them as very high at all.

If and when a court does uphold the actions of a diocese in amending its own governing documents, and reaffirms what I believe to be an obvious and straightforward principle -- that a minority cannot seize control of an organization from its majority, or claim their assets -- the result will be disastrous for the current program in ECUSA. All of the millions of dollars which the DFMS's Treasurer has disbursed to the pseudo-groups at the behest of the Executive Council will suddenly be at risk, because they will not have been given to entities which have an established 501 (c) (3) charitable, tax-exempt purpose. Allow me to elaborate.

For many years now, the I.R.S. has allowed ECUSA to extend the umbrella of its own charitable exemption to its dioceses, by simply certifying that the diocese is one of its members. Some dioceses (such as those which have withdrawn) have chosen for their own reasons to apply for and obtain separate exemptions, but many have not bothered. If a court now rules that the member dioceses in question have properly withdrawn from ECUSA, what then becomes of the status of the pseudo-groups? They cannot claim to be dioceses in their own right, because they were not formed as Article V specifies must be done, and they are not the dioceses which withdrew.

So what are they, if a court so rules? Since they have not yet qualified as properly formed Episcopal dioceses, they are not entitled to use the tax-exempt umbrella of the Episcopal Church, and until they receive their own tax-exempt status, they do not qualify as charitable organizations. They are merely private associations under the law: non-profit associations, to be sure, but not tax-exempt ones. And the Church's corporate arm, the DFMS, will be risking its own tax-exempt status if it is shown to have disbursed charitable funds to benefit private, non-exempt groups.

I wonder what ECUSA's and DFMS's auditors in 2011 will have to say about that, when and if it happens. This is a high-risk, winner-take-all strategy, and the loser will surely pay, and pay dearly. But without any accountability at the top, there is no one to put the brakes on and cry "Hold! Enough!"

Unconstitutional acts are a risk in themselves, but when they spill over to implicate an entire organization's tax-exempt status, they go beyond individual ego and ambition. They become the Achilles heel of the entire organization. And the longer they continue, the worse the ensuing mess will be, and the greater the cost to clean it up.
Dictum sat sapienti.

No matter what "side" you are on it appears the Presiding Bishop is acting in a reckless manner here.