FFRF wins standing to sue IRS over 990 Forms

U.S. District Barbara Crabb, Western District of Wisconsin, ruled Aug. 22 that FFRF has standing to pursue IRS inequities favoring churches over other tax-exempt nonprofits.

Crabb previously granted FFRF standing over its federal challenge of the 1954 Congressional “parish exemption” law. That case has been “put to bed” and both sides now await a decision.

In her Form 990 ruling, Crabb wrote that the plaintiffs — FFRF and Triangle FFRF, its chapter in Raleigh, N.C. — have been injured because “the government is relieving an ongoing burden from some taxpayers on the basis of religious affiliation.” She added, “it is not plaintiffs’ ‘belief’ that gives them standing. Rather, it is their status as organizations that are burdened with requirements not imposed on churches.” 

In exchange for the significant advantage of retaining tax-exemption, all 501(c)(3) organizations except churches must file an annual Form 990. The forms are available for the public to view and reputable charities post them on their websites for easy access.

Tax-exempts report to the public on what they do with donations, financial oversight policies, salaries of top employees, how much of the income is used for fundraising versus mission or management, etc. Most active nonprofits, such as FFRF, hire a certified public accountant to prepare the form, incurring significant annual accounting costs.

“Don’t get us wrong. We think the cost and transparency are worth it,” says FFRF co-founder Annie Laurie Gaylor. “We’re grateful for the privilege of the government designating donations to FFRF as deductible for income-tax purposes. But since we began filing these forms in 1978, we’ve been aware that churches don’t play by the same rules, yet get equal or better privileges.”

Co-President Dan Barker asks, “What do churches have to hide? Why don’t they want to be accountable to the public?”

“Look at Jonestown, Guyana, to see can happen when tax-exempt churches are not accountable to the government, or necessarily anyone,” Gaylor added. “Had Rev. Jim Jones had to account to the government for the wealth, armory and even the foster children he and his church amassed, I believe that heinous slaughter in 1978 would have been averted.”

The suit also challenges the expensive filing fees which all applicants must pay, except churches. A nonprofit seeking tax-exemption other than a church must pay either $400 or $850, depending on income, just for the privilege of applying. The one-time fee is not returned. Crabb ruled that since FFRF and its chapter have already paid the fees, and likely won’t incur more, she is planning to dismiss this aspect of the suit.

FFRF noted that because of secrecy regarding church finances, FFRF’s challenge in a related lawsuit of church electioneering is all the more important. Read more:


Freedom From Religion Foundation