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Scrap the Code
Guest Post by Congressman Bob Goodlatte
Last week, as we marked Tax Day, individuals, families and businesses across this nation struggled to comply with our onerous tax code. Americans spent countless hours and large sums of money to ensure that they were following the letter of the law when it comes to filing their income taxes. Every year this exercise reminds taxpayers that the current code is broken beyond repair and it is obvious that tax reform is absolutely necessary.
In fact, during a recent television interview Douglas Shulman, the IRS Commissioner, admitted “that he does not file his own taxes in part because he believes the tax code is complex”. He is not alone. It has been reported that nearly 63% of filers used paid preparers. This is up from 38% in 1980. If it is this hard for those who enforce the tax code to comply with the code then imagine what it is like for the average American family or small business to comply with it.
I understand the frustrations of taxpayers and so I have introduced bipartisan legislation which will force Congress to finally address fundamental tax reform. The Tax Code Termination Act will abolish the tax code by December 2012, and call on Congress to approve a new federal tax system by July of the same year.
While almost every Member of Congress recognizes that our tax code is no longer working in a fair manner for Americans, nothing has been done to create a more equitable tax code. Congress won’t act on fundamental tax reform unless it is forced to do so. My legislation will force Congress to finally debate and address fundamental tax reform.
With enactment of my legislation, today’s oppressive tax code would survive for only three more years, at which time it would expire and be replaced with a new tax code that will be determined by Congress, the President, and the American people. This allows us, as a nation, to collectively decide what the new tax system should look like. There are many competing alternatives including the flat tax, the fair tax and others but having a date-certain to end the current tax code will force the issue and the debate to the top of the national agenda.
Whichever tax system is adopted, the key ingredients should be: a low rate for all Americans; tax relief for working people; protection of the rights of taxpayers and reduction in tax collection abuses; promotion of savings and investment; and encouragement of economic growth and job creation. But passage of my legislation, the Tax Code Termination Act, is the first step in replacing our current tax code with a system that includes these critical principles.
To contact me about this or any other matter, please visit my website at www.goodlatte.house.gov.
Is Torian Fleecing His Flock?
Could it be that Pastor Luke Torian, who is a Democrat running in Virginia 52nd House District, might be in trouble with the law? After a June 12th confrontation with a voter who questioned whether or not Torian could provide a copy of his church’s (First Mount Zion Baptist Church) IRS 990 report, I am starting to wonder whether or not he might be hiding something.
This voter inquired about the 990 report, after hearing the claims from some disgruntled members of Torian’s congregation that he is overpaid — allegedly he makes $200,000 and his wife, who serves as the church’s Associate Pastor, is said to pull in $100,000 (which together is surprisingly more than TRIPLE the median household income of those living in the zip code of 22026). Many from within the community report that they have seen Torian driving around in a Hummer and a Lexus, sporting Rolex watches.
Torian refused to provide a copy of the 990 report to the voter, and said, “I don’t care about the IRS.” The voter, then handed Torian a copy of the law, and he still refused to comply with the request.
Torian is required by law immediately to hand over the 990 reports to any member of the public who requests this during regular business hours, as his church is a 501(c)(3) organization, and all non-profits must comply with this request. The information in a church tax return must include unrelated business income and the top five compensated employees of the church.
Now, the registration and reporting rules for churches are slightly different, and according to this IRS publication,
“Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.
“Although there is no requirement to do so, many churches seek recognition of tax-exempt status from the IRS because such recognition assures church leaders, members, and contributors that the church is recognized as exempt and qualifies for related tax benefits. For example, contributors to a church that has been recognized as tax exempt would know that their contributions generally are tax-deductible.”
This law was enacted in 1987 after TV ministers, such as Jim and Tammy Faye Bakker were found living the lavish lifestyle off of their congregations without giving much back in the way of charitable services.
If Torian’s church is relying upon the automatic 501(c)(3) exemption and did not file (which would be very curious for a church this large with a self-described multi-million dollar facility), then he should have stated that to the voter. Instead, the fact that Torian was handed a copy of the law, refused to read it and was so defensive is not only suspicious, but raises questions about what sort of legislator he would be and how he would hold the public trust.
Regardless of whether or not Torian’s church is required filed a tax return, the following would still apply. Again, from the IRS:
Churches and religious organizations, like all exempt organizations under IRC section 501(c)(3), are prohibited from engaging in activities that result in inurement of the church’s or organization’s income or assets to insiders (i.e., persons having a personal and private interest in the activities of the organization). Insiders could include the minister, church board members, officers, and in certain circumstances, employees. Examples of prohibited inurement include the payment of dividends, the payment of unreasonable compensation to insiders, and transferring property to insiders for less than fair market value. The prohibition against inurement to insiders is absolute; therefore, any amount of inurement is, potentially, grounds for loss of tax-exempt status. In addition, the insider involved may be subject to excise tax.
Would TRIPLE the median household income for the area be seen as unreasonable compensation to an insider? You make the call…
Then there is the issue of employment taxes.
The compensation that a church or religious organization pays to its ministers for performing services in the exercise of ministry is not subject to FICA taxes. However, income that a minister earns in performing services in the exercise of his ministry is subject to SECA tax, unless the minister has timely applied for and received an exemption from SECA tax.
We’ve seen some of Obama’s cabinet nominees taken down for failure to pay self-employment taxes. People have the right to know if the Democratic candidate in the 52nd District has been paying his.
Pastor Torian owes it to the people of the 52nd District to clear the air on all of this. I call upon Pastor Torian to release immediately any tax records for his church that have been filed over the past year, to disclose his salary and that of his wife as well as any other compensation that they may receive from the church, and to release his most recent personal tax returns. The allegations made by members of his own congregation are troubling. His attitude towards the law that he exhibited before a potential constituent is even more so.
