THE C STREET CENTER: WHERE IS SENATOR GRASSLEY AND HIS SENATE INQUIRY?

DATELINE: February 24, 2010, Chicago

The folks in the EO division of the IRS must be unhappy today.  From their standpoint, the worst of all possible worlds have collided—religion, politics and taxes.  That vortex scares the hell out of IRS officials.  Bad enough to be forced to define what a church or religion is, now add politicians to the mix, particularly...

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the ones that set your agency’s budget. 

You’ve probably heard of that house in Washington, D.C. where a group of conservative legislators reside.  It has been the center of conservative Republican infidelity a la South Carolina Governor Mark Sanford (sought "counseling" at the house following revelations of his Argentine lady friend), Nevada Senator John Ensign (resided there), and Mississippi Representative Charles Pickering, Jr. (alleged to have entertained his mistress there).  We can only wonder whether they have a communal bathroom with stalls similar to the ones in the Minneapolis-St. Paul airport. 

It may surprise you that this den of iniquity and Republican hypocrisy is owned by the C Street Center, which apparently claims it is a church or religious organization.  We are unable to verify this by reference to a Form 990 because the group apparently claims it is exempt from filing a Form 990 as a church, but it is listed in Publication 78.  The Washington Post reported yesterday that a group of Ohio ministers has filed a complaint with the IRS demanding that the IRS investigate the C Street Center’s claimed status as a tax-exempt entity.  Peter Slevin, C Street House Target of Clergy’s IRS Complaint (February 23, 2010).  Interestingly, many if not all of these religious leaders comprise a group that has been dubbed the Dirty 31.  They actually operate under the moniker "Clergy VOICE."

When it comes to controversy, Marcus Owens is always willing to step into the fray.  The former director of the IRS’s EO division is providing the Ohio ministers with counsel.   His successors at the IRS must be thrilled with him.  Now they get to investigate members of the Congress.  Lucky them.

Seems the problem is that the church dormitory is not open to the public for religious services.  Nor does it have any recognized creed or form of worship or distinct ecclesiastical government. It apparently conducts no religious education, nor does it promulgate religious teachings.  C Street apparently has claimed or at least tried to create the impression that it is somehow affiliated with an evangelical Christian network called the Fellowship Foundation, but Richard Carver, the president of the Fellowship Foundation, claims there is no affiliation. 

With Owens involved, it comes as no surprise that the complaint is well written and grounded in case law and IRS doctrine.  In addition to getting into the definition of church and  religion, the complaint also raises questions of private benefit, eligible charitable class, the operational test, and violations of public policy.  Although the complaint is handicapped by lack of financial information, it raises the possibility that the center is a private foundation and that it has engaged in self-dealing transactions.

While we are obviously having a lot of fun with this story, there is a serious side to it.  According to the reporting, nobody knows who owns the house or who is funding the activities going on there.  This opens up the possibility that the politicians residing in the house are using a charity to avoid public disclosure of what might be charitably characterized as campaign contributions.  If the contributions are better characterized as campaign contributions, the center donors may be inappropriately deducting what are campaign contributions or lobbying expenditures as charitable contributions.  At the end of the day, the more appropriate agency to conduct the investigation might be the Justice Department.

Apparently some of those who have resided in the house have recognized that the air conditioning isn't working and the house is becoming to hot too live in.  Representative Bart Stupek moved out, as did Representative Mike Doyle, both Democrats.  You remember Rep. Stupek.  He is the one that so aptly demonstrated that health care reform would lead to the politicization of health care decisions when he added an abortion rider to the health care reform bill.

If the IRS does enter the fray, it may want to start by examining how the District of Columbia treated the house for property taxes.  It denied property tax-exemption for 66% of the property.  The Columbus Dispatch is reporting that the house is said to be valued at $1.8 million.  Joe Hallett, Columbus-Area Pastors Try to Lift Veil on Mysterious D.C. Organization (February 23, 2010).

We would not be surprised if the IRS undertakes a cursory review and steers clear of this one, although the media coverage will make that difficult.  We therefore are looking to Senator Charles Grassley, who has been on a seven-year crusade to make sure that tax-exempt organizations, including religious ministries, are not abused.  He regularly sends his “love letters” to groups which he believes are abusing their tax-exempt status, demanding that they produce all sorts of documents to demonstrate that they are not abusing that status.  If Senator Grassley determines that there is abuse, he threatens to turn the matter over to the IRS unless reforms are undertaken.  It's about time that the tables get turned on members of Congress, who all too frequently abuse their powers with show hearings that are aimed at making headlines rather than finding the truth—see Senator Charles Schumer and Representative Henry Waxman, some of the worst purveyors of this technique.

You gotta love Marcus Owens.

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