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why would a church file a 5500?

Guest Enda80

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I wrote an e-mail to Americans United for Separation of Church and State:

Hello, I have been familiar with your group since at least reading an interview with Mr. Lynn in American Legion magazine in the early to mid 1990's.

I work for the IRS, and an issue that occurred to me and my fellow trainees is that it is mentioned that churches do not have to file 5500s for their defined benefit or defined contribution retirement plans, but once they do, they are locked in to doing so afterward-so we wondered why they would do that. I dug up a book by Paul Blanshard which pointed out that in the recent past (after 1870), the courts had stopped deciding property disputes in favor of the lay members of the congregation ( i.e. the non-clerical members) and had started deciding matters in favor of the bishops and hierarchy. I will include an excerpt of this passage from Blanshard at the bottom of my e-mail, but I draw your attention to it only in that it reminded me of the fact that in court cases lay members of churches can easily stand to lose in favor of the bishops.

So, do you know of, or have you handled, any court cases involving defined benefit plans or defined contribution plans and churches where the churches filed a 5500? Or retirement plans where the churches did not file a 5500? If so, in these cases, who won? The lay or clerical members?



* I remembered a book by Paul Blanshard called God and Man in Washington. On page 60 of that book, the author writes "In matters of institutional power, the Court cannot maintain such neutrality. When a quarrel for the possession of physical property breaks out in a church, someone must decide which faction has title to its physical assets. In such cases the Court follows the charter of the church and not necessarily the conventions of democracy. If the charter is congregational, the congregation rules. If the charter is autocratic, the bishops rule. This policy is something of an innovation, since the courts before 1870 tended to say that any church could be ruled by a majority of its members. What Professor Mark DeWolfe Howe of Harvard has described as "enforced congregationalism" has now been abandoned". Howe used that phrase in Leo Pfeffer's Church, State and Freedom, specifically Volume I of the Conference Proceedings of "The Institute of Church and State" of Villanova University, 1958.

Blanshard mentions two notable cases regarding Church property, Kedroff vs. Saint Nicholas and Saint Peter's Roman Catholic Parish vs. Urban. The former case involved the conflict with the Moscow home church and a New York located church in 1952, and the latter case involved Bishop John F. Dearden in Pittsburgh and the Urban Redevelopment Authority.

Their answer:

No, we’ve never handled any cases like this. A tax attorney who specializes in non-profit organizations would be a better resource for you.

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Guest Danny Miller

The IRS has adminstratively exempted church retirement and welfare plans from filing IRS Form 5500. Your questions about property dispute issues are not something on which I can comment, other than to say I'm not sure how filing (or not filing) a 5500 would relate to that issue.

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