Complaint Urges IRS to Strip the Mormon Church of its Nonprofit Status After Reports of Tithing Mismanagement
The former investment manager the Mormon Church’s investment division filed a complaint to the IRS alleging the Church of Jesus Christ of Latter-day Saints has stockpiled $100 billion intended for charitable purposes. The complaint, received November 21, claims LDS leaders not only mislead church members as to how they were using the money, but potentially deceived the IRS and breached federal tax regulations.
The Washington Post reported their findings after acquiring a copy of the complaint. The complaint was filed by David A. Nielson, a senior portfolio manager for the church’s investment division until September of this year. The 41-year-Mormon formerly worked at Ensign Peak Advisors, an LDS-sanctioned company located near the church’s headquarters.
Religious groups are typically categorized as nonprofit organizations in the United States, meaning they are exempted from paying taxes on their income. The Post says since Ensign is legally registered as a “supporting organization and integrated auxiliary of the Mormon Church”, it is also permitted to function as a nonprofit and not pay taxes on their income.
However, Nielson claims Ensign has not met the requirements of operating as a nonprofit and failed in their legally sanctioned role to function strictly for religious and charitable purposes.
According to the complaint, the church collects around $7 billion annually through members’ tithing. Tithing is a practice many faith groups use where members give 10% of their income to the church.
Of the $7 billion income generated, the Mormon Church uses approximately $6 billion for operating costs, and the leftover $1 billion is transferred to Ensign. Ensign allegedly puts that money into “an investment portfolio to generate returns.”
The complaint alleges that since 1997, the inception of Ensign, this portfolio has grown to approximately $100 billion. According to Nielson, this money should have been used for charitable purposes.
What Does This Mean for the Mormon Church?
In the complaint, Nielson advocates for the IRS to remove Ensign’s nonprofit status, insinuating Ensign could owe the government upwards of billions in taxes. As a whistleblower, Nielson could receive a reward from the IRS for reporting Ensign. If the IRS does find Ensign guilty, Nielson will receive a cut of the unpaid taxes the IRS recovers.
According to the Post’s whistleblower analyst Philip Hackney, Nielson’s complaint provided “legitimate concern” about whether Ensign should maintain its nonprofit status and reflects poorly on the trustworthiness of Church-sanctioned businesses.
“If you have a charity that simply amasses a war chest year after year and does not spend any money for charity purposes, that does not meet the requirements of tax law,” Hackney stated. Hackney, as a former official for the IRS, states that the Church must show Ensign “furthers a charitable purpose exclusively on its own” in order to maintain its nonprofit status.
To read the Washington Post’s full story, click here.