Restrictions on church tax inquiries and examinations
TITLE 26 > Subtitle F > CHAPTER 78 > Subchapter A > Sec. 7611
Sec. 7611. - Restrictions on church tax inquiries and examinations
(a) Restrictions on inquiries
(1) In general - The Secretary may begin a church tax inquiry only if -
(A) the reasonable belief requirements of paragraph (2), and
(B) the notice requirements of paragraph (3), have been met.
(2) Reasonable belief requirements - The requirements of this paragraph are met with respect to any church tax inquiry if an appropriate high-level Treasury official reasonably believes (on the basis of facts and circumstances recorded in writing) that the church -
(A) may not be exempt, by reason of its status as a church, from tax under section 501(a), or
(B) may be carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities subject to taxation under this title.
(3) Inquiry notice requirements
(A) In general - The requirements of this paragraph are met with respect to any church tax inquiry if, before beginning such inquiry, the Secretary provides written notice to the church of the beginning of such inquiry.
(B) Contents of inquiry notice - The notice required by this paragraph shall include -
(i) an explanation of -
(I) the concerns which gave rise to such inquiry, and
(II) the general subject matter of such inquiry, and
(ii) a general explanation of the applicable -
(I) administrative and constitutional provisions with respect to such inquiry (including the right to a conference with the Secretary before any examination of church records), and
(II) provisions of this title which authorize such inquiry or which may be otherwise involved in such inquiry.
(b) Restrictions on examinations
(1) In general - The Secretary may begin a church tax examination only if the requirements of paragraph (2) have been met and such examination may be made only -
(A) in the case of church records, to the extent necessary to determine the liability for, and the amount of, any tax imposed by this title, and
(B) in the case of religious activities, to the extent necessary to determine whether an organization claiming to be a church is a church for any period.
(2) Notice of examination; opportunity for conference - The requirements of this paragraph are met with respect to any church tax examination if -
(A) at least 15 days before the beginning of such examination, the Secretary provides the notice described in paragraph (3) to both the church and the appropriate regional counsel of the Internal Revenue Service, and
(B) the church has a reasonable time to participate in a conference described in paragraph (3)(A)(iii), but only if the church requests such a conference before the beginning of the examination.
(3) Contents of examination notice, et cetera
(A) In general - The notice described in this paragraph is a written notice which includes -
(i) a copy of the church tax inquiry notice provided to the church under subsection (a),
(ii) a description of the church records and activities which the Secretary seeks to examine,
(iii) an offer to have a conference between the church and the Secretary in order to discuss, and attempt to resolve, concerns relating to such examination, and
(iv) a copy of all documents which were collected or prepared by the Internal Revenue Service for use in such examination and the disclosure of which is required by the Freedom of Information Act (5 U.S.C. 552).
(B) Earliest day examination notice may be provided - The examination notice described in subparagraph (A) shall not be provided to the church before the 15th day after the date on which the church tax inquiry notice was provided to the church under subsection (a).
(C) Opinion of regional counsel with respect to examination - Any regional counsel of the Internal Revenue Service who receives an examination notice under paragraph (1) may, within 15 days after such notice is provided, submit to the regional commissioner for the region an advisory objection to the examination.
(4) Examination of records and activities not specified in notice - Within the course of a church tax examination which (at the time the examination begins) meets the requirements of paragraphs (1) and (2), the Secretary may examine any church records or religious activities which were not specified in the examination notice to the extent such examination meets the requirement of subparagraph (A) or (B) of paragraph (1) (whichever applies).
(c) Limitation on period of inquiries and examinations
(1) Inquiries and examinations must be completed within 2 years
(A) In general - The Secretary shall complete any church tax status inquiry or examination (and make a final determination with respect thereto) not later than the date which is 2 years after the examination notice date.
(B) Inquiries not followed by examinations - In the case of a church tax inquiry with respect to which there is no examination notice under subsection (b), the Secretary shall complete such inquiry (and make a final determination with respect thereto) not later than the date which is 90 days after the inquiry notice date.
(2) Suspension of 2-year period - The running of the 2-year period described in paragraph (1)(A) and the 90-day period in paragraph (1)(B) shall be suspended -
(A) for any period during which -
(i) a judicial proceeding brought by the church against the Secretary with respect to the church tax inquiry or examination is pending or being appealed,
(ii) a judicial proceeding brought by the Secretary against the church (or any official thereof) to compel compliance with any reasonable request of the Secretary in a church tax examination for examination of church records or religious activities is pending or being appealed, or
(iii) the Secretary is unable to take actions with respect to the church tax inquiry or examination by reason of an order issued in any judicial proceeding brought under section 7609,
(B) for any period in excess of 20 days (but not in excess of 6 months) in which the church or its agents fail to comply with any reasonable request of the Secretary for church records or other information, or
(C) for any period mutually agreed upon by the Secretary and the church.
