Linda's Litigation Options

[Fran]

So Fran, when you speak of 3ABN not using GAAP accounting, are you saying that they use GAP instead?

i am sorry, Bob, "Information was not available" or "Information was not provided;" therefore, I was not able to give an evaluation or opinion of this matter, at this time.

[Fran]

In answer to your question, no they wouldn't be. But you said "back when 3abn had non profit status." They have non profit status presently and will continue to while the tax case is in appeal. The attorney's feel the appeal case is very promising.

Eirene;

This is not true in ALL Federal or State cases. It is certainly the case in SOME Federal or State cases. The current Property Tax Lawsuit against 3ABN is going to tried in the State of IL. This is entirely a State case, for now.

It is not good to confuse the State and Federal rulings. Each stand on their own.

Will the case ever go Federal?

Will 3ABN lose the state exemption, but maintain the Federal?

Will this case go to a higher level?

Will the State of IL call another audit to see if previous errors were actually changed?

Will they do the same thing over again?

Will having a Seventh-day Adventist Church on 3ABN property qualify 3ABN as having a church even though it is a Seventh-day Adventist Conference Church?

Will having a Seventh-day Adventist School on 3ABN property qualify the 3ABN entity tax exemption even though it is not a 3ABN School?

3ABN sells many goods and services. Will this be a factor in this case again?

3ABN donated money to the Thompsonville School. Was this donation made to provide evidence they are reaching out to their community?

Will this satisfy the Local School District and the State of IL?

Will the 10 Co0mmandment's Day Event help qualify as public outreach?

What happens if the "In-reach" is more than the "Out-reach"?

Will this tilt the balance for In-reach as more than Outreach and thus not qualify as a valid outreach?

When Danny promotes books and other items that Danny Lee Shelton Publisher markets, Does he pay 3ABN for the air time for the commercials?

Since he is a Publisher for 3ABN, what does 3ABN pay Danny Lee Shelton for this service?

Do you have any answers for us?

[Shepherdswife]

In answer to your question, no they wouldn't be. But you said "back when 3abn had non profit status." They have non profit status presently and will continue to while the tax case is in appeal. The attorney's feel the appeal case is very promising.

Thanks for the correction.

Yes, I know that they still have it, I was trying to say that if they lost it, would the people who donated "back when they had it" have to re-file. Just didn't make myself clear...

shepherdswife

[Observer]

Thanks for the correction.

Yes, I know that they still have it, I was trying to say that if they lost it, would the people who donated "back when they had it" have to re-file. Just didn't make myself clear...

shepherdswife

Let me comment:

The decision by Judge Rowe applied strictly to the issue of whether or not 3-ABN had some minor tax liability. On that specific issue Judge Rowe rulled that they did, and found that 3-ABN did not qualify under IL law for an exemption due to being a not-for-profit organization.

However, it must be pointed out that the only issue tried by Judge Rowe was related to exemption from certain school taxes. Judge Rowe did not try the issue of whether or not 3-ABN was entitled to a not-for-profit status, and/or exemptions under either Federal or IL law.

This may sound like a strange situation. It allows 3-ABN to continue to be registered as a not-for-profit organization under IL and Federal law, and to recieve whatever exemptions Federal and State law give to it, while at the same time being required to pay local school taxes.

While this may seem strange, it is quite understandable. Judge Rowe not only did not try an issue that involved IL and Federal registrations, but she did not have the jurisdiction to try the Federal issues, and probably did not have the jurisdiction to try the IL issues. Her authority was strictly limited to the issue of local school tax payments.

Therefore, at the present time, contributions made to 3-ABN may be tax deductable. To change that would require either a new trial on the issues, or an administrative ruling by either the IRS, or the proper IL agency.

NOTE: Why did I say "may be?" Simply because I cannot give individual tax advice. For individual tax advice, you will need to consult a competent person trained in tax issues. Frankly, if you exceed your deductions limit, or must pay that alternative minimumn tax, you are in a different situation.

[LaurenceD]

Her authority was strictly limited to the issue of local school tax payments.

A little clarification. The court document refers to property taxes, of which school taxes typically draw a portion of the total property tax. The school district is probaably only one entity that had something to gain and may have reported the misuse of 3abn's exemption status which led to a state dept. of revenue investigation, and thus the finding and the trial. Generally, the local county is the lead agency for property tax disbursement, sending a high percentage back to the state, a lesser percentage to the local city (and to the county itself), perhaps a large portion to the school district, and a small portion to other districts such as fire, emergency, irrigation, etc., etc.,...basically any agency that levied a tax on the property. This is likely how the school district fits in with the challenge. Notice the case on the docket is 3abn v. the state:

3 ANGELS BROADCASTING NETWORK

v.

THE DEPARTMENT OF REVENUE
OF THE STATE OF ILLINOIS

__________________________

Tax Type: Property tax
Issue: Religious Ownership/Use

Appearances: Mr. Kent R. Steinkamp, Special Assistant Attorney General for the Illinois
Department of Revenue; Mr. Nicholas P. Miller, Sidley, Austin, Brown, Wood, L.L.C., Mr. Lee
Boothby, Boothby and Yingst, and Mr. D. Michael Riva for 3 Angels Broadcasting Network;
Ms. Merry Rhodes and Ms. Joanne H. Petty, Robbins, Schwartz, Nicholas, Lifton and Taylor,
Ltd. for Thompsonville Community High School District 112.

FINDINGS OF FACT:
1. The jurisdiction and position of the Department that Franklin County Parcel Index
No. 174-116-11 did not qualify for a property tax exemption for the 2000 and 2001 assessment
years were established by the admission into evidence of Dept. Ex. Nos. 1and 2. (Tr. p. 27)
2. The Department received the requests for exemption of Franklin County Parcel
Index No. 174-116-11 for the 2000 and 2001 assessment years. In 2000, the assessed value of
the property was $505,500; in 2001, $556,050.

_______________________________________

BTW, I noticed Eirene said 3abn's "attorney's feel the appeal case is very promising." It should be understood this is normal for an attorney to say to a client. And often will do so even knowing there's little chance of success. The reason why should never be in doubt--for those who understand the system. :wink:

This post has been edited by LaurenceD: May 11 2007, 07:37 AM

[Noahswife]

BTW, I noticed Eirene said 3abn's "attorney's feel the appeal case is very promising." It should be understood this is normal for an attorney to say to a client. And often will do so even knowing there's little chance of success. The reason why should never be in doubt--for those who understand the system. :wink:

Seems like I hinted at something similar when I asked on another thread how willing the law firm representing DS would be to pursue the claim if they took the case against Joy and Pickle on contingency.......

[lurker]

Seems like I hinted at something similar when I asked on another thread how willing the law firm representing DS would be to pursue the claim if they took the case against Joy and Pickle on contingency.......

I have been wondering exactly what is sealed in the lawsuit involving Pickle and Joy and whether documents or testimony that might have been helpful to Linda in her case are at least temporarily made unavailable to her attorney by this sealing.

[LaurenceD]

Seems like I hinted at something similar when I asked on another thread how willing the law firm representing DS would be to pursue the claim if they took the case against Joy and Pickle on contingency.......

I doubt if any attorney would take this type of case on contigency fees...which mean they're entitled to sometimes half the selttlement--if they win--rather than working by the hour.

And BTW, the case with 3abn v. the State of Illinios, is not really a regular court trial. Administrative Law Judges conduct trials like regular court trials, but it's different. You can read a little about it here http://www.answers.com/topic/administrative-law-judge

I think the reason different types of judges (not subject to legislative approval) exist is because of the different levels of law. State laws are generally made up of three categories: administrative rules, legislative rules, and a constitutional rules (both state, feds). So, an Adminstrative Law is usually pretty clear, and as the link indicates, all administrative appeals must be exhausted before anyone can actually sue. It's not likely this type of challenge (property tax exemption) would ever go to a regular public trial, or a district court of appeals, or a supreme court of any kind (state, or fed).

[Observer]

[quote name='lurker' date='May 11 2007, 07:17 AM' post='195046']
I have been wondering exactly what is sealed in the lawsuit involving Pickle and Joy and whether documents or testimony that might have been helpful to Linda in her case are at least temporarily made unavailable to her

I do not know. My comment is speculative.

I do not believe that there is likely to be much in the sealed documents, at this time, that would be helpful to Linda.

However, I will suggest that all informed persons think that there is a potential for evidence to be presented to the court at a later time that would potentially be helpful to Linda. That might be a reason to seal the documents now. Or, perhaps, there is something, unrelated to Linda, in the presently sealed documents, that 3-ABN does not want to be public.

Legal documents are typically sealed (inpounded) on a temp. basis, until there can be a full legal hearing on that issue, and the judge can rule on it. Sometimes that ruling will come at the first hearing. Sometimes, more than one hearing will be required before the judge can make a carefully considered ruling. In any case, even without knowing the sealed records, we can assume that the impoundment of the documents will be an issue that will be dwelt with very early on in this case. Whether it will be decided in one hearing, or several, remains to be seen.

The options for the judge are generally to:

1) Immediately release the documents.

2) Seal the documenets for a limited period of time.

3) Seal them forever.

Which of these will be the final ruling is speculative.

[Eirene]

Let me comment:

The decision by Judge Rowe applied strictly to the issue of whether or not 3-ABN had some minor tax liability. On that specific issue Judge Rowe rulled that they did, and found that 3-ABN did not qualify under IL law for an exemption due to being a not-for-profit organization.

However, it must be pointed out that the only issue tried by Judge Rowe was related to exemption from certain school taxes. Judge Rowe did not try the issue of whether or not 3-ABN was entitled to a not-for-profit status, and/or exemptions under either Federal or IL law.

This may sound like a strange situation. It allows 3-ABN to continue to be registered as a not-for-profit organization under IL and Federal law, and to recieve whatever exemptions Federal and State law give to it, while at the same time being required to pay local school taxes.

While this may seem strange, it is quite understandable. Judge Rowe not only did not try an issue that involved IL and Federal registrations, but she did not have the jurisdiction to try the Federal issues, and probably did not have the jurisdiction to try the IL issues. Her authority was strictly limited to the issue of local school tax payments.

Therefore, at the present time, contributions made to 3-ABN may be tax deductable. To change that would require either a new trial on the issues, or an administrative ruling by either the IRS, or the proper IL agency.

NOTE: Why did I say "may be?" Simply because I cannot give individual tax advice. For individual tax advice, you will need to consult a competent person trained in tax issues. Frankly, if you exceed your deductions limit, or must pay that alternative minimumn tax, you are in a different situation.

Greg, usually you and I are on different sides but, in this case, you are the first here, to put the tax case in the proper perspective. Contrary to those here who have tried to make a "federal case" out of it, (forgive the pun) this was a very limited and localized case concerning school taxes.
As you pointed out, the judge did not even have the jurisdiction to go into tax exempt status change.
This case was approximately 4 years ago? Contributors have been receiving their tax deductable statements all of these years since the ruling. I know, I have donated in that time period.
The importance and evil surmising that has been put on this case is just, once again, fodder for the gossip mill.
Thanks for telling the truth of the matter.

Thanks for the correction.

Yes, I know that they still have it, I was trying to say that if they lost it, would the people who donated "back when they had it" have to re-file. Just didn't make myself clear...

shepherdswife

Thanks, I understand. I am positive that they wouldn't.

[b]Eirene;

This is not true in ALL Federal or State cases. It is certainly the case in SOME Federal or State cases. The current Property Tax Lawsuit against 3ABN is going to tried in the State of IL. This is entirely a State case, for now.

It is not good to confuse the State and Federal rulings. Each stand on their own.

Fran, I don't believe anywhere in my post did I mention FEDERAL period much less confuse the issue with it. We know this is at the state level.
As for the rest of "your" questions, it would not be wise to speculate. How could we possibly know if the case will even go that far? Or, if it does, what questions,if any, would the judge deem important to ask. Also when the answers are provided who could possibly guess if those answers will be accepted or ruled against. One can't know the mind of a judge in any given situation so speculation on such matters, to me, seem a waste of time and energy.

[Noahswife]

Greg, usually you and I are on different sides but, in this case, you are the first here, to put the tax case in the proper perspective. Contrary to those here who have tried to make a "federal case" out of it, (forgive the pun) this was a very limited and localized case concerning school taxes.
As you pointed out, the judge did not even have the jurisdiction to go into tax exempt status change.

Eirene,

If this is such a simple matter of "very limited and localized " concern, why was Liberty Magazine weighing in on it? Why did Bystander I believe also suggest that other churches are watching the outcome on appeal? And are you stating here that if the appeal is lost there is no concern in Thompsonville at the consequences?

I have asked before of those who claim to be familiar with the case if amicus briefs were filed on 3abn's behalf with the appellate court? I was ignored. Can you tell me if any were?

See Lee Boothby article----> http://www.libertymagazine.org/article/view/367

This post has been edited by Noahswife: May 11 2007, 01:16 PM

[Noahswife]

I doubt if any attorney would take this type of case on contigency fees...which mean they're entitled to sometimes half the selttlement--if they win--rather than working by the hour.

LD, no attorney in their right mind would agree to a contingency fee in this case. And the DS-fingers should not think for one moment anyone will determine/believe the viability of DS's cause of action merely because someone is paying big bucks to a large law firm to file the claim. Didn't we read somewhere several weeks ago that the firm has a reputation for settlements?

[Pickle]

Contrary to those here who have tried to make a "federal case" out of it, (forgive the pun) this was a very limited and localized case concerning school taxes.
As you pointed out, the judge did not even have the jurisdiction to go into tax exempt status change.

It seems to me, Eirene, that you are intentionally minimalizing the potential significance of that case. The decision was that 3ABN is not operating as a 501©3 should, correct? And even if the judge was not a federal judge, her findings could be used in the future as a basis for revoking 3ABN's tax-exempt status. Right?

That being the case, that decision is extremely significant even though 3ABN currently still is a 501©3.

[Observer]

Eirene,

If this is such a simple matter of "very limited and localized " concern, why was Liberty Magazine weighing in on it? Why did Bystander I believe also suggest that other churches are watching the outcome on appeal? And are you stating here that if the appeal is lost there is no concern in Thompsonville at the consequences?

I have asked before of those who claim to be familiar with the case if amicus briefs were filed on 3abn's behalf with the appellate court? I was ignored. Can you tell me if any were?

See Lee Boothby article----> http://www.libertymagazine.org/article/view/367

Liberty Magazine. . . Why?: The Liberty Magazine article is an interesting one. There are a couple of factors that I think are of interest:

1) It was written by an attorney retained by 3-ABN to try the case.

2) It was written prior to the decision by Judge Rowe.

I do not suggest that we need to case aspersions on the lawyer who wrote the article. I consider him to be an honorable person. But, I can assume that the article was written from the perspective that he used to contribute to the trial before Judge Rowe. In addition, I will suggest that it was written from a hope that other organizations would see it as a seminal case that would lay the groundwork for potential issues on a wider scale regarding taxation of religious organizations.

I can understand the position that Judge Rowe's ruling could lay the groundwork for larger issues. I have argued that point myself at times. But, I do not believe that we have to make a mountain out of a mole-hill. On its face, the ruling of Judge Rowe only affected the payment of school taxes, and nothing else. I own a home. When I get a notice of local taxes due, it is a collection of taxes due to a collection of local taxing authorities--school district, fire district, etc. Each one of then is independent, any any decision in regard to one has no effect on any of the others. The only effect will be on my total tax bill. When one of the independent taxing authorities goes either up or down, so also does my total bill.

NOTE: In the State where I live, there are a number of independent taxing authorities. Without looking at my bill, I am probably taxed by 6 or 7 such, in one combined bill.

It is highly unlikely that the decision of Judge Rowe could transfer directly into other venues. I doubt that her decision would set any precedent in other venues. As her decision did not directly affect the not-for-profit status of 3-ABN under either IL or Federal law, there would have to be either, depending upon the issues and the law, an administrative ruling, or a trial on the issues for 3-ABN to have its statue affected.

As to the potential here, regarding Judge Rowe: If such an attempt was made in regard to either Federal or IL status, the one trying the case could attempt to use the same reasoning of Judge Rowe. In addition, the decision of Judge Rowe could encourage someone to raise the same issues in other venues. Again, doing so would require a new trial on the merits.

It seems to me, Eirene, that you are intentionally minimalizing the potential significance of that case. The decision was that 3ABN is not operating as a 501©3 should, correct? And even if the judge was not a federal judge, her findings could be used in the future as a basis for revoking 3ABN's tax-exempt status. Right?

That being the case, that decision is extremely significant even though 3ABN currently still is a 501©3.

Bob, No. It is highly unlikely (impossible is probably more accurate) that Judge Rowes decision would ever set a precedent on a trial on the issues in either IL or the Federal courts.

[LaurenceD]

Another point of clarification. As I understand it, administrative judges do not make decisions, only recommendations...which have the same effect unless challenged/appealed. There may also be several levels of administrative judges in Illinois. Appeal would then be to the next level (perhaps even an administrative panel of legal experts) if the highest level has not alredy been reached. And if the appeal were denied there, one party could then sue the other and take it to a district court...and on from there.

The places in the Recommendation that refer to the US Code, Section 501©(3), are these:

The purposes for which the corporation is organized are
exclusively religious, charitable or educational within the meaning
of Section 501©(3) of the Internal Revenue Code of 1954, as
amended, (page 5)

Applicant is not required to pay federal income tax pursuant to a finding by the
Internal Revenue Service that applicant is an exempt organization under Section 501©(3) of the
Internal Revenue Code. (Applicant’s Ex. Nos. 4, 5) (page 20)

Applicant’s by-laws allow it, inter alia, (1) to develop religious programming for
electronic transmission, (2) to buy and sell television and radio apparatus, (3) to develop,
promote and produce recorded music and video programs, (4) to own or operate facilities for the
public’s welfare, (5) solicit support for its activities from the public, (6) promote interests of
other affiliated organizations (7) own and lease property, (8) contract with other organizations in
furtherance of applicant’s purposes, and (9) operate within the meaning of section 501©(3)
of the Internal Revenue Code. Although these by-laws express, generically, that the corporate
purposes are exclusively religious, charitable, scientific or educational, the enumerated
provisions illustrate that the organizational documents fail to satisfy the threshold tests set forth
in Crerar v. Williams, supra. (page 39)

The purposes set forth in applicant’s by-laws are that the applicant, in conjunction with
various religious organizations, will develop and produce electronic transmission for television
and radio broadcasting throughout the world. These purposes in and of themselves have no
relationship to the guidelines listed in Methodist Old People’s Home, supra. Further, the bylaws
submitted by applicant are not complete, did not contain the entire corporate purpose
section, and express, generically that the corporate purposes are religious, charitable, scientific or
educational within the meaning of Section 501©(3) of the Internal Revenue Code. There is no
language or prevailing authority that requires charity at all in the governing mandate for
applicant and the by-laws state nothing about charity under the Illinois Constitution as it pertains
to the grant of property tax exemptions. (page 40)

The Department, as shown by these cases, grants exemptions for religious organizations
that use property for exempt religious purposes and not with a view to profit. As discussed
above, applicant is not only not a religious organization, but, more importantly, does not
primarily use the property for religious purposes without a view to profit.
For the aforementioned reasons it is recommended that Franklin County Parcel Index No.
174-116-11 remain on the tax rolls for the 2000 and 2001 assessment years and be assessed to
the applicant, the owner thereof, except for the two pastor’s offices, each measuring 14 feet by
18 feet, on the second floor of the administrative production center building, and a corresponding
amount of land. That area, I recommend, be granted a property tax exemption as used for
religious purposes without a view to profit.

Respectfully Submitted,
Barbara S. Rowe
Administrative Law Judge
January 28, 2004 (last page)

3abn's use of their property was found to be not in keeping with 3abn's application to the state for Not-For-Profit status--as per within the "meaning" of Section 501©(3) of the Internal Revenue Code, and above that--within the meaning of the state code for such organizations. So therefore, the property is to be assessed it's normal value, and collected, by the county assessor, and disbursed in the normal fashion to whichever agencies are entiled to property tax. If, for example, the property was assessed at $550,000 in the year 2000, the mill rate set by county commisioners may bring the annual taxes to $15,000 to be distributed in the normal fashion according to the levy breakdowns and percentages set to affected agencies--including Thompsonville Community High School District 112. Over and over the judge demonstrates 3abn has failed to meet the threshold set by the state for property tax exemption--except for two small rooms as noted in the last paragraph. So, the majority of the property gets assesed like any other for profit corporation.

Think about it. Does your local book store, such as Barnes and Noble, get exempt from paying property taxes simply because they sell religious books, CDs, and DVDs, and hold wholesome cooking classes and promote a good way of life in most of the store? No. Does any independent radio station get exempt from property tax for playing religious music? Or independent TV stations for broadcasting religious programs on Sunday morning? No. They're independent for propfit enterprises.

It works the same for seniors in many states who are entitled to partial exemptions and who have incomes of less than $33,000. My folks, for example, instead of paying the full $2,000 anual property tax to the county (and distributed to the affected agencies), will only pay $440 because the state gives them a break. Not-For-Profit organizations would get the full break and pay zero. The money the county gets is still divided to the agencies according to the normal plan...it's just less money they get, except the state reimburses the county for senior exemptions. It's a state policy set by the legislative body and signed into law by the governor. Not-For-Profit exemptions are not reimbursed by the state. It just a loss of funds to the local agencies. Small cities, for example, have to contend with the fact that they may have a state college, three public shools, and 27 churches, all within the city limits--none of which contribute to the property tax funds. Every local agency suffers--including the schools, cities, and county, etc., and in some cases, it may mean as much as 25-35% less revenue than if those properties were poulated with general commercial.

In sympathy with 3abn, they probably did not hire specialized administrative lawyers, but more to do with a legal team specializing in constitutional and religious freedom. Big mistake, although I'm not sure it would have made a difference. Administrative law is clear and has been tried and tested as you see in the case law the judge cited.

Bottom line: Administrative Law is quite clear. Chances of changing it are slim to none.