Render unto Caesar.
Following in the footsteps of other religious broadcasters such as Jerry Falwell and Jimmy Swaggart who flouted federal tax law, Robertson has collided head-on with IRS regulations barring politicking with ministry resources.
The settlement between the IRS and CBN, announced March 16, included the following points:
* The revocation of CBN's tax-exempt status for the years 1986 and '87,
* An undisclosed "significant payment" by CBN to the IRS,
* An agreement by CBN not to engage in campaign activities,
* The revocation of the tax-exempt status of three now-defunct CBN affiliates -- the Freedom Council, the National Perspectives Institute and the National Freedom Institute,
* An increase in the number of outside directors on the CBN governing board, and
* Other undisclosed organizational and operational modifications to ensure ongoing compliance with tax laws.
Release of this information means a long-running IRS investigation of Robertson's Virginia Beach, Va., broadcast ministry is now complete. As part of the deal between the federal tax agency and CBN, a short announcement of the settlement was mailed to six news organizations.
This low-key approach was negotiated by CBN lawyers. One source told The Washington Post that the terms of the news release were fought over for months. "That was the hardest part of the deal," the source said. CBN "wanted this to see as little light of day as possible."
Robertson, the 68-year-old founder of CBN and now chairman of its board, struggled to smile while swallowing this bitter pill.
"I am very pleased to conclude this audit with an agreement that permits CBN to get on with its worldwide Christian ministry while satisfying the legitimate concerns of the IRS to ensure compliance with the tax laws," he said, in the IRS-approved press statement.
But Robertson, who has often expressed utter contempt for the IRS on his television show, was undoubtedly far from happy. Revocation of his ministry's 501(c)(3) tax exemption for a two-year period, notification of the public and cash outlays are among the most severe IRS sanctions. Robertson critics and tax experts said it represents a dramatic legal, financial and public relations disaster for the controversial religious broadcaster.
Americans United Executive Director Barry W. Lynn told the Post, "I have a one-word reaction: Hallelujah! Pat Robertson has been playing fast and loose with the federal tax law for years and it's about time the IRS cracked down. This should be the beginning of a thorough investigation by the IRS of all of Robertson's tax-exempt empire, including the Christian Coalition."
Tax specialists interviewed by the Post described the IRS action as "tough" and "significant." One expert said the two-year revocation is "evidence of the magnitude of the violation."
"Whether or not you agree with them, CBN would have to be regarded as a mainstream charity, important in the lives of many Americans," the expert observed. "This was seen as such a substantial violation that the IRS took the extra step of revoking their exemption."
Although the CBN press statement was not specific, one central problem the IRS apparently tackled was diversion of CBN resources to Robertson's personal political activities, particularly his disastrous run for president in 1988.
In 1981 Robertson launched a separate tax-exempt group called the Freedom Council. His book The Plan said it was created to "educate Evangelical Christians on the vital issues and then to get them into the public process."
In fact, the Council was a fundamentalist political operation intended to carry out Robertson's theocratic agenda. At an April 1982 state organizing meeting in Maryland, Council Director Ted Pantaleo said the group planned to identify "good Christian men and women" in each congressional district to set up a grassroots network that can "turn this country back to Jesus." (See "Christian Hornets Plan to Sting First Amendment," May 1982 Church & State.)
Quoting from the Old Testament book of Exodus, Pantaleo said a grassroots organization is essential in order to "take the land little by little." "Then you can have a Christian president and a Christian government," he explained.
Pantaleo said the Council's management chart would include state coordinators, congressional district coordinators and eventually activists in each precinct. He noted that 15 pastors were "risking" their churches' tax-exempt status by agreeing to serve as state contacts around the country.
Pantaleo told the Ellicott City gathering that Robertson had promised the group his support, including use of CBN's extensive list of donors.
When Robertson decided in 1984 to seek the 1988 GOP presidential nomination, the Freedom Council quickly became an important vehicle aimed toward that goal. According to the Post, Robertson directed $250,000 a month or more in CBN funds to the Council. Syndicated columnist Michael J. McManus estimated that a total of $8.5 million went from CBN to the Council from 1984 to 1986. The money was used to advance Robertson's presidential ambitions, especially in states such as Iowa and Michigan where early and important presidential caucuses take place.
Although the Council was supposed to be an educational organization, McManus examined the group's tax report for 1985 and found that only $10,193 of its $5 million budget went for publications. "The rest," the columnist charged, "went for massive staff that mobilized thousands of Christians at churches to become Republican delegates. Result: He has taken over [Michigan's] Republican Party."
The Freedom Council gambit helped Robertson get off to a strong start in the GOP presidential primaries, but news media reports about it also attracted IRS scrutiny.
Revelations by Freedom Council staffers didn't help. Former Council official Dick Minard told NBC News, "The entire process was to create a launching pad for Pat Robertson's bid for the presidency. I was a conduit...in spreading his work and his charade...to hundreds of people around the country to get involved in the Freedom Council, for a legitimate cause that turns out wasn't a legitimate cause..'
According to The New York Times, Council President Jerry R. Curry quit the organization in May 1986, in part because he was "concerned about the legitimate public perception of a man running for president supported by a tax-exempt organization."
Robertson shut down the Freedom Council in 1986. Today, however, his spokespersons are still trying to pretend the group's work was above board.
"One of the things CBN did back then was to try to encourage Christians to become more active by making their voices heard," Robertson flack Patty Silverman told The Virginian-Pilot after the March 16 announcement. "Those three organizations [the Freedom Council and its allied foundations] were set up for that purpose. We believe they were a proper part of our religious mission. The IRS disagreed."
The IRS crackdown on CBN raises hope that action against Robertson's current political unit, the Christian Coalition, may be forthcoming. The Coalition has been operating under a provisional tax exemption since its founding in 1989, and the ongoing IRS review of it has been unusually lengthy.
Unlike CBN, the Coalition has a 501(c)(4) status. That means it pays no taxes on its income, but contributions to it are not deductible for the donors. The category also allows considerable political activity as long as that is not the group's primary purpose. Critics, including Americans United, cite evidence that shows electioneering and other political endeavors are virtually the Coalition's only activity.
Americans United's Lynn said the IRS action against CBN is a timely reminder that federal law bars religious groups from engaging in electioneering.
"The IRS action," Lynn observed, "sends a strong message to other religious ministries that engage in partisan politics: You are risking your tax exemption. Robertson has tried to stampede churches into partisan politics. This shows what could happen to churches that follow his lead."
Robertson's Christian Coalition has assured churches that they can distribute the CC's biased voter guides without jeopardizing their tax exemption. The IRS move, Lynn noted, indicates that Robertson is not a reliable adviser on tax matters.
Robertson is only the latest of a string of TV preachers who have gotten into trouble with federal authorities for using their pulpits for partisan purposes. In 1993 the IRS determined that assets from Jerry Falwell's Old Time Gospel Hour were funneled into political committees. Falwell was forced to pay $50,000 to the tax agency and the OTGH tax exemption was retroactively revoked for 1986-87.
A year earlier Jimmy Swaggart signed an IRS agreement promising that his Jimmy Swaggart Ministries would not conduct campaign activities. He had come under IRS scrutiny for endorsing Robertson's presidential bid in a ministry magazine and at a press conference.
More recently, a New York church lost its tax exemption for taking a fullpage advertisement in USA Today against Bill Clinton in the 1992 presidential election. After the IRS penalized the Church at Pierce Creek, a Vestal, N.Y., congregation, in 1995, Robertson's American Center for Law and Justice filed a lawsuit challenging the revocation. The Branch Ministries v. Richardson case is pending before U.S. District Judge Paul L. Fliedman.
What will be the impact of the IRS penalties against CBN?
In the short run, the effect will be mixed. CBN contributors can still take deductions on the money they send to Robertson, and those who did so in 1986 and '87 won't be affected.
The long-term results are more problematic. Observers say it depends in part on how closely the federal tax agency monitors Robertson's compliance. One component requires CBN "not to engage in campaign activities" in the future.
Yet Robertson is unlikely to behave himself without close and ongoing IRS scrutiny. Robertson uses his nationally broadcast "700 Club" television show, the flagship CBN program, to preach ultra-conservative partisan politics, regularly bashing President Bill Clinton and congressional Democrats and giving advice to his Republican allies.
On the April I episode, Robertson talked about a recent meeting he had in Washington with GOP congressional leaders. Among the topics was Robert Dole's failed presidential bid and where it went wrong.
"One of them asked me, `Do you think Bob Dole was beaten before the election?' I said, `There's no question about it. By May he was beat."' Robertson blamed the Democrats' foreign money sources and help from the labor unions, while criticizing the failed strategy of the Republicans.
Describing himself as "an insider," the TV preacher said he discussed the GOP gameplan with party officials before the 1996 election season and complained about their lack of media aggressiveness.
"I personally talked with the chairman of the Republican Party," recalled Robertson. "I said, 'Look, I'm supposed to be an insider and I don't have a clue as to what you guys are trying to do. I don't even know what your Medicare program is. I don't know what your initiative is on the budget. If I don't know, how in the world do you think the public knows?' I said, 'You must spend some money to enunciate your issues.'
"And he said, 'No, we're going to save it all for the 1996 elections.' Well, by that time it was too late. And they lost the P.R. struggle with the president, and they have not regained it."
Meanwhile, CBN's wealth continues to grow by leaps and bounds. According to a profile from the Evangelical Council for Financial Accountability, CBN received $169 million in donations in the fiscal year ending March 31, 1997, with a total annual income during that period of $203 million.
The latest CBN bottom line is up dramatically from $113 million in donations the ministry took in in 1995. For a ministry founded by Robertson in 1960 with only a few hundred dollars and a single television station, that's quite a cash machine.
But people who know Robertson best say his ultimate concern is not personal wealth. Danuta Soderman Pfeiffer, who co-hosted "The 700 Club" from 1983 to 1988, insists, "It would be inaccurate to suggest that money is what makes him tick, however. He loves the power that money brings."
Writing in the March/April issue of Extra! magazine, Pfeiffer observes, "Many of these TV preachers fell into disgrace and ridicule by way of three insidious temptations: money, sex and power.
"Power, perhaps the most pernicious of the three, has slowly been strangling Pat Robertson," she continued, "since he was ensnared by the idea that God called him to run for president of the United States. Over the years Robertson's voice has become more shrill, his statements more bizarre and his judgments harsher as he is squeezed by this anaconda of vices....Robertson sees himself in an exaggerated role as spokesman for God, Moses leading the chosen people to a political paradise of morality."
A man who thinks he's God spokesman to the world is unlikely to let a little thing like the IRS get in his way.
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|Title Annotation:||Pat Robertson's Christian Broadcast Network penalized by IRS|
|Author:||Conn, Joseph L.|
|Publication:||Church & State|
|Date:||May 1, 1998|
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