The Internal Revenue Service is investigating whether Living Word Christian Center violated the law for favorable compensation and loan dealings it gave to church founder and pastor Mac Hammond. Those compensation and loan dealings were first reported by the Minnesota Independent in February 2007.
The church has resisted demands by the IRS to open its books for an audit, and the agency filed a petition in United States District Court ordering the church to comply.
Earlier this month, a magistrate ordered Living Word representatives to appear and explain their refusal to comply with the IRS. In response to a summons in March, a church attorney told the IRS they would not comply until "an appropriate high-level IRS official" using "reasonable belief" requested information.
At issue are financial dealings detailed in documents obtained by the Minnesota Independent in early 2007.
According to the documents, which involved a loan application in 2003 and contained more than 100 pages of pictures and detailed descriptions of the church's real estate assets, financial transactions and administrative history, Hammond owned two airplanes, one bought from Living Word for $1.06 million on credit supplied by Living Word. He leased the planes back to the church at a total annual rate of more than $893,000. The church asserted that "the aircraft are important to the efficient management of its ministry at the present time." Living Word also rented a hangar to store the planes, and it paid for the expenses of the planes as well.
In addition, Living Word made several loans to Hammond since 2000 totaling at least $1.9 million: Two were for the planes, three were unsecured, and one enabled Hammond to purchase a house in Florida.
Reporting by the Minnesota Independent also triggered an IRS investigation of Hammond and Living Word in 2006 after being the first to report that Hammond endorsed then-State Sen. Michele Bachmann for Congress from the pulpit.