Legal Issues for Churches: What Clergy and Members Need to Know

Criminal Charges & the Church

It is not uncommon for churches or clergy members to become the target of criminal probes. Each year, allegations of sexual misconduct, embezzlement, and tax fraud surface against church leaders and employees. This article looks at legal issues for churches in regard to criminal allegations that pastors, priests, and other clergy members may face.

Because churches encounter issues unique to houses of worship, it’s not unusual for congregations to attempt to resolve problems internally, sometimes through counseling and prayer. However, it is vitally important for church officials associated with any type of criminal allegation or inquiry, either directly or indirectly, to be proactive and contact an experienced criminal defense attorney as soon as possible, even if you are uncertain whether charges will be filed.

What is Sexual Assault by a Clergy Member?

Members of the clergy have a unique relationship with their parishioners. As spiritual guides, members of the clergy take on a special role as an advisor and confidant. They are in a position of power, influence, and trust. Mindful of this relationship, the Texas legislature enacted Texas Penal Code 22.011(E)(10) which basically says sex between a parishioner and a clergy member is non-consensual if the clergyman causes “the other person to submit or participate by exploiting the other person’s emotional dependency on the clergyman in the clergyman’s professional character as a spiritual advisor.”

In other words, it is against the law for a clergyman to use his influence to have sex with a parishioner. Interestingly, according to a clergy sexual misconduct study conducted in 2008, 3 percent of individuals surveyed in the Dallas-Fort Worth area reported “mental, sexual, or physical abuse” by clergy. Religious organizations can help safeguard against sexual misconduct allegations by implementing the following procedures:

• Putting counseling procedures in writing;
• Offering only short-term pastoral counseling sessions;
• Conducting counseling sessions only on church premises when others are present;
• Refraining from any action that could be construed as affectionate, sexual or romantic.

What is Failure to Report Child Abuse and Neglect?

In Texas, any person – clergy or otherwise – has a duty to report if they suspect a child’s welfare has been or may be adversely affected by abuse or neglect. It is not uncommon for an adult to disclose an incident of childhood sexual abuse to a clergy member. If there is a risk of harm to any future victim, a duty to report exists. Clergy members who learn about or suspect child abuse may incorrectly believe that information is protected by clerical privilege and they may be tempted to confront the issue through the church without involving law enforcement. There is no exception for clergy–penitent privilege, clergy privilege, confessional privilege, or priest–penitent privilege. Simply put, clergy are obliged to report their concerns to police or child protective services. Failure to report child abuse is a Class B misdemeanor punishable by up to 180 days in jail. Intentionally or knowingly making a false report is a Class A misdemeanor punishable by a year in jail. It’s important to point out that the duty to report applies not only to present abuse but also past abuse.

What is Child Sexual Abuse?

In today’s world, child sexual abuse is a risk in any organization that provides services for children. Because most ministries offer childcare and youth programs, churches are particularly vulnerable. Any church, regardless of its size, denomination or location, may experience an allegation of child abuse. Ministries can help safeguard against sexual abuse allegations by implementing formal policies and procedures, which could include:

• Conducting background checks of ministry leaders and volunteers who supervise youth;
• Identifying at-risk individuals who may have diminished mental or physical capacity;
• Educating the congregation about child abuse;
• Developing a response plan to allegations, including notifying appropriate authorities, appointing a media spokesperson and contacting legal counsel.

Having policies in place not only creates a safer environment for youth, but also protects church employees and volunteers from unfounded accusations.

What is Embezzlement?

Embezzlement occurs when someone entrusted to manage or monitor someone else’s money takes it for personal gain. It’s relatively common in churches and often goes unnoticed for months or years. Often, the perpetrator is a trusted insider, such as a church treasurer, bookkeeper or even an usher in charge of counting offerings after Sunday services. To protect churches from embezzlement it’s important to have controls in place, including:

• Conducting background and credit checks for those dealing with church finances;
• Designating more than one person responsible for finances;
• Immediately depositing church offerings and checks;
• Activating email and text alerts to notify members of the finance team when there is activity on an account.
  

What is Tax Fraud?

Congress has enacted special tax laws that apply to churches, religious organizations, and ministers. Like many other charitable organizations, churches qualify for exemption from federal income tax under IRC Section 501(c)(3) and are able to receive tax-deductible contributions.

Religious leaders are also allowed to take advantage of a tax policy called a “parsonage.” A parsonage allowance says an ordained member of the clergy can live tax-free in a home owned by the church or can receive a tax-free annual payment to buy or rent a home. While the housing allowance is the most valuable clergy benefit, they also receive a number of other significant tax benefits.

These legitimate tax laws, however, sometimes also lead to abuse and fraud, especially since there is little government oversight. One issue involves individuals establishing churches to shelter their income from taxes when in fact a bona fide religious organization doesn’t truly exist.

The IRS states that a church must have some of the following characteristics to be considered a church for federal tax purposes:

• Distinct legal existence;
• Recognized creed and form of worship;
• Definite and distinct ecclesiastical government;
• Formal code of doctrine and discipline;
• Distinct religious history;
• Membership not associated with any other church or denomination;
• Organization or ordained ministers;
• Ordained ministers selected after completing prescribed courses of study;
• Literature of its own;
• Established places of worship;
• Regular congregations;
• Regular religious services;
• Sunday schools for the religious instruction of the young; and
• Schools for the preparation

Furthermore, according to the IRS tax guidelines for churches, churches can jeopardize its tax-exempt status by not following certain rules, including:

• Net earnings may not inure to any private shareholder or individual;
• They must not provide substantial benefit to private interests;
• They must not devote a substantial part of their activities to influence legislation;
• They must not participate or intervene in any campaign on behalf of (or in opposition to) any candidate for public office; and
• The organization’s purposes and activities may not be illegal or violate fundamental public policy.

According to the IRS, “the IRS may begin a church tax inquiry only if a high-level treasury official reasonably believes, on the basis of facts and circumstances recording in writing, that an organization claiming to be a church or convention or association of churches may not qualify for exemption, may be carrying on an unrelated trade or business (with the meaning of IRC & 513), may otherwise be engaged in taxable activities or may have entered into an IRC & 4958 excess benefit transaction with a disqualified person.”

As you can see, the legal issues for churches today can be quite complicated and serious. It’s important to have experienced legal help at your fingertips. If you have questions about whether or not your church is in compliance with the law, please contact Varghese Summersett for a consultation. Most importantly, if your church, a clergy member or an employee is the subject of a criminal investigation, contact us immediately. Our lawyers have decades of experience in state and federal criminal law, including sexual abuse allegations and all aspects of white collar crime. We can help.

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Call for a complimentary strategy session. During this call we will:

• Discuss the facts of your case;
• Discuss the legal issues involved, including the direct and collateral consequences of the allegation or issue; and
• Discuss the defenses that apply to your plan and, in general, terms discuss our approach to your case.

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