Church leaders respond to whistleblower’s IRS claims

Dec 17, 2019, 2:27 PM
Multiple Church of Jesus Christ of Latter-day Saints buildings are featured in the photo. The churc...
The John Witmer Historical Association claims to have released the first photo of, founder of The Church of Jesus Christ of Latter-day Saints, Joseph Smith. Photo: Getty Images

SALT LAKE CITY — A day after the Washington Post broke a story about a former employee for the investment arm of The Church of Jesus Christ of Latter-day Saints who claimed that company, Ensign Peak Advisors, does not meet IRS regulations, church leaders are responding.

Responding to the claims

In a statement released Tuesday, church leaders wrote:

We take seriously the responsibility to care for the tithes and donations received from members. The vast majority of these funds are used immediately to meet the needs of the growing Church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world. Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future. This is a sound doctrinal and financial principle taught by the Savior in the Parable of the Talents and lived by the Church and its members. All Church funds exist for no other reason than to support the Church’s divinely appointed mission.

Claims being currently circulated are based on a narrow perspective and limited information. The Church complies with all applicable law governing our donations, investments, taxes, and reserves. We continue to welcome the opportunity to work with officials to address questions they may have.

Church leaders included a link to a 2018 article answering commonly asked questions about the faith’s finances.

The whistleblower

The complaint came from David Nielsen, a former employee of Ensign Peak who resigned earlier this year after his wife and children ended their church membership.

Last month, Nielsen filed a complaint with the IRS in Ogden. He claims Ensign Peak, which he says has holdings worth between $99 and $101 billion, does not meet the IRS’s regulations requiring a percentage of its funds to be used for religious, education or charitable purposes every year.

Before the Washington Post published its story, The Church of Jesus Christ of Latter-day Saints did not offer any comment about the IRS complaint or Nielsen. Instead, it directed the paper to past comments church leaders have made about church finances.

“Latter-day Saint Charities has provided more than $2 billion in aid to assist those in need throughout the world,” President Russell M. Nelson said in October at the faith’s semiannual general conference in Salt Lake City.

That assistance, he noted, is not dependent on recipients being members of the church, which also operates other charities, including helping local members with things like food and housing as needed.

The specific accusations

The Washington Post story reports a claim made by Nielsen, quoting his twin brother Lars, that Ensign Peak violated federal tax rules with two specific payments. In 2009, the Nielsens allege Ensign Peak bailed out Beneficial Financial Group and delivered the company $600 million. Beneficial is a life insurance company operated by Deseret Management Corporation, which manages the church’s for-profit companies. KSL is also owned by DMC.

At the time, the Deseret News reported that Beneficial disclosed the payment from DMC, of about $594 million, to the Utah Department of Insurance, during the financial crisis of 2008. Public filings at the Utah Department of Insurance back up that reporting; they also show Beneficial has paid nearly a half-billion in dividends back to DMC in the years since that bailout.

The second payment involves the church’s City Creek development, a mixed-use property combining shopping, housing and parking in downtown Salt Lake City. The Nielsens claim Ensign Peak Advisors sent $1.4 billion to the church entity that funded City Creek, Property Reserve Inc., between 2010 and 2014. While the church did invest in the housing and parking elements of the project, the shopping center is owned and operated by Taubman Centers, Inc.

More details about those two payments and the accusations can be found in the Deseret News.

The IRS and church rules

Nielsen did not speak to the Post; neither has he offered public comment about his complaint. However, in the letter to the IRS, he asked the federal agency to revoke Ensign Peak’s tax-exempt status and force it to pay back taxes.

Complaints to the IRS are filed under the potential threat of perjury.

The Post did speak extensively to Nielsen’s twin brother, Lars, who also shared videos on YouTube and provided a link to documents he says back his brother’s claims. According to the Post, David Nielsen is seeking a whistleblowing reward: a percentage of those back taxes, if recovered by the IRS.

In the United States, nonprofit groups, which include churches, are exempt from paying income taxes. As an arm of The Church of Jesus Christ of Latter-day Saints, Ensign Peak Advisors is also considered tax-exempt under IRS rules.

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Church leaders respond to whistleblower’s IRS claims