PTL’s Tax-Exempt Status Reportedly in Peril

The Internal Revenue Service wants to revoke the PTL’s tax-exempt status for three years because a “substantial portion” of its earnings benefited Jim Bakker, his relatives and other PTL officers, the Charlotte Observer reported.

The IRS said in a confidential 1985 report that Bakker was paid nearly $1 million more than the agency deemed reasonable from 1981 to 1983, the Observer reported in its editions today.

Meanwhile, as the PTL ministry’s new board prepared for a crucial meeting today, the Rev. Jerry Falwell said he had received a letter from Bakker threatening a “holy war” to wrest back the PTL empire he gave up in a sex scandal.

The IRS contended that Bakker and other officers spent money lavishly, holding $8,000 dinner parties and renting $350-a-night hotel rooms, the Observer said. The agency also said PTL failed to report all of Bakker’s income on his W-2 forms, the newspaper said.

Granted a Hearing

According to the ministry’s 1986 audited financial statements, PTL has been granted a hearing before the IRS regional appeals director. The ministry’s next step would be to go to court or submit to the IRS decision.

In a separate matter, the South Carolina Tax Commission is demanding that PTL pay $5.5 million in penalties, interest and back taxes for 1984-85, according to documents obtained by the newspaper.

PTL expects the two tax agencies to extend their claims to cover more recent years, according to undisclosed parts of PTL’s 1986 financial statements obtained by the Observer.

Such a move would jeopardize the ministry’s tax-exempt status for 1984 and 1985 and result in another South Carolina claim for at least $4.5 million in sales and accommodations taxes, the newspaper said.

A PTL spokeswoman who refused to give her name said Monday night that spokesman Neal Eskelin was not available for comment. PTL, which has refused to answer past tax questions, is appealing the findings inside the two tax agencies, the newspaper said.

Back Tax Returns

If the Fort Mill, S.C., ministry loses its tax-exempt status, its contributors would no longer be able to deduct donations on their tax returns. PTL, which stands for “Praise the Lord” and “People That Love,” also would have to file back tax returns and perhaps pay back taxes.

It is not known how much PTL would owe the federal government if it lost its tax-exempt status. PTL’s auditors indicated, however, that the IRS claim would have a significant effect on PTL’s financial statements. PTL reported $129 million in revenue in 1986.

The IRS documents provide the first publicized evidence that government officials objected to PTL’s spending on Bakker and his wife, Tammy, who together led the ministry. Bakker resigned March 19 after he admitted a tryst with a church secretary.

The IRS said “numerous expenditures and transactions were made, or entered into, for the personal and private benefit of some of the officers of PTL, primarily James O. Bakker.”

Federal law prohibits tax-exempt charities from allowing individuals to pocket funds except as reasonable payment for goods or services.

Falwell, who took over the ministry at Bakker’s behest, said he had no intention of fighting over control of PTL and strongly implied he may wash his hands of the whole thing at today’s board meeting in Fort Mill, S.C.

There was no firm indication whether Bakker, who has been secluded in his Palm Springs home, would attend.

Falwell, in a taped appearance on Monday’s “700 Club” television show, said Bakker told him in a cable that he wants to regain his job as head of PTL. “If he decides to come back,” Falwell said, “he’ll preside over a funeral--the funeral of his ministry.”