PTL Ministry to Negotiate With IRS in Hopes of Retaining Tax-Exempt Status

The PTL will seek to negotiate with the Internal Revenue Service to avert a threatened loss of tax-exempt status that the Rev. Jerry Falwell said Wednesday could destroy the embattled ministry.

“It appears that funds were raised under false pretense,” Falwell said during a break in a seven-hour meeting with auditors and lawyers. “We advised counsel to seek negotiations with the Internal Revenue Service,” he said.

Falwell, who took over the television and vacation resort ministry in March from its scandal-scarred founder, Jim Bakker, said that the IRS has closed its investigation of possible violations of civil laws and on Tuesday opened an audit looking for criminal violations.

Falwell also confirmed that the U.S. Justice Department and U.S. Postal Service have begun formal investigations of the ministry’s operations and said they may be looking into allegations of wire fraud and mail fraud.

In a move perhaps designed to demonstrate its good intentions, Falwell said the board decided Wednesday to form a separate, profit-making corporation for PTL’s holdings at Fort Mill, S.C., such as the Heritage USA park, its luxury hotel and the ministry’s television satellite. Bakker had included those entities under the church tax exemption for the organization.

“We’ll pay taxes on the parts of the organization that compete with other tax-paying organizations,” he said.

Speaking briefly to reporters outside the offices of his own television ministry, the Old Time Gospel Hour headquarters, Falwell said, “Today we had our first long and in-depth look at the finances of the company. “We owe 1,400 creditors $70 million. Twenty-three million is delinquent. We obviously have some problems.”