The Church today jealously guards its tax exempt status, and I suspect that there is a group of lawyers whose sole job it is to sit around worrying about the ways in which the IRS might assess taxes against the Church. It turns out that the feds have tried to tax Church properties and income in the past. In 1869, John T. Taggart, the newly appointed U.S. assessor for the territory of Utah cam across a decision of the federal Commissioner of taxation holding that a religious society in Ohio was subject to federal taxes. According to Taggart:
I became convinced that the Mormon church would come under the same rule; I accordingly wrote to the Commissioner with regard to the matter, and received from him instructions to make the assessment on the income of the property of the Church of Jesus Christ of Latter-day Saints. Upon this I notified Brigham Young, through my assistant assessor, to make out a return of the income of the church, of the property of which he is trustee.
At the time, Taggart speculated that the Church had about $3 million of tithing revenue annually and held property valued in excess of $60,000. As part of a Gentile clique in Salt Lake that was trying to push the federal government into more aggressive action against Brigham Young and the Mormon theocracy.
Despite his sometimes frenzied denunciations of lawyers, however, Brigham does not seem to have been above a legal quibble when it would serve the purposes of the Kingdom of God. Brigham responded to Taggart’s request with the following note:
From Brigham Young to the United States answer,
August 20, 1869
We, the government of the United States, have no knowledge of any such person as the trustee in trust of the Church of Jesus Christ of Latter-day Saints, nor of any such organization as the Church of Jesus Christ of Latter-day Saints. If there ever was such an officer, or such an organization, we, the government of the United States, have obliterated them of existence by legal enactment.
Approved July 1, 1862.
The reference here is to the Morril Anti-Bigamy Act, passed in 1862. As part of that law, Congress specifically revoked the corporate charter granted to the Church by the Utah Territorial Legislature in the early 1850s, dissolving the corporation as a legal entity. Of course, Brigham’s argument may have been a bit too cute. There is a common law doctrine of corporation by prescription, under with a group that acts for a prolonged period of time as though it is a separate corporate entity will be treated as such, even in the absence of a formal legal act of incorporation. This argument, had it occurred to Taggart, might still have been problematic in Utah Territory, which had pointedly refused to pass a reception statute making the common law binding and hence it was unclear whether the doctrine of corporation by prescription was valid under Utah law. In any case, Taggart’s plan to tax the Church ultimately came to nothing, and the feds would have to wait twenty years — and two rounds of congressional legislation and Supreme Court litigation — in order to take Church property. Of course, when they did finally get their hands on Church assets in 1890, they made a grab that makes Taggart’s attempts of the 1860s look mild by comparison, confiscating all of the Church’s property.