Daystar Television Network Considered a Church by the IRS

Marcus and Joni Lamb, founders of Daystar, also host their own show, as seen in this screenshot from their network. With $233 million in assets, Daystar is the largest religious television network in America that also calls itself a church. (Daystar Television Network)
Marcus and Joni Lamb, founders of Daystar, also host their own show, as seen in this screenshot from their network. With $233 million in assets, Daystar is the largest religious television network in America that also calls itself a church. (Daystar Television Network)

Flip on Daystar television at any hour of the day and you’ll likely see the elements of modern televangelism: a stylish set, an emotional spiritual message and a phone number on the screen soliciting donations.

Based in a studio complex between Dallas and Fort Worth, Texas, and broadcasting to a potential audience of 2 billion people around the globe, Daystar calls itself the fastest growing Christian television network in the world.

The Internal Revenue Service considers Daystar something else: a church.

Televangelists have a choice when they deal with the IRS. Some, like Pat Robertson and Billy Graham, register as religious organizations. They’re exempt from most taxes but still must file disclosure reports showing how they make and spend their money.

Daystar and dozens of others call themselves churches, which enjoy the greatest protection and privacy of all nonprofit organizations in America.

Churches avoid not only taxes, but any requirement to disclose their finances. And, as NPR has learned, for the past five years churches have avoided virtually any scrutiny whatsoever from the federal government’s tax authority.

Today, television evangelists are larger, more numerous, more complex, richer, with bigger audiences than ever before and yet they are the least transparent of all nonprofits.

The top three religious broadcasters — Christian Broadcast Network, Trinity Broadcasting Network and Daystar Television — are worth more than a quarter of a billion dollars combined, according to available records.

With $233 million in assets1, Daystar is the largest religious TV network in America that calls itself a church. As such, there’s no objective way for viewers — who annually give an average of $35 million to Daystar — to be certain how their money is spent.

But NPR found hundreds of pages of court records filed as part of a 2011 employee lawsuit in Texas that has since been dismissed. In them were six years of audited financial statements from Daystar, including balance sheets, income and expense records and detailed accounting of donations.

Those records offer a deep and unprecedented look at the inner workings of a modern religious empire, and they raise issues as basic as the definition of “church” and as grand as the role of government in religion.

They show generous donations and loans that Daystar made to friends, and records of charitable giving that looked different from what Daystar describes on the air.

The founder and CEO of Daystar is a dapper, often-tearful, 56-year-old Pentecostal minister from Georgia named Marcus Lamb. He’s a spirited preacher and a tireless fundraiser. He declined numerous requests to speak to NPR. But in a four-page letter from Daniel Woodward, Daystar’s director of marketing, the network defends its business practices and notes that all of them comply with IRS rules. As a nonprofit broadcaster, it is little different from NPR, Woodward says, but for its classification as a church under IRS guidelines.

“Both networks are nonprofit entities that are tax exempt under Section 501(c)(3),” Woodward writes. “They both enjoy all of the same benefits and obligations, other than the fact that Daystar does not have to file a form 990, due to its church status, for which it is fully compliant under the law.”

Daystar produces its own lineup of popular Christian talk shows and sells airtime to well-known evangelists such as T.D. Jakes and Joel Osteen. “It just speaks to me, and I feel like I’m being ministered to,” says Jordan Riley, a Christian pop singer in Seattle who supports Daystar.

Despite its self-description as a church, Daystar does not resemble a church in any traditional sense.

“Church to me is when I’m gathered with other believers,” Riley says. “I don’t consider it an electronic church.”

Several former employees also don’t call Daystar a church.

“When the lights are on and the cameras are on, we’re a ministry. When those lights are off, cameras are off, it doesn’t feel like a ministry,” says Lisa Anderson, former executive assistant to Marcus Lamb and his wife, Joni. “It is a business making money.”

Daystar’s former IT manager Bill Hornback agrees. “I mean, there’s no Sunday sermon, no Wednesday night meeting. It’s all business. It’s not a church. It’s a television broadcasting company, that’s what they are,” says Hornback.

In his letter, Daystar’s marketing director points out that the IRS has recognized Daystar as a church from the network’s inception. And he adds that Daystar regularly conducts marriages, funerals, baptisms and communions just like any other church. Yet former employees interviewed by NPR said they could not recall a single instance of this happening.

The IRS has a definition of a church, called the “14-point test.” Among the criteria: regular services, Sunday school, ordained ministers and a regular congregation. But it rarely enforces the 14-point test anymore and, in fact, has never challenged Daystar’s claim to be a church.

In a deposition filed with court records, Marcus Lamb defended Daystar’s standing as a church, saying the network’s viewers “are our congregation.”

NPR asked Washington tax lawyer Marcus Owens, former director of the Exempt Organizations section at the IRS, if a television audience can constitute a congregation. Owens referred to a case when he was at the IRS in which that same issue came up.

“That argument did not fly,” he says, “because of the absence of a congregation, a group in the room with the religious leader when the services occurred.”

As part of America’s commitment to religious freedom, anyone can start a church, start preaching and passing the collection plate. They are presumed to be a church by the IRS — no questions asked.

“For the most part, a church is a church if they say it’s a church. And if it’s a church, then it’s tax-exempt,” says Ron Wright, tax assessor-collector in Tarrant County, Texas, where Daystar is located.

Daystar’s broadcast complex and corporate jet — together valued at $9.5 million — would be subject to property taxes in Texas if the ministry were a for-profit business. But it’s exempt because of its status as a church.

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SOURCE: 91.3 HQR
John Burnett

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