Hill, Wideman, wrote letters to IRS on MBC letterhead long after resignations
In attempt to save the foundation’s tax-exempt status
By Bob Baysinger
November 4, 2003
JEFFERSON CITY – Missouri Baptist Convention legal counsel have uncovered documents indicating that two former Missouri Baptist Convention (MBC) executive directors provided questionable assistance to the Missouri Baptist Foundation (MBF) to help it to obtain its own tax-exempt status after the foundation broke away from the MBC in 2001. The former employees of the Convention wrote letters addressed to the Internal Revenue Service on Convention letterhead, long after the employees had ceased employment with the Convention.
MBF apparently discovered it had a problem with its exempt status with the Internal Revenue Service (IRS) after foundation trustees voted to become a self-perpetuating board. While it operated as an agency of the Convention, , the foundation had enjoyed use of the MBC’s group exemption. Exemption from federal and state income taxation is important to the foundation because of the more than $131 million it manages for individuals and entities who presume that gifts made to or through the foundation will be tax exempt.
Records obtained by The Pathway show the MBF encountered some difficulty obtaining its own tax exempt status when its trustees voted to become self-perpetuating. When MBF advised IRS that it was already covered under a group exemption, IRS reported that its records showed that the Foundation had not been covered by the MBC group exemption since 1997. MBF insisted that the removal from the MBC group exemption was a mistake. The IRS told the Foundation that clarification would require the MBF to submit to the IRS a letter from MBC officials on MBC letterhead, stating that MBF was in good standing with the MBC.
The IRS requirement put the MBF in a dilemma since its trustees had voted to break away from the MBC. Convention officers might not have signed any letter to the IRS to facilitate the foundation’s separate tax exemption since MBC viewed the MBF trustee action as illegal under Missouri corporate law.
The result was that the MBF chose to go to two former MBC executive directors – Don Wideman and Jim Hill – for help with the matter. They responded by signing letters on MBC letterhead, long after they had left the MBC. Those letters are now a focal point for MBC attorneys in the convention’s legal case against the MBF and four other agencies where trustees voted to become self-perpetuating.
Here is how it happened:
John Hardin, secretary and general counsel for the MBF, sent an email to Hill on April 15, 2002 – more than six months after Hill resigned as director – asking him to write a letter to the IRS on MBC letterhead.
Hardin dictated in the email what Hill should say:
“It has been brought to my attention that the IRS records indicate that the Executive Board of the Missouri Baptist Convention, which operates under the group exemption number 1725, requested the removal of the Missouri Baptist Foundation from that group exemption in April of 1995. During my entire tenure as Executive Director of the Missouri Baptist Convention, from ___________ through ___________, 2001, it was the belief of the Executive Board of the Missouri Baptist Convention that the Missouri Baptist Foundation continued its tax exempt status under the group exemption of the Executive Board of the Missouri Baptist Convention."
Hill served as MBC executive director from Jan. 1, 1998 until Oct. 19, 2001 . Wideman was the executive director at the time the IRS removed the MBF from the MBC’s group exemption number.
Hardin also urged Hill to write:
“The Missouri Baptist Foundation remained in good standing with the Executive Board of the Missouri Baptist Convention during my said tenure as Executive Director and its removal must have been the result of an inadvertent error."
Hardin followed up with another email to Hill. It said:
“Jim, when we spoke earlier today, I indicated that you could email the letter to me. I had forgotten at the time that the IRS representative indicated that they wanted the letter on MBC letterhead. Do you have any MBC letterhead that could be used for this letter? Would you be comfortable in writing a letter on their letterhead? If you would be comfortable in doing so but don’t have letterhead, please let me know and I will be happy to get some for you."
Hardin instructed Hill to fax the letter back to him, and he would fax it to the IRS agent, Cheryl Skaggs.
Records also reveal that Wideman wrote a similar letter to the IRS on April 14, 2002 , using substantially similar language as Hill used in his letter. Both Wideman’s and Hill’s letters were on MBC official letterhead, even though they had left MBC employment long ago.