Church Responds To Allegations Made By Former Employee In IRS Complaint

Dec 17, 2019, 12:47 PM | Updated: 8:17 pm

SALT LAKE CITY, Utah — David A. Nielsen, a former employee for the investment arm of The Church of Jesus Christ of Latter-day Saints, filed an IRS complaint last month alleging the church should be forced to pay taxes on returns made from invested tithing funds and challenging the faith’s investment strategy, humanitarian efforts and tax-exemption status.

Meanwhile, Nielsen’s twin brother has posted to YouTube videos and a link to 74 pages of documents he said Nielsen took from his former employer to back his claims. Lars Nielsen spoke to the Washington Post, which was first to publish a story on the IRS complaint Monday evening.

Reaction to that story brought reaction from the church in a statement released Tuesday morning:

“We take seriously the responsibility to care for the tithes and donations received from members. The vast majority of these funds are used immediately to meet the needs of the growing church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world. Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future. This is a sound doctrinal and financial principle taught by the Savior in the Parable of the Talents and lived by the church and its members. All church funds exist for no other reason than to support the church’s divinely appointed mission.

“Claims being currently circulated are based on a narrow perspective and limited information. The church complies with all applicable law governing our donations, investments, taxes and reserves. We continue to welcome the opportunity to work with officials to address questions they may have.”

David Nielsen, 41, resigned from church employment in August because, according to the Post, his wife and children had left church membership. Nielsen alleges in the complaint that Ensign Peak Advisors, the church’s investment arm, has holdings worth between $99 billion and $101 billion. He claims Ensign Peak is not meeting IRS regulations for using a percentage of its funds annually for religious, educational or charitable purposes.

Nielsen is seeking a whistleblower’s reward of a percentage of any back taxes the IRS recovers, according to the Post.

The church offered no specific comment about the complaint or Nielsen prior to the Post’s story. Instead it directed the Post and other media to past comments by church leaders about church finances. Leaders previously have said the faith provides $40 million a year to address famines, respond to natural disasters, aid refugees, give medical care and training and more through its humanitarian arm, Latter-day Saint Charities.

Latter-day Saint Charities reported in February that the figure is even larger. Its 2018 annual report says the charity has provided more than $2.2 billion, or an average of $64.7 million a year, in 197 countries since its creation in 1985.

“Latter-day Saint Charities has provided more than $2 billion in aid to assist those in need throughout the world,” President Russell M. Nelson said two months ago at the church’s semiannual general conference. “This assistance is offered to recipients regardless of their church affiliation, nationality, race, sexual orientation, gender, or political persuasion.”

The church also operates other charitable concerns. For example, local bishops and branch presidents — leaders of the faith’s 30,500 individual congregations around the world — help members with food, housing and other welfare needs on a daily basis.

Nonprofit groups, including religious organizations, are exempted from paying taxes on income in the United States. Ensign Peak Advisors is an integrated auxiliary and supporting organization of the church and is tax exempt.

David Nielsen did not speak to the Washington Post and has not commented publicly. In his letter, he asked the IRS to remove Ensign Peak’s tax-exempt status and compel it to pay billions in back taxes.

His twin, Lars, a Minnesota-based health care consultant, posted videos this week in which he accused church leaders of making fraudulent statements, derided BYU — his alma mater — for penny pinching and mocked the religious reasons cited by Ensign Peak and church leaders for having a large reserve fund.

The Nielsens claimed that Ensign Peak made two payments from the fund that violate federal tax rules.

They claimed that in 2009 Ensign Peak bailed out Beneficial Financial Group, a life insurance company owned by the church’s for-profit arm, Deseret Management Corp., which also owns the Deseret News. They alleged that Ensign Peak delivered $600 million to Beneficial in 2009.

In fact, Beneficial made full disclosure to the Utah Department of Insurance that Deseret Management Corp., its owner, provided $594 million to Beneficial during the 2008 financial crisis to strengthen its balance sheet. Those public filings are on file with Utah Department of Insurance and were reported in two articles published by the Deseret News at the time.

Since 2009, Beneficial has paid dividends of almost a half billion dollars back to Deseret Management Corp., according to public filings at the Utah Department of Insurance.

The second payment challenged by the Nielsens was made as part of the church’s City Creek development in Utah’s capital city. The Nielsens alleged that Ensign Peak Advisors improperly sent $1.4 billion from 2010 to 2014 to the church entity funding City Creek, Property Reserve Inc. The church did invest in the housing and parking elements of City Creek while Taubman Centers, Inc., a nationally recognized shopping center developer, owns and operates the shopping center.

The Nielsens also said church leaders should exempt church members from paying tithing or give them a rebate because the church could cover its operations with the investment income of its reserves.

While tithing is a source of income for the church, it is regarded within the faith as much more than a financial principle. Tithing is a biblical principle practiced in many faiths with components far beyond church operations. Abraham and Jacob paid 10% of their increase to God, and Jesus Christ also taught the principle. Muslims and Christians including Latter-day Saints believe tithing is inherently important because it sanctifies the individual.

The church teaches its members to be self-reliant and build a personal or familial reserve. Its leaders say the church follows the same principles.

Presiding Bishop Gérald Caussé referred to those principles last year in a public talk and published later in a book, “The church applies this same principle in its own savings and investments. In addition to food and emergency supplies, the church also sets aside funds each year for future needs. These funds are added to church reserves, which include stocks and bonds, taxable businesses, agricultural interests and commercial and residential property. Investments can be accessed in times of hardship or to meet the emerging needs of a growing, global faith in its mission to preach the gospel to all nations and prepare for the Second Coming of Jesus Christ.”

In 2018 the church published this Q&A on church finances.

KSL 5 TV Live

Top Stories

Local News

(Utah Highway Patrol)...
Madison Swenson

One dead after head-on collision in southern Utah

One person died Friday following a head-on collision in Washington County. 
17 hours ago
A rattlesnake hiding off a trail in Snow Canyon. (Credit: Suzi Holt)...
Michael Houck

Utahns continue to rattle our inbox with snake tails

As the weather gets warmer, humans are not the only ones enjoying the summer heat; rattlesnakes are also out to get some sun.
17 hours ago
Eliza Pace

Anonymous donor offers 50k reward in Cornelis ‘Casey’ Bokslag disappearance

South Salt Lake Police Department and Summit County Sheriff's Office provided an update in the missing person case of Cornelis "Casey" Bokslag, including the announcement of a $50,000 reward offered anonymously for the person that provides info to find Bokslag.
17 hours ago
days of 47 parade 2017...
Cary Schwanitz

SLC Police say safety is “our number one priority” in preparation for Days of ’47 Parade

Following Monday’s deadly shooting at an Independence Day parade near Chicago, the Salt Lake City Police Department called the community its top partner in preventing public threats.
17 hours ago
Michael Houck

Kidnapping fugitive in custody after car chase in Taylorsville

A fugitive wanted for aggravated kidnapping and assault led police on a car chase Monday afternoon.
17 hours ago
(Chopper 5/KSL TV)...
Casey Scott, KSL TV

Beautiful Tuesday morning from Chopper 5 over Antelope Island

KSL TV's Casey Scott was above Antelope Island and the Great Salt Lake Tuesday morning, catching a beautiful sunrise and some of the bison roaming the island.
17 hours ago

Sponsored Articles

hand holding 3d rendering mobile connect with security camera for security solutions...
Les Olson

Wondering what security solutions are right for you? Find out more about how to protect your surroundings

Physical security helps everyone. Keep your employees, clients, and customers safe with security solutions that protect your workplace.
Many rattan pendant lights, hay hang from the ceiling.Traditional and simple lighting....
Lighting Design

The Best Ways to Style Rattan Pendant Lighting in Your Home

Rattan pendant lights create a rustic and breezy feel, and are an easy way to incorporate this hot trend into your home decor.
Earth day 2022...

How Are You Celebrating Earth Day 2022? | 4 Simple Ways to Celebrate Earth Day and Protect the Environment

Earth Day is a great time to reflect on how we can be more environmentally conscious. Here are some tips for celebrating Earth Day.
Get Money Online...

More Ways to Get Money Online Right Now in Your Spare Time

Here are 4 easy ways that you can get more money online if you have some free time and want to make a little extra on the side.
Lighting trends 2022...

Lighting Trends 2022 | 5 Beautiful Home Lighting Trends You Can Expect to See this Year and Beyond

This is where you can see the latest lighting trends for 2022 straight from the Lightovation Show at the Dallas World Trade Center.
What Can't You Throw Away in the Trash...

What Can’t You Throw Away in the Trash? | 5 Things You Shouldn’t Throw in to Your Trash Can

What can't you throw away in the trash? Believe it or not, there are actually many items that shouldn't be thrown straight into the trash.
Church Responds To Allegations Made By Former Employee In IRS Complaint