Did The Church of Jesus Christ of Latter-day Saints evade millions of dollars in taxes it owed?
An independent website devoted to detailing the global faith’s wealth through public documents says there is “strong evidence” its investment arm, Ensign Peak Advisors, failed to report up to $450 million in taxable business income, dodging a potential tax bill as high as $90 million.
That underreporting, according to The Widow’s Mite Report, happened between about 2003 and 2017, when, for some of those years, Ensign Peak held stocks through a series of shell companies — a practice that the Salt Lake City-based firm and church leaders later acknowledged in a $5 million legal settlement with U.S. regulators in 2023.
The watchdog website’s yearlong study also reveals a complex strategy of investing by Ensign Peak that the group says deferred tax obligations by putting millions into what are called publicly traded partnerships, or PTPs, over those years.
Widow’s Mite — which includes unnamed current and former Latter-day Saints with professional backgrounds in finance, business, real estate and law — alleges the church’s investment firm then underreported income from those PTPs when it sold its stakes in them, according to an analysis of Ensign Peak’s nonprofit tax filings (known as 990-T forms) alongside disclosures of stock holdings, filed with the U.S. Securities and Exchange Commission.
“Tax evasion appears evident,” the website asserts, unless Ensign Peak somehow made separate, significant and undisclosed tax payments to the IRS outside of public view.
The site also notes that Ensign Peak substantially increased the income it reported from these PTP investments starting in 2018 and 2019, when key details on the overall size and nature of its portfolio began to leak out.
A church spokesperson disputes allegations that Ensign Peak did not meet its income tax obligations in past years, saying such accusations are “wrong and the result of incomplete information and speculative analysis.”
“Ensign Peak’s tax returns are prepared by world-class independent accountants, and they have carefully designed procedures to provide them with access to all relevant information,” church spokesperson Chris Moore said in a statement to The Salt Lake Tribune. “The church and its affiliates, including Ensign Peak, believe in obeying, honoring and sustaining the law.”
(Chris Samuels | The Salt Lake Tribune) The Church Office Building is reflected in a downtown Salt Lake City building, where Ensign Peak Advisors, an investment arm of The Church of Jesus Christ of Latter-day Saints, is located.
The statement did not address specific Tribune questions on the apparent underreporting of income from PTPs.
For its part, Widow’s Mite is calling on Ensign Peak to correct its public filings to address any apparent discrepancy.
“We identified specific tax compliance issues arising from careful diligent study of Ensign Peak’s IRS and SEC filings,” one of the site’s founders said in a statement. “Given the long history of selective legal compliance at Ensign Peak, the public is entitled to equally specific answers.”
‘Gold standard’
The Widow’s Mite authors have operated anonymously in the past, but for this latest tax study, the group enlisted Spencer Anderson, assistant professor of financial accounting at Indiana University’s Kelley School of Business, to audit its methods and findings, and act as a spokesperson.
Anderson, who is also a Latter-day Saint, called the methods for financial analysis and modeling used by Widow’s Mite to arrive at its latest findings “the gold standard.”
“People might ask, ‘How could a church engage in tax evasion in the first place?’” Anderson said, given that faiths are generally tax exempt. “The fact is, there are taxes that the church does have to pay, particularly with some of its operating nonpassive income.
“And in this case,” Anderson said, “it looks very consistent with tax evasion, based on my own review of the data.”
PTP investments provide leeway on how taxes on the income they generate can be deferred — until they are sold. At key points leading up to 2017, the Widow’s Mite study shows that up to 5% of Ensign Peak’s multibillions in investments were held in over 30 of these specialized partnerships, which are typically offered by oil and gas and real estate companies.
What are PTPs?
Publicly traded partnerships, or PTPs, are lesser-known securities traded on some financial markets, where the ownership interests of business partners — typically in energy and natural-resources sectors — are themselves bought and sold on stock exchanges.
PTPs offer special tax features and are relatively uncommon, with an estimated 40 or so currently offered on U.S. markets.
Also sometimes known as master limited partnerships, these investments generate unrelated business taxable income for those holding them, even for investors operating as nonprofits that are otherwise exempt from taxes.
As early as 2010, the website says, Ensign Peak had amassed one of the largest PTP portfolios in the world, held through shell companies it had created — as the church would later acknowledge in the SEC settlement — to, as the federal agency stated, “obscure” the size and scope its investments.
The church and Ensign Peak acknowledged to the SEC in 2023 that they had created 13 limited liability shell companies before 2018, shielding ownership in a portfolio that topped $30 billion in value over that time.
Ensign Peak paid $4 million and the church $1 million in SEC penalties based on those reporting violations.
(Andrew Harnik | AP) The U.S. Securities and Exchange Commission, headquartered in Washington, fined the church and Ensign Peak Advisors $5 million in a 2023 settlement.
(J. David Ake |AP) IRS headquarters in Washington, D.C. A Widow’s Mite study says the church may owe up to $90 million in taxes.
Widow’s Mite estimates the church’s cumulative underreporting of taxable income from PTPs in the $200 million to $450 million range, representing a potential federal tax tab of between $40 million and $90 million.
Anderson noted that the alleged underreporting of PTP income occurred at the same time the church “was already going to great lengths to hide some of its other holdings from the SEC, from the public and the church’s membership, and was willfully breaking SEC reporting law in the process.”
“And so to keep that charade up,” Anderson said, “the church may have faced a decision where it needed to lie to the IRS as well.”
‘Managed with the utmost care’
(Illustration by Christopher Cherrington)
In his statement to The Tribune, Moore, the church spokesperson, did not address that specific time frame for Ensign Peak as spelled out in its high-profile settlement with the SEC, but he called the church’s overall financial stewardship “a sacred matter that is managed with the utmost care.”
“Following the principle of preparing for the future, both near- and long-term, the church maintains diversified reserves, including stocks, bonds, commercial and residential real estate, and agricultural properties,” the statement said of Ensign Peak and other holdings. “All funds are invested solely to support the church’s mission to bring others to Jesus Christ.”
The statement also included links to recently published webpages explaining church financial administration, and outlining how it uses its donations and financial reserves.
The Widow’s Mite study also explored other possible explanations for the discrepancies in Ensign Peak’s alleged long-term pattern of underreporting PTP income — though it says none of them appears likely, given the underlying data.
Ensign Peak could have, for instance, made an honest mistake, the site says, or it could have reduced its reportable income gains from PTPs on its tax forms by pairing them with other income losses in its portfolio.
The church could also have paid its full tax bill to the IRS by some other means not captured in its public 990-T tax filings — a scenario a professor at church-owned Brigham Young University says Widow’s Mite appears to vastly underplay.
Not speaking on behalf of BYU or the church, Aaron Miller, teaching professor of business ethics and nonprofit management, said that Widow’s Mite did not give adequate weight to the possibility that Ensign Peak voluntarily disclosed and corrected its errors.
Miller noted there were substantial and unrelated changes in the U.S. tax code around 2018 that could have prompted Ensign Peak to voluntarily reevaluate and correct its tax reporting to the IRS. That would also explain, he said, the changes in how it reported that income from that point forward.
“In a voluntary disclosure,” Miller said, “it’s by default a private action where the taxpayer says, ‘Whoa, hold on. We realize we should have paid taxes here. We’re coming to you, IRS, and we’re saying here’s what we actually owe.’
“The IRS looks into it, and then they come to a private agreement where the unpaid taxes are paid,” Miller said. “That’s at least as likely as any other explanation.”
In its report, Widow’s Mite acknowledged it “cannot rule out the possibility that Ensign Peak secretly paid the full amount of tax owed.”
The church did not answer a Tribune question about any “alternative explanation” to the tax finding by Widow’s Mite.
Either way, Widow’s Mite called for additional financial transparency from the church and a refiling of its 990-Ts “to correct the public record.”
The watchdog website’s ongoing analysis has estimated the church’s overall wealth, including investments, operating businesses and global landholdings, at about $293 billion as of last year. With yearly gains, it has said, the faith could be worth $1 trillion within 25 years.
The Widow’s Mite Report, an online study of the finances of The Church of Jesus Christ of Latter-day Saints, forecasts the church could be worth $1 trillion within 25 years.
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