Sen. Rick Kloos sees God's Storehouse's fight with IRS as standing up for all churches

For the first time, the Topeka area politician who is pastor of God's Storehouse has publicly addressed an ongoing legal battle with the Internal Revenue Service.

"I want to address this whole thing of the IRS," said Sen. Rick Kloos, R-Berryton. "I haven't done this publicly, but I'm doing it tonight because my heart is at this point that we're in conflict."

The general public wasn't invited to the private campaign event Oct. 27 at Fairlawn Plaza Mall attended by about 100 people, where Kloos announced his Senate reelection campaign and his wife, Pennie Boyer-Kloos, launched a run for the House.

The Klooses founded God's Storehouse Topeka Church in 2009, which operates a thrift store and coffee shop that have garnered interest from the IRS.

Information on the IRS probe has been made public through court records as God's Storehouse challenges IRS efforts to obtain bank records. A federal judge in Kansas ruled against God's Storehouse, which has appealed. Kloos's attorney got a filing deadline pushed back to Nov. 15, after which the 10th U.S. Circuit Court of Appeals is expected to rule.

The IRS is probing God's Storehouse status as a church, or whether it is primarily a thrift store; whether taxes were paid from its coffee shop, Judee's; whether the church engaged in prohibited political campaign activity; and whether it failed to withhold employment taxes on wages paid to Kloos and Boyer-Kloos, despite withholding taxes from other employees.

Kloos said it is time "that I speak to that elephant in the room and the situation that has come up because of our sacrifice."

"I'm subject to ridicule. ... I'm subject to lies and judgment and people attacking our character," he said.

IRS wants bank statements from God's Storehouse

As part of its investigation, the IRS has been trying to get its hands on God's Storehouse's bank statements.

The IRS said in court documents that it needs the bank statements "to independently verify the coffee shop and thrift store transactions" and to "examine the compensation paid to Richard and Pennie Kloos, and to determine whether taxpayer had engaged in any political campaign intervention."

The IRS audit could ultimately result in God's Storehouse losing its tax-exempt status or being liable for additional taxes, the court documents indicate.

God's Storehouse has sought to quash third-party summonses to Kaw Valley Bank and FISERV. Kaw Valley Bank told the IRS in March 2022 that it had prepared the documents but would hold them until the court proceedings are resolved.

A federal judge in Kansas ruled against God's Storehouse on the Kaw Valley Bank summons, which has been appealed, while a Colorado federal judge has yet to rule on the one for FISERV.

In the appeal, God's Storehouse attorneys at Kriegshauser Ney Law Group have centered their arguments on whether the IRS properly followed legal and bureaucratic procedure.

"Because this church tax inquiry and examination was not properly authorized, the summons is unenforceable," they wrote.

U.S. District Court Judge Daniel Crabtree previously rejected those arguments.

"Here, the IRS complied with the church audit procedure requirements, then followed the administrative requirements before issuing a summons to Kaw Valley Bank," he wrote.

Kloos sees IRS fight as standing up for all churches

Kloos told his fellow Republican legislators in the room that he was sounding the alarm of "we got to protect our churches and faith organizations in our communities."

"I'm speaking against this because this isn't about one church," Kloos said. "This is about the church. And you better believe that if our civil liberties have been attacked, our religious liberties are next. And we've got to start protecting that."

Kloos said they voluntarily gave 19 documents to the IRS — but not the requested bank statements — while noting the church goes through bank audits every year.

But the church has no intention of further cooperating with the investigation.

"You see, it's bigger than just us," Kloos said. "Can you imagine what's going to happen when 87,000 IRS agents are turned loose? So I'm sharing this tonight because it sets a precedent. Why, after we've given all this documentation and all these things, why are we pushing back so hard? Why don't we just give them everything they want? Because it sets a precedent right now."

He accused the IRS of circumventing the Church Audit Procedures Act and acting at the behest of "hearsay from an atheist group."

"If an atheistic group can get away with a little church and and say Rick Kloos is politicking or the church is politicking, then what other churches are going to be attacked anytime somebody — a minister or a Sunday school teacher or someone in the faith community of predominance — runs for an office?" he said. "Where does it stop? So we're going to continue to push back on these attacks."

Crabtree wrote that examining whether God's Storehouse operates as a thrift store instead of as a church "is a legitimate purpose for an IRS investigation."

The federal judge rejected the church's claim that the IRS acted with political motive because there was no evidence proving it.

"Since the issue of petitioner's potential campaign interference appeared in the newspaper," Crabtree wrote of reporting by The Topeka Capital-Journal, "the FFRF was far from the only witness to that claim. And — as the court has concluded already — petitioner has adduced no evidence to demonstrate that the FFRF played any role in the IRS's decision to initiate its examination. Instead, it merely speculates that FFRF played such a role."

Freedom from Religion Foundation letter

Kloos took issue with the Freedom from Religion Foundation sending a letter to the IRS in September 2020.

"Since when should an atheist group be policing churches and giving information to the IRS?" he said. "What's wrong with that picture?"

He said the Wisconsin-based organization "know nothing about Rick Kloos here, they know nothing about the church, they know nothing about the ministry. They're not here."

Their letter accused Kloos of leading "a thrift store that runs a church."

"They got it backwards," Kloos said. "A church that runs a thrift store is what it is."

The FFRF letter to the IRS includes a copy of a Kloos campaign sign that identified him as the God's Storehouse founder and used the church's logo.

Kloos' reelection campaign signs do not use the God's Storehouse logo

The FFRF letter also included a screenshot of a Facebook post from his campaign account that said he would be speaking at a Scranton church on a Sunday afternoon. The Scranton church, A Place Called THERE, claimed in Facebook replies that it did not have to comply with IRS restrictions on churches and other nonprofits engaging in politics.

"It wasn't a campaign event," Kloos said of that church visit promoted by his campaign account. "The pastor called us up and asked if the church could pray over us. We went to the service, we sat through their whole service, skipped our church service, went down there and they prayed over us. And that's all that happened."

Rick Kloos' take on separation of church and state

Kloos offered his own perspective on the separation of church and state.

"My wife kind of hesitated on saying 'God's Storehouse' earlier," he said. "We don't need to hesitate on saying that we belong to a community of faith or we belong to a church. Those are our God-given rights. Separation of church and state, most people don't even know what they're talking about when they try to define that. It's not about keeping the church out of the state, it's about keeping the state out of the church. The church was here long before.

"Matter of fact, I don't see anybody having a problem when the Department of Corrections for years sends their clients over to God's Storehouse to help them to get some clothing or furniture, or when social services and the Department for Children and Families or when the prison release come and we provide clothes so they can, at free, no charge, that we can give them something to go get an interview to help our economy, right? Where is separation of church and state then?"

Addressing the two reporters in attendance as "you guys who are taking notes," he said "a real story" is that God's Storehouse is continuing "ministering to the humanitarian needs across this community and the spiritual needs across this community and within this region. We will continue to do that day in and day out."

He urged people to visit SoundTheAlarm.Church for more information.

The website includes copies of the Freedom from Religion Foundation letter, one out of many federal court filings, an undated letter from the God's Storehouse board of directors and a November 2022 letter that U.S. Sen. Jerry Moran, R-Kan., sent to the IRS.

"This needs to pass," Kloos said. "They need to let this thing go. And and if they don't, that's OK because we'll keep pushing back until we get the breakthrough that is ours, because we will protect our religious liberties."

Shawnee County husband and wife are running for Legislature

Kloos' comments came at an Oct. 27 event where he and and his wife, Boyer-Kloos, announced campaigns for the Legislature. Kloos said he is running again because of the importance of faith, family and freedom.

House Speaker Dan Hawkins, R-Wichita, said he first met Kloos at an Osage County GOP get-together, where Kloos said he was going to challenge longtime legislator Anthony Hensley, D-Topeka. Hawkins indicated he doubted Kloos could win, even though "we all want Hensley gone, but that's a mighty tall order."

Kloos beat Hensley, then the Senate minority leader, in November 2020.

"That was just kind of like slaying the dragon," Hawkins said. "I mean, it truly was. He took down the biggest guy on the Democrat side."

Now, Hawkins thinks Boyer-Kloos can defeat incumbent Rep. Virgil Weigel, D-Topeka, should he run for reelection.

"He's a pretty quiet guy, doesn't say a whole lot," Hawkins said of Weigel. "He does participate in his committees, but really once in a while he'll get up on the floor and enter into the debate, but not very often."

He praised Boyer-Kloos' "servant's heart" and hard work.

"I don't think I will see Pennie being quiet like Virgil," he said. "I think Pennie will be very engaged with the issues, she's going to be very engaged with our constituents. She's going to be out there talking to him all the time, knowing want her constituents want, and then she's going to come to the Legislature and she's going to deliver."

Boyer-Kloos said the issues on her heart including greater legislative oversight and support for state and local agencies because "we've had a lot of deaths in Topeka of young people." She urged greater funding for mental health and drug abuse services while calling for lower income and property taxes.

"There's going to be a lot on the plate, a lot of legislative decisions to make, a lot of issues," Boyer-Kloos said. "They're going to be diverse, and I realize that, but I will serve our district the best I can. I'll listen and I'll help find solutions."

Jason Alatidd is a statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jalatidd@gannett.com. Follow him on X @Jason_Alatidd.

This article originally appeared on Topeka Capital-Journal: Rick Kloos sees God's Storehouse IRS fight as standing up for churches