Topeka-area senator Rick Kloos pushes back as IRS questions tax-exempt status of God's Storehouse

DENVER — Court records show that a Topeka church, whose pastor is a Kansas state senator, is under federal scrutiny over the church's tax-exempt status.

The Topeka Capital-Journal obtained a copy of the records that were filed Monday in federal court in Denver by God's Storehouse church, where Sen. Rick Kloos, R-Berryton, serves as pastor. They are similar to those filed in the U.S. Court for the District of Kansas last month.

In Colorado, the church wants a judge to nullify a summons the Internal Revenue Service issued Feb. 8 to a Denver-area company that processes credit card transactions of the church's thrift store.

A similar complaint was filed in Kansas to quash a separate summons, filed last week, targeted at the church's financial records, held by Kaw Valley Bank.

Kloos was elected in 2020 to the state Senate, defeating longtime Democrat incumbent Sen. Anthony Hensley in a major upset.

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Concerns raised about God's Storehouse church, Rick Kloos' campaign

The Capital-Journal reported on Sept. 25, 2020, that Hensley and others had raised questions and concerns about a line on the signs noting Kloos to be the founder of God’s Storehouse, a Topeka thrift store and church, accompanied by the organization’s logo.

Under federal tax law, churches or nonprofits “may not participate in or intervene in” politics. That includes making endorsements and campaigning on behalf of candidates.

Those activities could risk a group’s tax-exempt status. The report stated that while God’s Storehouse wasn’t registered with the IRS as a 501(c)(3) nonprofit, it is registered with the state of Kansas as a church organization, making it tax-exempt.

In a statement, Ryan Kriegshauser, the attorney for God's Storehouse, said the case was "harassment at the instigation of an atheist organization intent on politically damaging our client," referencing a September 2020 letter sent by the Wisconsin-based Freedom from Religion Foundation the IRS about God's Storehouse.

'We will zealously litigate this in federal court'

"This is governmental overreach that infringes on our client's First Amendment rights as a church," Kriegshauser said in a statement. "We will zealously litigate this in federal court."

The church's 20-page petition in Colorado appears similar to one filed in Kansas. The church contends "the IRS is using its summons powers in a manner inconsistent with good faith pursuit of a congressionally authorized purpose."

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Kloos' attorneys have said they believe his use of the campaign signs were the primary basis for the IRS investigation and have argued he used campaign monies, rather than church funds, to pay for them.

The petition states "Kloos’s campaign created and paid for these signs wholly independently of God’s Storehouse, and the use was solely for identification purposes. The signs were reviewed by the State of Kansas Governmental Ethics Commission prior to display, and the Commission rightly opined that the signs provided voters with valuable context ‘regarding who you are and the nonprofit with which you are associated' and approved them for use in the campaign.’"

Experts on nonprofit law at the time said the signs' design pushed the envelope and could land Kloos in hot water, particularly given the use of God Storehouse's logo.

“He’s gone beyond just identifying himself with a charity, which he did found and runs, and is now using the charity property,” Lloyd Mayer, a professor of law at Notre Dame University, said in September, 2020.

At the time, Kloos said the campaign materials were merely intended to tell voters that he founded the church, helping them understand his background.

“I’m running on who I am and there is no reason I can’t do that,” he said.

Kloos' attorneys say they gave documents voluntarily

Attorneys for Kloos also argue they voluntarily provided documents on the church's faith-based activities, as well as its organizational and financial activities, and said they believe those records would ultimately vindicate the church.

"We believe that the latest round of requests constitutes nothing more than harassment without any reasonable justification, which is why we filed a petition to quash," Kloos said in a statement.

The IRS summons is for Fiserv Inc. to turn over "any and all documents in your possession or under your control concerning any and all merchant accounts with the business operating as GOD’S STOREHOUSE TOPEKA CHURCH, 2111 SW CHELSEA DR, TOPEKA, KS 66614, ... for the period beginning January 1, 2019 through December 31, 2020."

That period includes the time of Kloos' election campaign.

The summons in Kansas, addressed to Kaw Valley Bank, seeks the church's monthly statements, cancelled checks, loan applications and other documents for the same two year time period.

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IRS declined invitation to attend service at church

Fiserv is to bring the documents on Monday to an IRS agent in Denver. The summons was issued by the IRS' tax exempt division. Fiserv Inc. is an American multinational Fortune 500 company that provides financial technology and financial services.

"The IRS initiated this examination on the IRS Commissioner’s asserted 'reasonable belief' that the Church may not be operating as a taxexempt organization and because of concerns ... that (the Church is) operating as a thrift shop rather than as a church,'" according to God's Storehouse's petition.

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Monday's petition asserts that "the Church invited the IRS to attend a worship service and to meet with Pastor Kloos and the Church’s board. The IRS did not accept this invitation. Given the detailed information already provided, the IRS has ample data to determine whether the Petitioner qualifies or not as a “church” without obtaining all of the information sought" by the summons, the petition contends.

Andrew Bahl is a senior statehouse reporter for the Topeka Capital-Journal. He can be reached at abahl@gannett.com or by phone at 443-979-6100.

This article originally appeared on Topeka Capital-Journal: IRS flags Topeka church God's Storehouse's tax-exempt status