Community Worship Fellowship v. United States

CourtUnited States Court of Federal Claims
DecidedOctober 23, 2025
Docket19-352
StatusPublished

This text of Community Worship Fellowship v. United States (Community Worship Fellowship v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Community Worship Fellowship v. United States, (uscfc 2025).

Opinion

In the United States Court of Federal Claims

COMMUNITY WORSHIP FELLOWSHIP,

Plaintiff,

v. No. 19-352 Filed October 23, 2025 THE UNITED STATES,

Defendant.

William L. Ghiorso, Ghiorso Law Firm, Salem, OR, for plaintiff.

Alex Schulman, Tax Division, United States Department of Justice, Washington, DC, for de- fendant.

OPINION AND ORDER Granting the government’s motion for summary judgment

Community Worship Fellowship (CWF) challenges the IRS’s decision revoking its tax-

exempt status as a 501(c)(3) charitable organization and as a church for the period from 2013 to

2016. CWF asks the court to reverse the IRS’s decision and declare that the organization is tax

exempt.

The government moves for summary judgment, arguing that during those tax years, CWF

operated for the financial benefit of its members, primarily a single family, and did not meet the

qualifications of a tax-exempt organization or a church under the tax code.

In that period, CWF’s disbursements overwhelmingly went to one family. CWF paid fam-

ily members unsubstantiated salaries. It also paid for family members’ Prada handbags, jewelry,

furs, Chanel fragrances, and private boat payments; paid for cruises and trips to Disneyland, Ha-

waii, and Paris; paid for golf outings, spa visits, dining out, and event tickets; paid for home im-

1 provements for family members; and disbursed money to family members as “gifts,” “reimburse-

ments,” “loans,” checks for “taxes,” and “benevolence.” There is no genuine issue of material fact;

CWF is not entitled to tax-exempt status, and the government is entitled to summary judgment.

I. Background

A. The history of CWF’s tax status

1. CWF was founded as a nonprofit organization

Lester Goddard founded CWF in 1998 when he and his family decided to leave the Four-

square megachurch in Oregon to start their own religious organization. ECF No. 64 at 11:16-12:9;

ECF No. 60-2 at 1-2. CWF was incorporated in Oregon as a nonprofit corporation under 26 U.S.C.

§ 501(c)(3). ECF No. 1 at 2 [¶3]. CWF was “organized exclusively for … religious … purposes”;

its articles of incorporation and bylaws prohibited anyone from using its net earnings to “inure to

the benefit of, or be distributed to, its officers, [council] members or other private persons.” ECF

No. 57-5 at 41-42 (articles V-VI); ECF No. 57-3 at 20 (bylaws).

CWF began with sixteen active members, all former members of the Foursquare church.

ECF No. 57-3 at 16; ECF No. 60-2 at 2. Lester Goddard served as CWF’s main pastor, and Ryan

Goddard, his son, served as CWF’s part-time youth and associate pastor. ECF No. 57-4 at 1293,

1296. Laura Goddard, Lester’s wife, was also involved in the operation of CWF, taking on “full-

time pastoral duties” alongside Lester. ECF No. 60-1 at 1-2.

In applying for federal tax-exempt status, CWF stated that its activities would consist of

bible teaching, praise, worship, and prayer. ECF No. 57-3 at 7-18. CWF would be governed by an

uncompensated council of elders. Id. at 9, 26; ECF No. 64 at 10:2-18. The council members in-

cluded Laura Goddard, Ryan Goddard, and others who were not initially related to the Goddards;

the others later joined the Goddard family through marriage. ECF No. 64 at 10:10-11:4, 54:3-13.

2 CWF’s revenue would be generated exclusively from tithes and offerings—tax-deductible dona-

tions—contributed by its members. ECF No. 57-4 at 1299. CWF attested that it qualified as both

a 501(c)(3) tax-exempt organization and a “church” for tax purposes under 26 U.S.C.

§ 170(b)(1)(A)(i). ECF No. 57-3 at 12.

The IRS approved CWF’s application, exempting it from federal tax as a 501(c)(3) organ-

ization and granting it church status under the tax code. ECF No. 57-3 at 46-48.

2. The IRS reexamined CWF’s tax-exempt status

More than a decade later, the IRS began to question whether CWF was adhering to the tax-

exemption requirements. See ECF No. 57 at 6. In September 2016, the IRS sent CWF a church tax

inquiry notice. ECF No. 57-3 at 50-55. The notice explained that the IRS was concerned that “the

church’s assets inured to the benefit of [its] pastors for personal use” and that CWF “facilitated the

unreporting of income by enabling church members to deduct amounts contributed and by return-

ing the amounts received as charitable contributions back to church members.” Id. at 50.

CWF did not respond to the notice, and the IRS issued a church tax examination notice.

ECF No. 57 at 6-7; ECF No. 57-3 at 96-97. When CWF again did not respond, the IRS selected

CWF for an audit. ECF No. 57 at 7; ECF No. 57-3 at 109-10. The IRS sent inquiries and requested

records concerning CWF’s finances and expenses, membership, banking, and tax returns covering

tax years 2013 through 2016. ECF No. 57-3 at 111; ECF No. 57-4 at 779, 1103, 1109, 1257, 1261.

In December 2018, the IRS issued a final letter revoking CWF’s tax-exempt status under

section 501(c)(3), effective August 2012, so CWF was not entitled to tax-exempt status for tax

years 2013 through 2016. ECF No. 57-4 at 1288-89, 1292-1314. The IRS explained that (1) at least

part of CWF’s earnings inured to the benefit of its members; (2) CWF operated for the benefit of

the private interests of its members; and (3) CWF was not a church within the meaning of the tax

code. Id. at 1288.

3 The IRS explained that, during tax years 2013 through 2016, CWF’s membership “primar-

ily consist[ed] of Lester Goddard and his immediate and extended family.” ECF No. 57-4 at 1296.

CWF “received its revenue solely from tithes and offerings”—tax-exempt donations from its mem-

bers—and then disbursed that revenue back to its members for their personal benefit and private

use. Id. at 1299-1300, 1304, 1307-11. Over the four years, CWF received $1,093,560 in net de-

posits. Id. at 1304, 1311. CWF spent $1,083,688 of that money. Id. Of that, approximately

$950,000 was traceable as checks to individuals. Id. at 1304, 1309-11. Of the $950,000 in checks,

approximately $933,000, or 98 percent, was disbursed to the Goddard family: Lester and Laura

Goddard, their children and children’s families, and Berit Homes, Ryan Goddard’s for-profit con-

struction business. Id. at 1308-10. And Lester and Laura Goddard alone received approximately

$784,000 of the total check disbursements. Id. at 1310. CWF funds were also used to pay off Lester

and Laura Goddard’s personal credit card. Id. at 1311.

CWF used its credit card to spend the rest of the $1,083,688 in expenses. ECF No. 57-4 at

1304, 1310-11. Lester and Laura Goddard were the only authorized users of that card, and it was

used to purchase flights, cruises, hotel stays, and resort stays in, among other places, Hawaii, Paris,

and Disneyland; golf outings; meals at restaurants; jewelry, handbags, and furs; event tickets; gro-

ceries; private loans; and home renovations. Id. at 1302-03, 1310.

CWF did not provide any evidence that any of those credit card charges were for church-

related expenses or that the checks or payments issued directly to members were used for tax-

exempt purposes. ECF No. 57-4 at 1303, 1310-11.

The IRS found that the funds disbursed to individual members constituted private inure-

ment. ECF No. 57-4 at 1301-04, 1310-11. The IRS explained that Lester and Laura Goddard had

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