Mansion Owner Fights Taxes With Church Exemption

April 5, 2010 — -- He says he converted part of his home into a chapel and became ordained as a minister by signing up with an online program. But is that enough to exempt Illinois real estate agent George Michael from tens of thousands of dollars in taxes on his multimillion dollar lakefront property?

Michael, of Lake Bluff, Ill., has been locked in a dispute with state and local government officials for three years over whether he qualifies for a property tax exemption provided to religious organizations.

One state judge has called Michael's tax exemption application "a sham," arguing that Michael's professed faith -- the Armenian Orthodox religion -- is at odds with the church that licensed him online, the Church of Spiritual Humanism.

But Michael contends that all he was trying to do was help his wife, who has multiple sclerosis, and his disabled daughter worship at home instead of traveling miles to the nearest Armenian church. He chose online ordination, he said, because it was faster than spending years at a theological school.

Michael said he's fighting for the tax exemption on "principle."

"If I didn't live in a property facing Lake Michigan worth millions of dollars, [there would be] no problem," he said. "There are thousands upon thousands of churches in the U.S. that have never had a single appeal against them."

As Michael pursues his battle for the exemption in court, local government officials say it's time to pay up: Next month, the county will send him a property tax bill of roughly $225,000 for 2007 through 2009, said Lake County chief assessment officer Martin Paulson.

"I've not seen anything like this in my 20 years doing this type of work," Paulson said. "It's just too bad that it happened the way it did."

There are decades' worth of cases where authorities accused people of inappropriately claiming religious tax benefits after being ordained in untraditional ways. Among the most high-profile examples: In the early 1980s, the Internal Revenue Service pursued criminal charges against several pilots with now-defunct Braniff International Airlines.

The pilots had been ordained through a "mail-order ministry" -- a religious organization that, sometimes for a fee, allowed would-be ministers to be licensed through mailed-in applications -- and later claimed they were exempt from income taxes. In 1983, seven Braniff pilots, along with the head of their church, the Basic Bible Church of America, were convicted of tax fraud.