Two weeks ago, a magistrate recommended dismissing the case against Living Word Christian Church Center and its high-profile pastor, Mac Hammond. The federal government says the issue raised in the Living Word case is important for the IRS' ability to examine the books of religious organizations.
Because of the separation between church and state, the government may only look into a church's finances if a "high-level treasury official" reasonably believes the church violated the tax code.
Last February a citizens group filed a complaint with the IRS that alleged the church gave sweetheart deals to its pastor that allowed him to buy an airplane partially on credit and then lease it back
Living Word argued that the official who ordered the probe in its case, the IRS' director of Exempt Organizations Examinations, didn't qualify. Magistrate Jeffrey Keyes agreed. But the federal government has objected to Keyes' report saying the magistrate erred by not giving more credence to the IRS' interpretation and expertise.