On August 16, 2010, the Court of Appeals for the Federal Circuit ruled against the “Foundation for Human Understanding” (FHU) which had appealed an IRS action revoking its nonprofit status as a church. The Court ruled that FHU was not a church and it based its finding in part on a 14 point test created by an IRS commissioner in 1979. Those 14 points were:
In Foundation of Human Understanding v. United States; No. 2009-5129 (16 Aug 2010), the Court of Appeals for the Federal Circuit determined that the Foundation of Human Understanding (FHU) did not meet the requirements to qualify as a church.
FHU and its founder, Roy Masters, started operation in 1963. Following incorporation of FHU, it applied for tax-exempt status. The IRS denied that request in 1983 and the FHU brought an action before the Tax Court.
In 1987 the Tax Court ruled that FHU was a church. It listed four grounds for that decision. FHU owned a church building and conducted services each week in Los Angeles. It operated a religious school named The Brighton Academy. It acquired the Tall Timber Ranch in Selma, Oregon as a seminar and retreat center and it conducted services at a church building in Grants Pass, Oregon.
In 2001, the IRS began a second review of FHU for the years 1998 to 2000. Following that review, the IRS determined that FHU no longer qualified as a church. FHU contested that decision and the United States Court of Federal Claims supported the IRS determination.
The court determined that there are two principal tests to decide whether or not an organization is a church. The first is a series of 14 criteria created by the IRS Commissioner in a 1979 speech. These include (1) a distinct legal existence; (2) a recognized creed and form of worship; (3) a definite and distinct ecclesiastical government; (4) a formal code of doctrine and discipline; (5) a distinct religious history; (6) a membership not associated with any other church or denomination; (7) an organization of ordained ministers; (8) ordained ministers selected after completing prescribed studies; (9) a literature of its own; (10) established places of worship; (11) regular congregation; (12) regular religious services; (13) Sunday schools for religious instruction of the young; and (14) schools for the preparation of its ministers.
The second test is the "associational test." It has been preferred by several courts as opposed to the "14 criteria" approach. Under the associational test, a church must demonstrate that it has a "body of believers or communicants that assembles regularly."
During the period of years in question, FHU did not conduct regular religious services. It held 21 seminars in various locations during the three years. FHU also broadcast sermons and messages over the radio and the Internet. Because of the seminars and Internet broadcasts, FHU claimed that it still should be treated as a church.
However, FHU no longer had regular services with a body of believers and, therefore, failed the association test. The Internet sermons and radio broadcasts did not provide the opportunity to interact and associate that would be present with the body meeting periodically for worship. Therefore, FHU no longer qualified as a church.

In Foundation of Human Understanding v. United States; No. 2009-5129 (16 Aug 2010), the Court of Appeals for the Federal Circuit determined that the Foundation of Human Understanding (FHU) did not meet the requirements to qualify as a church.
FHU and its founder, Roy Masters, started operation in 1963. Following incorporation of FHU, it applied for tax-exempt status. The IRS denied that request in 1983 and the FHU brought an action before the Tax Court.
In 1987 the Tax Court ruled that FHU was a church. It listed four grounds for that decision. FHU owned a church building and conducted services each week in Los Angeles. It operated a religious school named The Brighton Academy. It acquired the Tall Timber Ranch in Selma, Oregon as a seminar and retreat center and it conducted services at a church building in Grants Pass, Oregon.
In 2001, the IRS began a second review of FHU for the years 1998 to 2000. Following that review, the IRS determined that FHU no longer qualified as a church. FHU contested that decision and the United States Court of Federal Claims supported the IRS determination.
The court determined that there are two principal tests to decide whether or not an organization is a church. The first is a series of 14 criteria created by the IRS Commissioner in a 1979 speech. These include (1) a distinct legal existence; (2) a recognized creed and form of worship; (3) a definite and distinct ecclesiastical government; (4) a formal code of doctrine and discipline; (5) a distinct religious history; (6) a membership not associated with any other church or denomination; (7) an organization of ordained ministers; (8) ordained ministers selected after completing prescribed studies; (9) a literature of its own; (10) established places of worship; (11) regular congregation; (12) regular religious services; (13) Sunday schools for religious instruction of the young; and (14) schools for the preparation of its ministers.
The second test is the "associational test." It has been preferred by several courts as opposed to the "14 criteria" approach. Under the associational test, a church must demonstrate that it has a "body of believers or communicants that assembles regularly."
During the period of years in question, FHU did not conduct regular religious services. It held 21 seminars in various locations during the three years. FHU also broadcast sermons and messages over the radio and the Internet. Because of the seminars and Internet broadcasts, FHU claimed that it still should be treated as a church.
However, FHU no longer had regular services with a body of believers and, therefore, failed the association test. The Internet sermons and radio broadcasts did not provide the opportunity to interact and associate that would be present with the body meeting periodically for worship. Therefore, FHU no longer qualified as a church.