GREENSBORO, N.C., DEC. 16 -- A federal bankruptcy judge today temporarily blocked the Internal Revenue Service from revoking PTL's tax-exempt status.
After a 2 1/2-hour hearing, Judge Rufus Reynolds granted a preliminary injunction requested by David Clark, a trustee overseeing the evangelical empire built by Jim and Tammy Bakker.
Reynolds told U.S. Justice Department attorney Richard Mitchell, representing the IRS, that revoking PTL's tax-exempt status would be "the kiss of death" to the ministry.
"I feel, balancing all the factors, PTL would definitely be in a position of going under if this were not restrained," he said.
Mitchell declined to say whether he would appeal. Clark said he thought "justice was served."
"To have imposed a death penalty on an organization because of the misuse of funds by its prior leaders would be unfair, and I think the American public would see it that way," he said.
Reynolds urged the IRS and PTL to work out their differences before the expected confirmation of a PTL reorganization plan now before his court.
Bakker resigned March 19 as chairman of PTL over a sexual liaison with former church secretary Jessica Hahn and an agreement to pay $265,000 for her silence.
The ministry filed for Chapter 11 reorganization under federal bankruptcy laws in June, and a federal grand jury in Charlotte began investigating Bakker and several top aides.
The IRS contends ministry contributions funded the Bakkers' lavish life style and that some PTL enterprises -- its hotel and theme park -- were more commercial than ministerial.
The IRS says PTL owes at least $62 million from June 1983 to June 1987. If the ministry is not found to be tax-exempt, the IRS says, PTL could be subject to an additional $20 million for business income taxes.
Clark said contributions to PTL, which are now tax deductible, pay for about 58 percent of the ministry's operations. A loss of the tax-exempt status would cause a reduction in contributions, he said.
Mitchell told the judge he believed the IRS filed its request to revoke the tax-exempt status because contributions deducted on tax returns reduce revenue to the Treasury.