In 1972, the Rev. Ben Morehead bought an old Chinese laundry on upper Georgia Avenue, turned it into a small community church, and for eight years has preached The Good Word to a dozen parishioners who faithfully attend his Sunday services.

Now, however, the word is bad.

The church was sold at a tax sale after the District of Columbia government claimed Morehead had failed to pay property taxes on the church, apparently, the government says, because he had neglected to apply for tax-exempt religious status. Morehead now has sued the city for recovery of the church.

"I hope we work it out so they don't take the church from us," Morehead said recently. "I was supposed to be tax-exempt. They even sent a man out to check us out."

Morehead, a Pentecostal whose True Church of the Lord Jesus Christ, Inc. previously had been located on North Capitol Street, bought the former laundry at 6206 Georgia Ave. in 1972. A large lighted cross at the church entrance greets its dozen or so regular members and guests.

Morehead's lawsuit, filed last week in D.C. Superior Court, contends that he knew that as a church he was exempt from property taxes. Morehead claims he filed an application in 1973 for such exempt-status and assumed that it had been granted.

In 1976, the lawsuit states, the city placed a tax lien on the property and in 1977, the property was sold to a local lawyer at a tax sale. Late in 1979, the new owner, Elbert C. Robinson, was issued a deed for the property.

Normally, taxpayers have a number of administrative remedies to recover property being lost for nonpayment of taxes. Morehead estimates the city has billed him for about $3,000 in back taxes. He says that an official from the tax department visited him, but that he never heard anything else. Morehead says he never availed himself of the city's administrative remedies because the city never informed him that he was about to lose his church.

The District of Columbia "never notified Morehead of the tax lien, the notice of sale, the sale, the expiration of the redemption period, or the issuance of the tax deed," said Morehead's lawyer, Robert Case Liotta.

Now, according to Liotta, Morehead is paying $165 monthly rent to Robinson, who has agreed to let the church remain operating until the lawsuit is resolved. Robinson declined comment on the matter.

"It sounds like a pretty sad story," said an official of the Department of Finance and Revenue, who noted that there are 1,179 churches and other tax-exempt religious institutions in the city, costing the city about $11.5 million in lost tax revenues.

Department deputy director, Edward Meyers, said the city generally grants tax-exempt status to churches as long as they are owned by a pastor who is registered to perform marriages and funerals with the Superior Court. An official of the marriage bureau confirmed that Morehead is registered to perform such ceremonies.

Meyers said he could not recall a city church that had een sold at a tax sale, although he noted that no church is "certified for tax-exempt status until it's been certified" by the finance and revenue department.

"We don't like seeing anybody lose a home or a church," Meyers said. He would not comment on Morehead's lawsuit, but said that generally "if we find that the fault is with the District government in providing proper notice, then they won't lose their property. If the problem is with the delinquent taxpayer, the courts will uphold the city."

Some of Morehead's parishioners said they were insulted by the city's action, which they saw as a challenge to the church's legitimacy.

"It's an honest church. It's a good church. It's not a rip-off church," said Margaret Hawes, who has acted as the church's treasurer and attended for 12 years.

Rosalee Thompson, who lives near the church and has attended since 1977, said, "That church is more needed than anything. It's a part of our life. Without that church, what will we do?"