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March 24, 2013: Romans 13 – What every 501c3 Pastor and Church Member Needs to Hear (Message preached at Gateway Anabaptist Church)
“Internal Revenue Code § 501. Exemption from tax on corporations, certain trusts, etc.:
“(a) Exemption from taxation. An organization described in subsection (c) … shall be exempt from taxation under this subtitle [26 USCS §§ 1 et seq.] unless such exemption is denied under section 502 or 503 [26 USCS § 502 or 503]….
“(c)(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office….
“(h) Expenditures by public charities to influence legislation. (1) General rule. In the case of an organization to which this subsection applies, exemption from taxation under subsection (a) shall be denied because a substantial part of the activities of such organization consists of carrying on propaganda, or otherwise attempting, to influence legislation…” (26 U.S.C. § 501(c)(3) (2007) in relevant part).
Notice that churches are not mentioned in 501(c)(3). It does mention, among other things, “[c]orporations … organized and operated exclusively for religious … purposes.” Even the federal government thereby recognizes that the basic character of a church who seeks and obtains 501(c)(3) status has changed and that church has become a “religious organization.” That happens when a church incorporates under state law. When a church incorporates, it becomes a corporation organized exclusively for religious purposes.
The state controls, defines, and instructs a corporate 501(c)(3) religious organization to a large degree. Control and definition go hand in hand. The federal government, not God, defines “religious purposes” as to an incorporated church. What if an incorporated 501(c)(3) religious organization considers an activity to be God-ordained and spiritual, but the civil government disagrees? The civil government with authority over that issue controls.
Under the IRS interpretation of 501(c)(3), to qualify for tax exempt status under 501(c)(3) religious organizations must meet the following requirements, i.e. abide by the following rules:
“1. must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes,
“2. net earnings must not inure to the benefit of any private individual or shareholder,
“3. no substantial part of its activity may be attempting to influence legislation,
“4. the organization may not intervene in political activity,
“5. the organization’s purposes and activities may not be illegal or violate fundamental public policy” (IRS Publication 1828 (2007), pp. 3, 5. This and all IRS publications referred to may be accessed at irs.gov. IRS details on proscription #3 are on pp. 5-6 of IRS Pub. 1828. Just mentioning a candidate may violate proscription #4. Detailed guidelines with consequences of violation of proscription #4 are on pp. 7-11 of Pub. 1828. As to proscription #5, public policy is determined by the courts.).
The last requirement—“may not violate fundamental public policy”—is not from law; that is, it is not listed as a requirement in § 501(c)(3). This requirement was made law by the Supreme Court of the United States in Bob Jones University, 461 U.S. 574, 578, 579, 580, 581, 582-583, 586-588, 588, 591 fn. 10, 595-596, 602 fn 28, 603, 604, fn. 29 at 604 (1983).
“§ 508. Special rules with respect to section 501(c)(3) organizations.
“(a) New organizations must notify secretary that they are applying for recognition of section 501(c)(3) status.
“(c) Exceptions. [Emphasis mine.]
“(1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—
“(A) churches, their integrated auxiliaries, and conventions or associations of churches” (26 U.S.C. § 508 (2007)). [Emphasis mine.]
Note. A church applies for 501(c)(3) recognition by filling out and filing IRS Form 1023.
§ 508(a),(c) says churches are excepted from obtaining § 501(c)(3) tax exempt status. In other words, churches are non-taxable; and, therefore, churches are an exception to the civil government requirement that certain organizations file for 501(c)(3) tax exempt status. Thus, even the federal government recognizes that a New Testament church is non-taxable. …
Note, however, that § 508 is a law. If a church claims § 508 status as opposed to First Amendment status, that church may be held to have submitted herself to the rules which apply to § 501(c)(3) status. To make sure she retains here First Amendment status, a church should remain non-taxable under the First Amendment to the United States Constitution.
(Click link to the first chapter listed below to read the whole chapter from which the above was taken.)
Links to chapters from God Betrayed/Separation of Church and State: The Biblical Principles and the American Application on 501(c)(3) tax exemption for churches follow. To download an article, right click the link and then click “Save link as”:
- Federal government control of churches through 501(c)(3) tax exemption (Section VI, Chapter 4 of God Betrayed; Chapter 4 of Separation of Church and State. Internal Revenue Code Section 501(c)(3) quoted on first page of this chapter.)
- The church incorporation-501(c)(3) control scheme (Section VI, Chapter 5 ofGod Betrayed; Chapter 5 of Separation of Church and State)
- Spurious rationale for church incorporation: limited liability/incorporation increases liability of church members (Section VI, Chapter 6 of God Betrayed; Chapter 6 of Separation of Church and State)
- Spurious rationale for church incorporation: to hold property (Section VI, Chapter 7 of God Betrayed; Chapter 7 of Separation of Church and State)
- Spurious rationale for church corporate-501(c)(3) status: tax exemption and tax deductions for contributions OR Tax reasons given for church corporate 501(c)(3) status: a biblical and legal analysis (Section VI, Chapter 8 of God Betrayed; Chapter 8 of Separation of Church and State)
- Spurious rationale for church corporate-501(c)(3) status: one’s convictions (Not included in God Betrayed or Separation of Church and State)
- Spurious rationale for church corporate-501(c)(3) status: winning souls is more important than loving God/The Most Important Thing: Loving God and/or Winning Souls (Not included in either God Betrayed or Separation of Church and State)
Relevant Articles by Jerald Finney:
Click here to go to “Separation of Church and State Law” blog which posts comprehensive studies of the issue of Separation of Church and State to include what is below and much more.