What's the big deal about tax exempt status?

HeDied4U

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Seriously, what's the big deal?

Seems like I'm always reading somewhere online that a church can't/shouldn't say this or the church can't/shouldn't say that, and if it does, it will lose it's tax exempt status. Is it going to mean the end of that particular church if for some reason it would lose that status?

One would think a church would want to be able to speak out on whatever issue it wants to in whatever manner it wants to and say whatever it needs to and not have a muzzle put on it by the "state."

Exactly what taxes is a church exempt from anyways? Property tax? Payroll tax? Sales tax on the coffee from the Starbucks in the lobby? (Okay, that last one was supposed to be a joke)

Maybe I'm picking at nits here, but I guess I've just never really understood it all.
 
Do you want your church to send 30% (minimum) of its tithes?

I say "no way." I'd rather that $$ go to missions, outreach or better pews ;)
 
Another part of it is that donations to a non-profit (e.g. a church) qualify for tax write-offs.

But then, I'm not a fan of a church marrying itself to the State anyways...
 
All churches in the US are considered non-taxable under USC Title 26 Section 508c1a. If a church uses more than 10% of its assets in political activity intended to influence the outcome of an election (lobbying) it may lose its tax exempt status. That does not mean the church will have to pay income tax on its tithes and offerings. It means that the tithes and offerings will not be able to be deducted from the giver's income tax.
 
In Canada, it is a bigger deal. If you decide to turn in your tax status, you must disperse 100% of your assets. Cash, land, building, vehicles, everything must be dispersed to another registered charity. You can choose where it goes, but it must go to another registered charity, and it must be 100% dispersed. No option. The fine for not dispersing, a vague fine that could and has been "up to and including 100% of the charities assets".
 
I don't really see the point in a church wanting to engage in partisan politics anyway. Unless all the members are of one mind politically, but I've never seen that. My church is full of Republicans, Democrats, Libertarians and Greens. We could never agree on who to support.
 
The financial side of the issue is an important one but not the most important one. The power to tax is the power to control. Once the govt has the legal foundation to tax churches it is but a small step to exercising control over the message or practice of those churches. To me, that is the larger issue.
 
Tom Brennan said:
The financial side of the issue is an important one but not the most important one. The power to tax is the power to control. Once the govt has the legal foundation to tax churches it is but a small step to exercising control over the message or practice of those churches. To me, that is the larger issue.
Which I agree with. The question I ask and get varying responss is this.

By applying for or accepting the goverments status that allows us to write tax receipts (in Canada we call this Charitable status, in the US I think it is 501c) we accept the conditions of the right to write those reciepts. Sure, people get a tax deduction or exemption but there are strings attached. Do those string themselves not violate the princiiple of the separation of church and state enough that we should in good conscience abstain from applying for or accepting that "strings attached"privilige in the first place?
 
"My kingdom is not of this world." - Jesus
 
ItinerantPreacher said:
By applying for or accepting the goverments status that allows us to write tax receipts (in Canada we call this Charitable status, in the US I think it is 501c) we accept the conditions of the right to write those reciepts. Sure, people get a tax deduction or exemption but there are strings attached. Do those string themselves not violate the princiiple of the separation of church and state enough that we should in good conscience abstain from applying for or accepting that "strings attached"privilige in the first place?

An American church is automatically tax exempt. It doesn't need to file anything with anyone on a federal level for anything. An American church does not need to be a registered 501c(3) corporation in order to issue giving records.

Incorporation is a state matter, and has nothing to do with issuing giving records. It is a legal statement that says you are not a one man show. Thus, if you get sued, the plaintiff cannot come after the personal property of the members of the church. It is simply a matter of financial prudence. It also helps to establish the ability to get loans and to qualify for state sales tax exemption, but these are lesser matters.

I have pastored in two states. Neither state required anything for incorporation other than an annual filing, a small fee, and the names of the people on the board. There is zero requirement in relation to what you do or don't do, say or don't say.

...and when the day comes that there are such requirements we will simply unincorporate and take the financial lumps that come with it.
 
Tom Brennan said:
...and when the day comes that there are such requirements we will simply unincorporate and take the financial lumps that come with it.

^this^
 
Tom Brennan said:
ItinerantPreacher said:
By applying for or accepting the goverments status that allows us to write tax receipts (in Canada we call this Charitable status, in the US I think it is 501c) we accept the conditions of the right to write those reciepts. Sure, people get a tax deduction or exemption but there are strings attached. Do those string themselves not violate the princiiple of the separation of church and state enough that we should in good conscience abstain from applying for or accepting that "strings attached"privilige in the first place?

An American church is automatically tax exempt. It doesn't need to file anything with anyone on a federal level for anything. An American church does not need to be a registered 501c(3) corporation in order to issue giving records.

Incorporation is a state matter, and has nothing to do with issuing giving records. It is a legal statement that says you are not a one man show. Thus, if you get sued, the plaintiff cannot come after the personal property of the members of the church. It is simply a matter of financial prudence. It also helps to establish the ability to get loans and to qualify for state sales tax exemption, but these are lesser matters.

I have pastored in two states. Neither state required anything for incorporation other than an annual filing, a small fee, and the names of the people on the board. There is zero requirement in relation to what you do or don't do, say or don't say.

...and when the day comes that there are such requirements we will simply unincorporate and take the financial lumps that come with it.
The issue was once the same in Canada. Due to abuses of the system, (which there have been in the Us as well) our system changed. The government first of all adopted legislation (around 1973) which required churches to provide proof that the giving records were accurate. The changes came one at a time, and included adopting a registry, issuing registration to existing churches, exercising penalties on improper record keeping, requiring registration before issuing giving records, requiring disbanding and dispersement to drop registration, and recategorizing churches under the same legislation as all other non-profits organizations.

This all started in the 70's, so many churches now find themselves with land, buildings, bank accounts, and the only way to get out is to disperse it all and start over. One of the reasons I bring this up is to warn people. There are more or less 300 IFB churches in Canada. The vast majority of these are pastored as missionary works by men from the US. I praise the Lord for them, but most do not understand or inquire about the issue before coming. It is significantly different than what you described Tom Brennan, and has been since the late 60's early 70's. The big difference is, once you register, you cannot un-register, or perhaps put more accurately, you cannot un-register without potentially significant consequences.

Now, I understand that you could disband, disperse and re-form without charitable registration, but let's face facts, that would hurt a church.

Just my two cents worth.
 
Our churches beliefs are- Tax exempt status means the church becomes what equates to a charitable organization (per IRS)

A church acting as a charitable organization would not be partial to some church members over others.

Being charitable to the needy should be part of the churches teachings. It is scripture. So everyone in the church who can, will personally

and regularly, be donating to the needy one on one, should be doing so. Privately, as no other person except that recipient would know about

the blessings these two shared together. And spiritual growth and bonding they shared together as a result of the experience.

Otherwise we know the church operates via what the world knows as-volunteers.

So it needs very little $$ to operate.

Electricity, Water, Rent possibly (but hopefully not)  would be examples of the most costly of checks written to sustain this volunteer organization/church

Since the Old Covenant aka Old Testament tithing was done away with, and replaced with a new Covenant which now has "cheerful giver" as the new standard for Christians, it still leaves whatever expenses the church has left, to be met. As a church member you can logically divide whatever it costs to sustain the church by the number of church members.

If you suspect any checks going to specific church member(s) ensure to ask why they are donating to that specific person over others who also volunteer their time per scripture. Is  the check so large it is actually fully sustaining them? For how long? If the head of household is a male, what disability or challenge is involved which prevents him from fulfilling his basic obligation to financially support his family? Mental depression counts. And the older we get, the harder it is. But..why isn't he working part time at least?

You want to ensure there is a darn good reason for your hard earned money via your obedience to scripture..it being filtered to any specific church member within an ALL VOLUNTEER organization aka church. Are they disabled, down on their luck? A man of age, Able to work but refuses, even though all able bodied Christian men in scripture did? Infidels aka the unbelievers, is the actual definition of an able bodied man who refuses to work to financially support his family. That is contrary to the churches purpose. Contrary to why Jesus came.


We have a couple who tends to the churches garden but it's the size of a private school gym. It was their creation/vision. Their wages actually save the church members money, so it's  a no-brainer. All church members benefit. Most everyone, who attended services that day, receive a barrel full of organic vegetables and fruits. This occurs for the majority of the year. This couple also tends to 14 Fruit trees on the property. He is working his trade but it isn't enough money, even at full time, to sustain his family. They work very hard for the church while he works his job on the side.


In the end, not sure if the small amount of money saved in taxes via this tax exempt status, is worth worrying over.
 
FSSL said:
Do you want your church to send 30% (minimum) of its tithes?

I say "no way." I'd rather that $$ go to missions, outreach or better pews ;)
Where in the New Testament, the new covenant, do we find tithing?

And in the Old Testament, who did this tithing apply to?
 
Exemption Requirements - 501(c)(3) Organizations http://www.irs.gov/Charities-&-Non-Profits/Churches-&-Religious-Organizations

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.

The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.

Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. For a detailed discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more information about political activities of charities, see the FY-2002 CPE topic Election Year Issues.
 
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