Tax Reforms Should Include Removal Of Automatic Tax Exemptions For All Types Of Churches

Author: August 3, 2011 12:45 pm

The Mormon Temple in Salt Lake City, Utah. In 2008, despite a clear violation of separation of church and state, the Mormon Church in Utah called for it's patrons to donate money to fight Prop 8, a ballot initiative in the State of California. Image from

The newly passed deficit reduction plan, which was forcibly attached to the debt ceiling increase, includes the creation of a special bipartisan congressional ‘Super Committee’ to fast track deficit reduction legislation by the end of the year.  A critical, though long-ignored, source of revenue which should be addressed by this committee is the removal of the automatic tax-exempt status provision for churches as well as for synagogues, mosques, and other similar places of worship.  This discussion is vital if tax reform is a truly legitimate goal of this Congress, as both Democrats and Republicans have stated on numerous occasions.

The five qualifying factors for charitable organizations to gain tax exemption are the following, according to the IRS:

  • The organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes.
  • The organization’s net earnings may not inure to the benefit of any private individual or shareholder.
  • No substantial part of the organization’s activity may be attempting to influence legislation.
  • The organization may not intervene in political campaigns.
  • The organization’s purposes and activities may not be illegal or violate fundamental public policy.

While charities and religious organizations must apply for tax exemption status and prove that they meet these criteria, churches are virtually automatically tax-exempt. They do not need to apply for the exemption. Nor must they do anything significant to prove that they qualify under the above guidelines.

Not every church violates these qualifiers, but many violate one or more.  Giving churches blanket tax-exempt status, without the means to adequately verify that the qualifiers are being met, opens up the system to rampant violations.  The answer is simple: Base tax exemptions on specifically documented actions rather than on a “blanket” church tax exemption.

Recent political events illustrate why there is a growing need to change the church tax policy.

With the flood of fundamentalist-backed legislation passing in GOP-controlled states, as well as in the GOP-controlled U.S. House of Representatives, it is most likely that many churches are in violation of the third of these qualifiers.  In addition, with an increasing number of churches holding political rallies at their locations, the fourth qualifier is in danger of being ignored as well.

An example of this violation occurred in Republican Representative Allen West of Florida’s 22nd congressional district.  On numerous occasions West has not only used various churches for political events, he has also made political appearances at functions officially organized by churches.  The IRS maintains that while a politician as a non-candidate may speak at a church event, the event must be non-partisan.  However, at one public forum held at a church when one of his constituents asked a legitimate question, which Representative West did not like politically, she was removed forcibly.  Hardly a non-partisan reaction!

Additionally, money floating around in churches, in many cases, provides church leaders with an affluent and profitable lifestyle. This may disqualify many churches on the grounds of the second requirement.

In fact, one could argue that churches are not charities at all, they are businesses.  They may perform charitable acts at times but so does the average citizen, who is definitely not granted the boon of automatic tax-exempt status.  The primary objective of a church is to maintain and recruit members to their organization, and to spread its theology (in other words sell its product) regardless of any factual support.  In the process it often makes a profit financially as well as other growth.  Thus, churches are either for-profit businesses, private clubs with extensive marketing campaigns, or both.  In any event, accordingly, they should pay their fair share of taxes.

In extreme, or perhaps all too common, cases it appears that the only qualifier which some churches meet is the first and possibly the fifth.  The church tax exemption code was for small local churches whose major purpose was tending to their “flocks.”  However, large mega-churches, many of which have deep political agendas and deeper pockets, are granted the same tax-exempt allowance using large legal staffs to twist the tax code to their own advantage.

Churches should be allowed to itemize charitable exemptions like the rest of America does, no more, no less.  If they do perform legitimate acts of charity or substantial non-religious services to the community from which they do not profit, they should be able receive a tax exemption to cover the loss.   Though, if they profit from an action it is no longer an act of charity and the church should be taxed accordingly, just like any other business.

–Raymond Gellner, National Liberal Examiner,     |   Twitter 

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Edited By: Alexis Atherton


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  • Alan Batterman

    Property owned by churches and other religious organizations should be subject to property tax. They have to pay for utilities and insurance. They receive services from their municipality such as garbage pick-up and police and fire protection. The children of the clergy people can, and many do, go to public school. So they should pay for those services in the form of property tax.

  • Here’s the thing… exempting a church from any form of taxation is not the ‘separation of church and state’ quite the contrary, it is a very cozy and close relationship for the church.

  • If churches want to play the game of politics, let them pay admission like everyone else [George Carlin]

  • Another Idea would be to add a 15% tax to all city,county,state and federal employees. After all isnt it thier jobs, not churches that got us into this mess?

    • “The organization’s net earnings may not inure to the benefit of any private individual or shareholder.” When they pay these .org leaders salaries that are in the hundreds of thousands of dollars, they CERTAINLY do not need to be tax free…if they have that kind of money flow, they should be able to afford to pay taxes!

    • So you are saying that government employees caused the problems that this country is facing? All the first responder’s of 9-11 are the problem? Stop watch FAUX NOOSE and learn the real facts. Government employees are not the enemy. The economy is in the toilet because of deregulation, and ridiculous tax break’s for big business and the rich, or is it ok for corporations like GE to get a bailout, pay no taxes, and get a refund?

  • I imagine that the reason all churches are “blanket” exempt is due to the separation of church and state, plain and simple. Perhaps they do need to enforce the definition of what is considered a church.

    • Your idea scares me. Defining what is — and is not — a church sounds good on the surface, like telling WBC they can stop pretending to be a church. That appeals to me.

      Then, put that power in the hands of fundamentalist conservatives. How long under their power would it take for every mosque and pagan gathering to lose their tax-exempt status? If we had a Palin or a Bachmann in the Oval Office, I’m pretty sure an egg timer wouldn’t move fast enough to clock that.

  • Absolutely! We should also remove the tax credits people receive for donating to churches and charitable organizations. This boils down to government subsidized religion which is clearly unconstitutional.

  • This could very quickly become yet another tool to punish churches the current administration doesn’t like, whatever administration that might be. Consider what might have been done to Black churches in the South in the 50’s and 60’s

    In general increasing the power of the IRS over religious institutions is a scary idea I think.

    • You make a really good point and I agree. A conservative might try and better aid a christian facility and that is definitely not fair.

      I’ve never heard of this dramatically affecting how much the government earns from taxes, so I’d imagine it to be miniscule. Probably best to leave this as it is. Also, many people view their church service as a basic need, I’d feel wrong taking that away from them. Even if they are scary tea partiers.

  • Not totally true. Churches (as well as other charitable orgs) are “automatically exempt” up to a revenue of I think 50k a year. The caveat is, that without 501(c)(3) paperwork, no one has to recognize it. So for instance…if my church is buying supplies for the next family picnic and I go to the local grocery store and we are 501(c)(3), the grocery store does not have to accept that we are tax exempt and can tax us on our purchases. On the other hand…if we have the IRS later saying that we are a 501(c)(3) organization…then they have to recognize it and all of our purchases are tax exempt. The process of becoming 501(c)(3) certified is not an easy one. When I ran a local pagan temple…I looked into it and since we didn’t make enough in revenue, the IRS said they didn’t even recommend it.

    WHat i do agree with is that the IRS should watch 501(c)(3) orgs and other charitable groups more closely. if they are not abiding by the rules, then they should lose their tax exempt status…as they did to the Christian Coalition. Westboro Baptist, since they do actively take part in political actions, should lose their exempt status.

    • Perhaps it is time to revoke the tax-exempt status. Increasing oversight over churches will only work if that “oversight” is unbiased. The current political climate leaves me thinking that only those churches who speak up for justice for the poor or marginalized will have their tax-exempt status challenged, and the fundamentalists (who are fundamentally against “loving neighbor” as Jesus expressed)will continue their political reign.
      *BTW – most clergy are considered self employed and do pay both halves of their FICA tax.

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