Should churches pay taxes?

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.

Churches should be tax-exempt.

 

I am actually for it -- in some VERY LIMITED ways.

For instance, starting new churches in some major cities will likely never happen due to the expenses incurred from trying to find a place to meet, getting around (or complying with) city regulations, heavy fees, etc., all of which work to hinder any fledgling congregation in their mission. In these cases, a congregation might get creative and actually purchase a building and/or business, operate the business for profit to cover expenses, and also use the building (or a portion) for the church. They will never get a 501 (c)(3) for that sort of use, so they may as well just pay tax and get the church established.

This has already happened in several instances and it is starting to prove a viable model for church planting in these areas. One church in a large California city has purchased a downtown motel. They operate the motel as usual, but reserve a couple of floors for church activity. It is working great!

 

Misguided at best and intentionally wrong at worst. Here are a few facts ---

1. Those who work for churches do pay state/federal income taxes. Ask anyone who works for a church and they will let you know. There is no difference between them and me (and anyone else who works in the private sector - or public sector for that matter).

2. Churches do not pay business/corporate taxes.

3. Other organizations that do not pay these taxes --- private universities, Boy/Girl Scouts, nonprofit hospitals, etc. -- all nonprofit entities. Since these organizations do not turn a profit per se, there is no item to tax.

Somehow, this web site seems to focus only on churches.

 

My concern is mostly twofold:
1. I believe that by requiring a church to pay taxes to the government, it opens up the possibility for the government's interference in its affairs. Tax policy can be used as a tool for influence.
2. A tax liability can hinder small, poorer churches. Property taxes are not usually based on income, but property values. It's possible a church whose municipality has different plans for its property can tax them into leaving. A group of politicians with an ax to grind against the church could do the same.

My concern is with the potential problems to churches taxation would bring. Let's face it, government is not trustworthy. I think if it had this tool, it would eventually use it to attack American Christian churches.

...Besides, we pay enough taxes already.

 

Salty- Are you for church taxation? If so why?

 

How does taxation prohibit the free exercise of religion.

My question is 'why should churches not be taxed like everyone else?'

 

Yes, like any other organisation. I think even the Roman Catholic churches have lost that privilege.

 

You are correct. There cannot be taxes on profits when there are no profits.

Property tax may be the only issue. However, churches would only be taxed only if all other nonprofits paid property taxes. But think about it -- churches (and other nonprofits) would be raising money not to help others, but to simply fill the government coffers.

Wouldn't it be great if people spent their time trying to find ways to lower the tax bill for all of us, not find new ways to tax more people and more organizations???

 

Most "non-profits" are a tax rip-off. All "non-profit" means is there are no shareholders who get dividends. The profits in large non-profits are usually distributed to employees and executives in excess pay and benefits. Not referring to your local Little league team.

 

Churches are not tax exempt because they are non profit. They are exempt because they are churches:

Churches Are “Automatically Tax-Exempt”

According to IRS Code § 508(c)(1)(A):

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.

(1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—

(A) churches, their integrated auxiliaries, and conventions or associations of churches.

This is referred to as the "mandatory exception" rule. Thus, we see from the IRS’ own publications, and the tax code, that it is completely unnecessary for any church to apply for tax-exempt status. In the IRS’ own words a church “is automatically tax-exempt.”
Churches Are “Automatically Tax-Deductible”

And what about tax-deductibility? Doesn’t a church still need to become a 501c3 so that contributions to it can be taken as a tax deduction? The answer is no! According to IRS Publication 526:

Organizations That Qualify To Receive Deductible Contributions

You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other than churches and governments, as described below, must apply to the IRS.

In the IRS’ own words a church “is automatically tax-deductible.”
Churches Have a Mandatory Exception To Filing Tax Returns

Not only is it completely unnecessary for any church to seek 501c3 status, to do so becomes a grant of jurisdiction to the IRS by any church that obtains that State favor. In the words of Steve Nestor, IRS Sr. Revenue Officer (ret.):

"I am not the only IRS employee who’s wondered why churches go to the government and seek permission to be exempted from a tax they didn’t owe to begin with, and to seek a tax deductible status that they’ve always had anyway. Many of us have marveled at how church leaders want to be regulated and controlled by an agency of government that most Americans have prayed would just get out of their lives. Churches are in an amazingly unique position, but they don’t seem to know or appreciate the implications of what it would mean to be free of government control."


http://hushmoney.org/501c3-facts.htm

 

Bill's right. My non-profit can never have more than $3,000 in the bank. When it gets close, we spend the money on a BBQ for the staff.

 

The actual numbers for non-profit or not-for-profit are closer to $50K not $3K. $25K is the upper limit before additional tax liabilities kick in -- not necessarily paying tax, but filing requirements.

I'm in the process of creating a non-profit organization right now. This stuff is fresh at hand.

But, all of this is really a non-issue for a church as long as the church IS a church. Unfortunately, some have used the term "church" as a tax loophole these days and they have created all sorts of fanciful worship exercises to do so. Scientology comes to mind. A Sci-Fi novel by L. Ron Hubbard until about 50 years ago, now a tax exempt religion that allows rich Holly-weird types to pour in huge sums of money tax exempt while living fantasy lifestyles that go far astray from any true religious purpose.

 

I was looking for a non-profit scheduling group list, but can't find one. I am aware different schedule NPOs have different laws. I am not at my home desk, so I can't post one up. My number is correct, though.

For instance, we put on several free concerts a year, with no problem, but to give a grant to a charity, or another NPO, laws kick with language only a lawyer could love.

My small NPO has a limit of $3,000.

 

Never heard the $3000 number before and I have been a part of several non-profit groups that were not church-related, but that may be a state regulation. All sorts of variances at the State level, including the ease at which one can form a non-profit, etc.

In Kentucky, we file a single sheet of paper with a few signatures and it is a done deal. Federal exemptions handle the rest.

From an accountant friend who is helping us make wise decisions to structure our 501 (c)(7) non-profit LLC:

 

If there were a tax on every speech a person makes in a public forum would we then have free speech?