Tax

A Non-Profit organization does not mean that the organization makes zero profit, but that there are limits as to how much profit it can make.

And many churches do, in fact, make a profit. Profit is simply a surplus after all expenditures.

The last church I was part of had three CDs (certificate of deposit) which were the result of a surplus in the general fund. That means that somewhere along the way, they brought in more money than they spent, which is a profit.

I think there should be no such designation as "non-profit", and any organization which provides a product or service ought to be treated the same. Whether it's a computer repair service, or spiritual service, a service is a service.

I don't agree that a business is a "person" even if the government says that is the case.

A rudimentary distinction is that a business supplies, and a person consumes.

I took a short look at the tax page you linked, and at first glance I would have concerns, such as the number of points in the middle where money changes hand for one reason or another. Could have a tendency to drive up prices.

But ultimately that is not a huge concern. I think things ought to be fair, but in reality there is no such thing as fair

 

Wow! What happened to freedom of conscience? The power to tax is the power to destroy. A church provides no services. As the Quakers say, after the meeting the service begins.

 

The argument is moot. Churches are not subject to taxation in the U.S. whether they are organized as a 501(c)(3) or not. The U.S. Supreme Court stated in Lemon v. Kurtzman in 1971 that non-taxation of churches is undergirded by "more than 200 years of virtually universal practice imbedded in our colonial experience and continuing into the present." Why? The Court found there is a distinction between constitutionally separate "sovereigns." For one sovereign entity to tax another leaves the taxed one subservient to that authority.

Churches in America are guaranteed in the Constitution to be free from subjection to government authority. The First Amendment requires that "Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof ... " The Constitution prevents the government from wielding its authority to control churches, and taxation represents control. Churches in this way differ from all other businesses and organizations. They are a unique institution whose existence is not derived from government authority, nor even from governmental acknowledgment. Churches preceded the birth of our nation and will remain long after its death. They transcend geographic and ethnic boundaries.

That's partially true, James, but totally misleading. Tax-exempt non-profits often make money as a result of their activities and use it to cover expenses. Such income can be essential to an organization's survival. As long as a nonprofit's activities are associated with the nonprofit's purpose, any profit made from them isn't taxable.

But if non-profits make money in ways that aren't related to their non-profit purposes, they will most likely have to pay corporate income tax on those profits. The kind of income they can earn as "profit" is extremely limited without jeopardizing their nonprofit status. Generally, the first $1,000 of unrelated income is not taxed, but the remainder is subject to the going corporate tax rate. For most non-profits, even a local church, earning more than $1,000 in conducting business unrelated to their non-profit purposes could be devastating to their tax-exempt status and their non-profit purpose.

The issue, in light of Lemon v. Kurtzman, is not whether churches should be taxed. It is, why do churches organize under 501(c)(3) status in the first place? The answer is simple: There is no guarantee for the continued interpretation of the First Amendment as barring government interference in religious/faith-based organizations. It is for future self-protection.

As you can see from above, that is much too much of an oversimplification.

That's considered by the IRS "investment" and as such was taxable. I hope they paid taxes on it, or they've put their 501(c)(3) in jeopardy.

Perhaps you should become familiar with another U.S. Supreme Court decision, Walz v. Tax Commission of the City of New York in 1971. It held that " ...the First Amendment tolerates neither governmentally established religion nor governmental interference with religion ... the legislative purpose of tax exemptions is not aimed at establishing, sponsoring, or supporting religion, and New York's legislation simply spares the exercise of religion from the burden of property taxation levied on private profit institutions ... tax exemption creates only a minimal and remote involvement between church and state, far less than taxation of churches would entail, and it restricts the fiscal relationship between them, thus tending to complement and reinforce the desired separation insulating each from the other ...Freedom from taxation for two centuries has not led to an established church or religion, and, on the contrary, has helped to guarantee the free exercise of all forms of religious belief."

This is totally irrelevant to the issue, but to briefly address it, if a corporation isn't a "person" it can't be sued, made subject to civil and criminal laws, and it can act in any way its directors see fit, even if such action is not in the best interests of the community, city, state or nation. The "personhood" of a corporation has been established for nearly 700 years. Arguments to the contrary are just silly.

Completely erroneous. Where does a business get the raw materials from which to manufacture the good its sells? How does a business establish a brick-and-mortar public outlet for those goods and services without consuming from the construction and wholesale industry, not to mention the public utilities it uses? How does a service-based industry provide its services without consuming from virtually every segment of the economy to put itself in a position to do business with the public? That statement is not very well thought through, James, no offense.

The sooner we disabuse ourselves of the fallacy of "fairness" the better off we will all be. Find any verse in the Bible that promises "fairness," please.

 

The reason why some organizations are given non-profit status is because the surplus in that organization cannot legally go to any one private person. Those surpluses must stay within the organization and only be used for its purposes.

The reason non-profits get tax breaks that for profit organizations do not is because non-profits serve the community. It allows the money that would have been paid in taxes to go out into the community.


Churches cannot lose their tax status. Churches have a special code in the tax law just for churches and the tax status for churches are not dependent on the 501c3 letter.

In order for the church to lose its tax status the Tax code would have to be rewritten on that issue.

 

Rev and TND,
I think there is a disconnect between what I wrote and how you guys perceived it.

I have no disagreement with what either of you wrote, but you both are speaking from the standpoint of how our government views the church (and other nonprofits).

I was writing from a standpoint apart from how our government views the church

I wish the government did not give preferential tax status to churches. Because the result of a government being "kind" to us, it has the potential to attach certain strings to that kindness. And that's what we see happening now.

The church is looking to be financially kind to us, but then we don't want the inevitable strings attached with that kindness.

Governments are not our allies, and whenever governments have chosen to be on our side, Christians get complacent and the gospel suffers

 

Unless and until the Supreme Court rules otherwise, the government can bluster and fume all it wants about churches being autonomous of government control, but there isn't a danged thing the government can do about it. It isn't the government "being kind to us," it is our founders' intent echoing down through 235 years of Constitutional law.

Honestly, I'm not sure what this has to do with anything.

In the U.S., government doesn't have to be our ally. All it has to do is follow the Constitution, and we will be fine.

 

TND,

Salty's intent of the thread was not - how does the U.S. government treat us, how are our IRS laws set up, how are we viewed by the government, what the founding fathers intended, etc.

The thread was started because I stated in another thread that I wish churches would all lose their tax exempt status. So it's about what I believe should be the case, not how it is currently.

I had a typo with:

What I meant to write is that the church is looking for the government to be financially kind to us, but then we don't want the inevitable strings that come with that kindness.


The church wants the government to be involved only as it pertains to being kind to us in financial matters. But then we don't want the government to dictate that in order to keep that financial favor, we have to adhere to their version of moral and social correctness.

Best way to avoid the conundrum? Quit looking for a financial blessing from the government, then we don't feel the pressure to cower to their threat of removing the financial favor.


What did Abraham say to the king of Sodom?

Abram said to the king of Sodom, “I have sworn to the Lord God Most High, possessor of heaven and earth, that I will not take a thread or a sandal thong or anything that is yours, for fear you would say, ‘I have made Abram rich.’ (Gen 14:22-23)


The church needs to have this attitude toward our government. Tell them they can have back their financial favor, and we will trust God instead. The church has a socialist agenda in this sense, that they want everybody else to pick up the slack for our part.

If we use the public street as an access to our church parking lot, then the church needs to pony up some money to go toward street repairs

If we want the government to protect our religious freedom, then we need to shell out a few bucks toward the cost of running the government.

Should we expect to get free electricity and water? Free envelopes and copier ink?

Many Christians feel like people, companies and governments are obligated to give us financial favors with no amount of allegiance in return.

 

You sure about that?

He does go on to talk about the automatic electronic tax, no deductions on individual returns, etc. Nonetheless, the issue is whether churches and other non-profits should be taxed and that is what I was discussing.

So, that aside ...

There are no strings. The Constitution says there can't be any.

I doubt that. We have moved, as individual church bodies, to organization as 501(c)(3) corporations, but as I pointed out, it isn't necessary.

No we don't. We don't have to do anything that is outside the realm of biblical principle. When churches do so, it isn't because of the government, it is because of their own bad decisions and misconception of the teachings of the Bible.

You need to drop the idea that we're "looking" for anything from the government. The right to be free from government taxation was granted to us by the founders who were, themselves, members of local churches. And you don't want the government charging charitable organizations, churches or otherwise, taxes. That truly will put us out of business.

That is a grossly misapplied verse. It has nothing to do with taxation of churches, nor government favoritism -- "kindness," if you will -- to a body of believers. Abram was not a church. He was an individual. No teaching applicable to man as an individual can be claimed by the body of Christ as applicable to it. This passage is, in fact, a lesson in serving for serving's sake, and not taking reward for that which is expected of us as believers.

I'm sorry James, but that's balderdash. A fundamental right granted under the Bill of Rights cannot be surrendered on the whim of incorrect political thought.

No it doesn't, because it is not the church using the street. It is the individual members of the church using the street to do God's work, and our individual taxes pay the freight for the streets.

All the government has to do to fulfill its part of the First Amendment is leave us alone. That doesn't cost anything. You seem to be operating on the concept that there is a codified "separation of church and state" in the Constitution, but it offers no such language and no such theory.

Another complete misnomer. Paying for public utilities is not "taxation," it is payment for usage of service and product. Non-profits have to do that regardless of whether they deal with public or private entities.

Again, an erroneous conclusion based on faulty reasoning. We seek nothing from the government, and we owe nothing to the government. You fail to understand, the First Amendment proffers autonomy to the church to function separately and completely outside the framework of government, and as such is not subject to anything good bad or indifferent from the government.

 

Not to get this thread off track, but I just have to add...

I have long contended that the same sex marriage brouhaha is not about "marriage", it's about money.

You mention one reason. Another is social security survivorship benefits. If they can adopt a couple of kids, they receive even more. at age 60, they would recieve it either way, kids or not.

And we are all aware of the mortality rates of homosexuals, males in particular.

Lots of money out there.


BTW Excellent discussion of the tax status of churches.

 

Not at all. Because as I've mentioned several times, I am not trying to discuss how things are, how the founding fathers intended thing to be, anything of the sort. In this discussion, I wish the word "constitution" could be given a time out.

I am trying to discuss how things ought to be if we are trusting God instead of looking for the government to bless us financially

And with that governmental blessing comes "inevitable" strings. Maybe not intended, but inevitable - like we're starting to see now. You wanna keep your tax free status, you'll have to tow the line on issues such as abortion, same sex marriage, etc

Don't wanna tow the line, it's gonna cost money

But the church wants the financial favor without those strings. So they fight in the political arena to have their cake and eat it, too

Only as soon as you stop mentioning how the constitution was intended, or how a 501 works, or anything else.

As long as you keep appealing to the constitution or tax laws, I'll keep saying you're looking to the government


And I agree with carpro. It is a good discussion, even if we don't agree

 

No church is looking for blessings from the government (what a silly way to put it) It is fool hardy to not be an incorporated non profit these days with liability laws as they are.

 

James ...

I have freedom of speech because of the Constitution. That doesn't mean that I cite the freedom of speech every time I speak freely. I don't have to. It's just there.

By the same token, stating factually that the First Amendment -- the same one that gives me my freedom of speech -- establishes that Congress can't make laws to collect taxes from churches is the same thing. It isn't something we "look to." It's just there, and has been for 225 years.

Like Rev said, the concept that we're "looking for blessings" from the government is ludicrous. We don't have to "look for blessings" that were given freely long before we even thought about them.

 

For the last forty four years, a decision by the U.S. Supreme Court has stood to prove otherwise, as I mentioned earlier. In its 1970 opinion in Walz v. Tax Commission of the City of New York, the high court stated that a tax exemption for churches "creates only a minimal and remote involvement between church and state and far less" than taxation of churches would create. An exemption " ... restricts the fiscal relationship between church and state, and tends to complement and reinforce the desired Constitutional non-interference the founders desired." The Supreme Court also said that "the power to tax involves the power to destroy." Taxing churches breaks down the Establishment Clause and would eventually lead to the destruction of the free exercise of religion.

In other words, contrary to many statements here, taxation, not "non-taxation," is what would threaten the ability of Christians to worship as they see fit.

 

That's considered by the IRS "investment" and as such was taxable. I hope they paid taxes on it, or they've put their 501(c)(3) in jeopardy.

I found this interesting. Our church has had a need to increase the space in the building for several years, and has been both receiving donations to the building fund and allocating a portion of general offerings toward that purpose. Not wishing to be like the man given one talent, who buried it rather than use it for his master's good, we chose to place some the Master's provision in a CD, with all interest (modest, to be sure) staying within the building fund. As the Lord's provison has allowed the expansion to get under way, the CD has been withdrawn and utilized for that purpose.

 

As everyone knows, the Supreme Court ruled that the power to tax is the power to destroy.

Now tax exemption of churches goes to freedom of conscience and nothing else.

If you favor taxing churches, then you do not believe in freedom of conscience.

It is that simple. Freedom of conscience means that the government cannot tax me for my freedom of conscience beliefs.

I may be one of the few here who believe that God made every person capable of deciding his spiritual destiny for himself. It is called individual competency if you want the name of the doctrine.

It was Nero who martyred St. Lawrence over the treasury of the church--for the record. Nero became angry when St. Lawrence said that the church was broke and brought some ragged beggars in to Nero as the true treasure of the church. For this St. Lawrence was tied to an iron cot and burnt to death, according to Fox.