Churches Tax Exempt Status

“No church has ever lost its tax exempt status.” Matthew Staver, Founder of Liberty Counsel.

During this current election cycle it is important to consider what we can and cannot do with regards to preaching and teaching on political issues and how that may effect the churches tax exempt status.
“Recognition of Tax-Exempt Status
Automatic Exemption for Churches
Churches that meet the requirements of IRC section
501(c)(3) are automatically considered tax exempt and
are not required to apply for and obtain recognition of
tax-exempt status from the IRS.
Although there is no requirement to do so, many
churches seek recognition of tax-exempt status from the
IRS because such recognition assures church leaders,
members, and contributors that the church is recognized
as exempt and qualifies for related tax benefits.
For example, contributors to a church that has been
recognized as tax exempt would know that their contributions
generally are tax-deductible.”
http://www.irs.gov/pub/irs-pdf/p1828.pdf

Most people assume that churches are required to apply for a non-profit 501 (c)3 tax exempt status. However, according to the tax code churches have a special status and do not need to apply for tax exempt status. For the purposes of tax exemption to do so is redundant and unnecessary. There are other benefits of being incorporated but tax exempt status is not one of them. I would encourage every church member and Pastor to get the publication created and distributed by Matthew Staver founder of Liberty Counsel that delivers a wealth of information that debunks some myths about what churches can and cannot do in dealing with political issues and candidates.

www.libertycounsel.org

What you will discover is that a churches tax exempt status cannot be pulled from the church on a permanent basis. Since the exemption is automatic and does not rely on a letter of recognition from the IRS the automatic exemption applies to the church everyday. If the IRS attempts to pull the status from the church today, then tomorrow is a new day and the exemption begin a new. Not one church has ever lost its tax exempt status in the history of IRS oversight. Many churches apply for tax exempt status because they feel it is required. There have been approximately 5 churches that the IRS has pulled this letter of recognition from. However, since the tax status is automatic and does not require this application or letter of recognition their tax exempt status remains in tact.

In 1992 the church Pierce Creek in Binghamton NY did lose its letter after placing a full page add in USA Today and in the Washington Times. In this add they expressly endorsed Bill Clinton for President of the United States. As a result of this the IRS approached the church in 2002 long after the election was over. The IRS wanted to know if this church would promise not to do this again. However the church wanted to poke its finger in the eye of the IRS and simply told them to go away and to leave us alone. The IRS then revoked the churches 501c3 letter in an effort to pull their tax exempt status. At this point the church filed suit, not to get back its tax exempt status (since a letter is not required for churches) but to retain its letter. This case ended up at the federal court of appeals. This court said that the IRS could take the letter from the church, but it could not take the tax exempt status. This federal court of appeals specifically said the church does not lose its tax exempt status even though it ran full page adds endorsing a political candidate in two national newspapers. The courts ruling was as follows: “Because of the churches unique tax exempt status the revocation of the letter is likely to be more symbolic than substantial.”

The federal government at the appellate court level recognizes that the churches tax exempt status is not to be lumped in with all other non-profit organizations. Its tax exempt status is outside of all others. Barry Lynn with the organization Americans United For Separation of Church and State has sent out countless numbers of warning letters to churches threatening to turn you in for any perceived political activity by the church. And to date he has not been successful in getting one single church prosecuted. Not one. His organization has been and remains today a complete failure in their endeavors. So why would we listen to men and organizations like these who are acting erroneously and unsuccessfully? They are not to be listened to or feared.

Preachers of the gospel of Jesus Christ should preach boldly the message of a holy and righteous God. This requires that we speak to issues that are brought up in the product of campaigns. We should preach against the murder of unborn children, God ordained marriage between one man and one woman, we should preach against support of unbiblical religious and political positions. Let’s continue to proclaim the gospel with boldness.

 

Tax benefits never come into play.