Is it fair that churches are exempt from property tax?

Must churches obtain official 501(c)(3) status from the Internal Revenue Service to be exempt from taxation?

No, churches are automatically exempt from taxation, according to attorney Marcus Owens, Washington, D.C., a former head of the IRS’ tax-exempt division, now defending a California church against the IRS (see related story).

Must churches be 501(c)(3) for their members’ tithes, donations, and gifts to be tax-deductible?

Again, no, according to Owens and to IRS regulations readily accessible to the public.

But even if a church chooses not to be recognized as a 501(c)(3) tax-exempt organization, Owens said, provisions of the federal tax laws prohibiting “intervention in a political campaign” still apply to all churches. If the IRS finds that a church has violated this prohibition, the activities that constituted the violation are subject to an excise tax, according to the IRS.

“A church needs no ruling from the IRS to be exempt from taxation,” Owens said. “It is exempt by virtue of being a church. But churches are still bound by provisions of the Internal Revenue Code in regard to intervening in political campaigns.”
The Church’s Free Speech Rights

Regardless of whether a church has 501(c)(3) status, the church always has the right to speak out on the issues of the day, according to Glen Lavy, a constitutional attorney with the Alliance Defense Fund.

Because the question comes up so often, the ADF on its website (www.alliancedefensefund.org) has provided “Guidelines for Political Activities by Churches and Pastors” (http://www.alliancedefensefund.org/userdocs/GuidelinesforChurchesandPastors.pdf).

“In regard to churches getting involved in social issues, the IRS rule against intervention in a political campaign doesn’t apply,” Lavy said.

What does apply, then?

“IRS rules have the force of law,” Lavy said. “The government’s administrative agencies, like the IRS, have the ability to enact regulations which have validity, unless they are changed by the legislature. Congress has the right to change any regulation.”

The ADF’s “Guidelines” specify that churches are not allowed to endorse a particular candidate, contribute either funds or in-kind services to a candidate’s campaign, or distribute literature for a particular candidate

“Issue advocacy, however, may not be limited by government and can be freely engaged in by churches,” the ADF pamphlet says. “As long as one does not use explicit words expressly advocating the election or defeat of a clearly identified candidate, one is free to praise or criticize officials and candidates — this is called issue advocacy.”

Although churches are often threatened with loss of their tax-exempt status — sometimes by anti-church activists, sometimes by the IRS itself — there is no law that restricts churches from defining moral positions and asking people to vote accordingly, according to the ADF.

captainbryce wrote:Churches should pay taxes just like any other organization (private or public). The end!

Suzi wrote:They are supposed to lose the tax exemption if they preach politics from the pulpit, but many do and nothing ever happens. I feel none should be exempt any way.

wants2laugh wrote:churches do much for the community. Churches here have food banks, run homeless shelters, abused womens shelters, and even provide entertainment and daycare for little to no cost for working parents. Why should they have to pay taxes? Unless EVERY non-profit winds up paying taxes... I do not agree.

wants2laugh wrote:churches do much for the community. Churches here have food banks, run homeless shelters, abused womens shelters, and even provide entertainment and daycare for little to no cost for working parents. Why should they have to pay taxes? Unless EVERY non-profit winds up paying taxes... I do not agree.