501c3 Non-Profit?
That’s a Safe Bet…

501c3 Non-Profit?
That’s a Safe Bet…

For what does it profit a man to gain the whole world, and forfeit his soul? Mk 8:36

501c3 Facts:

Most churches in America have organized as “501c3 tax-exempt religious organizations.” This is a fairly recent trend that has only been going on for about fifty years. Churches were only added to section 501c3 of the tax code in 1954. Lyndon B. Johnson, LBJWe can thank Sen. Lyndon B. Johnson for that. Johnson was no ally of the church. As part of his political agenda, Johnson had it in mind to silence the church and eliminate the significant influence the church had always had on shaping “public policy.”

Although Johnson proffered this as a “favor” to churches, the favor also came with strings attached (more like shackles). One need not look far to see the devastating effects 501c3 acceptance has had on the church, and the consequent restrictions placed upon any 501c3 church. 501c3 churches are prohibited from addressing, in any tangible way, the vital issues of the day.

For a 501c3 church to openly speak out, or organize in opposition to, anything that the government declares “legal,” even if it is immoral (e.g. abortion, homosexuality, etc.), that church will jeopardize its tax exempt status. The 501c3 has had a “chilling effect” upon the free speech rights of the church. LBJ was a shrewd and cunning politician who seemed to well-appreciate how easily many of the clergy would sell out.

Did the church ever need to seek permission from the government to be exempt from taxes? Were churches prior to 1954 taxable? No, churches have never been taxable. To be taxable a church would first need to be under the jurisdiction, and therefore under the taxing authority, of the government. The First Amendment clearly places the church outside the jurisdiction of the civil government: “Congress shall make NO LAW respecting an establishment of religion, nor prohibiting the free exercise thereof.”

Religion cannot be free if you have to pay the government, through taxation, to exercise it. Since churches aren’t taxable in the first place, why do so many of them go to the IRS and seek permission to be tax-exempt? It occurs out of:

  • Ignorance (“We didn’t know any better”)
  • Bandwagon logic (“Everyone else is doing it”)
  • Professional advice (many attorneys and CPAs recommend it)

Does the law require, or even encourage, a church to organize as a 501c3? To answer that question let’s turn to what the IRS itself has to say.

Churches Need Not Apply

In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 and 1024. However, note what the IRS says regarding churches and church ministries, in Publication 557:

Some organizations are not required to file Form 1023. These include:

Churches, inter-church organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group. These organizations are exempt automatically if they meet the requirements of section 501(c)(3).

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.”

 

501c3 Problems:

In Bob Jones University v. United States (461 U.S. 574), the U.S. Supreme Court noted the following about the government’s intended purpose for the 501c3:

The Court asserts that an exempt organization must “demonstrably serve and be in harmony with the public interest,” must have a purpose that comports with “the common community conscience,” and must not act in a manner “affirmatively at odds with [the] declared position of the whole Government.” Taken together, these passages suggest that the primary function of a tax-exempt organization is to act on behalf of the Government in carrying out government-approved policies.

Government Hush Money

IRS Code § 501c3 reads as follows:

Sec. 501. Exemption from tax on corporations, certain trusts, etc.
(c) List of exempt organizations —

(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

While it may be appropriate for many non-profit organizations to waive their right to intervene in political campaigns, or to influence legislation, is this the right thing for a church to do?

Waiving such rights is to waive one’s freedom of speech. Waiving one’s right to influence legislation is especially problematic. The inevitable result has been that the church has abandoned its responsibility to influence their elected representatives to craft legislation that is biblical and that comports with the Constitution. The unchurched, and even those who are openly hostile to the church, have taken over that influence and are now seeing to it that their legislators craft statutes which are unbiblical, immoral, and unconstitutional.

One need not look far to see that the church’s acceptance of the 501c3, and its significant restrictions, has had devastating consequences to not only the church, but to the entire nation.

When a church accepts the 501c3 status, that church:

  • Waives its freedom of speech.
  • Waives its freedom of religion.
  • Waives its right to influence legislators and the legislation they craft.
  • Waives its constitutionally guaranteed rights.
  • Is no longer free to speak to the vital issues of the day.
  • Becomes controlled by a spirit of fear that if it doesn’t toe the line with the IRS it will lose its tax-exempt status.
  • Becomes a State-Church.

The church in America today is, by and large, not speaking to the vital issues of the day. The church has been effectively silenced. There has been a chilling effect upon the church’s freedom of speech for fear of IRS retribution should the church get out of line. The inevitable result is a moral downward spiral in the culture as the church stands mute.

This did not happen by accident, but by design, and it is something of relatively recent design. Churches were added to IRS Code § 501c3 in 1954. All one need do is analyze who is responsible for sponsoring the congressional bill to include churches in § 501c3 and it should become apparent that his agenda was not to empower the church, but to silence the church (hint: the sponsor was a Senator from Texas who later became President).

“The church is the moral compass of society.”President John Adams

John Adams stated while he was our President, “The church is the moral compass of society.” But in order to remain a true and faithful compass, the church must remain separate and independent of the influences of that society, particularly its civil government. It must be a “free-church.” Should the church become subordinate, or in any way controlled or co-opted by the civil government (a “State-Church” system), it can no longer effectively serve as that society’s moral compass. Unless it is respected, no one will listen to what it has to say.

Indeed, few citizens in any society, at any time in history, in any nation, have ever had any genuine respect for any State-Church system (nor should they). State-Church systems are inevitably compromised and governed by pragmatism, rather than genuine Christian faithfulness. It should surprise no one that the 501c3 church in America has lost its prophetic voice, lost the respect it once held, and is no longer “the moral compass of society.”

source: Peter Kershaw | HushMoney.org