501c3 Tax Exempt Status and the

Church
Many organizations in America each year apply for and receive tax-exempt
recognition from the Internal Revenue Service under Internal Revenue Code
section 501c3. What types of organizations qualify for IRS tax-exempt status?
According to IRS Publication 557:

An organization may qualify for exemption from federal income tax if it is

organized and operated exclusively for one or more of the following
purposes.
Charitable.
Religious.
Educational.
Scientific.
Literary.
Testing for public safety.
Fostering national or international amateur sports competition.
The prevention of cruelty to children or animals.

In many cases it's probably a good thing to have certain types of organizations
that fulfill a useful purpose in society, and which are not operated for profit, to be
exempted from federal taxation. Such entities are often referred to as "charitable
organizations."

The rationale the courts have long used in exempting charitable organizations
from taxation is that such entities often relieve the government of having to
provide many similar services (feeding the poor, etc.). As such, charitable
organizations also relieve taxpayers of having to pay additional taxes for such
services. The courts have also acknowledged that private charitable
organizations have usually provided their services far more efficiently, more
competently, and more cost effectively.

The focus of our discussion here, however, is not about charitable organizations,
but for the Christian church and whether it is proper, or even necessary, for a
church to seek tax-exempt recognition from the IRS, and what happens to a
church if it does seek 501c3 recognition.

If you ask the opinion of an attorney or CPA they will almost always urge you to
seek 501c3 status. If you believe that "licensed professionals" have been an
asset to the Church of the Lord Jesus Christ, then you will likely do whatever they
tell you to do.
 If, on the other hand, you have come to realize that attorneys are
part of the problem in America, then you should know that there is a
great deal of information that they will never disclose to you about
what 501c3 status does to your church, and why you don't even
need it.

To learn more about whether it is even necessary for a church to

seek 501c3 status from the IRS in order to be treated as exempt
from income taxes, click on the "NEXT" button below.

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.
We 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 to 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, interchurch 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
12 ¶ Wherefore it shall come to pass, if ye hearken to these judgments, and
keep, and do them, that the LORD thy God shall keep unto thee the covenant
and the mercy which he sware unto thy fathers:

13 And he will love thee, and bless thee, and multiply thee: he will also bless the
fruit of thy womb, and the fruit of thy land, thy corn, and thy wine, and thine oil,
the increase of thy kine, and the flocks of thy sheep, in the land which he sware
unto thy fathers to give thee.

14 Thou shalt be blessed above all people: there shall not be male or female
barren among you, or among your cattle.

15 And the LORD will take away from thee all sickness, and will put none of the
evil diseases of Egypt, which thou knowest, upon thee; but will lay them upon all
them that hate thee.

16 And thou shalt consume all the people which the LORD thy God shall deliver
thee; thine eye shall have no pity upon them: neither shalt thou serve their gods;
for that will be a snare unto thee.

17 If thou shalt say in thine heart, These nations are more than I; how can I
dispossess them?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: Myths
 1. A church or church ministry must be 501c3 in order to avoid paying taxes.

2. A church or church ministry must be 501c3 in order to be tax deductible.

3. Churches should comply with all the laws of the land because Jesus said,
“Render to Caesar the things that are Caesar’s” (Mr 12:17). Therefore, it is
only right for a church to become a 501c3.

4. Being a 501c3 helps to legitimize a church in the eyes of the world. After
all, Paul said, “Providing for honest things, not only in the sight of the Lord,
but also in the sight of men.” (2Co 8:21)

Myths #1 & 2 have been promulgated for years by swarms of attorneys, as well
as some accountants. Both myths are patently false. When it comes to legal and
tax matters, most people just assume that the “licensed professionals” know what
they're talking about. Little do people realize that far too many attorneys never
personally study the law for themselves, and are merely parroting what they've
heard other attorneys say. Once a myth gets started in the legal profession, it
tends to spread like a wildfire, particularly when the myth can make a lot of
money for the tens of thousands of attorneys who want to take advantage of it.
We’ll debunk these myths using the IRS’ own publications.

Myth #3 is often promulgated by folks who misconstrue the statements of Jesus

to justify placing His church under State authority. Theologically, this is referred
to as “Erastianism,” a position that holds that the church is, and ought to be,
subordinate to the State.

Myth #4 is often promulgated by those who are preoccupied with pleasing men in
order to win their approval. This is problematic because it inevitably results in
worldly compromise. The emphasis in Paul's teaching is first upon doing what is
honest “in the sight of the Lord.” Only then are we enabled to do what is honest
“in the sight of men.”

Myth #1. Tax Exempt:

The IRS has acknowledged for decades that it is completely unnecessary for any
church to apply for a tax-exempt status. According to IRS Publication 557, as
well as IRS Code § 508, churches and church ministries are “exempt
automatically.” Application for an exempt status is not only superfluous, but to do
so subordinates that church to the IRS. Churches in America have always been
nontaxable anyway. It simply makes no sense for a church to go to the IRS and
seek permission to be exempted from a tax the government can’t impose in the
first place.
The church in America is protected from the government by the First
Amendment:

“Congress shall make NO law respecting an establishment of religion, or

prohibiting the free exercise thereof.”

It would be absurd to suppose that you could have free exercise of religion if you
had to pay for it (taxes). If Congress can make NO law respecting the church, it
can make NO law to tax the church.

The IRS lacks the jurisdiction necessary to tax the churches in America. The IRS
has no more jurisdiction over the churches in America than it does over the
churches in Canada. It would be as absurd (and tyrannical) for the IRS to tax the
churches in America, as it would be for the IRS to tax churches in Canada. They
don't have jurisdiction.

Myth #2. Tax Deductible:

Whether or not a church or church ministry applies for and receives a “501c3 tax-
exempt recognition letter” from the IRS, any contributions made to a church are
“automatically qualified” as a tax write-off to the contributor, pursuant to IRS
Publication 526, and IRS Code § 170(c)(2)(B). A church does not have to be a
"nonprofit charitable organization" to be tax deductible, nor does it need IRS
authorization to be tax deductible. According to the IRS, churches have that
status “automatically.”

Myth #3. Render To Caesar:

Jesus did indeed say, “Render to Caesar the things that are Caesar’s;” but that’s
only half the verse! Jesus went on to say, “and to God the things that are God’s.”
The obvious question to be asked is at what time did Jesus place His church
under the authority and jurisdiction of Caesar (the State)?

Mark 12:17 is the most brilliant teaching on lawful authority and legal jurisdiction
that anyone has ever uttered. We can properly interpret Jesus’ teaching in this
way, “Don’t render to Caesar the things that don't belong Caesar.”

Only the "sovereign" (the supreme power) has the authority to impose a tax, and
he may do so only upon his own citizen and subjects. Is the State sovereign over
Jesus Christ and His body, the church? No, the civil government has no such
lawful authority, biblically or constitutionally. If the civil government has the
authority to tax the church, the church is a subordinate and a subject of the State.

God ordained both the church and the civil government, and has delineated their
respective spheres of authority. There should be mutual accountability between
the church and the State, but one is not an underling of the other.
 America's Founding Fathers forever abolished the old State-Church
and Church-State systems. However, those who would now advocate
that the church should be subordinate to the State are, in reality,
calling for a return of that old State-Church system.

For the church to apply to the government to be exempt from taxes

presupposes that the government has legitimate authority to impose
taxes on the church to begin with. Such thinking smacks of
Erastianism.

“It should wrong our consciences.”

The clergy in America have not always been so confused on the issue of State
taxation of the church. For many years it was understood that the church cannot
and must not go to the State with hat in hand and ask permission to be exempted
from taxes. To do so would be an admission that the church was under State
jurisdiction. Instead, the church must refuse such an admission. The Rev. Isaac
Backus was one such clergyman. In September of 1775 he preached a sermon
to the Massachusetts Assembly in which he stated:

“Yet, as we are persuaded that an entire freedom from being taxed by civil
rulers to religious worship is not a mere favor from any man or men in the
world but a right and property granted us by God, who commands us to
stand fast in it, we have not only the same reason to refuse an
acknowledgment of such a taxing power here, as America has the
abovesaid power, but also, according to our present light, we should
wrong our consciences in allowing that power to men, which we believe
belongs only to God.”

Myth #4. 501c3 Status Legitimizes the Church

It's a sad commentary on the church of our day when any church feels compelled
to go to sinners to seek legitimacy. The church of Jesus Christ is in no way
legitimized by the license, approval, acknowledgement or permission of wicked
men (those who don't appreciate how corrupt the IRS is haven't taken the time to
study the public record).

For any church to submit to the IRS for 501c3 approval in an effort to be
perceived by the world as being honest ("Providing for honest things"), even if it
is well-intentioned is, nonetheless, completely illogical. Accountability is a good
thing, but only when we make ourselves accountable to those whom the
Scriptures call us to be accountable, and to those who are honest and
trustworthy themselves.
Is it biblical for a church to make itself accountable to the IRS? Is the IRS honest
and trustworthy? Is the IRS itself legitimate such that it can, with any genuine
sense of credibility, legitimize anyone else as legitimate?

le•git•i•mate, adj. 1. Being in compliance with the law; lawful: a legitimate

business. 2. Being in accordance with established or accepted patterns
and standards.

Let's examine the IRS' own track record to determine its legitimacy: The last time
that the Government Accounting Office even attempted to audit the IRS' books
was in 1996 (they're supposed to audit the IRS every year, but they are no longer
able to do so). In that year, GAO audits determined that over $13 billion of the
taxes that the IRS had collected (in 1995) could not be accounted for. Thirteen-
billion dollars had vanished, and the IRS offered no better explanation than to
shrug their shoulders! The GAO found the IRS's books in such a shambles that
they declared the IRS to be "unauditable." Furthermore, the IRS refused to be
held accountable for the "loss."

How could 501c3 recognition from such a corrupt entity, an agency that literally
holds itself to be above the law, and accoutable to no one, result in "legitimacy"?
It's simply illogical to hold that recognition from any agency that isn't legitimate
itself could result in legitimacy.

Is “honesty” (morality) a prerequisite for 501c3 recognition? If it were, then only

honest and moral groups would be approved; but that is simply not the case at
all. Even just a cursory review of IRS Publication 78 (an annual list all 501c3
organizations) reveals that many thousands of 501c3's are immoral and wicked
organizations. These include:

• Satanists
• Wiccans
• Homosexuals
• Pedophiles
• Pornographers
• Pro-Aborts
• Pagans
• Atheists
• and thousands of other organizations which are hellbent on destroying the
moral fabric of this nation

Becoming a 501c3 places any church in very sordid company. It is both unbiblical
and illogical to claim that a church becomes "legitimate" by receiving a 501c3
status.