Tax status for Religious Institutions

[NH Baritone]

The tax status of churches has been brought under closer scrutiny following the overt church political activity in recent elections. While other non-profit organizations are banned from participating in electoral politics, some churches have devoted staff time and money toward influencing the electoral process.

This occasion calls for public expression on this issue. It cannot be denied that religious institutions use public services while simultaneously providing some community benefits. How are we to assess the benefits vs. the costs presented by these religious institutions and to formulate a reasonable tax policy that benefits the public?

[Richard]

I agree with option 3:
"Religious institutions should have to apply for non-profit status with Federal & state tax officials and follow the regulations to receive & maintain tax-exempt status."
They want to be a non-profit organization, then they should follow the rules that apply for those.

[darkumbra]

Define religion...

Christianity counts... (obviously)

Judaism... (obviously)

Islam... (obviously)

Church of the Latter day Saints? 'obviously' it does - lost gold tablets found by a con man - not-with-standing.

Scientology?

Flying Spaghetti Monster?

Darkumbra's Church of the Prime Divinity, Pi and Phi?

Who decides? Who says THEY decide?

[Pseudonym]

I agree with option 3, though I'd be okay with option 2.

The bottom line for me is that it is morally wrong, and a violation of the principle of separation of church and state, for the government to discriminate against an organisation just because it's a religious institution. What other nonprofits get, religious nonprofits should also get.

[spongebob]

I tend to agree with Pseudonym. I don't see an advantage in discriminating against religious non-profit groups over non-religious non-profit groups. I think that if a group is legally deemed "non-profit" then they should receive the same treatment. However, I do believe that ANY non-profit group that breaks its commitment to the this agreement should be dealt with promptly and with little remorse.

[NH Baritone]

Define religion...

Christianity counts... (obviously)
Judaism... (obviously)
Islam... (obviously)
Church of the Latter day Saints? 'obviously' it does - lost gold tablets found by a con man - not-with-standing.
Scientology?
Flying Spaghetti Monster?
Darkumbra's Church of the Prime Divinity, Pi and Phi?

Who decides? Who says THEY decide?

Small cults with <$1000/year donations would not have enough sway to catch any tax collector's eye. But once you have enough $$$ MOOLAH $$$ to pay your clergy & staff and issue W-2s that state that their employer was The Church of the Prime Divinity (Praise π & φ!), to buy property (and seek to avoid paying property taxes), or to apply for an exemption from state sales taxes for Prime Divinity Stationery, THEN your organization will catch the Eye of Sauron (aka, the tax collectors).

Here's what the IRS regulations say regarding Federal tax exemption:

TAX EXEMPT STATUS

Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions.

To qualify for tax-exempt status, such an organization must meet the following requirements (covered in greater detail throughout this publication):

• the organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes,
• net earnings may not inure to the benefit of any private individual or shareholder,
• no substantial part of its activity may be attempting to influence legislation,
• the organization may not intervene in political campaigns, and
• the organization’s purposes and activities may not be illegal or violate fundamental public policy.

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.

[NH Baritone]

I agree with option 3, though I'd be okay with option 2.

The bottom line for me is that it is morally wrong, and a violation of the principle of separation of church and state, for the government to discriminate against an organisation just because it's a religious institution. What other nonprofits get, religious nonprofits should also get.

The question arises, then, should the property and income associated with WORSHIP be free of taxes?

In other words, should the IRS remove its exemption for the promotion of religion? It's not hard for me to argue that groups organized to worship are no different from groups that open a country club or a book club.

[Pseudonym]

The question arises, then, should the property and income associated with WORSHIP be free of taxes?

In other words, should the IRS remove its exemption for the promotion of religion? It's not hard for me to argue that groups organized to worship are no different from groups that open a country club or a book club.

And it's not hard for me to argue that groups organised to worship are no different from groups that open a school or a charity, especially if they do indeed teach and do indeed collect money for charity work.

In most countries, even community sporting clubs are eligible for tax exempt status. Is that not the case in the United States?

EDIT: And why not book clubs? I'm not sure of the tax status of country clubs, though.

[Penguin]

And it's not hard for me to argue that groups organised to worship are no different from groups that open a school or a charity, especially if they do indeed teach and do indeed collect money for charity work.

And it would be fine to me to justify preferential tax status for a religious organization on that basis, but IMO it should be the same basis as any other charity: the nature of the work they do and the structure of the organization, not the organization's religious character.

Personally, I believe in fully secular government. I think that government should be blind to religion, and that religious status shouldn't matter when deciding what tax status an organization should have. If a religious charity meets all the normal criteria for a secular charity, fine - treat it as a charity. However, a church shouldn't be automatically considered a charity just because it's a church.

In most countries, even community sporting clubs are eligible for tax exempt status. Is that not the case in the United States?

That's the case in Canada. Here, we have non-profit organizations that aren't charities. Because they don't make a profit, their profits aren't taxed... though I believe that if they own property, it's taxed like normal. Because they don't engage in charitable work, donations to them aren't tax-deductible for the donor.

An example would be the car club I belong to: technically, it's organized as a corporation without share capital. We're not-for-profit, and even though we do community-minded activities occasionally, our activities are primarily for the mutual benefit of the club members so we definitely wouldn't be able to register as a charity. However, because the club takes in more than $30,000 a year (the magic number for the federal Goods and Services Tax) in the things they "sell" like event entry fees are subject to sales tax, which the club has to collect and then remit to the government.