Is it illegal for a church in America not to incorporate? Does a church have to be a 501c3?


A Publication of Separation of Church and State Law Ministry.


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Jerald Finney
Copyright © November 28, 2017


From IRS Publication 1828

It is not illegal for a church in America not to incorporate and a church does not have to be 501c3.

A church in America can choose to remain under the Lord Jesus Christ only. The First Amendment to the United States Constitution and corresponding provisions in the constitutions of all 50 states make this clear. The First Amendment is a statement of America’s highest man made law and the a 1947 U.S. Supreme court case applied the establishment clause to the states. So the states are bound, not only by their own state constitutions, but also by the First Amendment. Of course, the federal government is bound by the First Amendment and is not subject to any state constitution. Incorporation is a matter of state law. 501c3 is a matter of federal law.

The First Amendment states:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

Minnesota Constitution Article I., Bill of Rights:

Preamble: We, the people of the state of Minnesota, grateful to God for our civil and religious liberty, and desiring to perpetuate its blessings and secure the same to ourselves and our posterity, do ordain and establish this Constitution.

Sec. 16. Freedom of conscience; no preference to be given to any religious establishment or mode of worship. The enumeration of rights in this constitution shall not deny or impair others retained by and inherent in the people. The right of every man to worship God according to the dictates of his own conscience shall never be infringed; nor shall any man be compelled to attend, erect or support any place of worship, or to maintain any religious or ecclesiastical ministry, against his consent; nor shall any control of or interference with the rights of conscience be permitted, or any preference be given by law to any religious establishment or mode of worship; but the liberty of conscience hereby secured shall not be so construed as to excuse acts of licentiousness or justify practices inconsistent with the peace or safety of the state, nor shall any money be drawn from the treasury for the benefit of any religious societies or religious or theological seminaries.

The constitutions of the other states have similar provisions.

Below are some quotes from court cases, from the IRS Code, and from some other legal resources. You can go directly to these cases online by clicking the links attached to this article.

Here is a quote from Everson, U.S. S.Ct. 1947:

“Neither a state nor the Federal Government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another. Neither can force or influence a person to go to or to remain away from church against his will or force him to profess a belief or disbelief in any religion. No person can be punished for entertaining or professing religious beliefs or disbeliefs, for church attendance or nonattendance. No tax in any amount, large or small, can be levied to support any religious activities or institutions, whatever they may be called, or whatever form they may adopt to teach or practice religion. Neither a state nor the Federal Government can, openly or secretly, participate in the affairs of any religious organizations or groups, and vice versa. In the words of Jefferson, the clause against establishment of religion by law was intended to erect ‘a wall of separation between Church and State.

Now, let’s look at a case from Tennessee:

KOPSOMBUT-MYINT BUDDHIST CENTER, v. STATE BOARD OF EQUALIZATION, 728 N.W. 2d 327 (1986) Court of Appeals of Tennessee, Middle Section, at Nashville. Permission to Appeal Denied, April 6, 1987. IMPORTANT POINT: Property held in trust for a Buddhist Temple qualifies for a property tax exemption, if the property is used for religious purposes and the owner, any stockholder, officer, member or employee of such institution is not lawfully entitled to receive and pecuniary profit from the operations of that property in competition with like property owned by others which is not exempt. Property held in trust and which otherwise qualifies for the exemption is to be exempted from property tax.  Of note, for emphasis, it was obvious that corporate, 501(c)(3) status was not a prerequisite for religious property tax exemption. Also, this case deals with a “trust,” not a “business trust” “charitable trust” or some other type of trust that is a legal entity.” As to the trust relationship, the court stated:

  • “A valid trust need not be in writing. It can be created orally unless the language of the written conveyance excludes the existence of a trust. Sanderson v. Milligan,585 S.W.2d 573, 574 (Tenn. 1979); Linder v. Little,490 S.W.2d 717, 723 (Tenn. Ct. App. 1972); and Adrian v. Brown, 29 Tenn. App. 236, 243, 196 S.W.2d 118, 121 (1946). However, when a party seeks to establish an oral trust, it must do so by greater than a preponderance of the evidence. Sanderson v. Milligan, 585 S.W.2d 573, 574 (Tenn. 1979); Hunt v. Hunt, 169 Tenn. 1, 9, 80 S.W.2d 666, 669 (1935); and Browder v. Hite, 602 S.W.2d 489, 493 (Tenn. Ct. App. 1980).
  • “The existence of a trust requires proof of three elements: (1) a trustee who holds trust property and who is subject to the equitable duties to deal with it for the benefit of another, (2) a beneficiary to whom the trustee owes the equitable duties to deal with the trust property for his benefit, and (3) identifiable trust property. See G.G. Bogert & G.T. Bogert, The Law of Trusts and Trustees 1, at 6 (rev. 2d ed. 1984) and Restatement (Second) of Trusts § 2 comment h (1957). We find that the Kopsombut-Myint Buddhist Center has proved the existence of each of these elements by clear and convincing evidence.” [p. 333].

From Tennessee Application for Property Tax Exemption:

“PLEASE ANSWER ALL QUESTIONS AND SUPPLY THE REQUIRED SUPPORTING DOCUMENTATION: (1) Quitclaim or warranty deed for real property; (2) Corporate Charter & Bylaws or if unincorporated, a copy of any other document that explains the organization’s governing structure; (3) Financial information for the last fiscal year (i.e., Form 990 if required by IRS, or income/expense statement/budget); (4) Photograph of property; (5) Personal property schedule/list for personal property only applications.”

WAUSHARA COUNTY v. Sherri L. GRAF, 166 Wis.2d 442 (1992), 480 N.W.2d 16, Supreme Court of Wisconsin. Submitted on briefs October 4, 1991.Decided February 17, 1992The Supreme Court of Wisconsin reviewed the evidence and concluded that “The evidence indicates that Basic Bible was established to evade taxation. Basic Bible failed to meet its burden of proving that it is a “church” or “religious association” under [Wisconsin law]. The court held that Basic Bible was not property tax exempt.” The fact that the church held “in trust” the property for which a property tax exemption was sought was not a factor in the decision. The Court concluded that incorporation and 501(c)(3) status is not a prerequisite for church property tax exemption; and, again, made clear that the fact that the church held the property “in trust” did not disqualify the church from property tax exemption. 

Of course, I could give you many other opinions from state and federal courts that make clear that a church does not have to incorporate.

Now let’s briefly look at Internal Revenue Code Sections 501(c)(3) and 508. A church may apply for 501c3 or claim 508 tax exempt status. See Endnote for links to more resources which explain 501c3 and 508.

The IRS knows the 1st A and the above laws. They know churches do not have to incorporate or get 501c3 or 508 status. The First Amendment and corresponding state constitutional provisions alone make clear that a church does not have to incorporate or get 501c3. The courts know this. The IRS knows the law. The IRS, in Publication 1828, says:

The IRS knows that churches do not have to incorporate and that they can organize in a variety of ways. IRS Publication 1828 says on page 1:

“Churches and religious organizations may be legally organized in a variety of ways under state law, such as unincorporated associations, nonprofit corporations, corporations sole and charitable trusts.”

[Notice that these are not the only way a church can organize—OPBC uses a way that has been used by churches from time immemorial. Court cases establish that churches were using the concept of the simple trust in the 1800s. This manner of organization was the way churches organized in the New Testament.]

So why do churches get 501c3 status? IRS Publication 1828 says on page 2:

“Although there is no requirement to do so, many churches seek recognition of tax-exempt status from the IRS because this recognition assures church leaders, members and contributors that the church is recognized as exempt and qualifies for related tax benefits.”

Also many pastors, churches, and Legal Scholars also know that churches do not have to incorporate of get 501c3 status. See relevant law review articles and cases at Law Review Articles: 501(c)(3), 1st Amendment History, etc., and Law on Church Organization (Trusts, Property tax, etc.).

Old Paths Baptist Church is not an incorporation not does it have 501c3 status. I have helped many other churches stay out of or get out of corporate 501c3 status. We are not hiding this, we are publishing it to the world. Why? Because what we are telling you is the truth and because you can please God by keeping your church connected to her God-ordained Head without persecution.

The law, the First Amendment and state constitutional provisions, the courts, the IRS all know these things. Yet, some pastors don’t know it. They say, “We must obey man’s law and get incorporated and get 501c3.” “My people are destroyed for lack of knowledge.”

Click here to go to Old Paths Baptist Church Website.


Endnote

Federal government control of churches through 501(c)(3) tax exemption; The church incorporation-501(c)(3) control schemeChurch Internal Revenue Code § 508 Tax Exempt Status; Internal Revenue Code Section 501(c)(3); Exemption Requirements-501(c)(3) Organizations; Internal Revenue Code Section 508

 

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