Copyright © March 17, 2022
- How a church becomes tax exempt (under man-made federal law) as opposed to non-taxable (Under the First Amendment to the United States Constitution (“First Amendment”).
- An overview of the fundamental changes which result when a church is granted 501(c)(3) or claims 508(c)(1)(A) status
- List of rules and regulations which come with tax exempt status.
1. How a church becomes tax exempt (under man-made federal law) as opposed to non-taxable (Under the First Amendment to the United States Constitution).
A First Amendment church—a church who has not applied for and been granted tax exempt status and who has not acted as a legal entity in any way so as to forfeit her status as a church under Christ alone—is non-taxable. The only way a civil government can tax is by law or edict. The First Amendment religion clause forbids federal law taxing churches (religion) in America. The establishment and free exercise clauses of the First Amendment, consistent with the Bible doctrine of separation of church and state, protect those churches who decide to obey God and refuse federal tax-exempt status. The First Amendment religion clause is consistent with the Bible doctrine of separation of church and state. Although 501(c)(3) and 508(c)(1)(A) are laws passed by Congress with violate the religion clause, they do not force churches to become tax exempt; rather, the give churches a choice of whether to be tax exempt as opposed to non-taxable.
Contrary to “Christian” propaganda, 508(c)(1)(A) does not state that a church is automatically tax exempt. Rather, 508(c)(1)(A) states that “churches, their integrated auxiliaries, and conventions or associations of churches” are mandatory exceptions to the requirement for filing for tax exempt status under 501(c)(3). To mandate automatic church tax exempt status would violate the First Amendment which states, in part, that “Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof.” Both 501(c)(3) and 508(c)(1)(A) are laws passed by Congress which establish a religion and prevent the free exercise thereof. Because of the First Amendment, churches cannot be forced to become tax exempt.
508(c)(1)(A) churches who meet the requirements of 501(c)(3) may claim 508(c)(1)(A) tax exempt status. See, Church Internal Revenue Code § 508(c)(1)(A) Tax Exempt Status for explanation and links to relevant IRS Regulations. A church can claim 508(c)(1)(A) status by open declaration which includes providing IRS Acknowledgements to donors for tithes, offerings, and gifts (according to IRS Regulations). The real purpose of tax-exempt status is to attract those who give for easy tax deduction claims and not because of their love for the Lord.
If the IRS audits a donor to a 501(c)(3) tax exempt “church,” the church will be on the IRS list and the acknowledgement from the church will verify his giving. If a church claims 508(c(1)(A) tax exempt status, the IRS may likely require the donor to prove that the donee was a church since the church is not on the IRS list. Internal Revenue Code Section 170 and IRS Regulations deal with the matter of tax exempt deductions for gifts to non-501(c(3) or 508(c)(1)(A) churches. A donor concerned about this matter may see, Separation of Church and State/God’s Churches: Spiritual or Legal Entities, Chapter 8, pp. 85-96, “Spurious Rationale for Corporate-501(c)(3) or 508 Status: Tax Exemption and Tax Deduction for Contributions.” Note, the law may have changed since publication of that book. Refer to IRS Code Section 170 for updates and changes in the law.
To become tax exempt (a “501(c)(3) or 508(c)(1)(A)” church), as opposed to non-taxable (a church solely under the protection of the First Amendment to the United States Constitution) a church may apply for Internal Revenue Code Section 501(c)(3) tax exempt status by completing IRS Form 1023 (See En[i] for more information of Form 1023) or claim “508(c)(1)(A)” tax exempt status. A church may claim 508(c)(1)(A) tax exempt status by declaring that tithes, offerings, and gifts are tax exempt and providing IRS acknowledgements to the donors. When the church claims 508(c)(1)(A) status, she is subject to the rules and regulations that come with 501(c)(3); she is now tax exempt as opposed to non-taxable and therefore loses much of her first Amendment protections. See, Church Internal Revenue Code § 508(c)(1)(A) Tax Exempt Status.
Any non-tax-exempt church should inform all givers, in advance, that it is not tax exempt and that it does not give IRS acknowledgements for tithes, offerings and gifts.
2. An overview of the fundamental changes which result when a church is granted 501(c)(3) or claims 508(c)(1)(A) status
A church who is not a legal entity of any kind has the total protection of the First Amendment: She can do things God’s way without control or persecution by any civil government, city to national.
A non-legal entity is not controlled by civil government. Of course, a tyrannical government can declare that any entity, whether legal or not, is under their control. Korea, for example, persecutes and kills any one caught speaking the name of Jesus in a positive way, possessing a Bible or Gospel tract, holding a church meeting, etc.
Legal entities are under the authority of of civil government for many purposes. As “persons” under Fourteenth Amendment for many purposes, churches have given up much of their First Amendment status. Corporations (aggregate of sole), unincorporated associations, charitable trusts, business trusts, individuals, and federal tax-exempt organizations are among the list of legal entities.
Whether or not a civil government can enforce an edict against a believer or a church who is not a legal entity depends upon the individual or church. A Christian (one who believes in, loves and follows Christ, His commandments and Word as opposed to one who merely “believes in” Christ) will obey God rather than man when obeying man’s law requires one to disobey God. American believers and churches do not have to face control and punishment by civil government for loving and honoring God and His Word, as of yet.
A church who chooses to become a legal entity places herself under the authority, wholly or partially, other than the Lord Jesus Christ. She no longer has all (or maybe, any) of her First Amendment protections. She is no longer a totally First Amendment Church. She is now, as a legal person, a Fourteenth Amendment Church. See, Corporation: A Human Being with No Soul; see also, Separation of Church and State/God’s Churches: Spiritual or Legal Entities? for further explanation of much of what is said in this section.
A church, as a legal entity, can sue, be sued, enter into contracts, pay salaries, be charged with a crime (if she or any or her agents commit crime), hold property and insurance in the name of the church, etc. In other words, she has transformed herself into a worldly enterprise, a business. She is organized like and operates as a business, to one degree or another. She is subject to the laws and accompanying regulations of her creator(s), the state and/or federal government.
As a legal person, a church acts to one degree or another—usually to a greater degree—like a temporal, worldly, fleshly entity ruled by tradition of men and the rudiments of the world as opposed to a spiritual entity ruled by God’s Word. She has a new sovereign or sovereigns; she employs business techniques of organization, operation, and doctrines. Many have become apostate. Their goal is to find out what people want and give it to them rather that finding out what God, in His Word, wants and giving it to Him. They may honor the Lord with their tongues, but their heart is far from Him as they keep the commandments of men rather than those of God.
A church who has chosen legal entity status is subject to civil government. She has agreed that the controlling party, in the case of disputes, is the civil government; and she has agreed to follow all rules and regulations contained in the law they agreed to. A church which chooses to become a legal entity such as a corporation has agreed that the controlling party for many purposes is the court of the state of incorporation. Churches who choose to become tax exempt agree that they will follow accompanying rules and regulations.
Many incorporated churches follow none of, or only some of, the rules and procedures in the non-profit corporation law they agreed to when getting the status. Many churches openly violate some or all of the rules and regulations coming with 501(c)(3) or 508(c)(1)(a) status because they know that the IRS does not have the resources to enforce them; by so doing, they dishonor both God (by dishonoring their legal agreement with the federal government) and man (by entering into a legal agreement which dishonors God). Believers who dishonor their agreements, their word, are not “Christians;” and by their actions, they cause men to blaspheme God.
For more information on church 501(c)(3) and 508(c)(1)(A) status, see:
- Federal government control of churches through 501(c)(3) tax exemption(Section VI, Chapter 4 of God Betrayed; Chapter 4 of Separation of Church and State);
- The church incorporation-501(c)(3) control scheme(Section VI, Chapter 5 of God Betrayed; Chapter 5 of Separation of Church and State); and
- Church Internal Revenue Code § 508(c)(1)(A) Tax Exempt Status.
3. List of rules and regulations which come with tax exempt status.
Under the terms of 501(c)(3) and 508(c)(1)(A) and IRS interpretation thereof, a church agrees to the rules and regulations that come with the status. The church agrees to abide by the following rules:
“1. must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes,
“2. net earnings must not inure to the benefit of any private individual or shareholder,
“3. no substantial part of its activity may be attempting to influence legislation,
“4. the organization may not intervene in political activity,
“5. the organization’s purposes and activities may not be illegal or violate fundamental public policy.”
See, IRS Publication 1828. This and all IRS publications may be accessed at irs.gov. Just mentioning a candidate may violate proscription #4. Detailed guidelines with consequences of violation of proscription #4 given in Pub. 1828. As to proscription #5, public policy is determined by the courts. What is fundamental public policy regarding same-sex marriage? This policy has not been enforced against tax exempt churches, but that may be coming. The real issue is, does church tax exempt or legal status of any kind please God. See also, , Internal Revenue Code 508(c)(1)(A).
Rules and regulations for 501(c)(3) and 508(c)(1)(A) churches are made by the legislative and executive branch, by the IRS, and by the courts. Rules one through four above are stated in 501(c)(3). Rule four was added by legislation sponsored by Lyndon Johnson. The last requirement—“may not violate fundamental public policy” was first implemented by the IRS and then upheld by the United States Supreme Court in Bob Jones University v. United States, 461 U.S. 574 (1983). See, PDF of Separation of Church and State/God’s Churches: Spiritual or Legal Entities? pages 35-37.
501(c)(3) and 508(c)(1)(A) tax exempt status not only come with five government imposed rules, such status also invokes a myriad of regulations. See and read, e.g.,
- Publication 557 (01/2019), Tax-Exempt Status for Your Organization;
- Application for Recognition of Exemption; Exempt Organizations Treasury Regulations;
- Charities and Nonprofits A-Z Site Index (F-J);
- Exempt Organization Revenue Rulings; 1828, Tax Guide for Churches and Religious Organizations (PDF);
- Common Tax Law Restrictions on Activities of Exempt Organizations; Exempt Organizations – Ruling and Determinations Lettersr; Exempt Organizations – Private Letter Rulings and Determination Letters; Exempt Organizations Announcements;
- Annual Filing Requirements for Supporting Organizations; Exempt Organizations Notices;
- Public Disclosure and Availability of Exempt Organizations Returns: Copies of Exempt Organizations Tax Documents;
- Exempt Organization Revenue Procedures; Exempt Organizations Update;
- Exempt Organizations – Employment Taxes;
- The Truth About Frivolous Tax Arguments – Section II; Termination of Exempt Organization(“… Internal Revenue Code Section 6043(b) and Treasury Regulations Section 1.6043-3 establish rules for when a tax-exempt organization must notify the IRS that it has undergone a liquidation, dissolution, termination, or substantial contraction. Generally, most organizations must notify the IRS when they terminate. Among other things, notice to the IRS of a termination will close the organization’s account in IRS records. …)
The interested believer and church who love the Lord may go directly to those regulations by clicking the links above, if this is essay is opened online. Check them out for yourselves and ask yourself, “Does this status glorify and please God?”
En[i] Instructions for Form 1023. On page 2 of the December 2017 Instructions is stated: “Completed Form 1023 required for section 501(c)(3) exemption. Form 1023 is filed by organizations to apply for recognition of exemption from federal income tax under section 501(c)(3). Upon approval, we will issue a determination letter that provides written assurance about the organization’s tax-exempt status, and its qualification to receive tax-deductible charitable contributions. Every organization qualifying for exemption under section 501(c)(3) will also be classified as either a “public charity” or a “private foundation.”
A Bible believer may get much greater understanding of the anti-Christ agreement he is entering into by seeking and obtaining 501(c)(3) status by reading Form 1023 and the instructions as well as by reading Internal Revenue Code § 508(c)(1)(A) which places the church in the same position as 501(c)(3) status. See, . For more information from the IRS on Form 1023, see About Form 1023.
For an understanding of how a church can organize and operated God’s prescribed way, as a spiritual entity under Christ only, see The CUCM Bible Trust.