Tag Archives: church non-taxable status

My reply to pastor teaching on Matthew 16.18 and Ephesians 1.22 thereafter questioned by accountant about church non-taxable status and the First Amendment

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LETTERS AND QUESTIONS FROM PASTORS AND OTHERS ANSWERED

Jerald Finney
Copyright © January 14, 2019

CONTENTS:
1. THE PASTOR’S E-MAIL
2. MY REPLY

 1. THE PASTOR’S E-MAIL

Hello Brother Finney,

I have been preaching/teaching on Mt. 16:18 and Eph. 1:22 for the last two weeks. After the service one gentleman (who is an accountant) asked me to show him where in the First Amendment it says that churches are non-taxable.

Just checking with you if I answered him correctly. The phrase, “Congress shall make no law respecting an establishment of religion OR PROHIBITING THE FREE EXERCISE THEREOF….”  Would not taxing the church fall under, “…prohibiting the free exercise thereof…”?

Thanks for the 15 page article it was very helpful, also the one about Sovereignty.

And to your question, yes our church would like to be one of your “Lighthouse Churches”.

Keeping the Faith,
Brother ________________ for
________________________

 2. MY REPLY

Dear Brother ____________________,

What a blessing to hear that you are teaching these matters. By so doing, you are already a “lighthouse church.” I hope to set up some online conferences for pastors and churches who are fighting this battle for Christ’s churches. I will let you know when we get that going. Keep up the good work and let us keep in contact.

The only way a church, an individual, or a business can become taxable is for Congress to pass a law taxing them. For Congress to pass a law taxing churches is forbidden by the First Amendment. You correctly pointed out to the accountant that for Congress to tax a church would violate the First Amendment free exercise clause. It would also violate the First Amendment establishment clause because taxing churches would require a law made by Congress which would control churches, a law respecting an establishment of religion.

It does not violate the First Amendment for civil government to tax individuals and businesses. Only churches and religions have First Amendment protections. Of course, due to the 501(c)(3) and 508 laws made by Congress in 1954, churches can choose to place themselves under federal government controls by becoming tax exempt as opposed to non-taxable. First Amendment churches are non-taxable. 501(c)(3) and 508 churches are tax exempt. When a church freely applies for 501(c)(3) status or claims 508 status, that church becomes tax exempt, not non-taxable. Tax exempt status places another authority over a church other than the Lord Jesus Christ; and certain rules enforceable by the Internal Revenue Service come with that status. First Amendment non-taxable status gives churches protection from federal government intervention in any way, unless the church has chosen to become a legal entity by applying for state non-profit corporation status or has made herself a legal entity by some other action.

I believe 501(c)(3) and 508 are unconstitutional as applied to churches in that they violate the First Amendment religion clause: “Congress shall make no law respecting an establishment of religion or preventing the free exercise thereof.” 501(c)(3) or 508 status for churches respects an establishment of religion and prevents the free exercise thereof. Yet most churches, not being churches of Christ or churches under Christ, freely embrace 501(c)(3) and 508 status, thereby betraying their first love.

The accountant, like almost all attorneys, including myself until 2005, never knew the true history of the First Amendment. I had studied a Christian revisionist history of the First Amendment. The real history of the First Amendment makes very very clear that the First Amendment was meant to separate church and state and, in so doing, it was meant, among other things, to prevent the federal government from taxing churches and/or using tax money to support any religion or church.

In addition, the United States Supreme Court, although wrong about removing God from civil government matters, was right to declare that the First Amendment has erected a high and impregnable wall between church and state, a wall that was meant to keep church and the federal government completely separate:

  • “The constitutional inhibition of legislation on the subject of religion has a double aspect. On the one hand it forestalls compulsion by law of the acceptance of any creed or the practice of any form of worship…. On the other hand, it safeguards the free exercise of the chosen form of religion…. The interrelation of the ‘establishment’ and ‘free exercise’ clauses [according to the United States Supreme Court] has been well summarized as follows: ‘The structure of our government has, for the preservation of civil liberty, rescued the temporal institutions from religious interference. On the other hand, it has secured religious liberty from the invasion of the civil authority.’” Donald T. Kramer, J.D. Annotation: Supreme Court Cases Involving Establishment and Freedom of Religion Clauses of Federal Constitution, 37 L. Ed. 2d 1147 § 2 citing Everson v. Board of Education, 330 U.S. 1, 91 L. Ed. 711, 67 S. Ct. 504, 168 A.L.R. 1392 (1947), reh’g denied 330 U.S. 855, 91 L. Ed. 1297, 67 S. Ct. 962. For a full discussion of Everson and the removal of God from practically all civil government affairs, see Section V of God Betrayed.

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.’” McCollum v. Board of Education, 333 U.S. 203, 210-211 (1948). Jefferson, contrary to the assertions of Christian revisionists, clearly believed in a secular state and separation of church and state.

Separation of church and state does not equate to separation of God and state. It does not mean that civil government should keep God out of civil government. God ordained civil government in order for man to have direct control over certain matters: the protection of life, liberty, and property. God desires every individual, family, civil, and church government to choose to recognize Him and to operate within the jurisdictional boundaries He set out in His Word. He also desires total separation of church and state. See Part I of God Betrayed for explanation.

I would also suggest that you refer the accountant to the Law Review Articles linked to on the following webpage: LAW REVIEW ARTICLES: 501(C)(3), 1ST AMENDMENT HISTORY, ETC.

May the Lord continue to richly bless you and and this Churches Under Christ Ministry as we go forward for His Glory.

Brother Jerald Finney

Church Internal Revenue Code § 508 Tax Exempt Status

Jerald Finney
Copyright © April 28, 2014

Click the above to go to online version of God Betrayed.
Click the above to go to online version of God Betrayed.

In the book God Betrayed/Separation of Church and State: The Biblical Principles and the American Application (“God Betrayed.”)(See Endnote 1 for links to the two free versions or for ordering information should you desire a softback copy as well as information on other books and resources by Jerald Finney.) as well as in other books and writings, I originally taught that a New Testament church could depend upon Internal Revenue Code (“IRC”) § 508 (“508”) for her non-taxable status. I was wrong. After years of study, I have learned that a New Testament church cannot depend upon 508 for her non-taxable status because, in so doing, the church gives up her New Testament and First Amendment status. However, I am more certain than ever of the correctness of my original biblically based conclusions that a church grieves the Lord when they intentionally, knowingly, recklessly, or negligently attain church corporate and/or 501(c)(3) status or legal entity status (See Endnote 1) of any kind. I ask those who have followed my teachings to forgive me for misleading them concerning church 508 status. This brief article explains church 508 status and its effect.

A New Testament Church is also a First Amendment Church. This is because the First Amendment is a law which corresponds with some biblical principles including the principle of separation of church and state. The First Amendment is a part of the second highest law of the land, the United States Constitution. The highest law of every nation is God’s law, whether a nation recognizes it or not. The Lord, for the time being, allows individuals, families, churches, and nations free will to honor His precepts or not. The choices determine the ultimate consequences. Click here to listen to Jerald Finney’s lecture “Hierarchy of Law” (CD of speech at Old Paths Baptist Church in Fayetville, TN. given on the Sunday the church formally adopted the Declaration of Trust). The following article “First Amendment Protection of New Testament Churches/Federal Laws Protecting State Churches (Religious Organizationsalso explains hierarchy of law.

The First Amendment says:

“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.”

Notice especially that the First Amendment says, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” [Emphahsis mine.]

Are not those words very clear? No law means “no law.” What is IRC § 508? It, like IRC  501(c)(3), is a law made by Congress and signed by the President. According to the clear meaning of the First Amendment, IRC § 508 and IRC  501(c)(3) are, when applied to churches, laws “respecting an establishment of religion and preventing the free exercise thereof.”

Why would a church take themselves from First Amendment status and protection to either IRC § 508 or IRC § 501(c)(3)? One reason is lack of knowledge, wisdom, and understanding. When a church claims either 508 or 501(c)(3) status, she has rejected her First Amendment non-taxable status and freely accepted the offer of the federal government to enter into an agreement (contract) for tax exempt status as provided by a law. (See God Betrayed for teaching which explains this)

Let me repeat: First Amendment churches under God are non-taxable. 501(c)(3) and 508 religious organizations are tax exempt. IRC § 508 (the codification of Public Law 91-172 ratified in 1969) provides in relevant part:

A portion of Internal Revenue Code § 508. Click to the above to go to § 508.
A portion of Internal Revenue Code § 508. Click the above to go to § 508.

§ 508. 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” (26 U.S.C. § 508). [Emphasis mine.]

§ 508(a),(c) says churches are excepted from obtaining IRC § 501(c)(3) tax exempt status (See Endnote 2 for links to articles which fully explain church IRC § 501(c)(3)) status). 508 churches are an exception to the civil government requirement that certain organizations file for 501(c)(3) tax exempt status.

A church should rely on the First Amendment to the United States Constitution, not on 508 status for three reasons. First, the First Amendment is a statement of the biblical principle of separation of church and state (See, for a short explanation with links to more in depth studies, Is Separation of Church and State Found in the Constitution?). When a church relies on the First Amendment, they are relying on a biblical principle. Should the biblical principle be abused or ignored by the civil government, so be it—a church should then rely and act only on the biblical principle. Endnote 3.

A law of man which enacts some biblical principles.
A law of man which enacts some biblical principles.

Second, to rely on 508 contradicts the First Amendment. To repeat, the First Amendment religion clause 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.”

IRS Publication 1828. Click the above to go directly to IRS Pub. 1828.
IRS Publication 1828. Click the above to go directly to IRS Pub. 1828.

Obviously, 508 is a law made by Congress which regards an establishment of religion; 508 also prevents the free exercise of religion because a church which claims 508 status thereby submits themselves to some control by the federal government in that the church becomes subject to the rules that come with IRC 501(c)(3) status. 508 does not state that the First Amendment forbids Congress from making any law in violation of the First Amendment; and that, therefore, a church is non-taxable. 508 is a law made by Congress which states that Congress, by law, is declaring an exemption for churches. Thus, by a clear reading of the First Amendment, 508 is clearly unconstitutional. Most churches and pastors could care less about this technicality.

From IRS Publication 1828

The correct position which is held by the Internal Revenue Service (“IRS”) is that a church has submitted herself to IRC § 501(c)(3) regulation and ignored her First Amendment status by relying on 508 (a law passed by Congress) instead of the First Amendment. The IRS makes this position clear. Page 3 of IRS Publication 1828 states that “churches that meet the requirements of § 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” [Bold red emphasis mine]. The IRS repeats this on page 24 of IRS Publication 557, “Tax –Exempt Status for Your Organization.” Under Organizations Not Required To File Form 1023 churches are listed. The following sentence is included: “These organizations are exempt automatically if they meet the requirements of section 501(c)(3).” [Bold red emphasis mine.]

IRS Publication 557, p. 24. Click the image to go directly to the publication.
IRS Publication 557, p. 24. Click the image to go directly to the publication.

One should also understand that the New Testament (First Amendment) church will not be involved with the IRS for several reasons: the church claims no 501(c)(3) or 508 status; is not a legal entity such as a corporation aggregate or sole, an unincorporated association, or a charitable trust; is not a business; has no income; has no employees or staff; has no constitution or by-laws; and, no matter what the particular civil government does, honors the biblical principle of separation of church and state which is reflected in the First Amendment in America.

The New Testament (First Amendment) church who loves the Lord will be prepared for the eventuality that the Internal Revenue Service, some other Federal agency, the President (recent presidential actions and orders as well as the actions of many prior presidents demonstrate what a tyrannical president can and will do), and/or the Supreme Court of the United States may someday misinterpret and apply the First Amendment, and a New Testament church who loves the Lord and is committed to pleasing Him will remain submitted to the higher authority. God Betrayed (see above for free links to the book) explains all this and also shows how churches are operating in America without becoming legal entities such as incorporated 501(c)(3) religious organizations thereby retaining their First Amendment and biblical status. For specifics on how to organize a church under the Bible principle of separation of church and state, one can also go to: ABIBLETRUST.COM.

Third, a New Testament church (a church organized according to the principles of the New Testament), among other things, receives no income, is not a 501(c)(3) or 508 religious organization, has no constitution or by-laws,  has no employees or staff, and runs no businesses (daycare, “Christian” schools, “Bible” colleges, seminaries, cafes, etc.). Church members of a New Testament Church give their tithes and offerings to God, not to a religious organization, for use in ways consistent with New Testament teaching. All monies given to God are disbursed in accordance to the guidelines of the New Testament, and no money is left over. Let us use our common sense, if not our biblical sense: Even a business which makes no profit pays no taxes. A church which has no income cannot be taxed. A church which does have net income should be taxed since (1) she is operating as a business and not as a New Testament church; and (2) (if she is a legal entity such as a non-profit corporation (includes corporation sole – see Critique of “Church Freedom and the Corporation Sole” Website), or unincorporated association she is set up as a non-profit religious organization and therefore violates not only biblical principles for the organization of a church but also her non-profit agreements with the state of incorporation by making a profit.

Uncle Sam Wants God's Churches
Uncle Sam Wants God’s Churches

If a church does not apply for 501(c)(3) tax exempt status or claim 508 tax exempt status, and if she is organized as a New Testament church, according to the First Amendment which agrees with the biblical principle of separation of church and state, the non-taxable status of that church must be honored. No matter what the civil government claims, that church cannot be taxed anyway because she has no income; she gives her tithes, offerings, and gifts to God, not to a government created religious organization. Said another way, the church (the members) give to God, not to the church, inc.

Always keep in mind matters which I cover in detail in other writings and teachings: a church who incorporates (non-profit corporation or corporation sole), or becomes a charitable trust, unincorporated association or some other type legal entity has voluntarily given up her exclusive First Amendment status in favor of partial and substantial Fourteenth Amendment status since she has become a legal entity.

There are other ways a church may violate biblical principles concerning the doctrine of the church thereby becoming some type church other than a New Testament church. Understanding these matters requires a believer to grow in knowledge, understanding, and wisdom through dedicated Bible study.

If a church successfully applies for 501(c)(3) status or claims 508 exempt status, the government is granted some jurisdiction over the church since the civil government now declares and grants an exemption.

Please, God’s dear churches, do not lose your New Testament status by becoming a legal entity of any kind. Please learn to love the Lord as he loves you and gave Himself for you;

“That he might sanctify and cleanse it with the washing of water by the word. That he might present it to himself a glorious church, not having spot or wrinkle, or any such thing; but that it should be holy and without blemish” (Ephesians 5.25-27).

Please, dear believer, learn to think Biblicly (spiritually), not practically from the human perspective (fleshly). Please become more Christian than American, more heavenly than earthly. God made clear that Christ in heaven is to be the only authority (power or head) “over all things to” His churches. Put another way, a church, the body whose feet walk and work on earth, is to be connected to only one head, Christ in heaven. A church with two heads (authorities or powers) is a monstrosity.

  • “And what is the exceeding greatness of his power to us-ward who believe, according to the working of his mighty power, Which he wrought in Christ, when he raised him from the dead, and set him at his own right hand in the heavenly places, Far above all principality, and power, and might, and dominion, and every name that is named, not only in this world, but also in that which is to come: And hath put all things under his feet, and gave him to be the head over all things to the church, Which is his body, the fulness of him that filleth all in all” (Ep. 1.19-23).
  • “Now therefore ye are no more strangers and foreigners, but fellowcitizens with the saints, and of the household of God; And are built upon the foundation of the apostles and prophets, Jesus Christ himself being the chief corner stone; In whom all the building fitly framed together groweth unto an holy temple in the Lord: In whom ye also are builded together for an habitation of God through the Spirit” (Ep. 2.19-23).
  • “And he is the head of the body, the church: who is the beginning, the firstborn from the dead; that in all things he might have the preeminence” (Col. 1.18).

From the above verses, and many more that could be quoted, one sees that God desires his churches to be spiritual entities or bodies (See also, e.g., Ep. 4 and the whole book of Ep., Col., and 1 Co. 12 for more on churches as spiritual bodies) connected to their only God ordained Head, the Lord Jesus Christ in heaven, while walking as spiritual entities only here on the earth. Churches are to be “builded together for an habitation of God through the Spirit,” not built together as a corporate 501(c)(3) or 508 organization according to man’s earthly, legal laws.

Please repent and turn from the deceits of the god of this world to the precepts of God. Please prepare for the day when believers and churches will have to choose either to lay it all down for God and for eternal reward or to lay it all up for Satan for a perceived earthly security. That day has not yet arrived for believers and churches in America, but that day appears to be fast approaching.

Endnotes

1. For the definition of and more information on “legal entity” see the index of God Betrayed/Separation of Church and State:The Biblical Principles and the American Application which is available free in PDF, in online form (no index), or which may be ordered by clicking Order information for books by Jerald Finney.”

All books, except An Abridged History of the First Amendment, by Jerald Finney are available free in both PDF and online form. One may go to Order information for books by Jerald Finney should he desire to order any of the books which are in print.

God Betrayed/Separation of Church and State: The Biblical Principles and the American Application (Link to preview of God Betrayed)(PDF; online form) may be ordered from Amazon by clicking the following link: God Betrayed on Amazon.com or from Barnes and Nobel by clicking the following link: God Betrayed on Barnes and Noble. All books by Jerald Finney as well as many of the books he has referenced and read may also be ordered by left clicking Order Information for Books by Jerald Finney or directly from Amazon by going to the following links:

  1. Render Unto God the Things that Are His: A Systematic Study of Romans 13 and Related Verses (Kindle only)(PDF; online form);
  2. The Most Important Thing: Loving God and/or Winning Souls (Kindle only from Amazon.com; see Order information for books by Jerald Finney to order directly from Kerygma Publishing Co.)(PDF; online form) ;
  3. Separation of Church and State/God’s Churches: Spiritual or Legal Entities? (Link to preview of Separation of Church and State/God’s Churches: Spiritual or Legal Entities?) which can also be ordered by clicking the following Barnes and Noble link: Separation of Church and State on Barnes and Noble (PDF; online form)
  4. An Abridged History of the First Amendment is available in PDF only.
  5. Tract on the legality of street preaching is available in PDF only.
  6. “Quick Reference Guide for Churches Seeking to Organize According to the Principles of the New Testament” is available in PDF only.
  7. Miscellaneous articles by Jerald Finney.
  8. Links to some of Jerald Finney’s writings on legal issues.

Click here to see for updated list of Finney’s books. This Endnote is complete up to August 1, 2014.

Companion website:Church and State Law

When Did the Church Become a Business?” a beautiful song by Jason Bellard

2.Federal government control of churches through 501(c)(3) tax exemption” and “The incorporation-501(c)(3) control scheme.”

3. To understand the hierarchy of law, one may read the article “Laws Protecting New Testament Churches in the United States: Read Them for Yourself” or listen to the lecture “Hierarchy of Law.”

When Did the Church Become a Business?” a beautiful song by Jason Bellard

Click here to go to the article
Click here to go to the article “Is Separation of Church and State Found in the Constitution?”

A biblical and historical Baptist principle is that God desires separation of church and state, not separation of God and church or separation of God and state. Study Jerald Finney’s writings and/or audio teachings to discover the truth about and how to apply the principle. Finney’s teachings prove that the revisionist view of Separation of Church and State accepted without examination by most American “Christians” is false and has done great damage to the cause of Christ and to America.