Tag Archives: tax exemption of churches

Federal government control of churches through IRS Code Sections 501(c)(3) and 508 tax exemption


Jerald Finney
Copyright © December 10, 2012
Revised April 26, 2014


Note. This is a modified version of Section VI, Chapter 4 of God Betrayed: Separation of Church and State/The Biblical Principles and the American Application; Chapter 4 of Separation of Church and State/God’s Churches: Spiritual or Legal Entities


Click here for audio recording of this teaching.

A 501c3 church agrees to abide by the rules that come with the status. See article below for full explanation of those rules. A 501c3 church also has many regulations which it is required to honor. See Publication 4221: Compliance Guide for Tax Exempt Organizations (“Federal tax law provides tax benefits to nonprofit organizations recognized as exempt from federal income tax under section 501(a) of the Internal Revenue Code (the Code). The Code requires that tax-exempt organizations comply with federal tax law to maintain tax-exempt status and avoid penalties….”).

Click here to go to: ANSWER TO QUESTION REGARDING A LAWYERS FALSE STATEMENTS CONCERNING CHURCH CORPORATE 501(C)(3) STATUS

Requirements_501c3

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

In the twentieth century, the federal government added more cheese to the trap—26 U.S.C. or Internal Revenue Code (“IRC”) § 501(c)(3) (“501(c)(3)” or “501c3”) tax exemption. The Internal Revenue Service (“IRS”) exerts a certain amount of control over an incorporated 501(c)(3) “church.” Scripture makes clear that God wants no one else—especially the unregenerate—controlling, defining, and restricting His bride from totally following His precepts. IRC terms set limits on and control the activities of the corporate 501(c)(3) religious organization. Definition of terms used in the IRC by IRS personnel who do not have the expertise to define biblical terms further results in the operation of a corporate 501(c)(3) organization in ways inconsistent with biblical principles.

501(c)(3) invites churches to seek a tax exemption from civil government, even though the First Amendment already has erected a “high and impregnable wall” of separation between church and state which forbids civil government from making any law, including any taxing law, respecting a New Testament church. A New Testament church, which is a non-legal entity, is also a First Amendment church. 501(a),(c)(3),(h) reads in relevant part:

Ҥ 501. Exemption from tax on corporations, certain trusts, etc.:

“(a) Exemption from taxation. An organization described in subsection (c) … shall be exempt from taxation under this subtitle [26 USCS §§ 1 et seq.] unless such exemption is denied under section 502 or 503 [26 USCS § 502 or 503]….

“(c)(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office….

“(h) Expenditures by public charities to influence legislation. (1) General rule. In the case of an organization to which this subsection applies, exemption from taxation under subsection (a) shall be denied because a substantial part of the activities of such organization consists of carrying on propaganda, or otherwise attempting, to influence legislation…” (26 U.S.C. § 501(c)(3) (2007) in relevant part).

1Notice, in the above law, that churches are not mentioned in 501(c)(3). It does mention, among other things, “[c]orporations … organized and operated exclusively for religious … purposes.” Even the federal government thereby recognizes that the basic character of a church who seeks and obtains 501(c)(3) status has changed and that church has become a “religious organization.” That happens when a church incorporates under state law. When a church incorporates, it becomes a corporation organized exclusively for religious purposes.

The state controls, defines, and instructs a corporate 501(c)(3) religious organization to a large degree. Control and definition go hand in hand. The federal government, not God, defines “religious purposes” as to an incorporated church. What if an incorporated 501(c)(3) religious organization considers an activity to be God-ordained and spiritual, but the civil government disagrees? The civil government with authority over that issue controls.

Under the IRS interpretation of 501(c)(3), to qualify for tax exempt status under 501(c)(3) religious organizations must meet the following requirements, i.e. abide by the following rules:

LBJ led the charge for Rule No. 4 in IRS Code Section 501(c)(3)
LBJ led the charge for Rule No. 4 in IRS Code Section 501(c)(3)

“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,

Rule No. 4
Rule No. 4

“5. the organization’s purposes and activities may not be illegal or violate fundamental public policy” (IRS Publication 1828 (2007), pp. 3, 5. This and all IRS publications referred to may be accessed at irs.gov. IRS details on proscription #3 are on pp. 5-6 of IRS Pub. 1828. Just mentioning a candidate may violate proscription #4. Detailed guidelines with consequences of violation of proscription #4 are on pp. 7-11 of Pub. 1828. As to proscription #5, public policy is determined by the courts.).

Notice that the last requirement—“may not violate fundamental public policy”—is not from law; that is, it is not listed as a requirement in § 501(c)(3). This requirement was made law by the Supreme Court of the United States in Bob Jones University, 461 U.S. 574, 578, 579, 580, 581, 582-583, 586-588, 588, 591 fn. 10, 595-596, 602 fn 28, 603, 604, fn. 29 at 604 (1983):

  • “On January 12, 1970, a three-judge District Court for the District of Columbia issued a preliminary injunction prohibiting the IRS from according tax-exempt status to private schools in Mississippi that discriminated as to admissions on the basis of race…. Thereafter, in July 1970, the IRS concluded that it could ‘no longer legally justify allowing tax-exempt status [under § 501(c)(3)] to private schools which practice racial discrimination.’ IRS News Release, July 7, 1970, reprinted in App. in No. 81-3, p. A235. At the same time, the IRS announced that it could not ‘treat gifts to such schools as charitable deductions for income tax purposes [under § 170].’ Ibid. By letter dated November 30, 1970, the IRS formally notified private schools, including those involved in this litigation, of this change in policy, ‘applicable to all private schools in the United States at all levels of education.’ …
  • The IRS implemented Rule No. 5, and the highest authority for the 501c3 religious organization upheld the IRS rule.
    The IRS implemented Rule No. 5, and the highest authority for the 501c3 religious organization upheld the IRS rule.

    “The court permanently enjoined the Commissioner of Internal Revenue from approving tax-exempt status for any school in Mississippi that did not publicly maintain a policy of nondiscrimination….

  • “Bob Jones University [was] a nonprofit corporation located in Greenville, S. C. Its purpose is ‘to conduct an institution of learning …, giving special emphasis to the Christian religion and the ethics revealed in the Holy Scriptures.’ Certificate of Incorporation, Bob Jones University, Inc. [Bob Jones University had a policy that] Students who date outside of their own race will be expelled…. After failing to obtain an assurance of tax exemption through administrative means, the University instituted an action in 1971 seeking to enjoin the IRS from revoking the school’s tax-exempt status.
  • “The United States District Court for the District of South Carolina held that revocation of the University’s tax-exempt status exceeded the delegated powers of the IRS, was improper under the IRS rulings and procedures, and violated the University’s rights under the Religion Clauses of the First Amendment…. The District Court found, on the basis of a full evidentiary record, that the challenged practices of petitioner Bob Jones University were based on a genuine belief that the Bible forbids interracial dating and marriage.
  • “The Court of Appeals for the Fourth Circuit, in a divided opinion, reversed…. The Court of Appeals concluded that § 501(c)(3) must be read against the background of charitable trust law. To be eligible for an exemption under that section, an institution must be ‘charitable’ in the common-law sense, and therefore must not be contrary to public policy. In the court’s  view, Bob Jones University did not meet this requirement, since its ‘racial policies violated the clearly defined public policy, rooted in our Constitution, condemning racial discrimination and, more specifically, the government policy against subsidizing racial discrimination in education, public or private.’ … The court held that the IRS acted within its statutory authority in revoking the University’s tax-exempt status. Finally, the Court of Appeals rejected petitioner’s arguments that the revocation of the tax exemption violated the Free Exercise and Establishment Clauses of the First Amendment.
  • “[Included in the case was Goldsboro Christian Schools, a nonprofit corporation located in Goldsboro, N. C., a private Christian school which prohibited interracial dating based upon sincerely held religious beliefs.]
  • “[The Supreme Court reasoned in adding the ‘public policy’ requirement to the [IRC]:]
  • ‘The general words used in the clause …, taken by themselves, and literally construed, without regard to the object in view, would seem to sanction the claim of the plaintiff. But this mode of expounding a statute has never been adopted by any enlightened tribunal — because it is evident that in many cases it would defeat the object which the Legislature intended to accomplish. And it is well settled that, in interpreting a statute, the court will not look merely to a particular clause in which general words may be used, but will take in connection with it the whole statute… and the objects and policy of the law….’ … (emphasis added by the Court).
  • ‘Section 501(c)(3) therefore must be analyzed and construed within the framework of the Internal Revenue Code and against the background of the congressional purposes. Such an examination reveals unmistakable evidence that, underlying all relevant parts of the Code, is the intent that entitlement to tax exemption depends on meeting certain common-law standards of charity — namely, that an institution seeking tax-exempt status must serve a public purpose and not be contrary to established public policy.
  • ‘This ‘charitable’ concept appears explicitly in § 170 of the Code. That section contains a list of organizations virtually identical to that contained in § 501(c)(3). It is apparent that Congress intended that list to have the same meaning in both sections. In § 170, Congress used the list of organizations in defining the term ‘charitable contributions.’ On its face, therefore, § 170 reveals that Congress’ intention was to provide tax benefits to organizations serving charitable purposes. The form of § 170 simply makes plain what common sense and history tell us: in enacting both § 170 and § 501(c)(3), Congress sought to provide tax benefits to charitable organizations, to encourage the development of private institutions that serve a useful public purpose or supplement or take the place of public institutions of the same kind.
  • ‘The predecessor of § 170 originally was enacted in 1917, as part of the War Revenue Act of 1917, ch. 63, § 1201(2), 40 Stat. 330, whereas the predecessor of § 501(c)(3) dates back to the income tax law of 1894, Act of Aug. 27, 1894, ch. 349, 28 Stat. 509, infra. There are minor differences between the lists of organizations in the two sections, see generally Liles & Blum, Development of the Federal Tax Treatment of Charities, 39 Law & Contemp. Prob. 6, 24-25 (No. 4, 1975) (hereinafter Liles & Blum). Nevertheless, the two sections are closely related; both seek to achieve the same basic goal of encouraging the development of certain organizations through the grant of tax benefits. The language of the two sections is in most respects identical, and the Commissioner and the courts consistently have applied many of the same standards in interpreting those sections. See 5 J. Mertens, Law of Federal Income Taxation § 31.12 (1980); 6 id., §§ 34.01-34.13 (1975); B. Bittker & L. Stone, Federal Income Taxation 220-222 (5th ed. 1980). To the extent that § 170 ‘aids in ascertaining the meaning’ of § 501(c)(3), therefore, it is ‘entitled to great weigh.’ … [the Court analyses ‘charitable trusts’]….
  • “Act of Aug. 27, 1894, ch. 349, § 32, 28 Stat. 556-557. The income tax system contained in the 1894 Act was declared unconstitutional, Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601 (1895), for reasons unrelated to the charitable exemption provision. The terms of that exemption were in substance included in the corporate income tax contained in the Payne-Aldrich Tariff Act of 1909, ch. 6, § 38, 36 Stat. 112. A similar exemption has been included in every income tax Act since the adoption of the Sixteenth Amendment, beginning with the Revenue Act of 1913, ch. 16, § II(G), 38 Stat. 172. See generally Reiling, Federal Taxation: What Is a Charitable Organization?, 44 A. B. A. J. 525 (1958); Liles & Blum….
  • ‘The exemption from taxation of money or property devoted to charitable and other purposes is based upon the theory that the Government is compensated for the loss of revenue by its relief from financial burdens which would otherwise have to be met by appropriations from other public funds, and by the benefits resulting from the promotion of the general welfare.” H. R. Rep. No. 1860, 75th Cong., 3d Sess., 19 (1938).
  • ‘A corollary to the public benefit principle is the requirement, long recognized in the law of trusts, that the purpose of a charitable trust may not be illegal or violate established public policy. In 1861, this Court stated that a public charitable use must be ‘consistent with local laws and public policy,’ Perin v. Carey, 24 How., at 501. Modern commentators and courts have echoed that view. See, e. g., Restatement (Second) of Trusts § 377, Comment c (1959); 4 Scott § 377, and cases cited therein; Bogert § 378, at 191-192….
  • ‘[The Court then explained why racial discrimination now violates clearly defined public policy.]
  • “[The Court concluded:]
  • ‘Racially discriminatory educational institutions cannot be viewed as conferring a public benefit within the ‘charitable’ concept discussed earlier, or within the congressional intent underlying § 170 and § 501(c)(3)…. ‘This Court has long held the Free Exercise Clause of the First Amendment to be an absolute prohibition against governmental regulation of religious beliefs, Wisconsin v. Yoder, 406 U.S. 205, 219 (1972); Sherbert v. Verner, 374 U.S. 398, 402 (1963); Cantwell v. Connecticut, 310 U.S. 296, 303 (1940). As interpreted by this Court, moreover, the Free Exercise Clause provides substantial protection for lawful conduct grounded in religious belief, see Wisconsin v. Yoder, supra, at 220; Thomas v. Review Board of Indiana Employment Security Div., 450 U.S. 707 (1981); Sherbert v. Verner, supra, at 402-403. However, ‘[not] all burdens on religion are unconstitutional…. The state may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest.’
  • ‘On occasion this Court has found certain governmental interests so compelling as to allow even regulations prohibiting religiously based conduct. The governmental interest at stake here is compelling.
  • “[The Court noted:] We deal here only with religious schools — not with churches or other purely religious institutions; here, the governmental interest is in denying public support to racial discrimination in education.
  • [The Court also stated:] “The IRS policy at issue here is founded on a ‘neutral, secular basis,’ Gillette v. United States, 401 U.S. 437, 452 (1971), and does not violate the Establishment Clause.”

Bob Jones Univ4Although Bob Jones University was limited to religious schools in that a church was not being attacked in that specific case, the same rationale that supported the Court’s conclusions can also be applied to 501(c)(3) religious organizations, although more hurdles will have to be jumped. It is common knowledge that the IRS regularly attacks such organizations for infractions of requirements of IRS regulation. The outcome of such a case against a church hinges upon the liberal-conservative makeup to the Court. Liberal dominated courts have no problem clearing whatever logical, legal, and/or spiritual hurdles they encounter.

God wants members of His body, the church, to decide what is spiritual and what is not. If His body messes up, He will take care of it. The IRS requirements require instruction, definition, and control. The IRS determines, subject to costly and time consuming court challenge, whether a restriction has been breached by a 501(c)(3) religious organization. These restrictions subject a religious organization to suit in the courts for violating a federal government law.

Especially notice the last IRS requirement. Fundamental public policy is above biblical principle if the two conflict. Certain public policies can, do, and will conflict with biblical principles. It is the responsibility of the church, not the state, to determine biblical principle as to the doctrines of the church. A nineteenth century Supreme Court wisely observed:

public-policy“The question, what is the public policy of a state, and what is contrary to it, if inquired into beyond these limits, will be found to be one of great vagueness and uncertainty, and to involve discussions which scarcely come within the range of judicial duty and functions, and upon which men may and will complexionally differ; above all, when that topic is connected with religious polity, in a country composed of such a variety of religious sects as our country, it is impossible not to feel that it would be attended with almost insuperable difficulties, and involve differences of opinion almost endless in their variety. We disclaim any right to enter upon such examinations, beyond what the state constitutions, and laws, and decisions necessarily bring before us” (Vidal v. Gerard’s Executors, 43 U.S. 127, 198; 11 L. Ed. 205; 1844 U.S. LEXIS 323; 2 HOW 127 (1844)).

Internal Revenue Code § 508
Internal Revenue Code § 508

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

“§ 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. [Emphasis mine.] “(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 (2007)). [Emphasis mine.]

Note. A church applies for 501(c)(3) recognition by filling out and filing IRS Form 1023.

§ 508(a),(c) says churches are excepted from obtaining § 501(c)(3) tax exempt status. § 508 churches are an exception to the civil government requirement that certain organizations file for 501(c)(3) tax exempt status.

The beginning of a multi-page document to be filled out by a church who cares not that they dishonors the Lord.
The beginning of a multi-page document to be filled out by a church who cares not that they dishonors the Lord.
A law of man which enacts some biblical principles.
A law of man which enacts some biblical principles.

However, 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. This principle is fully explained in Sections I-III and the history of how the blood of millions of Martyrs led to the adoption of the First Amendment is explained in Section IV of  God Betrayed (PDF OF God Betrayed online version of God Betrayed, Order Information for God Betrayed and other books by Jerald Finney). 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 only on the biblical principle.

Second, to rely on § 508 contradicts the First Amendment. 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.”

Obviously, § 508 is a law made by Congress which regards an establishment of religion. § 508 does not state that the First Amendment forbids Congress from making any law in violation of the First Amendment and, therefore, a church is non-taxable. § 508 states that Congress is declaring an exemption for churches. Hence, an adversary in a court proceeding can argue that a church has submitted herself to Internal Revenue Code § 501(c)(3) regulation and ignored her First Amendment status by relying on a law instead of the First Amendment. The Internal Revenue Service Publication 1828 states, that “churches which meet the requirements of § 501(c)(3) are automatically tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.” However, the New Testament (First Amendment) church will not be in court anyway for several reasons: the church is not a legal entity; is not a business; has no income; has no employees or staff; claims no § 508 status; 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.

IRS Publication 1828, page 3
IRS Publication 1828, page 3

Church_BusinessThird, a New Testament church (a church organized according to the principles of the New Testament), among other things, receives no income, has no employees or staff, and runs no businesses (daycare, “Christian” schools, cafes, etc.). Church members 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. Even a business which makes no profit pays no taxes. A church which does have net income should be taxed since she is operating as a business and not as a New Testament church.

If a church does not apply for § 501(c)(3) tax exempt status or claim § 508 tax exempt status, and if it 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 they have no income.

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

oru_tax_exempt_letter_sample“EXEMPT, a. Free from any service, charge, burden, tax, duty, evil or requisition, to which others are subject; not subject; not liable to; as, to be exempt from military duty, or from a poll tax; to be exempt from pain or fear. Peers in G. Britain are exempt from serving on inquests.

“2. Free by privilege; as exempt from the jurisdiction of a lord or of a court. “3. Free; clear; not included. “4. Cut off from. [Not used.]                                                                                   Shak.” (AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE, NOAH WEBSTER (1828)).

“exempt 2: free or released from some liability or requirement to which others are subject” (WEBSTER’S COLLEGIATE DICTIONARY 406 (10th ed. 1995)).

“PRIV’ALEGE, n.

“1.A particular and peculiar benefit or advantage enjoyed by a person, company or society, beyond the common advantages of other citizens. A privilege may be a particular right granted by law or held by custom, or it may be an exemption from some burden to which others are subject.“2. Any peculiar benefit or advantage, right or immunity, not common to others of the human race. Thus we speak of national privileges, and civil and religious privileges secured to us by our constitutions of government…. “3. Advantage, favor, benefit” (Ibid.).

8In spite of the fact that biblically sound churches are non-taxable, many, if not most, churches line up to incorporate and to become 501(c)(3) religious organizations. Why do churches apply? The IRS knows the answer:

“IRS concurrence that a religious organization is indeed a church is the best protection for a donor that his or her contribution to the church is tax-deductible and will not be challenged in an audit.  This knowledge makes a church’s fundraising efforts much easier” (Peter Kershaw, Hushmoney (Branson, Missouri: Heal Our Land Ministries), p. 30, citing Michael Chitwood, Protect Your Contributions (referring to statement of IRS on p. 3 of IRS Publication 1828)).

God had reasons for denying jurisdiction to the state over spiritual matters and restricting state authority to earthly matters. One reason has to do with qualification for determining the meanings of words. The interpretation of laws and regulations requires the defining of words. Employees of civil government are not qualified to determine the meanings of spiritual terms; but, by dealing with spiritual matters, such people are called upon to determine the meanings of spiritual terms. They must determine the meaning of “religion,” “religious,” “church,” and many other words. Since these employees are operating outside their realm of expertise, the outcome of their decisions on these matters will conflict with the biblical meanings of those words. In defining words, therefore, civil government officials intrude upon the jurisdiction of the church—the church is subjected to the state.

For example, what does the word “religion” mean? The word “religion” is used only five times, in the Bible, and only once in a good sense:

“Which knew me from the beginning, if they would testify, that after the most straitest sect of our religion I lived a Pharisee” (Ac. 26.5).  [Bold emphasis mine]. “For ye have heard of my conversation in time past in the Jews’ religion, how that beyond measure I persecuted the church of God, and wasted it: And profited in the Jews’ religion above many my equals in mine own nation, being more exceedingly zealous of the traditions of my fathers” (Ga. 1.13, 14).  [Bold emphasis mine]. “If any man among you seem to be religious, and bridleth not his tongue, but deceiveth his own heart, this man’s religion is vain. Pure religion and undefiled before God and the Father is this, To visit the fatherless and widows in their affliction, and to keep himself unspotted from the world” (Ja. 1.26-27).  [Bold emphasis mine].

definitionThus, from a biblical perspective, religion in the good sense may be defined as:

“2. Religion, as distinct from theology, is godliness or real piety in practice, consisting in the performance of all known duties to God and our fellow men, in obedience to divine command, or from love to God and his law. James i. “3. Religion, as distinct from virtue, or morality, consists in the performance of the duties we owe directly to God, from a principle of obedience to his will. Hence we often speak of religion and virtue, as different branches of one system, or the duties of the first and second tables of the law. “Let us with caution indulge the supposition, that morality can be maintained without religion. Washington” (AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE, NOAH WEBSTER (1828), definition of “RELIGION”).

Since the Bible also teaches that there is only one true God, there can only be one religion in the good and true sense. This means that all other religions are bad and false. All other “gods” are actually no gods at all:

  • “As concerning therefore the eating of those things that are offered in sacrifice unto idols, we know that an idol is nothing in the world, and that there is none other God but one. For though there be that are called gods, whether in heaven or in earth, (as there be gods many, and lords many,) But to us there is but one God, the Father, of whom are all things, and we in him; and one Lord Jesus Christ, by whom are all things, and we by him” (1 Co. 8.4-6).
  • “What say I then? that the idol is any thing, or that which is offered in sacrifice to idols is any thing? But I say, that the things which the Gentiles sacrifice, they sacrifice to devils, and not to God: and I would not that ye should have fellowship with devils. Ye cannot drink the cup of the Lord, and the cup of devils: ye cannot be partakers of the Lord’s table, and of the table of devils” (1 Co. 10.19-21).
The world does not understand God and the one true religion.
The world does not understand God and the one true religion.

Since there is only one true God, there is only one religion with power from God. Before one can know that one true God, one must know Jesus Christ, God the Son: “Jesus saith unto him, I am the way, the truth, and the life: no man cometh unto the Father, but by me. If ye had known me, ye should have known my Father also: and from henceforth ye know him, and have seen him” (Jn. 14.6-7).

The Bible, as pointed out above, recognized the Jewish religion. Members of the Jewish religion (and any other religion) who do not recognize the Lord Jesus Christ as sovereign God are false religions and have no piety or power from God. “And Jesus came and spake unto them, saying, All power is given unto me in heaven and in earth” (Mt. 28.18).  Unconverted Jews deny that Jesus Christ is God the Son. The Jewish religion, like all other religions except true biblical religion, is therefore a false religion. The IRS and the federal government to a great extent, however, have concluded that all religions are equal and have created a pluralistic code and a pluralistic nation.

Civil government officials are required by § 501(c)(3) to define “church.” By providing that churches can become legal entities by incorporating and obtaining 501(c)(3) status, the civil government assured that the IRS and the courts would have to define “church” because, first, a lot of churches would seek to incorporate and get government declared tax exempt status, thereby voluntarily taking themselves out from under First Amendment or New Testament status; and second, many religious organizations would claim to be churches so as to obtain the benefits offered by civil government. As one court noted,

“We hasten to emphasize that by its use of the term ‘church,’ Congress must have intended a more narrow classification than that embodied by a term such as ‘religious organization.’ Despite the lack of guidance from Congress, and in the absence of a more explicit regulatory definition of the term ‘church,’ we will continue our efforts to give a distinct meaning to this statutory classification” (Foundation of Human Understanding v. Commissioner of Internal Revenue, 88 T.C. 1341, 1361; 1987 U.S. Tax Ct. LEXIS 75; 88 T.C. No. 75 (1987)).

IRS Publication 1828
IRS Publication 1828

In attempting to define “church,” the IRS has “given certain characteristics [14 criteria] which are generally attributed to churches” (IRS Publication 1828 (2007), p. 23).  The court has recognized that 14-part test in determining whether a religious organization was a church. The 14 criteria are:

“(1) a distinct legal existence; “(2) a recognized creed and form of worship; “(3) a definite and distinct ecclesiastical government; “(4) a formal code of doctrine and discipline; “(5) a distinct religious history; “(6) a membership not associated with any other church or denomination; “(7) an organization of ordained ministers; “(8) ordained ministers selected after completing prescribed studies; “(9) a literature of its own; “(10) established places of worship; “(11) regular congregations; “(12) regular religious services; “(13) Sunday schools for religious instruction of the young; “(14) schools for the preparation of its ministers.” (American Guidance Foundation, Inc. v. United States, 490 F. Supp. 304 (D.D.C. 1980)).

“In addition to the 14 criteria enumerated above, the IRS will consider ‘[a]ny other facts and circumstances which may bear upon the organization’s claim for church status.’ Internal Revenue Manual 7(10)69, Exempt Organizations Examination Guidelines Handbook 321.3(3) (Apr. 5, 1982)” (88 T.C. at 1358).

The most glaring inaccuracy in the IRS criteria used to decide whether something is a church is the omission of God’s principles from the characteristics. When the natural man defines a church, he leaves God out; or, should he include God, he must have an incorrect conception and definition of God, since he does not know God. That is the most apparent problem with the IRS conception of a church. The natural man, as exemplified by the IRS characteristics of a church, overlooks the fact that Jesus is the one who builds and is the chief cornerstone of the church. If Jesus, and Jesus alone, is not the builder, there can be no church. Paul wrote, speaking to the church:

“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 growth unto an holy temple in the Lord: In whom ye also are builded together for an habitation of God through the Spirit” (Ep. 2.19-22).

The results of the attempts of the courts and IRS to define “church” are twofold: First, some of those “religious organizations” which are not “churches,” but have sought to be recognized by the civil government as “churches,” have been declared to be “churches” by the civil government; and second, New Testament churches which have sought and obtained incorporation and/or “tax exemption” have become legal entities and lost their status as New Testament churches solely under God.

The state and federal provisions and actions derived and resulting from those provisions which allow incorporation and declaration of tax exempt status of churches and religious organizations demonstrate:

(1)  the wisdom embodied in the First Amendment which recognized that the civil government is not qualified to “make [any] law regarding an establishment of religion, or [to prevent] the free exercise thereof.”

(2)  the undesirable consequences of deviation from the biblical principles that the church is a spiritual entity, the only spiritual institution ordained by God; the state is an earthly entity ordained by God to operate only within its God-given earthly jurisdiction; and that neither the church nor state should be over the other, but God should be over both.

(3)  that the federal government (and the states since the incorporation of the First Amendment by the Fourteenth Amendment) violates the First Amendment when civil government provides for incorporation and tax-exempt status for churches or any other religious organization.

(4)  most importantly, that most churches have abdicated their responsibility to honor their husband, the Lord Jesus Christ.

15Just one illustration of what can happen when the civil government determines if an organization is a church, when IRS officials determine what constitutes a church within the meaning of IRC § 170(b)(1)(A)(i), follows. The threshold question in determining whether an organization is a church described in § 170(b)(1)(A)(i) is whether the organization qualifies as a religious organization described in § 501(c)(3). Using the 14-part IRS test to determine whether a religious organization was a church, IRS officials held that an organization with the following purpose as stated in its articles of incorporation and bylaws was a church: “[T]o establish an ecumenical church to help people learn to pay attention, wake up, and discover what both Christ and Buddha referred to as one’s true self” (Internal Revenue Service Private Letter Ruling 8833001, 1988 PRL LEXIS 1594). The ruling stated:

“The organization was established to develop an ecumenical form of religious practice, place greater significance on the modes of religious expression that would unify western and eastern modes of religious practice, place greater significance on the mystical or interior experience of religious truth than that of most western church denominations, and be more spiritually satisfying to members than other existing church organizations” (Ibid.).

In other words, the IRS determined that an organization whose purpose was directly contrary to the principles for a church laid down by the Lord in His Word was a church.

The lost and most believers have no clue as to the true meaning of “New Testament (First Amendment) church,” and America is not a nation under God. The civil governments in the United States, following Satan’s principles, have constructed a code that undermines incorporated 501(c)(3) and 508 religious organizations. Yet most American “Christians” are fearful and more concerned with pleasing civil government than they are in pleasing the Lord, more concerned with allowing their members to claim a tax deduction than with pleasing their Husband, the Lord Jesus Christ. The Savior grieves.

Spurious rationale for church corporate-501(c)(3) status: One’s convictions


Jerald Finney
Copyright © December 10, 2012


From Separation of Church and State/God’s Churches: Spiritual or Legal Entities. Not in God Betrayed.


Preface

Today, the most common reasons given by churches for incorporating and seeking 501(c)(3) status are (1) to obey every ordinance of man (2) limited liability; (3) to allow a church to hold property; (4) convenience—it is easier to get a tax deduction for tithes and offerings given to an incorporated 501(c)(3) religious organization than for tithes and offerings given to a New Testament church; (5) one’s convictions; and (6) winning souls is  more important than loving God; if a church is incorporated, don’t cause problems. Just continue winning souls because winning souls is more important than anything else, including loving God.

This article will deal with the fifth false reason, one’s convictions. Other articles cover the other five reasons:  

  1. Render Unto God the Things that Are His: A Systematic Study of Romans 13 and Related Verses When a pastor is asked why his church is incorporated, he will often quickly answer: “Because of Romans 13 [Romans 13:1-2 “Let every soul be subject unto the higher powers. For there is no power but of God: the powers that be are ordained of God. Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation.” Or “We are to obey every ordinance of man.” He may also rely on some other verses. All these verses are examined in this online booklet which is also in online PDF form on this website. Not only that, no law requires a church to get incorporated or apply for 501(c)(3) status or claim 508 status. Instead, the highest law in America protects the right of churches to choose to remain free from corporate and 501(c)(3) or 508 status. See, e.g., First Amendment Protection of New Testament Churches/Federal Laws Protecting State Churches (Religious Organizations) 
  2. Limited liability (corporate status actually increases the liability of church members) (Section VI, Chapter  of God Betrayed; Chapter 6 of Separation of Church and State).
  3. Spurious rationale for incorporating: to hold property (Section VI, Chapter 7 of God Betrayed; Chapter 7 of Separation of Church and State).
  4. Spurious rationale for church corporate-501(c)(3) status: tax exemption and tax deductions for contributions OR Tax reasons given for church corporate 501(c)(3) status: a biblical and legal analysis (Section VI, Chapter 8 of God Betrayed; Chapter 8 of Separation of Church and State).
  5. Spurious rationale for church corporate-501(c)(3) status: one’s convictions (Not included in God Betrayed or Separation of Church and State).
  6. Spurious rationale for church corporate-501(c)(3) status: winning souls is more important than loving God/The Most Important Thing: Loving God and/or Winning Souls.

Article:
Spurious rationale for church corporate-501(c)(3) status: One’s convictions

Pastors, Christians, and churches give various “theological” reasons to excuse the incorporation and 501(c)(3) tax exemption of churches. The theologies of Catholic and Protestant churches have traditionally supported church-state union and therefore incorporation and 501(c)(3), although such churches have some problems with American incorporation and 501(c)(3) which give civil government considerable control over churches rather than giving the established church control over civil government (select articles from the categories at left for information on the control given civil government through incorporation  and 501(c)(3)). In most cases, their objection to corporate 501(c)(3) status and the control such a position gives civil government over their churches does not prevent them from submitting and obtaining that status. The author explains the Catholic and Protestant theologies that support church establishment in God Betrayed/Separation of Church and State: The Biblical Principles and the American Application (all books by Jerald Finney are also available free in both PDF and online form on this website; for information on ordering the paperback copies of the books see the “Books” page of the “Church and State Law“ website, or the “Order information page for books by Jerald Finney” page of this website); in the article “An Abridged History of the First Amendment“; in his radio broadcasts which are archived on the “Radio Broadcast” page of the ”Church and State Law” website; and in the audio teachings which are linked to on the “Blog” page of “Church and State Law” website. (Click the following link to preview God Betrayed: Link to preview of God Betrayed.))

Bible believing churches are not as sophisticated in their rationale for incorporating and getting 501(c)(3). Their rationale is anemic since biblical principle, without the perversions of Catholic and Protestant theologies,  supports separation of church and state (not separation of God and state). One reason given by “Bible believing” churches, especially Baptist,  is that the issue of whether to incorporate and/or get 501(c)(3) status is an important issue, but it is not the most important issue; therefore, they reason, if a church finds it impractical to discard or reject the corporate and/or 501(c)(3) status, then just go ahead with that status and do the best you can because the most important thing for believers and churches is winning souls. That reason is false, as the author explains in various resources: for example, (1) the booklet, The Most Important Thing: Loving God and/or Winning Souls (all books by Jerald Finney are also available free in both PDF and online form on this website; for information on ordering the paperback copies of the books see the “Books” page of the “Church and State Law“ website, or the “Order information page for books by Jerald Finney” page of this website); (2) the article, The Most Important Thing: Loving God and/or Winning Souls; and (3) audio teachings on The Most Important Thing: Loving God and/or Winning Souls, available on the “Radio Broadcast” page of “Church and State Law”.

Another reason given by some pastors and Christians of “Bible believing” churches for their decision to incorporate is that it is up to each individual church to decide the issue based upon “their convictions.” The author hears this excuse from pastors all the time. In this article, he addresses this rationale using an article written by Dr. Charles Brown as a springboard.

The question to be answered is: “Can one decide either to incorporate a church (or to continue as an incorporated church) or not to incorporate a church and still please God?” The proper place to begin is by defining “conviction” and “principle.” Relevant definitions of “conviction” are: (1) “a strong persuasion or belief;” (2) “the state of being convinced” (Merriam Webster’s Collegiate Dictionary (10th ed., 1995)). Principle may be defined as: “a comprehensive and fundamental law, doctrine, or assumption” (Ibid.). Of course, if a conviction is based upon biblical principles, that conviction is valid in the eyes of God. Cannot true followers of Christ agree that if one acts upon a conviction which is contrary to or not based upon principles in the Word of God, “sin lieth at the door?”

Dr. Charles Brown wrote an article, “To Incorporate or Not to Incorporate,” which was published in the April, 2008 issue of The Landmark Anchor. In that article, Dr. Brown explains why his conviction is that a church should incorporate. However, he also states in the article, “If  a church has theological objections to becoming incorporated, then, by all means, do not incorporate.” In other words, according to that statement of Dr. Brown, since the Bible does not offer any comprehensive principles or doctrine controlling church corporate status one can safely choose either corporate or non-corporate status without violating biblical precept.

However, while making that statement, Dr. Brown also makes his case for church incorporation. Interestingly, he does not state any biblical principles concerning the organization, purpose, fate, or nature of churches to back up what he says. Rather, he bases his understanding upon “research and consultation with a law firm.”

He refers to the law in his article:

(1)    He correctly states that a “corporation is a legal status that enables a group joined together for a stated reason … to act as if it is a person. That ‘legal person’ may own property, conduct business, and otherwise carry out its purpose.” A New Testament and First Amendment church (hereinafter referred to as a “First Amendment church”) may not own property, or conduct business (as the word is used in America). A First Amendment church cannot also be a “business.” However, a First Amendment church may utilize property in American in a manner consistent with biblical principles; and, unlike the state incorporated church, she may carry out her purpose within the letter of civil law while still pleasing her Lord. The incorporated church has a “form of godliness, but denies the power thereof.”

Note. The First Amendment to the United States Constitution is the implementation of the biblical principle of separation of church and state (not separation of God and State). This is fully explained in the book God Betrayed which, as explained above, is available on this website in both PDF and online form and can be ordered in paperback form.

(2)    Dr. Brown then asserts that “Usually a church incorporates to limit its liability.” His statement is true as to a false reason given for incorporation of a church.  It is not true that a state incorporated “church” and its members has more protection from liability than a First Amendment church and her members. Again, I explain this in Section VI, Chapter 6 of God Betrayed, in audio teachings available on the “Blog” and “Radio Broadcast” pages of “Church and State Law,” and in the article “Church Incorporation Increases Liability of Church Members.”

(3)    Dr. Brown states, “An unincorporated church is owned by individuals. Each share in the liability of the property and all things done in the name of that church. In a church split, the assets of the church may be claimed by either side and lawsuits could erupt, because each member owns the church.” (This is a direct accurate quote from his article.).

His assertions are totally wrong as to a First Amendment church, but correct as to the incorporated church. A First Amendment church, a spiritual entity only, is owned by the Lord Jesus Christ only. A First Amendment church owns no property, although there are many legal means in America for such a church to utilize property without owning property. Perhaps Dr. Brown should reread the Bible, and especially I Corinthians Chapter 6 in regard to lawsuits by church members. All the legal problems occurring within churches are in incorporated churches – to understand this, just make use of Google.

In fact, the incorporated church creates several contracts when it incorporates – contracts between the state and the corporation, between the corporation and the members, between the members themselves, and between the members and the state. The controlling party to all these contracts is the state, and the state will decide disputes based upon secular, not Biblical, law. Try appealing to the Bible when you get into such a dispute. The sovereign of the corporation will quickly explain your error and hold you in contempt if you do not  abandon your appeal to God’s principles.

(4) He also asserts: “The United States Constitution guarantees freedom of religion and freedom of speech. Churches fit in those categories. Anything the state might choose to do (prosecute, regulate, etc.) to a church, they may do regardless if the church is incorporated or not.”

The author explains in detail why this is a totally ridiculous and false statement in various resources. A man who make such a statement is speaking outside his field of expertise.

(5) Dr. Brown proclaims: “[A] church is not state licensed because it is incorporated. A license is a recognition from a responsible authority to conduct an activity that would be illegal to conduct without that license. No church needs to be licensed to be a church. An unincorporated church may legally do the same activities that one that is incorporated.”

That statement by Dr. Brown is a jumbled mess. First, who is a “responsible authority?” Perhaps he is referring to a civil government. What if the civil government which requires a license is not a responsible authority? A First Amendment church which is not a legal entity such as a corporation cannot get a license. A corporate church, since she is a legal entity, can get a license. The author explains that in his resources.

Second, individual believers can choose to get such a license and thereby displease our Lord. One notable Christian who chose not to get a license was John Bunyan. One can read a portion of his trial transcript in the article, “An Abridged History of the First Amendment.” If you read the article, you will find out the reasons a Christian should not get a license for preaching, holding church meetings, and for certain other spiritual activities.

Third, although licensure and incorporation are not the same, they both violate the  biblical doctrine of the church.

Fourth, an incorporated church cannot do everything that a First Amendment church, which is not a legal entity in any way, can do.

Furthermore, the corporate church is organized according the law of her sovereign state (the law makes clear that the sovereign of the corporation, including the non-profit religious organization – the correct name for an incorporated “church” – is the state of incorporation). One can find out exactly what non-profit incorporation is in my books, articles, and audio teachings available from “Church and State Law” and “Separation of Church and State Law” blog.

Finally, the nature of a corporate church is entirely different from that of a First Amendment church in many respects. The corporate church has given up much of her Constitutional protections. She falls under the Fourteenth Amendment as opposed to the First Amendment as to many matters. She has also grieved our Lord since she has placed herself at least partially under another head.

(6) He goes on to say that “Incorporated churches are not ‘state run churches.’ Incorporated churches do not have to report to the state what they preach, how much money is spent, how they run their affairs, or who tithes. They do have to give the state an application typically containing: name and address of the church, purpose of the organization, manner of election of ‘officers,’ the  name and  address of the initial registered agent (usually the Pastor), and three names and addresses of the incorporators (usually trustees or deacons). The church ought to have a constitution and bylaws but they are for the internal working of the church and the state will not review them, nor want them.”

Dr. Brown does give a few isolated facts about incorporation, but he does not examine the law involved in any depth. He does not mention the biblical principles for a church and compare those principles to the facts and law concerning incorporation. He, for example, fails to mention that the “sovereign of the corporation is the state,” that the corporation is a creature of the state, that the corporation must follow the rules that are given her by her sovereign, that the corporation must be structured according to the organizational rules laid down by the sovereign state, etc. The author explains exactly the law of the non-profit corporation in books, articles, and audio teachings.

Again, the author has compared biblical principle with the law and facts about incorporation in various resources including his books (available for purchase on the “Books” page of “Church and State Law”; in articles audio teachings available on the “Radio Broadcast” and “Blog” pages of “Church and State Law;” and in articles and audio teachings on this “Separation of Church and State Law” blog.).

(7) Finally, Dr. Brown mentions the court case, Hale v. Hinkle, a Supreme Court decision. His analysis is flawed. See the article linked to in the next paragraph for my comments on this.

In “To Incorporate of Not to Incorporate: Attorney Jerald Finney Answers Dr. Charles Brown, Executive VP of Landmark Baptist College,” (as a reminder, you can left click the preceding link to go directly to that article; however, the website was hijacked and all the issues of the magazine from which the article was taken, “The Trumpet,” have as of this date – September 4, 2013, to have been restored) an article published in the July-September issue of The Trumpet, the author rebuts to Dr. Brown’s article. That article, which was originally entitled “Responses to Arguments that Biblical Principles Do Not Clearly Warn Against Incorporation of Churches” addresses Dr. Brown’s article in more detail than does this brief article.

All Jerald Finney’s resources comprehensively deal with the issue of separation of church and state. Involved in the issue is the issue of whether incorporation and 501(c)(3), or becoming a legal entity in any way) violates principles in the Word of God and therefore grieves our Lord and ultimately results in bad consequences. When one applies the law and facts to biblical principles,  he sees that it is very clear that incorporation and 501(c)(3), etc. of churches are “iniquities” and grieve our Lord.

The church who is serious about her relationship with the Lord Jesus Christ may be ignorant about the biblical doctrines of church, state, and separation of church and state. Sooner or later, she will suffer consequences as will the individuals and families in that church. However, the willfully ignorant church or the church which continues in presumptuous sin, her individual members, and the families within her church family are in greater danger (see, e.g., 2 Peter 1 and Hosea 4).

Endnote

Responses to Arguments that Biblical Principles Do Not Clearly Warn Against Incorporation of Churches
By Jerald Finney
Lead Counsel for the Biblical Law Center

Dr. Charles Brown recently wrote an article entitled “To Incorporate or Not to Incorporate” which was published in the April, 2008 edition of The Landmark Anchor. In that article, he brought out important issues which, from a biblical perspective, are preeminent for a New Testament church. This article briefly answers some of the common assertions of various Christians which are reflected in Dr. Brown’s article.

I recently completed a book called God Betrayed/Separation of Church and State: The Biblical Principles and the American Application. In that 453 page book I thoroughly addressed all the issues Dr. Brown raises and more. I want to encourage every Bible believer to get this book and study it. In the above mentioned article, Dr. Brown does not get into United States Code § 501(c)(3) (“501(c)(3)”) tax-exempt status for a church. Since almost all churches which incorporate also get 501(c)(3) status, such status should be considered in conjunction with the issue of incorporation of churches; but since Dr. Brown did not include the issue in his article, I will not address the issue herein. God Betrayed examines the issue of 501(c)(3) tax-exemption of churches.

It is impossible to do this subject justice in a short article, but I will attempt to shed some light on the issues he raised as succinctly as possible.

Dr. Brown stated: “A church does not have to be incorporated to be a real church.” My reply to that statement follows:

  • What is a real church? The New Testament gives the answer to that question. The revelation of the mystery of the church, which was foretold, but not explained by Christ in Matthew 16.18, was committed to Paul. In his writings alone we find the doctrine, position, walk, and destiny of the church. God Betrayed delves into the biblical doctrines concerning the church.
  • New Testament churches never submitted themselves to the state in any way. In fact, the apostles were careful not to render to Caesar the things that were God’s. They were jealous of God’s churches. Paul said to the church, “For I am jealous over you with godly jealousy: for I have espoused you to one husband, that I may present you as a chaste virgin to Christ. But I fear, lest by any means, as the serpent beguiled Eve through his subtilty, so your minds should be corrupted from the simplicity that is in Christ (II Cor. 11.2-3).”
  • Is a corrupted church a real church? What if the leaders of a church reject knowledge and succumb to Satan’s seductions? In other words, what if those leaders are willfully ignorant (see Hosea 4)? Individuals have a responsibility after being saved—they are to add to their faith virtue, to virtue knowledge, to knowledge temperance, to temperance patience, and to patience godliness, to godliness brotherly kindness, and to brotherly kindness charity (II Pe. 1.4-7). They are to engage in spiritual warfare using spiritual weapons which constitute the whole “armour of God” (Ep. 6.10-18). Included in that “armour” is having one’s loins girt about with truth (Ep. 6.14).
  • A New Testament church is a spiritual entity only. Doing anything in America which subjects a church to the civil government in any way renders that church a “legal entity.” A “legal entity” is “an entity, other than a natural person, who has sufficient existence in legal contemplation that it can function legally, be sued or sue and make decisions through agents as in the case of corporations (BLACK’S LAW DICTIONARY (6th Ed., 1990), definition of ‘Legal Entity’).”
  • God desires that Christ be the only head over His churches (Ep. 1.22, 23; 2.22; 5.23-24; Col. 1.15-18).
  • The church is analogized to a husband and bridegroom of the church (Jn. 3.28, 29; Ro. 7.4; II Co. 11.1-4; Ep. 5.23-33; Re. 19.6-8).

Dr. Brown stated: “The United States [C]onstitution guarantees its citizens freedom of religion and freedom of speech. Churches fit in those categories.” My response:

  • The First Amendment to the United States Constitution guarantees freedom of religion, speech, press, assembly, and the right to “petition the Government for a redress of grievances.” In the religion clause, churches are guaranteed freedom from government control. The words and history of the Amendment make this clear. Section VI of God Betrayed gives an unrevised account of the history of the First Amendment.
  • The words of the religion clause state, “Congress shall make no law respecting an establishment or religion, or prohibiting the free exercise thereof.” Thus, the First Amendment allows a church to remain under God only without persecution, or to repent if they incorporated, gained 501(c)(3) status, or made ithemselves a legal entity in any way. The Biblical Law Center has already helped many churches to return to New Testament church status and is there to help other churches who wish to please God and return to New Testament church status. The freedom guaranteed a church by the First Amendment can be enjoyed within the parameters of the laws of the states and of the United States. The United States Supreme Court still recognizes that the state cannot interfere with a New Testament Church. Of course, there may be rogue governmental agencies and courts that may ignore these protections; but if a New Testament church makes sure to close all doors to being classified as a legal entity, there is no avenue for suit or attack against that church.

Dr. Brown stated: “Anything the state might choose to do (prosecute, regulate, etc.) to a church, they may do regardless if the church is incorporated or not.”

  • This statement not only contradicts what Dr. Brown said in his previous two sentences, it also is simply not true. A New Testament church cannot be prosecuted. It is not a legal entity. An individual within a New Testament church may be prosecuted for crimes or sued for torts allegedly committed, whether as principal or party. However, a New Testament church is not a legal entity as is an incorporated 501(c)(3) church; and, therefore, she cannot sue, be sued, or be charged with a crime. Only a member or members who allegedly committed a crime or tort can be charged with a crime or sued under the laws of a civil government.
  • The First Amendment guarantees that a New Testament church cannot be prosecuted, regulated, etc.

Dr. Brown’s statements concerning incorporation which follow his last mentioned statement are jumbled and very misleading. He is correct to say that incorporation “is a legal status that enables a group joined together for a stated reason (business, church, club, etc.) to act as if it was a person. That ‘legal person’ may own property, conduct business, and otherwise carry out its purpose.” As I stated above, a corporation is a legal entity. However, Dr. Brown’s description is incomplete. As pointed out in much more detail and with legal citations given in God Betrayed, civil law makes clear that:

  • “A corporation is an artificial being, invisible, intangible and existing only in the contemplation of law. As a mere creature of law, it possesses only those properties which the charter of its creation confers upon it. A corporation is not a natural person but rather an artificial person, that is, a legal fiction or a creature of statute (18 AM. JUR. 2D Corporations § 1 (2007)).”
  • The sovereign of the corporation is the state that creates it. “No corporation can exist without the consent or grant of the sovereign, since the corporation is a creature of the state and derives its powers by legislative grant…. Because the granting of the privilege to be a corporation and to do business in that form rests entirely in the state’s discretion, a state is justified in imposing such conditions on that privilege as it deems necessary, so long as those conditions are not imposed in a discriminatory manner (18A AM. JUR. 2D Corporations § 156 (2007)).”
  • A corporation is defined as “An artificial person or legal entity created by or under the authority of the laws of the state.” (BLACK’S LAW DICTIONARY 340 (6th Ed. 1990), under definition of “Corporation,” citing Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518 (1819)).”
  • Early in our national history, the United States Supreme Court solidified already existing precedent—in a case involving a religious institution of higher learning and which influenced many churches to incorporate—concerning the attributes of incorporation which are applied to churches (Dartmouth College). In that same case, the Supreme Court defined the differences between public and private corporations. Public corporations are not voluntary associations and there is no contractual relation between the government and the individuals who compose the corporation as there is with the private corporation (such as railroad companies, banks, insurance companies, charities, churches, religious organizations, etc.); a corporation which does not possess governmental powers or functions is a private corporation (Ibid.).

Dr. Brown states that “[a]n unincorporated church is owned by individuals.”

If an unincorporated church is not a legal entity (incorporating and getting 501(c)(3) status are not the only ways to become legal entities), it is a New Testament church and the church is owned by the Lord Jesus Christ who said, “And I say also unto thee, That thou art Peter, and upon this rock I will build my church; and the gates of hell shall not prevail against it (Mt. 16.18)(Emphasis mine).” A New Testament church remains a spiritual entity only and owns no property. God Betrayed explains how an American church can assemble on property without owning it, etc.

Dr. Brown asserts that churches usually incorporate to limit liability.

However, in addition to limited liability, other reasons for incorporating are given by members of “churches:” incorporating protects their personal assets (1) from liability for the debts of the corporation, (2) from the torts and criminal acts of the corporation, and (3) from liability on contracts entered into by the corporation. Although such arguments are partially correct, they are misleading. These arguments are spurious for several reasons which are more thoroughly discussed in God Betrayed. The corporate veil can be pierced. Limited liability is not absolute as is explained in God Betrayed. Also, biblical principle is against a church going into debt; and if she does go into debt, not only does the Word of God teach that God expects her to honor her debts; but also that church has become a legal entity because she can be sued if she defaults on her debts and she can sue if the other party to the debt defaults on her agreements surrounding the indebtedness. As to torts and criminal acts, only visible members of a New Testament church can commit such acts. A New Testament church cannot commit a tort or a crime. Thus, only people (members), not a New Testament church (a spiritual entity only and not a legal entity), can be charged with a tort or crime to which they have allegedly either been principal or party. As to contracts, a New Testament church (a spiritual entity) has no need to and cannot enter into contracts. One can get around these principles only by means of human reasoning which are contrary to God’s principles.

Dr. Brown asks the question, “Is becoming an incorporated church the same as being a state licensed church?”

This question is a diversionary tactic. Of course the two are not the same; but, according to biblical principles, to license a church is a wicked act, and to incorporate a church is a wicked act. I have already pointed out many of the reasons why incorporation is wrong. God Betrayed gives other reasons and is much more detailed.

Dr. Brown then asks, “What about theological objections to incorporation?”He recommends not incorporating if one has theological objections.

  • The Word of God does not leave such an important issue up for grabs, and God expects His children to seek out and apply the principles He has laid down. God Betrayed is theological. Unlike most lawyers, including many or most of those who call themselves Christian, the foundation for all that I believe, as stated in God Betrayed, is biblical. My authority is not Supreme Court cases or civil laws. In God Betrayed, I first go to the Bible and explain the biblical principles of government, church, and separation of church and state. Then I examine history, Supreme Court decisions, and civil law (specifically incorporation, 501(c)(3), and other related laws as regards churches) in light of biblical principle. My main message is to New Testament churches, churches who want to be New Testament churches in obedience to biblical principle due to love for God, and to any other churches or Christians who want to know truth concerning these vital issues.
  • The real question should be, “What does the Bible teach about incorporation?” God Betrayed explains the biblical principles concerning incorporation (and 501(c)(3) tax-exempt status) for churches and the consequences for violating those principles. God teaches that a church which incorporates has committed a wicked act. That church may continue to operate within God’s permissive will, but as with the nation Israel, the only true theocracy which has ever existed,  when she rejected God as ruler (and God permitted Israel to reject Him), once a church dishonors her relationship with the Lord Jesus Christ, that church is on a slippery slope down. The end result will be spiritual apostasy, moral awfulness, and political tyranny. As the Bible teaches, the only remedy for apostasy is judgment.

Dr. Brown states that the Christian Law Association (“CLA”) has some excellent printed material that explains these issues simply and thoroughly.

I disagree. Although simplistic, CLA explanations on the issue of incorporation (and 501(c)(3) status) of churches are wrong according to biblical principles. As a Christian, I contributed to the CLA for a few years and respected much of what they did, as I still do concerning some of their work. Then I was called by God to become a lawyer. A few years ago, I began an intense study of the Bible, history, and the law concerning the issue of separation of church and state. I discovered that CLA founds what it believes on man’s statutory and case law, interprets the Bible according to man’s statutory and case law, revises history, and disseminates myths about the issue of separation of church and state (which involves the issues of incorporation and 501(c)(3) tax-exempt status for churches). In fact, David Gibbs of the CLA once taught biblical principles concerning these issues but was persuaded by powerful pastors who had decided that they were going to seek incorporation and 501(c)(3) status that he should go with them on the issue. According to some sources, these pastors told him that if he did so they would establish his legal practice. It is irrefutable that after Attorney Gibbs switched his position, his earthly power and influence were multiplied many times over and the CLA began to thrive materially as an earthly entity with the financial support of thousands of churches and believers. Perhaps he felt that he should go with them to help and protect them, just as Jeremiah went with some of the Jews to Egypt against God’s warning. However, Jeremiah still spoke total truth as given him by God.

Dr. Brown then states that “Incorporated churches are not ‘state run churches.’”

  • In fact, incorporated churches, as fully explained in God Betrayed, are two-headed monsters. “Thus, whenever there is an incorporated church, there are two entities—the one, the church as such, not owing its ecclesiastical or spiritual existence to the civil law, and the other, the legal corporation—each separate, although closely allied. The former is voluntary and is not a corporation or a quasi corporation. On the other hand, a corporation which is formed for the acquisition and taking care of the property of the church, must be regarded as a legal personality, and is in no sense ecclesiastical in its functions (66 AM. JUR. 2D Religious Societies § 5 (2007)).”
  • An incorporated church gets part of her powers from God and part from the civil government. She is under two heads. Part of the church, as a legal entity, can sue and be sued as to both earthly and some spiritual matters. Part of the church must have elected officers who conduct business meetings, meet statutory requirements, etc.
  • This bifurcation of a church has other consequences. As has been shown, the state is sovereign of the incorporated part of a church. “Sovereign” means: possessed of supreme power or unlimited in extent: ABSOLUTE (BLACK’S LAW DICTIONARY (6th Ed., 1990), definition of “sovereign”). Incorporation of churches creates contracts between the state and the corporation, the state and the members of the corporation, between the members themselves, and between the members and the corporation. Contract (agreement between two or more parties) is not biblical. The Bible teaches that the proper way to agree with another or others is through biblical covenant (covenant between two or more people and God).  The contracts created by incorporation entangle the incorporated church with earthly satanic concerns, solutions, and procedures. Furthermore, the statutory requirements as to the form and content of the articles or certificates of incorporation must be substantially followed. As sovereign, the state has ultimate authority in interpreting the articles of incorporation as well as the various contracts involved in incorporation should disputes be taken to court. By incorporating, a church gives up much of its First Amendment protection. It must, for example, keep records and make those records available to the state, on demand. Only a church which is not satisfied with the freedom and provisions afforded the church by God (which are, by the way, implemented by the First Amendment) seeks incorporation.
  • An incorporated church must deal with all the government red tape that comes with incorporation. The incorporated church must now elect officers, hold business meetings, notify members of those meetings pursuant to statutory requirements, keep records, etc. All these secular activities take tremendous time, energy, and resources which could be used in pursuing the God-given purposes of a church. The incorporated church which does not comply with statutory requirements is being dishonest and could face further problems from her sovereign state.

Notice that Jesus said that “the gates of hell shall not prevail against [my church].” What about the church that is partly under God and partly under Satan? That church has fallen for Satan’s seduction:

“SEDUCTION, n. … 2. Appropriately, the act or crime of persuading a female, by flattery or deception, to surrender her chastity. A woman who is above flattery, is least liable to seduction; but the best safeguard is principle, the love and purity of holiness, the fear of God and reverence for his commandments. (AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE, NOAH WEBSTER (1828))”

A corporation cannot be the bride of Christ, the wife of Christ. The incorporated part of an incorporated church is not the bride of Christ, the wife of Christ, but rather an extramarital illicit relationship existing alongside the marriage. An incorporated church, having compromised her love for her Husband, will continue to make incremental compromises, and ultimately (perhaps in 1, 5, 10, 50, 100, or 200 years or more) will fall into heresy and apostasy. And from the beginning of that initial compromise, the Lord, even though longsuffering in His love and mercy, is grieving because of His wife’s compromise; and the compromising church gives up at least a portion of the power of God.

With the above information it should already be completely obvious to any born again believer who loves the Lord and who has been saved any length of time at all that a church should never incorporate. Scripture contains no principle consistent with church incorporation or incorporation in general. In fact, everything about incorporation is anti-biblical. If one who loves the Lord and comes into this understanding is in a church that is already incorporated, he will do all he can to shed the 501(c)(3) and/or corporate status of that church.

Dr. Brown then refers to Hale v. Hinkle.

He is partially right about his observations concerning that case. Although God Betrayed very briefly mentions Hale v. Hinkle, 201 U.S. 43 (1906), the case could be eliminated from the book without compromising any assertions in the book. Dr. Brown is correct when he states that the case did not deal with a church. He says that “this ruling had nothing to do with a church and does not mean that a church is a state run entity.” This statement is only partially true in that a church was not involved in the case. However, Hale v. Hinkle presents general incorporation law, and the principles in the case are applied to the issue of church incorporation. For example, an incorporated church does give up some of its constitutional protections such as its First Amendment Rights while retaining only due process and equal protection rights just as the corporate officer in Hale v. Hinkle gave up Constitutional rights, as Dr. Brown mentions in his article.

Dr. Brown closes his article by saying he has “no particular advice to offer for a church to get or refuse to get incorporated.”

In effect, Dr. Brown is stating that God does not care what a church does concerning incorporation since, as he puts it, “It is an issue to decide for themselves.” In other words, according to Dr. Brown, the Bible can be read to both support and condemn incorporation. However, when one opens the Word of God, one opens the mind and heart of God concerning this issue as well as many others.

Loving God is preeminent for a believer and for a church. One does not love God by just asserting that he loves God. Jesus said, “If ye love me, keep my commandments (John 14.15).” The greatest commandment is to love the Lord with all one’s heart, soul, mind, and strength (Mt. 22.37; Mk. 12.30; Lk. 10.27).

Love is action. This love which Christ has for His church and which he desires His church to show Him is seen in the Song of Solomon which is primarily an expression of pure marital love, and secondarily of Christ and His heavenly bride, the church. Song of Solomon  8.7 says, “Many waters cannot quench love, neither can the floods drown it: if a man would give all the substance of his house for love, it would be utterly contemned.”  “Contemned” means “despised, scorned, slighted, neglected, or rejected with disdain (AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE, NOAH WEBSTER (1828), definition of “CONTEMNED.”).” God despises, scorns, slights, neglects, or rejects with disdain all that a church does, whatever professions of love she makes, if those acts and/or professions are without love. A church that does not honor Christ as a wife is to honor her husband, her bridegroom, by remaining chaste, does not display love for the Lord. Thus, loving ones neighbor by witnessing to him, sending missionaries to him, leading him to the Lord,  or helping him materially or any other way in obedience to the second commandment—“Thou shalt love thy neighbor as thyself”—is vanity in God’s eyes if one ignores the greatest commandment. Souls will still be saved because of the grace of God, but not as many, especially in the long run, as would be saved had the churches displayed love for their bridegroom, husband, and head.

This fact is also articulated in the New Testament. The Lord Jesus is jealous over His churches.  If we do not love the Lord Jesus, He despises all the “Christian” work we do and the money we put in the offering plate:

“Though I speak with the tongues of men and of angels, and have not charity, I am become as sounding brass, or a tinkling cymbal. And though I have the gift of prophecy, and understand all mysteries, and all knowledge; and though I have all faith, so that I could remove mountains, and have not charity, I am nothing. And though I bestow all my goods to feed the poor, and though I give my body to be burned, and have not charity, it profiteth me nothing (I Co. 13.1-3).”

“In a theological sense, [‘charity’] “includes supreme love to God and a universal good will to men. 1 Cor. xiii. Col. iii. 1 Tim. I (AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE, NOAH WEBSTER (1828), definition of “CHARITY.”).”  Love is an act of the will. A church refutes its proclamations of love for the Lord when it wholly or partially takes the church from under the headship of her Husband, the Lord Jesus Christ.

Love “[r]ejoiceth not in iniquity, but rejoiceth in the truth (I Co. 13.6).” Iniquity means “Injustice, unrighteousness, … [w]ant of rectitude [rightness in principle or practice], … a sin or crime; wickedness (Ibid., definitions of “INIQUITY” and “RECTITUDE.”)….” Bible truth makes clear that the love of Christ for His church is immense, that He wants to be the only Head and companion of the church which is likened to His wife and bride, and that for a church to even partially put herself under or associate with another entity is a great wickedness and repudiates all professions of love for the Lord. As shown in Section VI of God Betrayed, the church that secures a 501(c)(3) tax-exemption and/or incorporates puts herself partially under another head, commits a wicked sinful act in violation of biblical principle, rejoices in iniquity, and refutes its professions of love for the Lord.

The Lord Jesus gave a warning to the church at Ephesus:

 “I know thy works, and thy labour, and thy patience, and how thou canst not bear them which are evil: and thou hast tried them which say they are apostles, and are not, and hast found them liars: And hast borne, and hast patience, and for my name’s sake hast laboured, and hast not fainted. Nevertheless, I have somewhat against thee, because thou hast left thy first love. Remember therefore from whence thou art fallen, and repent, and do the first works; or else I will come unto thee quickly, and will remove thy candlestick out of his place, except thou repent (Re. 2.2-5).”

As Dr. J. Vernon McGee teaches us, this warning was for every church that has lost her love for the Lord Jesus:

“It was a warning of danger of getting away from a personal and loving relationship with Jesus Christ. The real test of any believer, especially those who are attempting to serve Him, is not your little method or mode or system, or your dedication, or any of the things that are so often emphasized today. The one question is: Do you love Him? Do you love the Lord Jesus? When you love Him, you will be in a right relationship with Him, but when you begin to depart from the person of Christ, it will finally lead to lukewarmness. The apostate church was guilty of lukewarmness. It may not seem to be too bad, but it is the worst condition that anyone can be in. A great preacher in upper New York state said: ‘Twenty lukewarm Christians hurt the cause of Christ more than one blatant atheist.’ A lukewarm church is a disgrace to Christ (J. Vernon McGee, Revelation, Volume I (Pasadena, California: Thru the Bible Books, 1982), pp. 121-122).”

As the Lord Jesus Christ is jealous over His churches, so should pastors and church members be jealous, with a godly jealousy, over the church they belong to, just as Paul was:

“For I am jealous over you with godly jealousy: for I have espoused you to one husband, that I may present you as a chaste virgin to Christ. But I fear, lest by any means, as the serpent beguiled Eve through his subtilty, so your minds should be corrupted from the simplicity that is in Christ.  For if he that cometh preacheth another Jesus, whom we have not preached, or if ye receive another spirit, which ye have not received or another gospel, which ye have not accepted, ye might well bear with him (II Co. 11.2-4; Lk. 18.8; II Ti. 3.1-8).

The church that really loves her Husband, the Lord Jesus Christ, will seek to maintain her purity, to be subject to her Husband in all things whether that church is persecuted or not. All the professions of love, all the good deeds, the hymns sung, and the messages preached by a church which does not totally submit herself in all things to her Husband, are contemned by the Lord. A church that takes a 501(c)(3) tax exemption, an incorporation, a license, or any type permit from the state, or puts herself under the state in any way, becomes an earthly legal entity subject to the jurisdiction of an earthly power, the civil government. Such a “church” is in fact a two headed monster. In spite of her emotions and professions of love for the Lord, according to her acts she shows, based upon God’s definition of love in the Bible, that she does not love the Lord Jesus Christ.

The Internal Revenue Code § 501(c)(3) Exemption-Definition-Control Scheme

Jerald Finney
Copyright © September, 2009
Jerald Finney teaches on “The Internal Revenue Code 501(c)(3) Exemption-Definition-Control Scheme” Left click to hear Jerald Finney teaching on this subject. Right click the link and then left click “Save link as…” to download. The teaching is preceded by a hymn sang by Rocky Otwell, a great man of God, and prayer. The teaching is approximately 25 minutes, not including the song.
Click here to go to: ANSWER TO QUESTION REGARDING A LAWYERS FALSE STATEMENTS CONCERNING CHURCH CORPORATE 501(C)(3) STATUS

“And the lord commended the unjust steward, because he had done wisely: for the children of this world are in their generation wiser than the children of light” (Lu. 16.8b).

It is amazing to see that most of the fundamental “Bible believing” pastors and Christians that I know believe that something is wrong with a church who refuses to incorporate and get Internal Revenue Code (“IRC”) §501(c)(3) (“501(c)(3)”) status. Biblical principles are against incorporation and 501(c)(3) for churches, and civil law does not purport to require that churches get either corporate or 501(c)(3) status. In fact, the First Amendment to the United States Constitution, laws, and regulations of the federal government as well as the constitutions, laws, and regulations of the states guarantee that churches may remain free under God without persecution. This article addresses church 501(c)(3) status.

501(c)(3) invites churches to seek a tax exemption from civil government, even though the First Amendment already has erected a “high and impregnable wall” of separation between church and state which forbids civil government from making any law, including any taxing law, respecting a New Testament Church.

The more I study the subject of “separation of church and state,” the more I realize that secular scholars have more insight into the issue than do most of those, including pastors, who call themselves fundamental Bible believers.  Both the Internal Revenue Service and secular scholars know that churches are not required by law to be incorporated and get 501(c)(3) status and that 501(c)(3), as applied to churches, is an exemption-definition-control scheme which is implemented simply by invitation. In this article I give a brief review of the 501(c)(3)  exemption-control-definition scheme and insights from the law, from the Internal Revenue Service, and from legal scholars.

To qualify for tax exempt status under 501(c)(3) religious organizations must meet the following requirements, i.e. 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, and
5. the organization’s purposes and activities may not be illegal or violate fundamental public policy.

The above listed rules, except for rule number 5, are stated in 501(c)(3). The original 501(c)(3) law had no accompanying rules, but four of the five were added by legislative enactment, and signed into law by the president. The last one, “may not violate fundamental public policy,”is not stated in the law; that is, it is not listed as a requirement in § 501(c)(3). This requirement was unilaterally implemented by the Internal Revenue Service and upheld as law by the United States Supreme Court in the illogical Bob Jones University, 461 U.S. 574,  (1983) case. The federal government may add additional requirements to the law in the future.

Under these rules, the state controls, defines, and instructs a corporate 501(c)(3) religious organization to a large degree. Control and definition go hand in hand. The federal government wants to control churches, and does so through 501(c)(3).

A study of relevant law, as well as IRS regulations and legal scholarship reveals that 501(c)(3) is voluntary and that it is a control-definition scheme.

IRC § 508(a),(c), in line with the First Amendment, says churches are excepted from obtaining § 501(c)(3) tax exempt status. In other words, churches are non-taxable; and, therefore, churches are an exception to the civil government requirement that certain organizations file for 501(c)(3) tax exempt status. Thus, the law recognizes that a New Testament Church is non-taxable under the First Amendment to the United States Constitution.

The IRS doesn’t hide the fact that churches are non-taxable under the First Amendment and IRC § 508(a),(c) and that the exemption-definition-control scheme is implemented by invitation. The IRS proclaims in IRS Publication 1828 (2007):

“Although there is no requirement to do so, many churches seek recognition of tax-exempt status from the IRS because such recognition assures church leaders, members, and contributors that the church is recognized as exempt and qualifies for related tax benefits…. Unlike churches, religious organizations that wish to be tax exempt generally must apply to the IRS for tax-exempt status unless their gross receipts do not normally exceed $5,000 annually.”

In the exemption and restriction scheme, the government extends an invitation to incorporated “religious organizations” to receive a tax exemption in return for allowing the government to interpret and categorize their expression and activities.

Civil government not only knows what it is doing when encouraging churches to incorporate and seek 501(C)(3) status; it also blatantly belittles the fact that the IRC provisions exempting churches from taxation and providing for certain controls over corporate 501(c)(3) “churches” are contrary to the First Amendment. The federal government flaunts the lack of knowledge and understanding of the average Christian as to both spiritual and earthly matters. IRS Publication 1828 states:

Congress has enacted special tax laws applicable to churches, religious organizations, and ministers in recognition of their unique status in American society and of their rights guaranteed by the First Amendment of the Constitution of the United States.” [Emphasis mine.] …

A comparison of the above statements of the IRS with the words of the religion clause of the First Amendment reveals the fact that the IRS flaunts the fact that Congress has enacted laws “respecting the establishment of religion and preventing the free exercise thereof.” The First Amendment religion clause says:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof….”  [Emphasis mine.]

Some legal scholars who have studied the issue know what the civil government is up to with the exemption-definition-control scheme. For example, Richard Garnett, assistant professor at Notre Dame Law School, wrote in A Quiet Faith? Taxes, Politics, and the Privatization of Religion, published in Volume 42 of B.C. L. Rev. starting on page 771 (this is a paraphrase of selected portions of the article with citations omitted):

  1. “The imposition of a tax is, after all, an assertion of power and an ‘application of force.’ The same is true of the decision not to tax, or to exempt from taxation. A power is no less real that is exercised selectively or indulged with restraint. The decision to exempt certain associations, persons, activities, or things from taxation presupposes and communicates the ability to do otherwise; definitional lines drawn to mark the boundaries of such exemptions implicitly assert the power to draw them differently…. My claim here is that the decision to exempt religious associations from federal taxation may reasonably be regarded as an assertion of power—the power, perhaps, to ‘destroy’—over these communities, their activities, and their expression….
  2. “In other words, maybe the power to tax churches, to exempt them from taxation, and to attach conditions to such exemptions really does as Chief Justice Marshall quipped, ‘involve the power to destroy’ religion. Neither heavy-handed repression nor even overt hostility toward faith is required, but merely the subtly didactic power of the law. Government need only express and enforce its own view of the nature of religion—i.e., that it is a private matter—and of its proper place—i.e., in the private sphere, not in politics—and religious believers and associations may yield to the temptation to embrace, and to incorporate, this view themselves….
  3. “It is an exemption-and-restriction scheme in which the government extends an invitation to ‘religious organizations’ to receive a tax exemption in return for allowing the government to interpret and categorize the expression and activities of the church.  There is the danger that, having made their own the government’s view of religion’s place, now-humbled and no-longer-prophetic religious associations will retreat with their witness to the ‘private’ sphere where—they now agree—they belong, leaving persons to face the state alone in the hollowed-out remains of the public square….
  4. “Still it strikes me that the Internal Revenue Code Section 501(c)(3)’s exemption-and-restriction scheme is noteworthy in the extent to which it invites government to label as ‘propaganda’ or ‘campaign[ing]’ what are, for religious believers and communities, expressions of their faith and responses to their calling. It is far from clear that this is an appropriate task for the liberal state….
    “My concern … is that the premises of the conditional exemption scheme, the labeling it invites, and the monitoring of distinctions it creates will tame religion by saying what it is and identifying what it is not, tempt religion to revise its conception of itself and of its mission, and convince religious consciousness to internalize the state’s own judgment that faith simply does not belong in politics….
  5. “[The tax exemption] is simply the government’s way of paying churches not to talk about certain things, enforce certain beliefs, or engage in certain actions—in other words, it’s the government’s way of privatizing the church….
  6. “By determining for its own purposes the meaning of religious communities’ statements and activities, and by enforcing the distinctions it draws, government subtly reshapes religious consciousness itself. In other words, by telling religion what it may say, really is saying, or will be deemed to have said, and by telling faith where it belongs, government molds religion’s own sense of what it is….
  7. “[Certain pronouncements] led my colleague, Professor Bradley, to suggest in another context that ‘[t]he Court is now clearly committed to articulating and enforcing a normative scheme of ‘private religion.’ Indeed, he argues powerfully that the Court’s post-Everson v. Board of Education cases ‘are most profitably understood as judicial attempts to move religion into the realm of subjective preference by eliminating religious consciousness.’ … [T]he Court turned to privatization ‘as the ‘final solution’ to the problem of religious faction.’ Its ambition—not merely the unintended effect of its decisions—is not only to confine the potentially subversive messages of religion to a ‘nonpublic ghetto,’ but also to revise and privatize the messages themselves. Having acquiesced to judicial declarations that it is a private matter, and accepted that its authority is entirely subjective, religious consciousness is unable to resist the conclusion that its claims to public truth are ‘implausible nonsense,’ and therefore cannot help but concede the field of public life and morality to government….
  8. “[T]his privatization of religion is not simply its institutional disestablishment or an entirely appropriate respect on government’s part for individual freedom of conscience and autonomy of religion institutions. Nor is the claim only that the exemption privatizes religion by deterring political activism and silencing political advocacy by religious believers and communities. It is, instead, that the exemption scheme and its administration subtly re-form religion’s conception of itself. Government evaluates and characterizes what churches say and do, and decides both what it will recognize as religious and what it will label as political….
  9. “[P]rivatization of the church is its remaking by government and its transformation from a comprehensive and demanding account of the world to a therapeutic ‘cacoon wrapped around the individual.’ It is a state-sponsored change in religious believers’ own notions of what their faith means and what it requires…. The government tells faith communities that religion is a private matter, and eventually, they come to believe it.
  10. “And finally, the retreat of religious associations to the private sphere suggests an ill-founded confidence that government will not follow. But it will. The privatization of religion is a one-way ‘ratchet that stems the flow of religious current into the public sphere, but does not slow the incursion of political norms into the private realm.’”

Michael Hatfield, Associate Professor of Law at Texas Tech University School of Law makes some important points in his article published in Volume 20 of Notre Dame Journal of Ethics and Public Policy beginning on page 125. (I suggest that the serious student get the article and study it for himself.):

  1. “There is an assumption among contemporary scholars [&, I might add, among Pastors and other Christians] that a church doing without tax exemption is ‘fundamentally repugnant,’ so there is no need for substantive analysis of the tax issues involved if a church becomes taxable. Instead of analyzing the tax problem, the tax problem tends to be used to introduce ‘bigger’ ideas about the Constitution, religion, and politics. In the current scholarship, the context of the issue – religion and politics – tends to become substituted for the substance: federal income taxation. The critical issue, however, is federal income taxation.”
  2. Professor Hatfield states that he uses the terms ‘Taxable Church’ and ‘Tax Exempt Church’ to make it clear that churches need not be Section 501(c)(3) organizations.…
  3. Professor Hatfield states, “A tax without a cost has no meaning.… Because of the unique treatment churches receive under the Internal Revenue Code, the impact of the revocation is likely to be more symbolic than substantial.”
  4. He states: “Churches ought not make guesses about the value of their assets or their moral convictions. There is no reason to believe that most American churches are eager to claim an express political identity, though there are indications that, more and more, religious and political identities in America are being fused. For churches with a clear moral conviction to campaign, the implication of the Asset Management Analysis is clear: crunch the numbers. Determine the cost of losing tax exemption. Decide if that cost is worth campaigning. Do not be distracted by imaginations as to what tax exemption is about. It is about taxes. It is about money. It is not about the ‘right’ and ‘wrong’ way to be a church, which is a religious issue and not a tax issue. It should be – and presumably is – the religious convictions and not the tax worries of churches that keep them out of politics.”

Thus, a New Testament Church (“NTC”) – that is, a church operating according to New Testament principles – is non-taxable, because even if the term “taxable” is used, civil government cannot, according to its own IRS law, tax a NTC because (1) all her income is from gifts (See Section 102 of the IRS Code; Professor Hatfield points this out in his article), and (2) a NTC spends every dime given in tithes and offerings for church ministries.  Since gifts are not net income, what is left after subtracting expenses from net income? Even a business with no net income pays no taxes. And an individual or a business has to make a certain amount of money before paying any taxes.

How can it be that “Bible believing” Christians have gotten the churches of America so far astray from the principles for churches laid down by God in His Word? Are pastors and Christians ignorant or are they willfully ignorant? We cannot hope to straighten America out unless we first straighten our churches out, but it seems that more Christians are concerned about the state of America than they are about the state of the churches in America. God’s people and God’s churches, as well as America, are being destroyed because of a lack of knowledge.

Note. The sodomites understand what 501(c)(3) for churches means, yet pastors and other Christians continue to ignore the issue because they, like lepers to whom the leprosy has spread to the head, have ‘their understanding darkened, being alienated from the life of God through the ignorance that is in them, because of the blindness of their heart: Who being past feeling have given themselves over to lasciciousness, to work all uncleanness with greediness” (Ephesians 4.18-19).  Here is a link to a sodomite article on the issue: “Equality is what we’re all about in Maine” (110518: Checked link; link is no longer active).  

END