Tag Archive: Church Tax Exemption

How American Taxpayers Subsidize Churches and Ministers

free-money-for-pastor-waltRight-wing Christian Republicans love to talk about the importance of religious freedom, and how liberals and atheists are hell-bent on destroying this freedom. Listen to Evangelical talking heads and you would think that the martyrdom of American Christians is just around the corner; that if atheists have their way, Christians will be rounded up and imprisoned in WWII-type internment camps. Of course, none of these things is true. Christians are free to worship Gods where they wish, in any manner they wish, without government intrusion. Christians are free to stand on street corners and preach their versions of the gospel. Christians are free to start new churches, proselytize, and do any of the things they have done for the past two hundred years. Similar to the cheesy bread in the Domino’s commercial, you’re FREE Christians, you’re FREE.

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What HAS changed is that Christianity is no longer given a seat at the head of the American culture table. Evangelicals, along with conservative Catholics, are butt-hurt over their loss of influence and power. In a last-ditch attempt to regain their glory days, many Christians have turned to politics. Now spiritually bankrupt, Evangelicals have abandoned Jesus and turned to their true God: Republican politics. Eighty-two percent of voting Evangelicals voted for pussy-grabber-in-chief Donald Trump. Without their vote, Hillary Clinton would be president. Worse yet, Evangelicals have spent the last two years defending and supporting a man who can only be described as a sociopathic, narcissistic liar. But, hey, he’s a “baby” Christian, right?

Secularism and religious indifference are on the rise in the United States, and young Americans are fleeing organized religion in droves. Evangelicals feel their power slipping away, and they don’t know what do. So, much as did Joseph McCarthy in the 1950s, Evangelicals see demons — and liberals, socialists, communists, and atheists — under every bed. What they, in fact, see are delusions cooked up in the minds of Evangelical preachers. The fall of American Christianity rests on Christians themselves, not secularists or atheists. Certainly, we are enjoying the bonfire, but it’s Evangelicals who gathered the wood and set it on fire. How about some hot dogs or marshmallows?

Secular legal groups have now set their sights on how government unconstitutionally subsidizes Christian churches, pastors, and educational institutions with taxpayer money. That’s right, atheists and Fundamentalist Christians alike help support Christian churches through their payment of taxes. I, for one, am tired of financially supporting religious institutions. It’s time for churches, parachurch groups, Christian colleges, and other religious institutions to pay their own freight.

Here are some of the ways ALL of us currently support Christian churches, pastors, and religious schools:

  • Churches are, by default, tax exempt. There are no forms to file or reports to be sent in to the IRS. Any group of people can gather together, call themselves a church, and the IRS will consider them tax exempt. Churches are, by default, EXEMPT from all filing requirements. A church is a church because it is a church. End of discussion. Or so says current tax law.
  • Churches in most states are exempt from paying real estate and sales taxes.
  • Monetary or in-kind donations to churches are tax exempt.
  • Pastors can claim what’s called a housing allowance. This allowance allows churches to designate their pastors’ rent/mortgage, utilities, home repairs, and other housing expenses as part of their housing allowances. Claiming a housing allowance allows pastors to drastically reduce their taxable income. Some pastors claim ALL their income as housing allowance, thus reducing their taxable income to ZERO.
  • Pastors can also opt out of Social Security. That’s right. Pastors can pay little or no income tax and no social security tax. Jesus F. Christ, what an awesome deal!
  • Pastors can buy cars through their churches, and have their churches pay all the expenses, further lowering their taxable income. Other expenses such as book and computer purchases can be made through the church, lowering a pastor’s taxable income. The goal is to give the evil government as little money as possible. Zero taxes paid and a big fat Earned Income Credit refund is the wet dream of countless Evangelical preachers.

I was a pastor for twenty-five years, and I can tell you this: any pastor who is paying income tax needs to get a better accountant. The U.S. Tax Code provided numerous ways for churches and clergy to avoid paying taxes.

It is time for us to end all tax subsidies for churches and clergymen. Churches should be forced to PROVE they are charitable organizations before receiving tax-exempt status. Good luck with that, churches. Churches should be required file the same tax forms and pay the same taxes as businesses. No more hiding the truth about the golden calf of American Christianity. And while we are at it, it is time for pastors to pay the same taxes as everyone else. Both churches and pastors should pay their fair share. The United States is a secular country, and as such, we should stop supporting Christian churches, pastors, and educational institutions with tax money.

Evangelicals clamor for religious freedom, and I am all for giving it to them. The government has no business subsidizing religious institutions and their leaders. It’s time to set the cheesy bread free!

About Bruce Gerencser

Bruce Gerencser, 61, lives in rural Northwest Ohio with his wife of 40 years. He and his wife have six grown children and twelve grandchildren. Bruce pastored Evangelical churches for twenty-five years in Ohio, Texas, and Michigan. Bruce left the ministry in 2005, and in 2008 he left Christianity. Bruce is now a humanist and an atheist. For more information about Bruce, please read the About page.

Bruce is a local photography business owner, operating Defiance County Photo out of his home. If you live in Northwest Ohio and would like to hire Bruce, please email him.

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The Johnson Amendment: I Agree With Donald Trump

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In the 1950s, thanks to men such as there’s-a-red-under-every-bed Catholic Congressman Joseph McCarthy, American Christianity’s God found a home in the Pledge of Allegiance and on the back of our paper money. Under God was added to the Pledge (1954) and In God we Trust was added to American paper currency (1957). In 1957, President Dwight Eisenhower signed a bill into law that stated the national motto was In God we Trust. These blatantly unconstitutional acts are still with us today. In 1954, then-Senator Lyndon B. Johnson proposed an amendment to U.S. tax code that would forbid churches and other non-profit, tax exempt institutions (501(c)(3)) from endorsing and campaigning for political candidates. This amendment is currently part of the tax code.

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain taxes.

Certain activities or expenditures may not be prohibited depending on the facts and circumstances. For example, certain voter education activities (including presenting public forums and publishing voter education guides) conducted in a non-partisan manner do not constitute prohibited political campaign activity. In addition, other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not be prohibited political campaign activity if conducted in a non-partisan manner.

On the other hand, voter education or registration activities with evidence of bias that (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates, will constitute prohibited participation or intervention.

The Internal Revenue Service provides resources to exempt organizations and the public to help them understand the prohibition. As part of its examination program, the IRS also monitors whether organizations are complying with the prohibition.

Churches and their pastors KNOW that U.S. law forbids directly endorsing or campaigning for political candidates. They also know that they are free to ignore the law because the IRS has shown that it has no appetite for going after churches and pastors who spend time and money whoring for political candidates. Evangelicals, sensing that the Obama Administration will not revoke their tax exemption, now want Congress to overturn the Johnson Amendment, giving churches and pastors the right to keep their blanket tax exemption AND endorse, work for, and financially support political candidates.

In recent days, Republican Presidential Candidate Donald Trump has said that, if elected, he would work to repeal the Johnson Amendment. I agree. I hope Congress will remove this amendment from the U.S. Tax Code. I also hope they will strip from the tax code the clergy housing allowance and any/all preferences churches and religious institutions currently receive. It is time for poor, helpless churches and their pastors to be cast out into the world to live by the same rules and laws that govern other businesses. Yes, other businesses, because churches are, above all else, profit-driven businesses. The charitable, public service parts of what churches do is minuscule. Churches exist, for the most part, to serve their customers — members and prospective members. If churches wish to remain tax-exempt, then the bulk of their income should be spent on charitable works. As it stands now, churches spend most of their money on buildings, salaries, benefits, and programs that only serve congregants.

If, as Donald Trump and many Evangelicals/Catholics want, the Johnson Amendment is overturned, churches and religious institutions should then be required to file business income tax returns and govern themselves according to current business law. This means churches and religious groups should also be required to pay sales tax, real estate tax, and every other tax businesses pay. Imagine the trillions of dollars that will make its way into local, state, and federal government coffers.

Churches and pastors should be careful about what they wish for. If churches are required to play by the same rules as businesses, I suspect that there would be a lot of church bankruptcies and mergers. Good news, to be sure, for those of us who are tired of churches receiving unconstitutional favoritism and financial support via tax exemptions, tuition payments, reduced postage charges, and other tax benefits that are only available to churches and religious institutions. But, bad news for those few churches and pastors who really do care about the social welfare of others.

Notes

Churches have always been permitted to support ballot initiatives and issues.

Pastors, outside of their official capacity, are free to endorse candidates. Unfortunately, this line has become blurred, and an increasing number of pastors and parachurch leaders now think they can endorse candidates without restriction. Realizing that they are breaking the law, these so-called men of God often add to their pronouncements, I say this as an individual, not in my official capacity as a pastor. And then they smile and wink.

Churches, by the way, do not have to file for 501(c)(3) tax status. They are, by default, considered tax exempt. Churches do not have to file any documents in order to be exempt.

21 Things You Might Not Know About Evangelical Churches and Pastors

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Most Americans are quite ignorant about the nature of Evangelical churches and their pastors (I use the word “pastor” as a general term that encompasses pastors, elders, missionaries, evangelists, et al.). Here are 21 things you might not know:

  1.  Churches, by default, are tax exempt. Churches do not have to apply for 501(c)(3) status in order to be exempt.
  2. In many states, churches are exempt from paying sales and real estate taxes.
  3. Anyone can start a church. (See How to Start an Independent Baptist Church) A church is a church if it says it is.
  4. In many states, churches can operate Christian schools, day cares, teen group homes, and boarding schools without ANY government licensure or oversight.
  5. In many states, Christian schools are exempt from all laws governing schools. (See How to Start a Non-Charted Christian School in Ohio and The Anatomy of an Unaccredited Christian School)
  6. In many states, churches can start colleges and grant degrees without ANY government licensure or oversight.
  7. Anyone can be a pastor. There are no educational or licensure requirements for becoming a pastor. A man is a pastor because he says he is.
  8. In many states, pastors can counsel people without having any training. In most states, pastors are not required to be licensed to counsel people.
  9. Pastors are permitted to opt out of paying social security tax. This means pastors don’t pay social security tax on their income and housing allowance.
  10. Pastors receive a housing allowance that is income tax-free.
  11. Pastors, in most instances, are treated as employees for income tax purposes and self-employed for social security purposes.
  12. Pastors can drive church-owned vehicles, thereby reducing their taxable income by thousands of dollars.
  13. The more expenditures churches pay on behalf of their pastors, the less income tax the pastors have to pay.
  14. For many pastors, their effective tax rate is quite low. Many pastors pay NO income tax, especially if they have a number of children.
  15. Pastors can incorporate, shielding themselves from liability and lawsuits.
  16. Churches can incorporate, shielding themselves from liability and lawsuits.
  17. Donations of money, personal goods, and property to churches are considered charitable, tax-deductible donations.
  18. Churches are exempt from filing non-profit tax returns.
  19. Churches are not required to do background checks on people who work with children and teenagers.
  20. There is no national database for pastors accused or found guilty of sexual abuse or other criminal behaviors.
  21. Many of the pastors who call themselves Dr. have honorary doctorates or doctorates from diploma mills. (See IFB Doctorates: Doctor, Doctor, Doctor, Everyone’s a Doctor)

John Oliver Starts a New Church, Our Lady of Perpetual Exemption

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Pastor John Oliver, Lady of Perpetual Exemption Church

John Oliver, host of  Last Week Tonight, has started a new church, Our Lady of Perpetual Exemption:

Video Link

See Should Church Donations be Tax Deductible? and What is a Church According to the IRS?

What is a Church According to the IRS?

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Anyone can start a church. In most cases, the new church will be considered tax exempt by federal, state, and local government.

The IRS lists the following generic (albeit very Christian sounding) characteristics of a church:

The term church is found, but not specifically defined, in the Internal Revenue Code. With the exception of the special rules for church audits, the use of the term church also includes conventions and associations of churches as well as integrated auxiliaries of a church.

Certain characteristics are generally attributed to churches.  These attributes of a church have been developed by the IRS and by court decisions.  They include:

  • Distinct legal existence
  • Recognized creed and form of worship
  • Definite and distinct ecclesiastical government
  • Formal code of doctrine and discipline
  • Distinct religious history
  • Membership not associated with any other church or denomination
  • Organization of ordained ministers
  • Ordained ministers selected after completing prescribed courses of study
  • Literature of its own
  • Established places of worship
  • Regular congregations
  • Regular religious services
  • Sunday schools for the religious instruction of the young
  • Schools for the preparation of its members

If a group of people generally exhibit these characteristics they are considered a Church by the IRS. State laws are different from federals laws and vary from state to state.

A Church is not required to file for 501c3 status to be tax exempt. 501c3 status does grant certain additional benefits to the church, BUT it is not required for tax exemption.

The IRS handbook for churches 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. Churches and religious organizations are generally exempt from income tax and receive other favorable treatment under the tax law; however, certain income of a church or religious organization may be subject to tax, such as income from an unrelated business.

The IRS church handbook states:

Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions. To qualify for tax-exempt status, such an organization must meet the following requirements:

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

Churches that meet the requirements of IRC section 501c3 are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.

Now, get out there and start a church. You can do it!

If you need ordained, check out the Universal Life Church.

Bruce, surely it is more complicated than that? I assure you, it is not. I’ve thought about starting a new sect, The Church of Bruce Almighty®. Donations would be tax-deductible and my church could buy buildings, property, cars, and other essential ministry tools and not pay tax.

Only in America…

Should Church Donations be Tax Deductible?

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If people give money, services, or property to a church, they can use the amount of their donation to reduce their federal tax liability. Every year, billions of dollars of money, services, and property are given to churches. All churches, by default, are tax exempt. Many people wrongly think that a church must be 501(c)(3)-approved to be tax exempt. All a group needs to say to be tax exempt is we are a church. That’s it. By  9:00 AM next Sunday, I could start a church that would be completely tax-exempt by IRS standards, even if only my family attended.

The IRS deliberately steers away from explicitly defining what a church is. In their view, if it looks and acts like a church, it is a church. Here are the main criteria the IRS uses to decide whether a church is tax exempt:

  • a distinct legal existence and religious history,
  • a recognized creed and form of worship,
  • established places of worship
  • a regular congregation and regular religious services, and
  • an organization of ordained ministers

As you can see, it is very easy for a group to be considered a church by the IRS.

Churches are also, in many states, exempt from paying sales and real estate taxes. Ohio is one such state. Churches can even operate for-profit businesses that are tax-exempt. In the 1970s, churches were encouraged to start day care centers as a way to maximize building use and generate income, uh I mean minister to the poor. Just because a church tacks the word ministry on the end of a business name doesn’t make it one.

The question I ask is this: Should church donations be tax-deductible? Should churches be tax exempt?

Christians will quickly state that their church is a charity and it does good in the community so their church should be tax-exempt and members should get a tax deduction for their donations. Relative to the amount of money they take in, do churches really do a great amount of good in the community? If the average church closed its doors tomorrow, would anyone outside of the membership care? Take a look at a church’s budget. Where does MOST of the money go? Salaries, benefits, insurance, utilities, buildings, and programs that only benefit the congregation. If a “real” charity spent their money in this manner, the IRS would pull their tax exemption and donations to said charity would no longer be tax-deductible. Yet, the IRS and federal and state governments give churches a blind-eye pass.

I have written on churches and their finances many times over the years. If you are getting ready to object, here’s my challenge. Send me your church’s budget. Let me take a close look at it. I have eyes for seeing through the budget secrecy and bullshit many churches practice. Let’s take a close look at the numbers. I have made this challenge many times over the years, and not one church, pastor, or Christian has taken me up on it. They whimper, whine, and complain, but they never produce their financial documents. Why? They know the emperor has no clothes. They know if they shared their financials that the truth would be revealed.

If a church wants to be considered a tax-exempt charity, then they should be required to apply for charity status. They should then be required to spend the bulk of their money on charitable services that benefit the community. No church should be tax exempt just because they say we are a church.

Most churches are social clubs and the price of membership is what people give in donations.  The club rightly spends the bulk of its money on things that directly benefit the membership. As a club, a for-profit business, a church should be required to pay taxes and fill out all the tax forms that other businesses do. Isn’t it about time churches start paying their own way, just like every other business does?  Why should First Baptist Church or St Peter’s Catholic Church be tax-exempt and receive free fire and police service and free infrastructure improvements? Why shouldn’t Betty’s Coffee Shop or Bob’s Bar and Grill get the same tax treatment as a church?

I support the elimination of all church  tax exemption (sales, real estate, income, social security), church donation tax deduction, and the clergy housing tax allowance/deduction. A practical side effect of eliminating these exemptions is that churches would then be free to endorse political candidates. No more Christian whining about their “free” speech being stifled. Churches would be FREE to do what they want AND pay taxes just like everyone else.

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