The 501(C)3 IRS statute is a voluntary and restrictive noose about the neck of any church that thinks it should become a state-regulated official state church.
I have heard otherwise good pastors muddy their speech and cross their eyes as they attempt to actually lead the sheep and also not run afoul of the government restrictions on free speech in churches.
501(C)3 status for a church is only a choice that a rube, a sucker or a frightened and timid pastor would agree to.
When the church-501(C)3 option was created, apparently no one took a good look at the snake-in-senators clothing who was the driver: Lyndon Johnson. He hated pastors and hated churches. He especially hated the Christian leadership telling their sheep when a particular politician was a lying snake, for example.
Most churches in America have organized as “501c3 tax-exempt religious organizations” purely for the money they hoped to bring in from large estates, who are more likely to donate to a registered 501(C)3. This is a fairly recent trend that has only been going on for about fifty years. Churches were only added to section 501c3 of the tax code in 1954. We can thank Sen. Lyndon B. Johnson for that. Johnson was no ally of the church. As part of his political agenda, Johnson had it in mind to silence the church and eliminate the significant influence the church had always had on shaping “public policy.”
Although Johnson proffered this as a “favor” to churches (You know, like Satan directed Eve to the Tree of Knowledge of Good and Evil), the favor also came with strings attached (more like shackles). One need not look far to see the devastating effects 501c3 acceptance has had to the church, and the consequent restrictions placed upon any 501c3 church.
501c3 churches are prohibited from addressing, in any tangible way, the vital issues of the day.
For a 501c3 church to openly speak out, or organize in opposition to, anything that the government declares “legal,” even if it is immoral (e.g. abortion, homosexuality, etc.), that church will jeopardize its tax exempt status. The 501c3 has had a “chilling effect” upon the free speech rights of the church. LBJ was a shrewd and cunning politician who seemed to well-appreciate how easily many of the clergy would sell out.
Did the church ever need to seek permission from the government to be exempt from taxes? Were churches prior to 1954 taxable? No, churches have never been taxable.
To be taxable a church would first need to be under the jurisdiction, and therefore under the taxing authority, of the government. The First Amendment clearly places the church outside the jurisdiction of the civil government: “Congress shall make NO LAW respecting an establishment of religion, nor prohibiting the free exercise thereof.”
Religion cannot be free if you have to pay the government, through taxation, to exercise it. Since churches aren’t taxable in the first place, why do so many of them go to the IRS and seek permission to be tax-exempt? It occurs out of:
Ignorance (“We didn’t know any better”)
Bandwagon logic (“Everyone else is doing it”)
Professional advice (many attorneys and CPAs recommend it)
Does the law require, or even encourage, a church to organize as a 501c3? To answer that question let’s turn to what the IRS itself has to say.
Churches Need Not Apply
In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 and 1024. However, note what the IRS says regarding churches and church ministries, in Publication 557:
Some organizations are not required to file Form 1023. These include:
Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group. These organizations are exempt automatically if they meet the requirements of section 501(c)(3).
Churches Are “Automatically Tax-Exempt”
According to IRS Code § 508(c)(1)(A):
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.
(1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—
(A) churches, their integrated auxiliaries, and conventions or associations of churches.
This is referred to as the “mandatory exception” rule. Thus, we see from the IRS’ own publications, and the tax code, that it is completely unnecessary for any church to apply for tax-exempt status. In the IRS’ own words a church “is automatically tax-exempt.”
Churches Are “Automatically Tax-Deductible”
And what about tax-deductibility? Doesn’t a church still need to become a 501c3 so that contributions to it can be taken as a tax deduction? The answer is no! According to IRS Publication 526:
Organizations That Qualify To Receive Deductible Contributions
You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other than churches and governments, as described below, must apply to the IRS.
In the IRS’ own words a church “is automatically tax-deductible.”
Churches Have a Mandatory Exception To Filing Tax Returns
Not only is it completely unnecessary for any church to seek 501c3 status, to do so becomes a grant of jurisdiction to the IRS by any church that obtains that State favor. In the words of Steve Nestor, IRS Sr. Revenue Officer (ret.):
“I am not the only IRS employee who’s wondered why churches go to the government and seek permission to be exempted from a tax they didn’t owe to begin with, and to seek a tax deductible status that they’ve always had anyway. Many of us have marveled at how church leaders want to be regulated and controlled by an agency of government that most Americans have prayed would just get out of their lives. Churches are in an amazingly unique position, but they don’t seem to know or appreciate the implications of what it would mean to be free of government control.”
from the Forward of In Caesar’s Grip, by Peter Kershaw
Dissolving your church’s foolish 501(C)3 status: https://portal.hud.gov/hudportal/documents/huddoc?id=DOC_14713.pdf
More Information on 501(C)3 and how it can destroy your ministry: http://www.creationliberty.com/articles/501c3.php
Common Sense Says No 501(C)3 for the church of Jesus Christ: http://spofga.org/ten_commandments/2006/feb/church_info.php