Churches and the IRS

The Incorporated Church –

By Brett Pharo 

“For the love of money is a root of all kinds of evil…”   (1 Timothy 6:10)

Make no mistake about it, this “love of money” is why the church in America is so entangled with government.  In 1954, Senator Lyndon B. Johnson pushed through a law allowing churches to become 501(c)3 corporations.   Of course like all politicians, Johnson painted it as a goodwill gesture toward the church.   His intentions were quite the opposite.   He desired to politically silence the church so they could no longer resist his political agenda.    Johnson was one of the ablest politicians this country has seen, which is not necessarily a compliment to character.   He fully understood that the clergy, once the hook of tax exemption was set, would not jeopardize that status by violating the terms of the attached strings (chains).   The clergy stepped, and continue to step, eagerly into the snare.

“Render unto Caesar the things that areCaesar’s; and unto God the things that are God’s.”   (Matthew 22:21)

Churches in the United States are not required to incorporate so why do they?   They rarely did prior to the twentieth century.   Arguably, one of the main reasons they do today is money, in the form of preferential tax treatment.   Didn’t someone once say something about not being able to serve both Mammon (Syrian god of riches) and God?   The norm today is that when someone wants to start a local church body, or other organized work for God, the first thing he does is run to the State to subject that work to the State by way of incorporating.   The second thing he does is run to the IRS, to subject that work to the Federal government, by applying to have the new state creation be recognized as a 501c3 status tax exempt entity.   Of course he recognizes there are a few strings attached.   That is an understatement; chains of bondage would be a better term.

According to the IRS Tax Guide for Churches and Religious Organizations, churches, etc., qualify for exemption from federal income tax under section 501c3, and are generally able to receive tax- deductible contributions.   But the bondage chains, as briefly described in the tax guide are:

  • 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.
  • The organization’s purposes and activities may not be illegal or violate fundamental public policy.

In order to maintain its privileged tax status under 501c3, a church must agree to put on a muzzle and speak only as the government allows.   Support or opposition regarding any particular candidate or any particular legislation, from federal to local, is not allowed.   Maybe even more important is prohibition of violating fundamental public policy.   In some parts of the world, it is illegal for a preacher to preach against homosexuality.   If acceptance of homosexuality, or euthanasia, or any other such thing is declared “fundamental public policy” in the eyes of the IRS, churches could lose their 501c3 status if they preach God’s word in opposition.

A local church body should concern itself with speaking, and acting, in agreement with the declared position of God, whether or not it is the position of the government.   Why would anyone purporting to be about God’s work voluntarily make God’s Word through them subject to government limitations? 

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