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Government Benefits to Churches

The United States Government gives “churches” a number of special privileges.  For example:

1.                Charitable donation deductions;

2.                Churches do not have to apply to IRS for recognition of exemption unlike other tax exempt organizations;

3.                Social Security exclusion election;

4.                Churches are exempt for filing annual information returns unlike other exempt organizations;

5.                Special procedural protections from IRS examinations.

The government gives special tax benefits to churches for secular reasons, namely, that organized religion benefits society because such associations of people promote morality, community and personal responsibility, benevolence, and, thus, help stabilize society and advance societies morals and minds.

Others argue that the “real” reason for granting churches such tax benefits is so that the government can control the churches and regulate their actions, such as political speech (e.g., for example not being permitted to endorse particular political candidates). 

What is a Church according to the IRS?

Although the term, “church” was not defined by Congress, the term is intended to have a narrower meaning than the broader term "religious organization.”

The Internal Revenue Service utilizes a "facts and circumstances" test to determine whether or not an organization is a “church”.  Fourteen criteria are evaluated:

1.    Does the organization have a distinct legal existence?

2.    Does it have a recognized creed and form of worship?

3.    Is there a definite and distinct ecclesiastical government?

4.    Is there a formal code of doctrine and discipline?

5.    Does the organization have a distinct religious history?

6.    Is the membership not associated with any other church or denomination?

7.    Is there an organization of ordained ministers?

8.    Are the ordained ministers selected after completing prescribed studies?

9.    Does the organization have literature of its own?

10.    Does the organization have established places of worship;

11.    Are there regular congregations?

12.    Are there regular religious services?

13.    Are there Sunday schools for religious instruction of the young?

14.    Are there schools for the preparation of its ministers?

Additionally, the IRS evaluates any other facts and circumstances which may have a bearing upon the organization's claim for church status.

From a litigation standpoint, no court has specifically adopted the fourteen points test.  However, many courts use it and deem it helpful.  However, "[a]t a minimum, a church includes a body of believers or communicants that assembles regularly in order to worship." American Guidance Foundation, Inc. v. United States, 490 F.Supp. 304, 306 (1980) [frequently cited case].

To be considered a Church, all or most of the 14 factors need not be present.  No single factor is controlling (because new organizations that would have difficulty meeting all 14 criteria).  Not every factor will necessarily be relevant. At the least, the term church includes those organizations recognized under common meaning and usage of the word, “church.”

However, in many cases, the key factor in whether or not an organization is classified as a church is the presence or absence of a congregation.  In other words, is the organization's membership a coherent group of individuals or families that regularly join together (primarily in person rather than by television or radio) to accomplish religious purposes or shared beliefs?

Views on the Government Defining

What Constitutes a Church

        Critics, a minority in number, complain that to define what is a church, is to control it.  It is to make a theological determination.  It is to take the Lordship away from Christ and give it to the government.  That it is better to not be tax exempt or not allow a tax deductible donation, if necessary, than to allow the government to have jurisdiction over church matters,  i.e., to entangle church and state.  In other words, God does not need a tax exemption to run His church.

Other commentators see this matter differently.  They argue that regulation over matters such as money, taxation, contracts, and business records are secular in nature.  They state that IRS regulation is necessary to challenge a variety of tax evasion schemes whereby a group merely pretends to be a church.   That when the government grants a tax exemption or deductible donation, it is allowing a party to keep money that would otherwise have to be paid to the government, and, therefore, the government may set conditions for such.

A congregation and its leadership ought to pray about whether or not they ought to seek IRS recognition as a tax exempt church.  See related article on seeking formal IRS 501(c)(3) recognition.

If you are in need of or desire legal counsel or representation, please feel free to contact my office.

 Copyright 2007.
All rights reserved.

Disclaimer: This author of this article is not rendering legal, accounting or other professional advice or service.  Professional advice on specific issues ought to be sought from a retained accountant, lawyer, or other professional.

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