The Consequences. of Taxing 501(c)3 “Churches”

Most "churches" in the USA destroyed the separation between Church and State by voluntarily filing with the State to become corporations created by the State. Because of the separation of Church and State, the Church is already non-taxable. Once a Church becomes a corporation, it now is a taxable entity created by the State. This newly formed taxable corporation then needs to apply for not-for-profit status under the 501(c)3 code of the IRS. And, yes, these not-for-profit corporations adopt a business model of operation offering their "services" in exchange for money. By the way, if you argue these not-for-profit corporations should pay taxes (essentially eliminating the 501(c)3 tax exemption line in the tax code), then you need to argue that all not-for-profit corporations should pay taxes as well.

As a side note, a “church” that registers with the State to become a corporation and later receives 501(c)3 status under the tax code is, by the nature of being a 501(c)3 corporation, limited to do only the certain functions listed in their By-laws. As 501(c)3 corporations, they also are forbidden from contributing to political campaigns, officially influence elections or legislation, and may only do a limited amount of lobbying. Finally, 501(c)3 corporations are open to public scrutiny, which the public can obtain copies of any non-for-profit’s tax returns, and can find out salaries and other expenditures.

So, if you argue for the taxation of these “churches”, you are saying you want these “churches” to do whatever they want for profit, have the ability, not only to contribute to political campaigns and speak about legislation, but have the right to do extensive lobbying, and have the right to be secretive about their finances, financial activities, salaries, and expenditures.

I’m not sure too many people are comfortable with “churches” having this much power, particularly in the political realm.

Personally, I believe pastors and churches compromise their true calling to be the Body of Christ and destroy the separation of Church and State when they sought legitimacy from the State by becoming a Corporation with not-for-profit status. I pastored a church for over 12 years that did not register with the State and maintained separation of Church and State. I hope someday "churches" will stop acting like business and start acting like the Church.