Thursday, July 9, 2015

Religious tax exemption and the problems there in.

On Facebook I recently shared a post from Ricky Gervais...
A friend of mine commented on this post:
This doesn't seem like a fair statement. Most non-profits do not pay taxes and everyone who attends said church pays taxes, including the minister which actually makes his salary and other church employees taxed twice in a way (a lot of church donations are not listed as charitable donations on a persons income tax return).
I have to say, I suck at facebook... I ruminate and muse on things.  I'm one of those people who three days after an argument goes "Ah ha!"  So, needless to say, I thought about this and a couple of questions came to mind.

  1. How are churches classified as non-profits and how do they compare to other non-profits?
  2. Are your donations to a church tax deductible?
So, to the first question.  Churches are automatically classified as tax exempt.  Apparently there is a part of the 503c code about churches but people argue both sides of the fence about if churches need to register with the IRS or not.

Here's where things get interesting though.  If tomorrow I decided I wanted to start a 503c charity, I'd have to file lots of paperwork with the IRS and then yearly I'd have to file lots more paper work with a break down of my contributions, expenses, etc. or risk losing my charity status and then having to pay all the appropriate taxes.

Churches don't have to do any of this. They can be completely opaque or transparent with regards to their finances. It turns out that the Boston Diocese is very transparent.  They could have been a lot more transparent when it came to outing those child raping priests, but I digress.

It turns out there's actually a Christian organization that does some accounting of Ministries: Ministry Watch  Though I must warn that link leads to a website with some truly jaw clenching carp, you've been warned...

At the other end of the extreme, you've got people like Creeflo Dollar who by any measure is a fraudsters of the worst kind.  This guy is one of these prosperity gospel people.  In a nutshell, if you throw $100 bills at him, his prayers come true.  Mind you this guy has built one of these mega-churches in one of the poorest parts of Altanta Georgia where a large portion of his parishioners live at or below the poverty line.  Mind you, he lives in a $2M mansion, with a couple of Rolls Royce's in the garage.  When asked about his salary or fiances of the church, etc. he drops the mike and walks off stage, literally.

Moving on, in the 1820's a guy who was desecrating native american graves looking for gold instead claimed he found gold plates and some magic stones there was also a hat involved... presto... Mormonism. Seriously.

The Mormons have not publicly disclosed their finances since 1959.  There are some estimations on what their holdings are worth, but it's all conjecture.  Needless to say, they engage an outside accounting firm to handle their finances.

I could continue to beat this to death but you get the idea.

To the second question: Are your donations tax deductible.  There is a simple and direct answer to this question.  Yes.

So, do Churches have a privilege? Yes.  They clearly get to skirt all of the rules that every other 503c has to abide by.  Apparently part of the rules about them being charities is that they're not to get involved in politics.  However, the IRS is completely lax in enforcing this and there are a number of churches who actively mail the IRS tapes of them advocating from the pulpit as a challenge.

I think churches should lose this privilege, in a way.  I think churches should be treated like every other 503c and should be legally obligated to file financial paperwork.  For the well run churches this is something they're basically doing either through the Ministry Watch project or through self reporting.  This would also force the shadier ministries to clean up their act.  Which honestly,  I would have to imagine the well run ministries would be happy to see.

This would also allow churches to be active in politics.  At this point, we let corporations be active in politics, I don't see why it should be any different for religions.  If some preacher wants to advocate for a particular candidate, fine.  I feel this is a 1st amendment rights question.  Who am I to say what you can or can't talk about at the pulpit!

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