A Church With `Tax Exemption' is not a `Tax-Exempt'
by Art Fisher
During the recent Senate hearings on Senate Bill 557 (the so-called "Civil Rights Restoration Act"), it was noted that Sen. Kennedy and other supporters consistently referred to "religious or church organizations", whereas opponents spoke of defending "religious freedom" and "rights" of the church. The term "organizations" may be the the key to understanding governmental meddling in the affairs of the church.
A "religious or church organization" is a CORPORATION that functions in a legal capacity, doing business as a church. The IRS is fully aware of this distinction, and their publications reinforce that status. Nowhere do they define "tax exempt churches" -- they always refer to religious or church "organizations". Surely Congress, in writing the tax law, understands this distinction as well!
A church that voluntarily initiates an application to the state for corporate status expects "limited liability" and "tax exemption". It in turn owes to the state its right to exist and prosper. It is obvious that its legal status and that of its of its "flock" has been drastically altered.
Churches do NOT have rights granted by the Constitution. They enjoy INALIENABLE rights granted by God, which are secured by the Constitution. Incorporated churches, in contrast, are artificial entities which may have such "privileges and immunities" as are granted by the state.
The U.S. Supreme Court well understands the artificial status of corporations:
A corporation is a creature of the state. It is presumed to be incorporated for the benefit of the public. It receives certain special privileges and franchises ... Its powers are limited by law ... It's rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation. Wilson v. U.S., 221 US 382.
Corporations are not citizens ... The term citizen ... applies only to natural persons ... not to artificial persons created by the legislature ... Paul v. Virginia, 8 Wall 168, 177. (See also, Opinion Field, 16 Wall 36, 99).
Whenever a corporation makes a contract it is the contract of the legal entity ... The only rights it can claim are the rights which are given to it in that character, and not the rights which belong to its members as citizens of a state. Bank of Agusta v. Earle, 13 Pet 586.
According to IRS Publication 557, the instruction manual for organizations seeking recognition of tax exemption under Section 501(c)(3); in order to be an "organization" in the legal sense, it is necessary to incorporate.
Black's Law Dictionary, 5th Ed. defines "organization" as:
... a corporation or governmental subdivision or agency, business trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity. UCC 1-201(2B).
Notice that ALL of the entities in this definition are government franchised, and therefore under the jurisdiction of the Uniform Commercial Code. The definition shows that a corporation (even if it functions as a church) is recognized by law as commercial and public; an incorporated church is legally interpreted as a commercial, public entity. Didn't Christ say that His house was NOT to be a house of merchandise? John 2:16.
Most states will not "permit" exempt status until a church applies for and obtains an IRS 501(c)(3) status ruling. This means, of course, that the church must willingly incorporate and submit itself to state jurisdiction.
IRS Publication 557 Sec. 508(c) provides that churches are not REQUIRED to apply for recognition of section 501(c)(3) status in order to be exempt from federal taxation or to receive tax-deductible contributions. The IRS fundamentally has no authority!
This would raise many ethical questions: Why are the churches of today almost always found to be incorporated? Why would the churches elect to place themselves under such jurisdiction; to find regulation under governmental franchise preferable to their own Divine Law?
Are they not in fact serving two masters?