The Freedom From Religion Foundation won a very important lawsuit this week against the parsonage tax exemption for churches, with their argument being that because it applies only to Christian churches, it is a special benefit for churches and thus unconstitutional. American Atheists has a similar suit going on another case of disparate treatment, the lower reporting requirements for churches under section 501(c) of the IRS code. Kimberly Winston writes about that case at Religion News Service.
The case centers around who must file IRS Form 990, an annual reporting statement that provides information on a group’s mission, programs and finances.
Current tax law requires all tax-exempt organizations to file a Form 990 financial report — except churches and church-related organizations. A few state, political and educational organizations are exempt as well if their annual revenues fall below certain amounts.
This means the IRS treats religious organizations differently than it does all other organizations, the suit holds. It claims the IRS policy is a violation of the First Amendment and the due process promised under the Fifth Amendment…
The suit argues that religious organizations receive preferential treatment because they do not have to withhold income tax from compensation to clergy, reveal staff salaries, or disclose the names of donors who give more than $5,000.
The plaintiffs allege that because they must reveal the names of major donors, they are hindered in the amount of money they can raise.
“We have donors who tell us, ‘I would like to give more than this but I don’t want people to know I am an atheist,’” Muscato said. “That is hurting us to be held to that different standard.”
It’s a pretty solid case. The counter-argument is that by forcing churches to open up their books in this manner, it would be meddling in the affairs of a church and violate the Free Exercise Clause, which is not an entirely invalid argument. But a distinction may be made between a church having to report such things to the government and the government interfering in church governance on the basis of that information.
I hear atheists yelling “tax the churches” all the time but that question is far more difficult than most of them know. Churches are tax exempt under the same section of the IRS code that also makes American Atheists, the FFRF, the American Humanist Association, the Center for Inquiry, the ACLU and millions of other groups tax exempt. There is no coherent argument for taxing churches only but not non-religious non-profits. In fact, wouldn’t that create the very same constitutional problem of treating churches differently that this suit alleges?
In the end, I think AA and FFRF are doing the right thing by demanding that religious non-profits be treated the same as non-religious ones. That’s the important thing, equal treatment.