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American Atheists Challenges IRS Religious Preferences

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.

Comments

  1. Reginald Selkirk says

    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…

    “I would have gotten away with it too, if it weren’t for you meddling kids!”

  2. Chiroptera says

    I hear atheists yelling “tax the churches” all the time but that question is far more difficult than most of them know.

    I think a common belief is that churches get special tax breaks that other similar organizations don’t get, which this reporting requirement and the recent ruling on housing seem to verify. I think that most atheists really want churches to have the same privileges and responsibilities that every other social club with paid staff/administrators and which may or may not be running a for-profit business on the side has.

  3. abb3w says

    @0, Ed Brayton

    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?

    Potentially, if churches were explicitly excluded from eligibility. Contrariwise, it seems likely there are some churches and religious foundations that could remain eligible on charitable and educational grounds if the word “religious” was struck from 26 USC § 501(c)3. Just not all of them — and they would have more paperwork. It incidentally would likely result in some Atheist groups needing face a choice of re-chartering or paying taxes, as well.

    Nohow, I’m not in the “tax the churches” crowd, myself. My impression is that the exemption has too much tradition behind it, and particularly too much of the electorate considering its continuation in their own self-interest. It seems to me for the near term to be at best a tactic for shifting the Overton window… at least on the timescale of the next three decades. (Circa 2040 to 2050, the demographic trends look like they could allow the question to be seriously raised.)

  4. D. C. Sessions says

    Other nonprofits don’t get a pass on (for example) real estate taxes. That’s one reason you see so many churches owning their properties but other nonprofits renting theirs.

  5. flyingsquirrel27 says

    I would suggest that whether or not non-profits should be taxed should depend upon what services they perform for society. The reason churches receive tax exempt status (at least way back when) was because they were providing services (health care, shelters,etc) the young US government could not afford to provide and the government decided it was better to not tax them and to have them perform those services than the other way around. As such, churches that provide no services should not be tax exempt and those who do should recieve credit based on the amount that they provide relative to their other activities.

  6. says

    @5:

    Exactly true. The reporting requirements would make it quite easy to separate the wheat from the chaff or the handwringing, teary-eyed bullshit from the truth.

    Until fairly recently, the IRS allowed substantial “discounts” on tax liabilities to folks who supported charitable organizations such as the Humane Society, United Way, etc.,. I think that sometime during the Reagan presidency that policy was changed or eliminated from the tax code–I welcome correction on this issue–hence the drop in charitable giving by the former big bucks donors who can now channel their money into PAC’s that are not called PAC’s.

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