Form 990 case goes to trial

In February of this year, I wrote about how a group of secular organizations had filed a suit arguing that it was unfair that they had to file Form 990 as part of their tax returns but religious organizations did not. I described then the onerous reporting requirements that all non-profits other than churches have to annually provide to the IRS.

I explained in that post how it is the absence of this requirement that enables the heads of these religious groups to hide how they raise and spend money and enables them to live lavish lives while supposedly remaining a non-profit.

That case went trial yesterday before the U.S. District Court for the Eastern District of Kentucky in Covington. Kimberly Winston writes:

If they prevail, it will change the tax-exempt status of churches and other religious organizations, and require the same transparency of donors, salaries and other expenditures that secular nonprofits must currently meet.

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.

I am hopeful about the outcome of this case because the whole thing is unfair on its face. The only problem as I see it is if the judge rules that requiring churches to disclose like this results in excessive entanglement of religion with government.

That is a bit if a stretch.


  1. tubi says

    The only problem as I see it is if the judge rules that requiring churches to disclose like this results in excessive entanglement of religion with government.

    While that would be a problem, if they do rule that way, then the only logical conclusion is that non-religious orgs also don’t have to do it. You can’t fix a problem (entanglement with religion) by imposing another problem (non-religious have to do it but religious don’t).

    I can’t see how the current circumstances can prevail.

  2. Félix Desrochers-Guérin says

    How exactly do they determine who qualifies as a “church or church-related organisation”? Can I apply for tax exempt status if I found the Holy Fictive Church of Make-Shit-Up (and move to the U.S.)? The government being in the business of deciding who is a “legitimate” church for tax purposes and who isn’t seems to me like a much bigger entanglement than requiring everybody to file the same forms.

  3. Mano Singham says

    It is not simply a fairness issue. The entanglement prong (part of the Lemon test) was written in the context of the Establishment Clause and only applies to religious organizations. There is no constitutional bar to the government being excessively entangled with secular organizations.

  4. Mano Singham says

    You are absolutely right. It seems like to avoid hassle, the government gives pretty broad leeway to anyone to declare themselves to be a religious organization. That is why we have so many crazy and tiny churches and religions in the US.

  5. thewhollynone says

    The IRS even gave up and let the Scientologists be classified as a church. If you say you’re a church, apparently you’re a church. Religion is nothing but a legal con game anyway.

    Frankly, whatever this Kentucky court decides will be appealed, and if the case gets to the SCOTUS, I cannot see those five Catholic men who rule that court deciding that the Catholic Church in the USA has to jump through those hoops, or even Catholic Charities which exists mainly on government money. They will prefer to let all the crazies and the Protestants set up fraudulent churches before they will require transparency in Catholic institutions. Welcome to life is not fair!

  6. smrnda says

    I do not believe that you can take the promise of freedom of religion and take from that *ANY* assumption that a religion is entitled to any special tax status. I’d really like to know the history of how this came to be.

    I’m involved in several non-profits which are secular and I feel that I’m being pissed and shat on, given that we deliver nothing but concrete, tangible services of obvious utility, whereas any number of churches seem to function more as social clubs and entertainment venues but are subject to far less scrutiny.

    On another note, the way the Supreme Court works is based on a fiction that people can actually interpret written laws in an unbiased fashion. I have no solution, though it might help to have more justices, or to rotate them more frequently so the same people with the same biases would not be deciding so much.

  7. Mano Singham says

    Actually, I am in the process of preparing a series of posts on the Greece prayer case that will look at the history of the Establishment Clause that has led to this state of affairs.

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