Every few days, we receive phone calls or e mails here at the Biblical Law Center that say, “Our church is not a 501 (c)(3) organization.” When I ask them why do they say that, they usually answer, “Because we are not incorporated, or we have never filed with the IRS, etc.” Others might say that they are a house church, or that they don’t have an EIN number, or that they operate strictly with cash, or that they pay no salaries. Others might say that their church has been working with someone that has sold them a package deal over the internet and their church is operating as some kind of a trust or corporation sole. Usually they have paid a pretty handsome sum for these schemes.

Then there are those that rattle off various, so called patriot or constitutional jargonese, that some “constitutional” guru has convinced them will either work for them or has worked for others – which many times they have also paid a good deal for. What the “expert” hasn’t told them is that often if they check further they will find that someone who has used that particular scheme is doing more perfecting of that particular plan in jail or has been there.

For some reason there is wide spread confusion over Section 501(c) (3) of Title 26 of the Internal Revenue Code (IRC) pertaining to churches and religious organizations. Even though we have written other articles on this subject, they have not received much traction, so here we go again, making one more effort to “put the cookies on the lower shelf”, as one of our professors in Bible College used to say, so no one will need to have an advanced law degree to understand, which believe me, I certainly don’t have. If I can decipher this maze of confusion, anyone can. Paul feared for the churches when he wrote to the church at Corinth, But I fear, lest by any means, as the serpent beguiled Eve through his subtilty, so your minds should be corrupted from the simplicity that is in Christ. (2 Cor 11:3)

To simplify the subject, the IRS has condensed everything into a Publication called IRS Publication 1828 – Tax Guide for Churches and Religious Organizations. The subtitle is: (benefits and responsibilities under the federal tax law). It also declares, on the cover that this is the division of: “Tax Exempt and Government Entities.”

Now if this isn’t enough to warn any self-respecting pastor, let alone a God fearing one, that has to stand before the Lord Jesus Christ at the Judgment Seat of Christ and give an account of his ministry, I don’t know what would cause alarm bells to go off. But somehow like the Three Little Pigs who were not afraid of the Big Bad Wolf, the preachers seem to buy in to the slogan, “We are from the government and we are here to help you.” I still remember a leader of the Baptist Bible Fellowship International who stood before the leadership in Atlanta on December 16, 1988 and said, “The IRS is our friend.” Just a casual glimpse into the present Congressional hearings on the IRS attack on the tax-exempt, conservative organizations should be sufficient enough to settle the matter once and for all as to the character of the IRS and especially the Non-Profit Division.   Whatever possessed our preacher forefathers to put our churches under this wicked governmental agency would have to be Satan himself. Surely the apostasy was already strong and they were deceived into thinking that this was a “Christian nation”, therefore they were somehow just doing their Christian duty. How sad. Surely they were “deceived and being deceived,” even then.

Did they not substitute the Lordship of Christ over His church for the headship of the Director of the Internal Revenue Service, and more specific, the head of the Tax-Exempt Organizations? Now the first thing the booklet deals with is jurisdiction with the following statement:

“Congress has enacted special tax laws applicable to churches, religious organizations and ministers, in recognition of their unique status in American society and their rights guaranteed by the First Amendment of the Constitution of the United States.”

There are several things wrong with this statement. First it is a violation of the Religious Amendment Clauses of the First Amendment that says, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…” Therefore Congress is prohibited from passing any legislation pertaining to religion to begin with. Next, the Lord’s churches are not tax-exempt, which is a benefit, which the church must qualify to receive. A New Testament church is not tax-exempt, nor tax immune, it is simply non-taxable. Third, a N.T. church is under the Lordship of Christ, not under the headship of Congress or the IRS, which they would be if Congress makes laws for them to comply with. And the fourth thing, the Word of God is their only rule of faith and practice, not Title 26 of the IRC which is subject to change. Fifth, it creates an agency relationship. There is an old saying, “Come shekels, come shackles.” Note the statement, “This publication explains the benefits and the responsibilities under the federal tax system for churches and religious organizations.” The Lord Jesus said, No servant can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. The sixth point that you will note is that the same preachers that cry out against ecumenicity have aligned themselves into a huge financial/religious monolith that controls practically all religion in America of every stripe and color and requires it to be a tax collector and payer to the federal beast to support everything from child killing to homosexuality, pornography, euthanasia, sex-ed, foreign wars and every other evil that man can conceive. In fact for a church of moderate size, according to StartChurch, Inc., an organization that advises churches on IRS rules and regs., it would take some one nearly full time to satisfy all of the bookkeeping needs required at this time by the IRS.

The Purpose of the Tax-Exempt Church

“Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions.

To qualify for tax-exempt status, such an organization must meet the following requirements (covered in greater detail throughout this publication):

* the organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes,

* net earnings may not inure to the benefit of any private individual or shareholder,

* no substantial part of its activity may be attempting to influence legislation,

* the organization may not intervene in political campaigns, and

* the organization’s purposes and activities may not be illegal or violate fundamental public policy.”

Listed above are the five basic prohibitions of the tax-exempt churches that are under the control of the IRS. Now the pastor in his own capacity may have free speech rights, but the church loses its First Amendment freedom of religion guarantees and has been neutered as any meaningful voice in society. The pastor has no more authority than the janitor or nursery worker, because they have the same free speech rights that he has, but he has lost his right to speak with the authority of God as the pastor of the church. This is the power that the Lord Jesus gave the church when He said, “Verily I say unto you, Whatsoever ye shall bind on earth shall be bound in heaven: and whatsoever ye shall loose on earth shall be loosed in heaven.” Matthew 18:18

The Devil is smart, he understands authority, and so does governmental powers, but the average preacher, believing in the universal church (body of Christ) position, thinks that he has authority or autonomy outside of the local church. Therefore this doesn’t bother him that the freedom of religion clause has been destroyed by previous court cases, and he thinks that as long as his speech rights are preserved that he has religious liberty; but he is sadly mistaken along with the law firms that are defending them.

However the last one is the most egregious of all in my opinion. For filthy lucre, the church agrees to obey all laws present and future including “fundamental public policy.”

How can any self-respecting church and pastor agree to do nothing “illegal”, in other words, obey all laws, local, county, state and federal. In the first place, who knows what all of them are or what they will be in the future? The church to the best of its ability is to obey the laws of God. That was settled two thousand years ago. Then Peter and the other apostles answered and said, We ought to obey God rather than men. (Acts 5:29). But then to add insult to injury by declaring that the church will propagandize for the state for its benefits, i.e. tax exemption and tax deductible gifts is beyond the pale. Heaven would have to blush if angels are not weeping to think that the church that Jesus bled and died for has prostituted itself for filthy lucre and has sold its birth right for a “mess of pottage.” It has to either espouse or remain silent on every issue that the church opposes. Socialism, communism, abortion, homosexuality, planned parenthood, no win wars, Obamacare, and all of this is but the tip of the iceberg.

But in reality it cannot be the church that the Lord Jesus founded while on earth that is described in Publication 1828. The reason is, in order to receive these benefits and to take on these responsibilities the organization that is being discussed here are four distinct legal State entities which are not found in the New Testament. They are as follows:

“Churches and religious organizations may be legally organized in a variety of ways under state law, such as unincorporated associations, nonprofit corporations, corporations sole, and charitable trusts.”

Now whoever you are that is reading this article. Which one of these describes your church? The purpose of the First Amendment was so a church did not have to be one of the above legal entities. Either Congress or a state legislature would have to pass a law to create a legal entity, which then would be a creature of the state which created it. The “corporation sole” is the Catholic model, where all property is held by the Bishop in a diocese. The “unincorporated association” is a church that is not incorporated. All of these legal entities are considered automatically to be tax-exempt under 508(c) of the IRC whether they file a 1023 exemption form or not. And their members can receive tax deductions for their gifts, even if there is no membership in their church. This is the great deception.

The Biblical Law Center uses a time honored method which we discuss privately with those who call us to free the church from this entanglement so that it no longer operates as this legal entity. However, it is like conversion and discipleship. The gate is strait and the way is narrow and not too many are interested in this narrow but blessed walk. However those that we have assisted, which number into the scores, will testify that it is a blessed path that they are walking. And these churches are functioning most successfully using our suggestions.