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Ian Morford
Mr. Rogers
Government
23 October 2015
Tax Exemption Research Paper
The United States Constitution clearly states that there is a separation of church and state.
Even so, in all fifty states religious institutions of all shapes and sizes are completely tax exempt.
Tax exemption refers to a monetary exemption which reduces taxable income. Tax exempt status
can provide complete relief from taxes, reduced rates, or tax on only a portion of items. To
qualify as a tax exempt religious institution in the United States, an institution only has to follow
nine out of fourteen requirements outlined by the IRS. The internal review service or IRS is in
charge of tax collection and all other tax laws. The requirements are insanely easy to follow even
a book club would qualify. Even though the IRS states prohibited inurement include the
payment of dividends, the payment of unreasonable compensation to insiders and transferring
property to insiders for less than fair market value. The prohibition against inurement to insiders
is absolute; therefore, any amount of inurement is, potentially, grounds for loss of tax-exempt
status(IRS) many religious institutions use their tax exemption to buy luxurious items such as
jets and African hunting trips and get to keep their tax exempt status. Religious officials also get
tax exemptions on their homes. Some of these properties are worth millions and there are no tax
regulations. these exemptions are unfair and should not be granted because they violate the
separation of church and state, can be used to improperly influence political campaigns and they
are indistinguishable from fraudulent companies whore looking for handouts.

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The first amendment of the constitution clearly enforces the separation of church and
state. By providing tax exemptions for religious institutions, the government is unfairly favoring
religion.The operation and formal institutions of church and government are constitutionally
separated in this country(Magruder's American Government). The separation of church and
state is fundamental to our country and treating churches differently is not constitutional.
religious institutions bring government closer by receiving special treatment Congress has
imposed special limitations, found in IRC Section 7611, on how and when the IRS may conduct
civil tax inquiries and examinations of churches.(IRS). This special treatment allows churches
to gain advantages when being audited whale other institutions have to play by the rules. All
citizens are forced to support churches, even those they do not belong to and may even oppose
(Atheism). The many Americans who oppose certain religions or are atheists and do not believe
in a higher power do not support churches, but are being indirectly forced to every time they pay
taxes. The government is violating the constitution by supporting tax exemption for religious
institutes, despite the fact that they are not supported by the citizens themselves.
A church or religious organization will be regarded as attempting to influence
legislation if it contacts, or urges the public to contact, members or employees of a legislative
body for the purpose of proposing, supporting or opposing legislation, or if the organization
advocates the adoption or rejection of legislation(IRS) Churches often take a side in many
political opinions. Though they are not allowed to directly support these causes, many churches
still openly try to persuade people to take their side. Adherents of particular faiths and
individual churches frequently take strong positions on public issues including, as this case
reveals in the several briefs amici, vigorous advocacy of legal or constitutional positions.
(Supreme Court of the United States) The courts are aware that churches take political opinions,

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but have only limited power to prevent this. Religious groups back certain points of view, and
not infrequently assert them in the political arena, as evidenced by the continuing debate
respecting birth control and abortion laws.(Walz v. Tax Comm'n) The fact that so many
churches take such strong political stances on issues is in direct violation of their tax exemption
agreement. Many churches bend the rules and try and get their political agendas across even
though they aren't allowed to.
There are believed to be hundreds of organisations and people posing as religions just to
abuse the system and get tax exemptions. The qualifications to be viewed as a religious institutes
are very basic.Distinct legal existence, Recognized creed and form of worship,Definite and
distinct ecclesiastical government, Formal code of doctrine and discipline, Distinct religious
history, Membership not associated with any other church or denomination, Organization of
ordained ministers, Ordained ministers selected after completing prescribed courses of study,
Literature of its own, Established places of worship, Regular congregations, Regular religious
services, Sunday schools for the religious instruction of the young, Schools for the preparation of
its members The IRS generally uses a combination of these characteristics, together with other
facts and circumstances, to determine whether an organization is considered a church for federal
tax purposes.(IRS) The IRS does not even demand that a religious institution follow all of the
qualifications. There is an increase in the number of "religious" tax-avoidance schemes, e.g.,
mail order ministries, family churches, vows of poverty, etc.(IRS) The government is aware that
this is happening and they have no way of stopping this activity and recently the number of
incidents is rising.More and more religious groups are now asking for a government bailout
through the faith based initiative and to keep their tax exemptions (LA times). Government is
supposed to be separate from religion, but when Religious Institutions demand government

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support, they are only bringing church and state together. Almost any organization or club could
become a Religious Institution in the eyes of the government if they tried hard enough and if
they are identified as a religion they will receive unfair tax exemptions and government support.
Some people believe that churches earn exemption through the charity they provide and
that taxing churches would take money away from the community. Many do actually perform
charitable work, however churches that do not provide service to the community or to people are
also exempted, unfairly for example Scientology has two goals, and two types of courses to
match: "auditing" people or "processing"... If each course is taken separately, it costs
approximately (the prices are always changing) $750 just to go from O-IV grade, $500 for the
next one, $1,200 for Grade V, $775 for Grade VI, $600 for "Solo" and finally $800 for the final
"clear" or a total of approximately $4,625(The Scandal of Scientology).The fact that churches
like scientology receives exemption directly counters the claim that churches earn exemption
through the charity because all religions like scientology do is make people pay. Declaring
Scientology an official Religious Institution saved the church tens of millions of dollars in
taxes(NY times). Scientology does not serve the community in any way however the
government still believes that they deserve millions of dollars in exemptions. With any churches
being able to apply for exemption, its not only those that provide a proper service who receive
it.
Churches have illegally received tax exemption without proper cause ever since this
county was founded. The constitution clearly states that church and state should be separated
which means that churches should not be treated any differently than any other non-profit
organization. Receiving different treatment from the IRS from what other organisations is
ridiculous and many people use religion under false pretences for their own personal gain.

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Religions abusing this power cost the government billions and defaces the good name of many
religious institutions. If this continues, the churches will search for more ways to work around
government rules and regulations, a strong stand to stop this now will prevent problems later.

Works Cited

Cooper, Paulette. The Scandal of Scientology. New York: Tower Publications, 1971. Print.
"Docket Search - Supreme Court of the United States." Docket Search - Supreme Court of the
United States. N.p., n.d. Web. 01 Nov. 2015.

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Frantz, Douglas. "Scientology's Puzzling Journey From Tax Rebel to Tax Exempt." The New
York Times. The New York Times, 08 Mar. 1997. Web. 01 Nov. 2015.
Los Angeles Times. Los Angeles Times, n.d. Web. 01 Nov. 2015.
McClenaghan, William A., and Frank Abbott Magruder. Magruder's American Government.
Needham, MA: Prentice Hall, 2014. Print.
"Tax Exemptions Available to Churches." About.com Religion & Spirituality. N.p., n.d. Web. 01
Nov. 2015.
"Tax Information for Churches and Religious Organizations." Tax Information for Churches and
Religious Organizations. N.p., n.d. Web. 01 Nov. 2015. <https://www.irs.gov/Charities-&-NonProfits/Churches-&-Religious-Organizations>.
"Walz v. Tax Comm'n of the City of New York." Walz v. Tax Comm'n of the City of New York.
N.p., n.d. Web. 01 Nov. 2015. <https://www.law.cornell.edu/supremecourt/text/397/664>.