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Discussion Question #1

Should religious entities qualify for non-profit status? Explain the reason(s) for your position.

The justification of non-profit for religious entities was the idea of servitude and selflessness throughout the community the church was in.  Non-profit status for religious organizations also helped ensure a separation of church and state and helps to keep the government from interfering with the right of freedom of religion (Focus on the Family Issue Analysts, 2015).  Religious entities earn their tax-exempt status by making donations that benefit the good of the public and help those in times of need (Procon.org, 2017). 

I believe that a religious entity should qualify for non-profit status, only if they can show proof of their benefit to the community they serve.  Feeding the poor through soup kitchens or passing out free food at weekly food drives, donating clothes to those in need, providing counseling services for abuse victims, providing shelter when possible, and free educational programs are all things that religious entities can provide to the community.  If the religious entities offer these services, that’s one less thing the government must concern itself with (Procon.org, 2017).  The non-profit status should be reviewed yearly, and, in my opinion, a proven track record of helping the community through outreach and support needs to be shown to maintain the non-profit status. 

Although I do agree with non-profit status for religious entities, there are some cons to be considered and addressed.  There are no rules that justify a religious entity established to truly help others versus an entity designed to deceive others or steal their money for personal gain.  There is no “watch dog” available for those apply for non-profit status to ensure they are supporting the community.  The “false” religious entities who are in it for monetary gain, make the fight the maintain non-profit status for those who truly do good, an ongoing battle within the government. The purpose of a religious entity receiving non-profit status was due to the idea that in times of need the “church” stepped in to help the community in any way it could.  I have seen many churches who abuse this exempt status and use it for personal gain while the community and even their own members struggle to feed and clothe their families.  This, to me, is reason to pull a non-profit status.  Many people within the government see a church’s loss in non-profit status to help with the country’s tax debt while others see losing non-profit as a detriment to every community that the church reaches and helps.  The benefit that churches provide to the community, and the religious entities who utilize non-profit status the way it was designed; to reach and help others and do good for the public; should maintain their non-profit status.  The benefits of religious entities qualifying for non-profit status far outweigh those who abuse the system.

References

Focus on the Family Issue Analysts. (2015). Why Are Churches and Religious Organizations Tax-Exempt? Retrieved from Focus on the Family: http://www.focusonthefamily.com/socialissues/religious-freedom/religious-freedom-after-the-obergefell-decision/why-are-churches-and-religious-organizations-tax-exempt

Procon.org. (2017, May 12). Should Churches (Defined as Churches, Temples, Mosques, Synagogues, etc.) Remain Tax-Exempt? Retrieved from Procon.org: https://churchesandtaxes.procon.org/#background

Discussion Question #2

I believe that religious entities should be allowed to qualify for non-profit status only if they are using it for the intended purpose of community outreach, advocacy, and/or other ways that transparently aids a specific demographic either on the local, state, national, or international level(s).  There is a plethora of religious organizations that are doing wonderful works within the communities that they service, even Mega Churches and faith-based organizations that provide outreach efforts internationally to provide hope and aid to regions that are in need. If the funding that is being provided is adhering to regulations, requirements, and provides concise and transparent operations then I am of full support.

The IRS have several rules for a religious entity to apply and keep tax exemption. In order for an organization to keep their tax exemption the entity must “none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates”(Internal Revenue Service, 2017). According to the IRS there are certain religious entities that should submit application IRS Form 1023 and 1024 in Publication 557 due to being automatically exempt if they should meet the requirements of section 501(c)(3) such as “Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group” under “IRS Code § 508(c)(1)(A)” (Heal Our Land Ministries, 2003).

The Supreme Court has a case on file, Walz v. Tax Commission of the City of New York, 397 U.S. 664 (1970), deeming tax exemptions for churches as constitutional (Freedom from Religion Foundation & Gaylor, 2010). In an 8-1 vote The Supreme Court ruled in favor of Mr. Walz who sued the Tax Commission of the City of New York granted the argument that all places of worship can have the same privileges as other non-profit organizations (Freedom from Religion Foundation & Gaylor, 2010). According to Justice Douglas, who presided over the case, stated that tax exemption for places of worship are a subsidy (Freedom from Religion Foundation & Gaylor, 2010). Justice Douglas went on to add, “grant tax exemption to church agencies that perform functions of the state, such as care of orphaned children and the destitute. " Under the First Amendment a State may not, however, provide worship if private groups fail to do so” (Freedom from Religion Foundation & Gaylor, 2010).

In order to regulate religious organizations from operating as a business under the cloth of being a religious entity in order to file as tax exempt while performing or servicing taxable operations, the IRS under section 7611 imposed by Congress states that religious entities would be deemed disqualified if the organization is claiming to be a church, association, or convention in religious affiliation yet carrying on “an unrelated trade or business within the meaning of IRC § 513, and the taxable activities enter into an IRC § 4958” (Internal Revenue Service, 2016).  

References

Freedom from Religion Foundation, & Gaylor, A. L. (2010, December). Tax Exemption of Churches - Freedom From Religion Foundation. Retrieved from https://ffrf.org/outreach/item/12601-tax-exemption-of-churches

Heal Our Land Ministries. (2003). 501c3 Facts. Retrieved from hushmoney.org/501c3-facts.htm

Internal Revenue Service. (2016, December 20). Special Rules Limiting IRS Authority to Audit a Church. Retrieved from https://www.irs.gov/charities-non-profits/churches-religious-organizations/special-rules-limiting-irs-authority-to-audit-a-church

Internal Revenue Service. (2017, January 26). Exemption Requirements - 501(c)(3) Organizations. Retrieved from https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501-c-3-organizations