501c3 Should you or shouldnt you!?

I have seen valid points on both?? whats your thoughts...should we, do you, and why should we go with 501c3...or should we avoid it at ALL costs?

4273 reads
Jay's picture

501(c)(3) status allows donations to be tax deductible and I believe is required for nonprofit tax exception.

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

Stephen Schwenke's picture

As I understand it, you do not have to "officially" register to be a 501(c)3 organization. If you meet the standards of what constitutes a 501(c)3 organization, then you can claim the status. There is some "magic" language you must put on your tax deductible receipts in order for the IRS to accept those receipts as valid. The language has something to do with "no goods or services were received...etc."

Pastor Steve Schwenke
Liberty Baptist Church
Amarillo, TX

Jack's picture

Lots of good information here.

Christopher's picture

ok...I understand these point, but what about lining up with Scripture?

Jay's picture

Stephen Schwenke wrote:
As I understand it, you do not have to "officially" register to be a 501(c)3 organization. If you meet the standards of what constitutes a 501(c)3 organization, then you can claim the status.
As someone who has worked for nonprofit 501(c)(3)'s for more than five years, I would be absolutely FLOORED if this were true...in every place that I've worked or know of, you have to have a letter of tax-exemption status given to you by the IRS.

Where did you get this information from?

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

JohnBrian's picture

If I understand correctly, churches do not have to seek 501 (c) 3 status, as they have it because they are churches. If that is true that may be what Stephen is referring to.

Please correct me if I'm wrong.

CanJAmerican - my blog
CanJAmerican - my twitter
whitejumaycan - my youtube

Jay's picture

I'm no attorney, but here's some information that might be helpful:

http://en.wikipedia.org/wiki/501%28c%29#501.28c.29.283.29 ]Wikipedia
http://www.irs.gov/charities/churches/index.html IRS Website Regulations For Churches

If anyone reading this is a member of a church that claims to be a 501(c)(3) or "tax exempt" but is not legally incorporated [at the barest minimum ] or who cannot produce an Tax Exemption letter should contact an attorney immediately to make sure that that organization is in full compliance with the state and federal tax regulations and that their own personal tax returns are correct. Failure to comply with IRS regulations can lead to massive fines and possibly legal trouble, including prison time. In case you are wondering - yes, the IRS can fine/penalize you for previous years that were filed incorrectly [either by mistake or deliberately ].

Fiscal / Taxable Regulations vary from state to state so what may be true in Nebraska [for a churches' state tax regulation ] may not hold true in Idaho. Furthermore, any organization that does not have 501(c)(3) status -may- take donations/contributions, but none of the donated items or monies are tax-deductible. People who donate to Organizations prior to being granted 501(c)(3) status are not permitted to write off the donations previous to 501(c)(3) approval [grandfather them in ].

AFAIK, you don't *have* to put in for 501(c)(3) status as a church, but I read somewhere [wikipedia, maybe? ] that if a charitable organization receives a certain amount of donations within a timeframe, they become legally obligated to register as a 501(c)(3). I don't know what that threshold is...if I find out, I will post it.

If it sounds like I'm trying to scare people into filing for it - yes, I am. The penalties and chances of making an error are just way too high to trifle with.

Christopher - Yes, I think you should file for it. The sooner the better ;).

JohnBrian, the IRS states:

IRS Link above wrote:

The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

So basically, only those kinds of organizations can apply for 501(c)(3) status but they do NOT earn it automatically because they are one of those groups.

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

Stephen Schwenke's picture

JohnBrian wrote:
If I understand correctly, churches do not have to seek 501 (c) 3 status, as they have it because they are churches. If that is true that may be what Stephen is referring to.

Please correct me if I'm wrong.

That is correct

I was not the founder of our church, but it was established by a good friend of mine. He contacted lawyers at the Christian Law Association (Attorney David Gibbs) who actually favors incorporation (makes it easier to defend in court for him). Our church is NOT incorporated (not going to debate that here, just a point of fact), yet we have 501(c)3 status because we are a church. The IRS has historically recognized churches as 501(c)3 organizations without all of the other incorporation, filings, etc., etc, etc...

Pastor Steve Schwenke
Liberty Baptist Church
Amarillo, TX

Becky Petersen's picture

Christopher wrote:
ok...I understand these point, but what about lining up with Scripture?

What does this mean? The guidelines by the IRS and Scripture? Being tax exempt? Being subject to your rulers? Suffering for Christ's sake.

I'm confused.

I'd say, go ahead unless something in the regulations requires you to actually compromise and violate your convictions. Do they somehow regulate what you are going to say? Do they make it impossible to fulfil your Christian duty?

Why not register? "If it be possible, as much as lieth in you, live peaceably with all men..." Why look for a fight?

Jay's picture

Stephen Schwenke wrote:
Our church is NOT incorporated (not going to debate that here, just a point of fact), yet we have 501(c)3 status because we are a church. The IRS has historically recognized churches as 501(c)3 organizations without all of the other incorporation, filings, etc., etc, etc...

That is actually correct - I checked into it with my pastor last Sunday. I'm really, really surprised about this.

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

James S.'s picture

That is correct. The 501c3 is not required for a Chirch to be tax exempt. What is more, getting a 501c3 makes one a creature of the state; a corporation, with the rights to be such comming from the state. The state therefore becomes the head of the Church; its rights and powers to operate come from the state!

Think this is a small matter?

With NO or little pressure we have bought into this, while many of our brothers in China would rather die than register with the state because they see the headship issue.

What is wrong with us?

Whatever it is, it will soon be brought to light. Soon the sodimites will have "civil rights", and soon most 501c3 "churches" will cave into the state's demands for these rights.

Soon this 501c3 issue will be front burner. What a shame it had to come to this. Why were we not more jealous for the headship of Christ? How pragmatic and worldly we have become!

This MP3 sermon was of help to me: Four Deadly Devices....http://www.sermonaudio.com/sermoninfo.asp?SID=101904211610

Jay's picture

James S. wrote:
That is correct. The 501c3 is not required for a Chirch to be tax exempt. What is more, getting a 501c3 makes one a creature of the state; a corporation, with the rights to be such comming from the state. The state therefore becomes the head of the Church; its rights and powers to operate come from the state!

...With NO or little pressure we have bought into this, while many of our brothers in China would rather die than register with the state because they see the headship issue.

...Whatever it is, it will soon be brought to light. Soon the sodimites will have "civil rights", and soon most 501c3 "churches" will cave into the state's demands for these rights.


James, if the State of New York came in tomorrow and revoked our 501(c)(3), it wouldn't change my church's functions one bit. We might have to give up our property or whatever to pay the taxes, but the mission of Christ is not and will not be hindered because the church pays taxes; we could organize ourselves as a Bible Study club or something and still carry out the Great Commission.

As for the 'sodomite' issue - I cannot, for the life of me, understand why so many are so concerned or panicked on this issue. There are people are in sin? Perish the thought! :O

More than one church I know of has already adopted a clause in the constitution on sexual identity and behavior, which should stand up to any legal challenge. Any church worth it's salt will make take as many preventative measures as they can to prepare for the battle - but safety comes from the Lord, not from our preventative measures. I do not fear the power of the State anymore. The book of Daniel convinced me of who their boss is :).

While I think that the homosexual movement will eventually have legal protection for their "rights", it's not a concern to me because it couldn't happen without God's approval [Not that God approves of their behavior, but that God ordained the rulers who made that decision, whether or not they're lawyers, politicians, or voters themselves ]; until then, we do what we can to preach Christ crucified, "the stench of death" to those who think they are alive without God:

Quote:
14 But thanks be to God, who in Christ always leads us in triumphal procession, and through us spreads the fragrance of the knowledge of him everywhere. For we are the aroma of Christ to God among those who are being saved and among those who are perishing, to one a fragrance from death to death, to the other a fragrance from life to life. Who is sufficient for these things? For we are not, like so many, peddlers of God's word, but as men of sincerity, as commissioned by God, in the sight of God we speak in Christ.

Finally, as a case in point, BJU is not tax exempt, and although they must run the school as a for-profit institution, they've hardly collapsed or failed. If you read "Standing Without Apology", you'll see that turning into a for-profit business was a blessing in disguise for them. Running a for-profit church is difficult, but not impossible.

"Our task today is to tell people — who no longer know what sin is...no longer see themselves as sinners, and no longer have room for these categories — that Christ died for sins of which they do not think they’re guilty." - David Wells

James S.'s picture

Jay, your words are in brackets [ ], I am new at this, and am not sure of the use of tags for quotes. My new comments follow and alternate with yours…

[James, if the State of New York came in tomorrow and revoked our 501(c)(3), it wouldn't change my church's functions one bit. We might have to give up our property or whatever to pay the taxes…, ]

Ok, I admit that property taxes are a big issue for those with buildings (after looking at it a bit more). At first I thought that its was just the fact that you don’t need a 501c3 to be tax exempt as far as money coming in and for the Pastors payroll. But it does look like many would loose large buildings in places where property taxes are high (like cities), if they gave up their 501c3. This is my understanding of things so far.

I need to do more study to understand if this is certainly true. However, I am sure you would agree that it would not be a godly approach to only consider the monetary aspects of this issue.

[but the mission of Christ is not and will not be hindered because the church pays taxes ]

I agree.

[… we could organize ourselves as a Bible Study club… ]

Why not organize as a Church?

One thing to ponder: Is the word “church” ever mentioned in Title 26 501(c)(3) of the IRS code? Answer: no. 501c3's are ONLY granted to corporations, community chests, funds & foundations organized for any variety of non-profit purposes.

One thing is clear: we don’t need a 501c3 to organize as a tax exempt church.

"churches" are mentioned as automatically "exempt from taxation" in Title 508(c)(1)(a).

One thing I want to know is why are we incorporating?

[…or something and still carry out the Great Commission. ]

Is not “carrying on the Great Commission” connected to not only what we do, but how we do it? When we fire our rounds from a fortified position that includes government tax favors and legal protection, is it not telling how little we think of the God we serve?

[As for the 'sodomite' issue - I cannot, for the life of me, understand why so many are so concerned or panicked on this issue. There are people are in sin? Perish the thought! ]

Let me ask you some questions…

Do you send your children to public school?

If you are a pastor, do any of the assembly have children in public school?

Do you pay taxes for public schools?

Have you ever been accosted by these aggressive sex fiends? (I have very often experienced this; I grew up in the San Francisco Bay Area.)

Do you think the story of Sodom is exaggerated in Genesis 19 as far as the nature of this is sin concerned?

These people will never be happy until we not only allow their sin, but also approve and confirm them in it. Why do you think they love to go on homosex-porno-pride-parades in public every year?

The sodimites have gained a tremendous foot hold in the public schools, have you not noticed? Is it ok with you to have children taught that homosex is a natural and even desirable thing at the age of 6 or 7, and then on an ongoing basis until graduation?

I say that in many states the action of sending your child to a public school is akin to denying the faith (causing children to pass through the fire). For the life of me I cannot understand your LACK of concern on this.

[More than one church I know of has already adopted a clause in the constitution on sexual identity and behavior, which should stand up to any legal challenge. ]

I find it shameful that we would play games like this. We ask the government for favors and protection and then we don’t want them to have input into what we do and say, so we wrangle with them legally. No wonder the world thinks we are slimy, we are! We want protection from being sued, we want donations to clearly be tax free, we want, we want… Is it any wonder that the world thinks we are all about the money?

[Any church worth it's salt will make take as many preventative measures as they can to prepare for the battle… ]

Amen; like restructuring without a 501c3. The website http://hushmoney.org/ might be a good place to start.

[I do not fear the power of the State anymore. The book of Daniel convinced me of who their boss is. ]

Amen.

[While I think that the homosexual movement will eventually have legal protection for their "rights", it's not a concern to me because it couldn't happen without God's approval [Not that God approves of their behavior, but that God ordained the rulers who made that decision, whether or not they're lawyers, politicians, or voters themselves ]; ]

This is not the attitude of a Christian, but one of a fatalist. Repent of this notion at once!

[…until then, we do what we can to preach Christ crucified, "the stench of death" to those who think they are alive without God: ]

Until then? Will you stop preaching against sin when it becomes illegal? Do you obey man and not God when push comes to shove? If so, you are in considerable danger of being counted as outside the faith.

Acts 5:27-29 And when they had brought them, they set them before the council: and the high priest asked them, Saying, Did not we straitly command you that ye should not teach in this name? and, behold, ye have filled Jerusalem with your doctrine, and intend to bring this man's blood upon us. Then Peter and the other apostles answered and said, We ought to obey God rather than men.

[Quote:
14 But thanks be to God, who in Christ always leads us in triumphal procession, and through us spreads the fragrance of the knowledge of him everywhere. For we are the aroma of Christ to God among those who are being saved and among those who are perishing, to one a fragrance from death to death, to the other a fragrance from life to life. Who is sufficient for these things? For we are not, like so many, peddlers of God's word, but as men of sincerity, as commissioned by God, in the sight of God we speak in Christ. ]

Amen.

[Finally, as a case in point, BJU is not tax exempt, and although they must run the school as a for-profit institution, they've hardly collapsed or failed. If you read "Standing Without Apology", you'll see that turning into a for-profit business was a blessing in disguise for them. Running a for-profit church is difficult, but not impossible. ]

As a case in what point is BJU not tax exempt? (Does BJU stand for Bob Jones University?)

And what is "Standing Without Apology" about, and why is it relevant to our discussion? I never argued that being “for profit” was impossible, or even undesirable.

It seems like you responded to some of this before your morning coffee. Please give it some more thought; have a look at the website http://hushmoney.org/ . I have not looked at it all, but it looks interesting. Please listen to the sermon link provided on my first post.

To review, some of my points are these:

1) 501c3’s are unnecessary to be a tax exempt Church, so why have one?

2) Churches with 501c3’s are creatures of the state (one becomes a corporation when one gets a 501c3, and corporations get their power and authority from the State). So how is having one not a headship issue (Christ vs. the world)?

3) When one gets a 501c3 one agrees to not preach for or against candidates in elections, so why have one? Why allow any worldly government ANY control over what you preach? Who is our LORD????

4) Is it not ungodly to ask the government for favors and then not allow them input on how we do our business? What kind of witness to the world does this wavering and wrangling have?

pgepps's picture

I concur. The Church is the embassy of God's Kingdom, and should act like it. In no way should that Kingdom meet under the flags of or be chartered by the kingdoms of this world. Even the nice ones we like. Not saying you should fail to obey the law as far as possible (you really *must* do this as a command of God and a law of your Kingdom), but the Church shouldn't make decisions as though it were a mere voluntary association, nor should it allow itself to become a creature of the state.