How you can resist funding the government →
about the IRS and U.S. tax law/policy →
tax exemptions for religious groups / activity
In the U.S., churches have certain tax privileges.
For instance, tithes to churches are treated as tax deductible charitable donations.
But in order to qualify for such special treatment, a church has to behave in ways that the government considers appropriate churchlike behavior.
For instance, a legitimate, IRS-approved church can’t make political endorsements.
The borderline between permissible and forbidden speech in churches is guarded by the IRS, which leads to this embarrassing problem of ministers all across the United States, which has well-earned pride in its freedom of religious belief and political speech, worrying about saying something political in their sermons that might be reported to the federal government.
What is a church to do if it considers the acts of politicians to be demanding of comment from the pulpit?
They’re not forbidden to speak on such matters, but it can be quite expensive to do so.
The church has to ask whether it is willing to give up its tax-exempt status in exchange for being allowed to speak freely about politicians.
Quite the dilemma.
What’s worse: paying Cæsar, or letting him decide what you can and can’t say?
Many try to bend the rules a bit — to make their endorsements with nods and winks, or while in some forum legally distinct from but more-or-less indistinguishable from the church.
For instance, Pat Robertson has been a mover and shaker in both Christian broadcasting and Republican campaigning.
He switches from pious, unhinged, tax-exempt minister to unscrupulous, unhinged, right-wing fundraiser so frequently that he sometimes forgets which hat he’s wearing.
Occasionally, the IRS catches up to him and forces him to pay a fine and reshuffle his org charts.
Shortly before the presidential elections , the Reverend George Regas of the All Saints Episcopal Church in Pasadena, California delivered a politically liberal and anti-war sermon that he called “If Jesus Debated Senator Kerry and President Bush.”
He tried to give all of the appropriate letter-of-the-law disclaimers (“I don’t intend to tell you how to vote” and so forth) but he attacked Bush’s policies explicitly and assumed that Jesus would be debating those other two candidates from the left.
Now the IRS is threatening to revoke the tax-exempt status of that church and twenty others for such unallowed campaigning.
The New York Times has been running an interesting series of articles about the various tax breaks (and exemptions from many other laws) that are available to religious groups in the U.S.:
There’s a lot of meat in those articles, and a lot of food for thought for the tax resistance (and libertarian) set.
Seems that you can kiss a lot of taxes and government regulation goodbye if you find (organized) religion — more cynically, it’s easy to see many of these taxes and regulations as penalties the government applies to people, businesses, and non-profit organizations to punish them for not being religious.
A new issue of NWTRCC’s newsletter — More Than a Paycheck — is out featuring an article I wrote about how to craft a persuasive and motivating tax resistance message.
(It’s a distillation of a Picket Line entry from .)
Also in the newsletter are some notes about IRS policy and foibles, an update on the ongoing attempts by war tax resister Daniel Jenkins to find a legal forum that will rule that conscientious objection to military taxation is a human right, and the latest on All Saints Church’s struggle to maintain its freedom of speech and its tax-exempt status at the same time.
“I suddenly woke up about five years ago and made a big sign that said ‘Does Our Lifestyle Demand War?’ and hung it on my door.”
Frances then proceeded to work at changing her lifestyle, starting by not using her car for two days a week.
As she walked more, she found she could use her car less and less — and liked walking more and more.
It became something of a meditation, with the added bonus of meeting people along the way.
She changed from a Friends Meeting that was some miles away to one within walking distance, and dropped her YMCA membership where they use so much heat and air conditioning.
She doesn’t want to fly anymore and takes the train instead.
She’s still working on many things, like buying food that is grown locally.
She’s really working to reduce her footprint on the planet, and at the same time redirecting taxes from war to funding real human needs like schools, peace and justice work, and rebuilding the new society in the shell of the old.
Some notes from this discussion are included on the new NWTRCC page, along with the following:
George Salzman’s “Inheritance and Social Responsibility” — about how he creatively used an inheritance in socially productive ways while keeping the IRS’s hands off of it.
A debate on interest between Juanita Nelson and Bob Irwin. Nelson sees interest on loans and bank deposits and such as inherently unethical, Irwin disagrees.
Another collection of writings looks at various issues associated with Nonprofits and Tax-Exempt Status. While becoming tax-exempt and then defending your tax-exempt status may seem like it should be a no-brainer for folks who are tax resisters, tax exempt status comes with strings attached and may be more trouble than it is worth.
In an act of civil disobedience billed as “Freedom Sunday,” dozens of American preachers made explicit political endorsements from the pulpit .
This puts their churches’ tax exempt status at risk, as the government demands that tax exempt organizations like churches refrain from electioneering.
This, I suppose, could be seen as a variety of tax resistance.
The preachers have organized and are taking this action in direct confrontation with the IRS.
They are recording their sermons and sending this evidence to the agency, and they have a mutual aid legal fund (The Alliance Defense Fund).
They’re spinning it as a freedom of speech and freedom of religion issue; the
government, on the other hand, sees its ban as a religion-neutral restriction
on all tax-exempt nonprofits and says that the preachers are free to
say whatever they want to say, but if they also want their churches to be
tax-exempt charities, they have to follow the rules.
Be that as it may, the Freedom Sunday organisers intuit that they’re putting
the government in an uncomfortable place by forcing it to parse sermons and go
after congregations. The government would much rather avoid such
confrontations. So Freedom Sunday is rubbing their noses in it trying to force
them to react in some way, or to concede that they won’t enforce the law
against churches — only one of the churches that participated in the
Freedom Sunday event was investigated by the
IRS and
the agency soon dropped the case.
An unusual method of tax resistance is to deliberately make yourself taxable
in order to owe a tax that you can then resist, or, similarly, to defy some
legal condition of your tax-exempt status. For example:
Anne Cobden Sanderson of the Women’s Tax Resistance League said that
while only some women were subjected to the income tax and could join the
resistance to that tax, “Everyone who perhaps has not an income to be
taxed can have a dog, and then refuse to pay tax.” The
New York Sun editorialized:
By buying up dogs of all sorts and refusing to pay the licenses the
suffragettes may get into jail with facility and honor. Why place a bomb
on the front porch or spread carbolic acid in a mail box, when you may
get jugged just as well merely by refusing to pay your dog tax?
If one dog sent you to prison for one month, how many months would you
be forced to serve if you owned 100 or 200 dogs? Meanwhile you might put
on all the dogs blankets inscribed “Votes for Women” and turn them loose
in the Strand to the confusion of the bobbies and Parliament.
For the last several years, a number of American church leaders have made
explicit political endorsements from the pulpit — and have even taped
these endorsements and sent them in to the government as proof. In the
United States, tax exempt organizations are not permitted to engage in
politics in that way. The churches are daring the
IRS
to take away the tax exemption from their churches, and have framed it as
a freedom-of-speech/freedom-of-religion issue. Over the last several
years, the number of participating churches has risen from a few dozen to
over a thousand, but the
IRS
has yet to take up their challenge.
War tax resister Ed Hedemann suggests that people in the United States
who do not owe income taxes (because their income is too low), but who
want to be income tax resisters, deliberately inflate their
declared income with “phantom income” so that they owe some small amount
that they can then resist.
The legal conditions of tax-exempt, non-profit status in the United States
have proven to be a powerful way for the government to make activist groups
timid. Anti-abortion tax resister Jerry DePyper noted that this was a big
reason why he was making no headway in trying to get the tax resistance tactic
on the agenda of the large anti-abortion groups. “[N]o recognized pro-life
leader would want to risk it,” he says, “because of the legal issues with the
IRS, and
they don’t want to lose their tax exempt status.”
Ruth Benn of the National War Tax Resistance Coordinating Committee had a
similar experience:
I was talking about a potential [war tax resistance] workshop with a group
for which I have great respect and who are very supportive of war tax
resistance. When I suggested a certain activity as part of the workshop, the
organizer hurriedly said, “Oh, no, we couldn’t sponsor that; we’re 501(c)3
[the section of the legal code that governs tax-exempt non-profits].”
For this and related reasons, tax resisting groups like the Catholic Worker
and NWTRCC
have never tried to apply for tax-exempt non-profit status. In
the
IRS
told the Catholic Worker that it owed some $300,000 in taxes and penalties
because of this (though it eventually backed down and acknowledged that the
group was a de facto non-profit charity, even if it was never
going to fill out the de jure paperwork). This turned out to
be a good propaganda opportunity for the Catholic Worker.
The New York Times editorialized:
Surely the
IRS
must have genuine frauds to investigate. Surely there must be some worthwhile
work this agency could be doing instead of obstructing acts of corporal mercy
for the poor.
Dorothy Day added:
The New York evening Post also editorialized on
our situation. The National Catholic Reporter and
the Commonweal editors also registered their
protest and other papers followed suit. Letters come in daily from our
friends, reassuring, comforting, indignant at the government, a few of them
indignant at us, that we cause them so much worry. …
…[T]he CW
refuses to pay taxes, or to “structure itself” so as to be exempt from taxes.
We are afraid of that word “structure.” We refuse to become a “corporation.”
… [W]e do not intend to “incorporate” the Catholic Worker movement.
The IRS continues to get smacked around in the partisan arena, with the Republicans smelling blood and baring their teeth, and the Obama administration having no hesitation in throwing agency bureaucrats overboard to save their sinking ship.
The scandal’s momentum has caused reporters and others to dig deeper, to give credence and airtime to previously-neglected stories, and to instead overhype what in other seasons would be ignored.
An anti-abortion group released a recording of a conversation with an IRS agent in which the agent told them that they couldn’t be a tax-exempt organization if they “use your religious belief to tell other people you don’t have a belief” or “take all kinds of confrontation activities [sic] and also put something on a website and ask people to take action against the abortion clinic” or “go to the front of the abortion clinic and… come for protesting activity, and then go up to the woman and tell the woman they should not do that.”
“When you conduct religious activities,” the agent told the group, “meanwhile you have to respect other people’s beliefs, other people’s religion.
You cannot use any kind of, you know, confrontation way, or to, or against other groups or devalue other groups, other people’s beliefs. OK?”
In a letter to the group in response to their tax-exempt status application (they were applying for 501(c)3 which has stricter guidelines than the 501(c)4 groups that have been the main focus of the recent IRS scandal), the agent had asked the group to “assure:”
that the information you distribute or present to the public are not representing biased and unsupported opinions;
that the information presented or distributed are with sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion
The letter went on to claim that “Activities that are conducted to expose the racist agenda (as you claimed) of the abortion industry” were an example of activities that are “neither educational nor charitable in nature.”
The agent claimed that:
[A]n organization’s activities may not be considered serving educational purpose, if an organization carries out activities that aims to deny or reduce the rights of another segment of the community; that are designed to influence public opinion in favor of its advocated position; that may have adverse effect on the day to day operation of public health facilities that may be detrimental to the community as a whole; and that show a type of propaganda to defy other’s beliefs or viewpoints on the same matter.
A second letter contained more of the same, telling the group that because their educational material was “condemnatory and opinionated” and made claims with “no data source provided and no explanation given on how the conclusion is made” and included expressions that were “aimed to inflame the hostility to the community health clinic or family planning clinic which hold opposition position or practice on the issues of abortion,” and included “no intelligent discussion of the subject of abortions and no information presented to inform the public concerning alternatives to the present law and practice related to abortions,” that the group might not qualify for tax-exempt status.
(The IRS eventually backed down and granted the group tax-exempt status last month.)
The president of another anti-abortion group told Congressional investigators that an IRS agent had told them “that we needed to send in a letter with the entire board’s signatures stating that under penalty of perjury we would not picket/protest or organize groups to picket/protest outside of Planned Parenthood.
Upon receiving such a letter, she indicated that the IRS would allow our application to go through.”
Such restrictions on the attitudes the group must have or profess towards people with contrary beliefs, what sorts of arguments their outreach material must contain, and what activities it must refrain from engaging in, do not appear to have much support in the law.
But apparently IRS agents have come to believe that it is part of their mandate to police groups that are applying for tax-exempt status in this way.
Here’s an excerpt from the latest draft of my upcoming book on the tactics of successful tax resistance campaigns that speaks to this:
Troubles with Tax-Exempt Status
The legal conditions of tax-exempt, non-profit status in the United States
have proven to be a powerful way for the government to make activist groups
timid. Anti-abortion tax resister Jerry DePyper noted that this was a big
reason why he was making no headway in trying to get the tax resistance
tactic on the agenda of the large anti-abortion groups. He spoke with two
leaders in that movement and reported: “Both… say that no recognized pro-life
leader would want to risk it because of the legal issues with the
IRS,
and they don’t want to lose their tax-exempt status.”
Ruth Benn of NWTRCC
had a similar experience:
I was talking about a potential war tax resistance workshop with a group for
which I have great respect and who are very supportive of war tax
resistance. When I suggested a certain activity as part of the workshop, the
organizer hurriedly said, “Oh, no, we couldn’t sponsor that; we’re 501(c)3
[the section of the legal code that governs tax-exempt non-profits].”
For this and related reasons, some tax resisting groups, like Catholic Worker
and NWTRCC,
have never tried to apply for tax-exempt non-profit status. In 1972 the
IRS
told Catholic Worker that it owed some $300,000 in taxes and penalties
because of this. The tax agency eventually retreated, acknowledging that
Catholic Worker was a de facto non-profit charity, even if
it was never going to fill out the de jure paperwork. This
episode turned out to be a good propaganda opportunity for Catholic Worker.
The New York Times editorialized: “Surely the
IRS
must have genuine frauds to investigate. Surely there must be some worthwhile
work this agency could be doing instead of obstructing acts of corporal mercy
for the poor.” Dorothy Day added:
The New York Evening Post also editorialized on
our situation. The National Catholic Reporter
and the Commonweal editors also registered their
protest and other papers followed suit. Letters come in daily from our
friends, reassuring, comforting, indignant at the government, a few of them
indignant at us, that we cause them so much worry.…
…[T]he CW refuses to pay taxes, or to “structure itself ” so as to be
exempt from taxes. We are afraid of that word “structure.” We refuse to
become a “corporation.”… [W]e do not intend to “incorporate” the Catholic
Worker movement.
