Unknotting thoughts about a tax court case

What is a church?

For all the sweat spilled in theological thought about ecclesiology, there’s a more earthly reason for the question: taxes. In the United States, churches — and I use that word deliberately — are untaxed and donations to them are tax-deductible. And unique in the charitable world, churches (plus denominations and their integrated organs) have no requirement to file the form 990, the “non-tax” form for nonprofit organizations. Contrast this with a “religious organization” — say, a religious publisher — that even if it is tax-exempt still has to file papers. (That’s no mean task, and suggests a work of a second-lass.)  Clearly, if your entity can be a church, so much the better.

But mere assertion isn’t enough. Most of us have heard of “mail order ordination” or its newer equivalent online. It has become a trope in countless television shows,  but relatively few know about the next step: the churches organized around these newly-minted ministers. Most are — or were — bald tax dodges. Since the IRS lacks congressional guidance for what is or isn’t a church — that’s its term, which is why I use it — it has its own set of standards, about which there’s some ambiguity because of tax court cases. On the one hand, there’s a weighted list of characteristics, including the training of ministers, whether members are all of one family and if the church has a written creed. These have been institutionalized in Schedule A (“Churches”) of form 1023, the one used to apply for tax-exempt status.  (Though churches and very small organizations can claim it without filing with the IRS.) Another test of church-ship is whether members regularly meet. This associational test is at the heart of a case that stripped a church-claimant of the status: Foundation of Human Understanding v. United States. (link to PDF of the ruling)

If you’re interested in such things, it’s worth reading the tax and law blogs about it, such as “Recent Decision Casts Doubt on Virtual Worship as a Qualifying Church Activity“ (Nonprofit Law Report) and “Court: Internet Church Is Not a ‘Church’ for Tax Purposes” (TaxProf Blog).

I’m no lawyer, but I did read the decision and this seems like very bad law to me. Indeed, it has been bothering me for months. The IRS image of a church is so laden with old conventions that it would fail to catch a more clever tax-dodger, but could easily ensnare a new or minority religious group. I can easily imagine a language-minority ethnic religion whose rites are largely home-based or held privately, but has an overarching need to establish a cemetery or school (and thus needs to raise funds), and so teaches and encourages its dispersed membership — which may be largely or exclusively from one family — through Internet chat because the distances and costs are currently too high. That sounds like a church to me, but I doubt that would fly with the IRS.

So before I go too far, here are some loose thoughts about this

  1. Unitarian Universalists benefit from our mainline roots. The word church, though ostensibly including synagogues, mosques and temples, speaks volumes. I think there’s encouragement to pass as conventional, even for those who are trying to create something innovative.
  2. The idea that a minority religious group has to pass using elements of majority religious culture is hostile to human rights.
  3. Ditto the would-be accommodation of being a “religious organization” when there’s legal and social value to being esteemed a church.
  4. But there’s something to be said for being cagey until one can secure those rights. And helping those whose practices are out of the mainstream. Sounds like a role for Unitarian Universalist witness to me.
  5. While the Foundation’s use of technology doesn’t allow for association, other kinds do. Consider Facebook for reuniting long-lost friends. But this case will surely chill experimentation.
  6. And from a missological point of view, radio and television ministries authentically minister to some far-flung people, however much some of us might find them distasteful or money-grubbing.

There’s more, but rather than ramble I’ll defer to your thoughts.