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Church Incorporation & The 501c(3) Tax Exemption

Since the early days of the American church, religious institutions have routinely incorporated their denominations and their various para-church outreaches. Incorporation is a legal means in which a group seeks to shield the institution from catastrophic legal consequences. It installs favorable financial structures that, at least theoretically, benefit the various institutions. Incorporation is also commonly utilized as a legal means to perpetuate the teachings and the work of the institution's founder after his demise. In short, it is a legal way for a leader to build an institution that will perpetuate his work and pass on the control of that institution to others in a multi-generational fashion. Few pastors ever consider the spiritual ramifications of their legal structure, for it has been deeply ingrained that incorporation is a necessary prerequisite to applying for tax exempt status. Pastors were taught this at their Seminaries and various denominational educational institutions, and for the last century this pattern has seemed to be the logical progression for church growth. This compartmentalization never seemed threatening to the faith of the individual pastor for they easily divided their business duties from their scriptural responsibilities. This is a grave error.
Under the Constitution of the United States, churches are tax immune. The very nature of the American revolution was related to the desire to separate oneself to the freedom to worship God without political constraints. Ever since King Henry broke with the Pope centuries ago, in the British state church (the Anglican denomination), the king was always the designated head of that church. When the colonials came to America, they brought with them a great desire to form their own churches without any state control whatsoever.
As the American congregations grew and prospered, they became more sophisticated in their financial dealings. They felt the need to build financial structures to administer their increasing wealth. Churches formed publishing houses, broadcast networks, overseas schools, soup lines, and dozens of other types of outreach ministries. The government, constrained by the Constitution, was not only forbidden to tax the church, they were forbidden to regulate it in any way. In order to neutralize the spiritual and political power the early American churches held, the spiritual principalities ruling the bureaucracy developed the concept of tax exemption -- as opposed to tax immunity. The system developed as a quid pro quo relationship between the churches and the government--or in the modern idiom,` you scratch my back and I'll scratch yours.' Government granted the incredibly intoxicating privilege of tax deductibility for any donation a citizen or corporation gave to churches--assuming that the "church" had formally received the government's tax exemption. The churches, in return, agreed in writing not to become directly involved in the political process.
In America today, many pastors will tell you they believe the church should not be involved in politics because they're "not called to do that." They frequently cite the great commission of Jesus Christ to go forth and evangelize. What they commonly conceal is the fact that they cannot legally endorse political candidates. They cannot campaign for specific legislative initiatives. They cannot directly contribute to political campaigns.
The truth is, they are legally forbidden to become directly involved in the political process because they have agreed not to do that in order to receive the 501c(3) tax exemption from the Internal Revenue Service. And every single church in America with this tax exemption voluntarily applied to receive it. So when the pastors tell you they don't believe the church should be involved in the civil political structure, the truth is their religious practice is actually in voluntary conformity to what the state has imposed as a condition of receiving their non-profit tax status.
Legal dictionaries define a corporation as an "artificial person." The word comes from the Latin word "corpus," meaning a body. In sort of a Freudian linguistic slip, we get our word "corpse" from the same word as corporation. This "artificial person" is actually a creation of the government that incorporated it. In short, the government is the creator and "head" of all corporations.
Conversely, the Bible teaches us that Jesus Christ is the head of the church (Ephesians 5:23). While this delineation may seem to be hair-splitting, an incorporated church is in every sense under the control and direction of its creator--the government. By every sense I mean legally, ethically, morally, financially, and even spiritually. After all, the aforementioned belief of non-involvement in government is a doctrine imposed on the corporate church by its creator, the state.
Because our God places a great deal of emphasis on the law, and judges mankind based on conformity or rebellion relative to the law of God (I John 3:4), this has profound spiritual consequences.
When the church leaders apply to receive the tax exemption, they are actually forfeiting their tax immunity under the constitution. The difference between immunity and exemption is subtle. To be immune from state regulation is to be completely free from the power of the state to regulate or affect one's behaviour in any way. To be exempt is to submit to that power with the promise of exemption from portions of that power. In effect, the churches are saying to the government, `we agree you have power over us, but in exchange for your exempting us from your lawful right to tax us, we will agree not to oppose your power.' In essence, they have voluntarily traded their birthright for a bowl of soup. The book of Romans, which is widely misinterpreted as teaching we should submit everything to government (chapter 13) actually teaches the opposite. Paul writes "Know ye not, that to whom ye yield yourselves servants to obey, his servants ye are to whom ye obey; whether of sin unto death, or of obedience unto righteousness?" (Romans 6:16). Because the basic structure of the "Christian" church is now inextricably interconnected with government, the overwhelming majority of Christians leaders, pastors, and teachers refuse to receive this teaching. The church is closely aligned with the beast governments of the world through their fundamental structure. This issue supercedes doctrine. Indeed, it is the single common denominator between every religious institution in the entire world. The Bible tells us in the end times, all religion will be seduced to the degree that it is characterized in the image of a harlot woman that is seen riding on the beast of government (Revelation 13). She is named Mystery Babylon, and true believers are uncompromisingly instructed to "come out of her." This issue may be destined to become one of the most significant aspects of end-times survival as Jesus instructs his remnant church in how He wants us to proceed through the dangerous times in which we now find ourselves.

Copyright ©2002 Christian Media Network
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