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A Church with Tax Exemption
Is Not a Tax Exempt Church

(Author Unknown)


During recent Senate hearings on Senate Bill 557 (1990), the so-called "Civil Rights Restoration Act," it was noted that Senator Kennedy and other supporters consistently referred to "religious or church organizations" whereas opponents spoke of defending "religious freedom" and "rights" of the Church. The word "organizations" is emphasized because the use of this term may be the key to government meddling in the affairs of the Church.

Most people believe a Church that has tax exemption is a "tax-exempt church." They err greatly. A church that has tax exemption is not a tax exempt Church ... it is a tax exempt "organization." A "religious or church organization" is a corporation that "functions" in a "legal" capacity, doing "business" as a church. The IRS is fully aware of this distinction, because all of their publications reflect it. Nowhere do they refer to "tax-exempt churches." They always refer to religious or church "organizations." Surely, Congress understands the distinction as well?!

A Church that voluntarily initiates an "application" to the State for "corporate" status obtains "limited liability" and "tax exemption." It has petitioned the State to dictate it's right to exist and prosper. Thus, the Church consents to a change of its status; from a "lawful" assembly of private citizens to that of a "legal" gathering of public subjects.

The Church (a congregation of believers) does not have rights granted by the Constitution. It has inalienable rights granted by God that are "secured" by the Bill of Rights to the U.S. Constitution. Incorporated churches and artificial persons (Corporations) do not have "inalienable rights" granted by God that are "secured" by the Constitution. They only have such rights, privileges and immunities, as granted to entities created by the State. The U.S. Supreme Court understands corporations are creatures of the State, as the Court has stated:

"A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its existence. These are such as are supposed best calculated to effect the object for which it was created. Among the most important are immortality, and, if the expression may be allowed, individuality; properties by which a perpetual succession of many persons are considered as the same, and may act as a single individual. They enable a corporation to manage its own affairs, and to hold property, without endless necessity of perpetual conveyances, for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men with these qualities and capacities, that corporations were invented and are in use."
                     Dartmouth College v. Woodward, 
                                4 Wheat. Rep. 634
                     Osborn et.al. v. The Bank of the United States,
                                9 Wheat 740 @ 767
"A corporation is a creature of the state. It is presumed to be incorporated for the benefit of the public. It receives certain special privileges and franchises.. . Its powers are limited by law ... Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation."
                       Wilson v. U.S., 221 U.S. 382
"... Corporations are not citizens ... The term citizen ... applies only to natural persons ... not to artificial persons created by the legislature..."
                       Paul v. Virginia, 8 Wall. 168, 177
                      (See also the Opinion of Field, J.,
                              in the Slaughterhouse Cases,
                              16 Wall.36,99)
"Whenever a corporation makes a contract it is the contract of the legal entity ... The only rights it can claim are the rights which are given to it in that charter, and not the rights which belong to its members as citizens of a state."
                       Bank of Augusta v. Earle,
                             13 Pet. 586
"A corporation can only appear by its attorney or solicitor, duly authorized; and if this authority is not apparent upon the face of the record, the decree is erroneous, and cannot be supported."
                      Osborn et.al. v. The Bank
                             of the United States,
                             9 Wheat 740 @ 767

According to IRS Publication 557, the instruction manual for organizations seeking recognition of tax exemption under section 501(c)(3) of the Internal Revenue Code, in order to be an "organization" in the legal sense, it is necessary to incorporate.

Black's Law Dictionary, 5th Ed., defines "Organization" as:

"Organization includes a corporation or governmental subdivision or agency, business trust, partnership or association, two or more persons having a joint orcommon interest, or any other legal or commercial entity."
                                   UCC 1-201(28)

Notice that all of the entities in the definition are government franchised, under the jurisdiction of the Uniform Commercial Code (UCC) which has been "Codified" into law within each state. The definition is sound evidence that a corporation (even if it functions as a church) is recognized by law as a commercial and public activity. An incorporated church, "legally" is a commercial or public activity. Didn't Jesus say that His house was not to be a house of merchandise (commerce)?

"And [Jesus] said unto them that sold doves, Take these things hence; make not my Father'shouse an house of merchandise."
                                    John 2:16

Since incorporated churches must register with the State tax commission as an "organization," most States will not permit exempt status until the Church applies for and obtains an IRS 501(c)(3) status ruling. As long as the church "organization" toes the government "public policy" line and performs according to the terms of the charter (remaining non-political and non-controversial), it retains its tax exempt status without hassle. Of course, that means the "church" must comply with every nit-picking demand passed by government that applies to any public entity ... including humanist doctrines of a "One World Caesar."

IRS Publication 557 stipulates that:

"Sec.508(c) of the Internal Revenue Code provides that churches are not required to apply for recognition of section 501(c)(3) status in order to be exempt from federal taxation or to receive tax deductible contributions ..
"Churches are automatically exempt from Federal income tax. That contributions to churches are deductible by donors under section 170 of the Code."

If Churches are "automatically exempt," then why would they be so dumb to apply for exemption? Exemption or immunity is a government grant afforded only to certain classes of juristic persons. Law Dictionaries that define "exempt" and "immune," plus Webster's 1828 Dictionary for the word "exclude" will provide you with a clearer understanding of what is being said here.

The First Amendment PROHIBITS government from making any law for or against the exercise of "religion." Laws that grant special benefits for religion are just as bad as laws enacted against religion.

The free exercise clause DOES NOT make the Church "immune" or "exempt" from anything. It excludes un-franchised Churches from the "legal" jurisdiction of man, but not from the "lawful" Common Law of God. A Church that fully retains its First Amendment status is "lawfully" and automatically "excluded" from any form of direct taxation or public laws governing business franchises.

When citing the First Amendment, it should be considered in all its parts, Freedom of Speech, Press, and Assembly are equally as important to the Church as any other part. Any law that infringes upon the inalienable right of pastors or believers saying or teaching whatever is proper and sound according to God's word, including His commandments on the unlawfulness of homosexuality, abortion, pornography, miscegenation, taxation and evil doings of government, etc., must be considered null and void. The same holds true for the printed word. It must be concluded, that for religious free exercise to exist, free choice as to whom may or may not assemble in a private setting must be upheld. A free un-incorporated Church cannot be held to the standards of a corporation doing "business" as a church.

A Church congregation is a private assembly of individuals, coming together as a family, to worship their Lord. Biblical worship is not a "public" activity. Jesus Christ, not the State ordained the assembling together of believers.

Legislatures pass laws effecting juristic entities as a safeguard to the "General" health, safety and welfare to the public as a whole. Congress has no authority to grant "special" benefits or privileges to un-enfranchised Churches or religious activities. The IRS only authorizes such "privileged" exemptions to churches that are incorporated as organizations. When a Church possesses such "benefits," it is because it has petitioned and accepted the State's franchise. As a "legal" organization, the Church removed itself from the protection of the First Amendment and is no longer free. As a subject of Caesar, the Church is rendering unto Caesar that which is God's.

It is the Church, not the State, that has transgressed the barrier separating Church and State. The greatest single thread that binds the Church to government is the act of "incorporation."




Reprinted in part from the FREEMAN LETTER published by the:

Freemen Education Association,
8141 E. 31st Street, Station "F",
Tulsa, Oklahoma 74145.

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