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Tax-Exemption, Favors, and Incorporation

In considering the subject of tax-exemption, favors, and incorporation, one can only agree that there has been, and still is, much debate in Christendom about if a church, or institution of a church, should receive favors, grants, or gifts from the world, and especially from governments. At the heart of the present-day issue are questions such as: “Should a church, or ministry of the church, be incorporated or unincorporated? Should the church seek a 501(c)(3) recognition from the IRS, or should it not?” Needless to say, this subject requires much prayer and thought. Nevertheless, we must carefully consider such issues when it comes to organizing a church or ministry of the church, and a little history will help in forming our conclusion.

At the SDA General Conference Session held February 17 to March 6, 1893, there was much debate about and resolutions to repudiate tax exemptions on all ecclesiastical property. This push was headed by the Religious Liberty movement within the SDA church. On March 3, 1893, the following resolutions were made by the General Conference concerning tax exemptions:

“Whereas, a better understanding of the principles of religious liberty is necessary, both for adequate appreciation of their importance, and an intelligent promulgation of them, therefore,

  1. Resolved, That we recommend to the several Conferences the holding of workers institutes for the study of religious liberty subjects, and that we will aid in such institutes as far as possible by furnishing instructors when so requested. Whereas, In view of the separation which we believe should exist between the Church and the State, it is inconsistent for the Church to receive from the State pecuniary gifts, favors, or exemptions, on religious grounds, therefore,
  2. Resolved, That we repudiate the doctrine that Church or other ecclesiastical property should be exempt from taxation, and, further,
  3. Resolved, That we use our influence in securing the repeal of such legislation as grants this exemption.” –General Conference Bulletin, 1893, p. 475.

Upon the adjournment of the meeting, and before it was dismissed, a message came from brother A. R. Henry concerning a problem facing a state representative of Michigan.

“The point in Brother Henry’s remarks was this: that our State representative from Battle Creek at the State Capital, who at the instance of trustees of several of our institutions, is working to obtain for them freedom from taxation for several of these institutions, is at a loss to know how to proceed or what to do, on account of the recent position by our people on this question. He and our attorney desire immediate instruction, and the attorney would like to meet a committee in regard to the matter, at the close of the meeting.

Voted that the Chair appoint a committee of five, to formulate a response to the foregoing, to be reported back to the General Conference for acceptance, before submitting to our representative at Lansing.

Carried. The Chair named as this committee, W. W. Prescott, A. R. Henry, U. Smith, A. T. Jones; G. C. Tenney.” –General Conference Bulletin, 1893, p. 484.

That evening, the committee of five reported back to the General Conference:

“The following report from the Special Committee appointed at the morning meeting was given by Prof. Prescott:—

Whereas, This Conference has clearly stated its position on the taxation of Church and other ecclesiastical property, and

Whereas, There are certain institutions incorporated under the laws of the State which occupy confessedly disputed grounds, therefore,

Resolved, That matters in which the taxation of such institutions as do occupy this disputed territory is involved—orphanages, houses for aged persons, hospitals, etc.—we leave to the action of the Legislature, without any protest against their taxation, or any request for exemption.” –General Conference Bulletin, 1893, p. 484.

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