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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    March 30, 2017 at 9:03 pm — Reply

    Hi Demario,

    I have just read your article on tax-exemption etc. It gave a very good historical perspective and I found it interesting. However, having just done AB…’s taxes this year, I did a little research and even asked a friend, my brother-in-law, who is retired from HRBlock (I think that’s the name) I found that yes indeed, an organization must be a 501(c)(3) corporation for one to get tax credit when they donate to it.

    However, there is an exception. If it is a religious church, even if it is not a 501(c)(3) corporation, as long as it is a church, one can still get the same tax credit when they donate to it.

    So, it matters not whether you are a 501(c)(3) corporation, or not, people can still get credit with their donations to it on their tax returns.

    Your brother in Christ
    Michael Brown

    • October 2, 2017 at 2:42 am — Reply

      Hello brother Michael,

      Thank you for the comments. I’m not sure if this point was clear or not in my article, but what you are saying is exactly what I was trying to communicate. A church is automatically exempt from taxes, yet as long as it is organized as a church, it can give tax deductible receipts to it’s donors. It doesn’t have to apply to the feds for a 501C3 recognition. Thanks for your feedback. I hope this reply makes sense.

      Yours In Christ
      Demario Carter

    January 2, 2018 at 2:58 am — Reply

    Most of this article went over my head so I am hoping I can get an understanding in simple English. Are you 501c3 or you are not? I do not believe God has meant for His church to mix with the state for anything. I like listening to you but I have come to learn not to trust many claiming to be workers for the LORD. I have learned to do more homework before investing my time, energy or money in online ministries. Please do not take this personal but I have trusted a few online Pastors and it came to find out they were corrupt and total enemies of God. Wolves in sheep clothing.
    What is your take on the church depending on the state? I could not really understand the article as I would like to have understood it. I am looking for someone I can truly trust to be loyal to God and keep his sheep. If I sound somewhat bitter I am because who do the sheep trust, especially at such a time as this in the world?

    • January 5, 2018 at 8:13 pm — Reply

      Hi Lisa,

      We are not officially 501C3, but we are tax-exempt. I sent you an email further explaining our position.

      In Christ service,
      Elder Demario

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