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Tax-Exemption, Favors, and Incorporation

In response to this collective decision of the General Conference, the Foreign Mission Board resolved to purchase the land from the British South African Land Company instead of accepting it as a grant. However, before this action was implemented, special instructions came from Sister White on the subject.

In her response to S.N. Haskell’s inquiry, Sister White gave the following counsel, dated Jan. 30, 1895, regarding receiving gifts:

“The Lord would move upon worldly men, even idolaters, to give of their abundance for the support of the work, if we would approach them wisely, and give them an opportunity of doing those things which it is their privilege to do. What they would give we should be privileged to receive. … We have put away from us privileges and advantages that we might have had the benefit of, because we chose to stand independent of the world. But we need not sacrifice one principle of truth while taking advantage of every opportunity to advance the cause of God.” –Testimonies to Ministers and Gospel Workers, pp. 197, 198.

The next day she wrote the following:

“I have letters to write that must go in the next mail to Battle Creek. Our brethren there are not looking at everything in the right light. The movements they have made to pay taxes on the property of the sanitarium and Tabernacle have manifested a zeal and conscientiousness that in all respects is not wise nor correct. … Nehemiah prayed to God for help, and God heard his prayer. The Lord moved upon heathen kings to come to his help. When his enemies zealously worked against him, the Lord worked through kings to carry out His purpose, and to answer the many prayers that were ascending to Him for the help which they so much needed. … Just as long as we are in this world, and the Spirit of God is striving with the world, we are to receive as well as to impart favors. We are to give to the world the light of truth as presented in the Sacred Scriptures, and we are to receive from the world that which God moves upon them to do in behalf of His cause. The Lord still moves upon the hearts of kings and rulers in behalf of His people, and it becomes those who are so deeply interested in the religious liberty question not to cut off any favors, or withdraw themselves from the help that God has moved men to give, for the advancement of His cause. … The Lord God of Israel has placed His goods in the hands of unbelievers, but they are to be used in favor of doing the works that must be done for a fallen world. … I have repeatedly been shown that we might receive far more favors than we do in many ways if we would approach men in wisdom, acquaint them with our work, and give them an opportunity of doing those things which it is our privilege to induce them to do for the advancement of the work of God.” –Testimonies to Ministers and Gospel Workers, pp. 200-203.

As is evident from the preceding historical account, it is absolutely appropriate to receive favors from worldly men, even idolaters. It is completely acceptable to seek such favors, as mentioned in the reference above. We are even encouraged to acquaint them with our work; “approach them wisely, and give them an opportunity of doing those things which it is their privilege to do.” But while it is appropriate and acceptable to pursue and receive gifts and favors from the world and even from legitimate governments, we do not believe it is necessary to seek such favors, unless prompted to do so by the Holy Spirit. In fact, in light of recent measures by our nation to restrict religious liberty, we think it is the better part of wisdom not to bind the church with unnecessary restrictions. Hence the “safest” course of action, in our opinion, is not to seek tax-exempt recognition or incorporation of a church solely for the benefits offered. And here is why.

On the federal level, it is relatively easy to understand the issues surrounding the Internal Revenue Code Section 501(c)(3). We have discovered that a church is automatically classed as a 501(c)(3) tax-exempt organization. This is without having to seek such a recognition from the IRS. How, then, is this possible? It is because the first amendment of the U.S. Constitution separates the church from the control of the government and, therefore, a church does not need to apply for recognition of tax-exempt status.

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” –First Amendment of the USA Constitution.

And as stated in the IRS Publication 1828:

“Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC Section 501(c)(3) and are generally eligible to receive tax-deductible contributions. … Churches that meet the requirements of IRC Section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.” (pp. 2, 3).

Also, IRS Publication 526 states the following for those inquiring if their contributions are deductible when given to certain charitable organizations:

“You can deduct your contributions only if you make them to a qualified organization. Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. … The following list gives some examples of qualified organizations. Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.” (pp. 2, 3).

On the state level, this has been more complicated than the federal. The two main options of investigation has been incorporation vs. unincorporation. While we are learning of the pros and cons of either option, we must also take into account the time in which we live and recent legislative developments. When dealing with questions concerning legislation, however, it is not always easy to discern the full implications of certain laws.

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4 Comments

  1. mikebrown@mhrc.net'
    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

  2. alexanderlisa37@yahoo.com'
    Lisa
    January 2, 2018 at 2:58 am — Reply

    Hi.
    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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