Churches & Other Non-Profits to Pay Income Tax on Employee Benefits under New Law; Atheists Celebrate

Separation of church and state

A guest post by Grif

The 2017 Tax Act (formerly known as the Tax Cuts and Jobs Act), signed into law late last year, was welcomed by wage earners and business alike that saw it as the fulfillment of President Trump’s campaign pledge to ease the burden of federal income tax. The law reduced the corporate tax rate from 35 percent to 21 percent, and created new income brackets that generally reduce the amount of federal income tax levied on wage earners. And yet, the new tax law has a darker, and for some, a more sinister side.

As of January 1, 2018, all non-profit 501(C)( 3) charitable organizations, including churches, which for decades were exempt from paying income tax, are no longer tax exempt.

Among other things, non-profits may have to file and pay a new income tax called “990-T,” at the rate of 21 percent on some benefits they give to their employees.

Section 512(a) (7) of the new tax code creates categories of taxable income by considering free employee benefits such as parking, travel expenses on company business, and the like as income to the church or non-profit corporation, which would then be taxed. The tax law applies to churches; religious organizations that provide services such as the Salvation Amy, Boys and Girls Clubs of America, Good Will; and secular non-profits such and hospitals and colleges.

See “2018 Tax Law Checklist: New Federal Tax Law – Now What for Nonprofit Board and Staff Members,” National Council of Nonprofits, April 17, 2018.

“Because of this new tax, many tax‐exempt employers, including churches, hospitals, charities, and schools will be required to file federal Form 990‐T, and in many cases, state corporate income returns, every year regardless of whether they actually engage in any unrelated business activity. This new tax was purportedly added to the law to put tax‐exempt employers on the same footing as taxable employers with respect to employer‐provided parking,” the Evangelical Council for Financial Accountability (ECFA) states.

The change in non-profit status was not mentioned during the debate over the tax bill. And even now, many people involved in tax-exempt organizations still do not have a good grasp of what the tax law means for their organizations.

The new law will reportedly apply to all churches that provide parking for their employees even if the employee isn’t charged for parking. So how much does a parking space cost? The IRS is still calculating it. Dan Busby, president of the ECFA, predicts it will cost non-profits even more money than the actual tax amount because some will have to hire accountants just to sort through the new tax requirements.

Busby said “churches weren’t expecting to’ get hit with – of all things – an income tax bill,” which he called “a huge burden on groups that have historically enjoyed tax-exempt status.”

He said there are “nearly 15 million employees that work in the United States for nonprofits – nearly 10 percent of the workforce – so that’s 15 million parking places. And conservatively, it’s going to cost the non-profit community as a whole up to a billion dollars (in income tax levies). That’s a lot of money for ministries that rely on donations.”

Brian Faler, writing for Politico, June 26, 2018, said, “House Ways and Means Chairman Kevin Brady is defending a controversial provision of the GOP tax law that requires churches and other historically tax-exempt organizations to begin paying a 21 percent tax on some types of fringe benefits they provide their employees.”

According to Faler, during the writing and debate leading up to the new tax code, Republicans wanted to treat nonprofits equally with for profit businesses, a task, “which proved challenging.”

“Because those organizations don’t pay income taxes lawmakers couldn’t take away fringe-benefit deductions,” he wrote. “So instead they created a 21 percent tax on the value of some of nonprofit employees’ benefits. The main benefits affected are transportation-related, like free parking in a lot or a garage and subway and bus passes. It also targets meals provided to workers and, in some circumstances, may affect gym memberships.”

However, Rob Damschen, Rep. Brady’s spokesman, defended the new tax policy, saying, “The Tax Cuts and Jobs Act included provisions that provided greater parity in the tax treatment of different types of employee compensation. These provisions apply to both employers that are taxable entities and those that are tax-exempt entities. Providing this greater parity helps to reduce the extent to which decisions about the elements included in the employee compensation package are driven by tax considerations.”

Mike Batts, ECFA chairman of the board, took issue with Damschen.  “What we’re talking about is an income tax on the church for providing parking to its employees — that’s what we’re talking about,” he said. “It’s absurd.”

Predictably, many churches and non-profit organizations are calling for the repeal of the law that would force ministries to file federal tax returns, and in some cases pay taxes.

While churches, religious organizations and other non-profits decry the tax, other groups are delighted that churches now will have to pay income taxes to the IRS. The groups?

Atheists and humanists.

Michael Stone, writing in the online progressive secular humanist blog Patheos June 26, praised the new law saying: Good news: The new Republican tax law that gives to the rich while hurting the poor has a surprising consequence: taxing churches.

“In fact,” he wrote, “the new GOP tax law will force churches to pay taxes for the first time. And the churches are furious. Despite the complaints, taxing churches is long overdue, and a welcome development. A 2015 report from the Secular Policy Institute shows that tax exempt churches cost U.S. taxpayers $71 billion every year. . . . Among the report’s findings: Each year religious groups receive $35.3 billion in federal income tax subsidies and $26.2 billion property tax subsidies. In addition, religious organizations also enjoyed approximately $6.1 billion in state income tax subsidies, along with $1.2 billion of parsonage, and $2.2 billion in the faith-based initiatives.”

Stone noted that there currently is no estimate of how much tax revenue the new law will produce. He quoted Politico, however that the new tax “could cost some churches tens of thousands of dollars.”

“Bottom line:” he wrote, “This is good news. Churches should be taxed. Taxpayers should not be in the business of subsidizing religious superstition. It’s long past time to start taxing churches.” 

Opposition to the new taxes is growing among non-profit organizations.  The Christian Broadcasting Network June 27 reported that more than 1,000 churches and other non-profit groups have signed a petition put out by the ECFA demanding that the new 990-T tax on non-profits be repealed.

According to the ECFA, “By signing the petition, you will be advocating for the repeal of this new burdensome provision in the law . . . either by legislation or effectively by action of the Treasury Department. The position statement may be used to communicate these concerns to members of Congress and/or Treasury officials.”

31 responses to “Churches & Other Non-Profits to Pay Income Tax on Employee Benefits under New Law; Atheists Celebrate

  1. Churches should give up all their government status/bennies and preach the TRUTH again.

    Liked by 7 people

    • I totally agree.
      The Catholic Church, for one, should have its tax-exempt status rescinded, given its blatant political pronouncements that are all in lock-step with the Demonrat Party, e.g., on immigration illegal border-crossing.

      Liked by 7 people

      • Dr Eowyn . . . . I am sure that since you are a devout Catholic, that was a very hard statement to make. God Bless you for your righteousness and total willingness to stand for truth in all times, and in all places. I am in total agreement with your statement. Any Church that will not get behind the laws of this land, and uphold Our Constitution, in all its facets should immediately have their tax-exempt status rescinded!

        To those of us who are non-Catholic, it is gut wrenching to see that a church which in past times led the fight for living a morally, law abiding life has changed the direction of where they are leading people–Catholics and non-Catholics alike.

        Liked by 5 people

        • You’re spot on I left the Episcopal Church because of their stances on Gun control and a lot of other issues that are sin they promote. Guess you can say we’re as close to Catholic as you can get. Loved the service but can’t get past obvious sin they accept now to just get along.
          Grew up in the church and now have nothing like the service but still looking to find a home and God will find me one.

          Liked by 5 people

  2. Signed so now where do we go? Very well written article Grif. The large print gives and the small print takes it away. It’s our government at work a constant contradiction to itself.

    Liked by 3 people

  3. Considering the actual definition of ‘Income’, as defined by Webster, or any other legitimate dictionary for at least several hundred years is: a gain or profit; which does exclude wages or salaries as they constitute compensation for labor,….Just how in the world does any non-profit become liable for taxation?

    Not even the i.r.s. has suggested a change in the definition of ‘Income’ as they surely know they would then open them selves to much debate and litigation for the years of extortion since the 16th amendment, which itself, truly changed nothing of what was already understood.

    Liked by 2 people

  4. traildustfotm

    I have seen a fixation on the 501C3 status cause pastor after pastor to compromise their messages. Pastors, you are in or you are out. You cannot serve God as a vassal of the state.

    Liked by 7 people

  5. Given the fact that churches have been able to perform charity work that the government simply cannot, I see this as a fiscal and financial catastrophe for the churches across America. Let us recall that the Affordable Care Act eliminated a lot of charity work provided by hospitals and the like.
    So my question is this: Who came up with this idea—President Trump or neo-con elements within the Republican Party? My gut reaction smells John McCain was in on this.
    It’s not that I am necessarily against churches paying taxes per se; My concern is that, under no circumstances should the government have a monopoly on anything (except waging war, for example). And to tax parking spaces???
    The consequences shall be catastrophic: Hospitals and schools will close over this. I am also concerned about our Native Americans on their reservations: Will their conditions get even worse than they are now?

    The ability of government to tax individuals and organizations must be severely curtailed—especially since corporations like General Electric have paid absolutely no income taxes at all for years. Make No Mistake: As long as banks and the oligarchs behind them write the tax laws, there can be no fundamental honesty or fairness. (And this is no way to remedy then-Senator LBJ’s 1954 501-(3)(c) problem!)

    Liked by 3 people

  6. I think taxing “parking spaces” is the height of idiocy. From July10, 1974 to May of 2006, I worked for an employer that provided employee parking. I was never taxed for having this supposed perk, not do I think my employer was. Tell me, why the double standard?

    Liked by 1 person

  7. ” taxing “parking spaces” ”
    Isn’t that what parking meters are doing,under a different name?

    Liked by 1 person

  8. Perhaps if churches come out from under the 501C3 burden, they can start preaching the Word of the Gospel of Jesus Christ once again. Maybe they will preach about sin again, like homosexuality, fornication, and abortion. Maybe, just maybe, our country would have a spiritual revival, like those our country saw many years ago. God knows we need it!

    Liked by 4 people

  9. A big can of worms opening up on so many fronts. There are many charities that do awesome work while their leaders take little to nothing in a salary. Others take in and use only a small percentage of donations to do their “work.” While the executive live the high life. Which should be taxed?
    As soon as a charity became political and starting sticking their noses in politics, they should lose their non profit status.
    You have planned parenthood supposedly doing good work, when in fact, little is produced. They take millions from our government, then in turn, use that same money to donate almost 100 percent to the Democratic Party. Why should Republican workers tax money pay for that? Money laundering at its best.
    You have several church charities taking millions from our tax money again to take in illegals and quietly place them around the country and no one is the wiser. Breaking laws, and fast tracking people to citizenship. Doing the work of the democrats. Again, why should good tax money support that. We have no idea how it all is being spent, there is no accountability to the taxpayer.
    Again, who should pay taxes? It looks like this needs to be on a one by one basis.
    There is a short list of charities that we give to. Some do truly good work, others, not so much.

    Liked by 3 people

  10. Mark Taylor, the author of the book about President Trump, has a lot to say about this topic. Here’s one example:

    “Ironically, at the end of the day, none of this is even necessary. The 501(c)(3) isn’t even required! Churches are already tax exempt, and always have been in this country. If they take away our 501(c)(3), where are we? Well, I’ll tell you: back at the NON-501(c)(3), tax-exempt status we had before 1954. Remember the one? The one where we were both tax-exempt—and—allowed to speak out?”

    I think he’s right.

    Liked by 1 person

    • Churches have always been allowed to speak out, they’ve only been prohibited from endorsing any single candidate. We as a church allowed this “separation of church and state” thing, which isn’t constitutionally required, to go way too far.

      Liked by 1 person

      • You have it exactly correct, on the Constitution, and the interpretation of some of it’s different parts. The so called separation of church and state, which actually only says that the federal government cannot make any laws to support or to abolish any particular religion, or no religion at all. In other words, the feds have no business speaking to religion at all. Period.
        The same thing about the education of our children. The constitution does not speak about the federal government being involved in the education of our children, and yet we have a cabinet level position, the Secretary of Education, with rules that states must follow, in order to get money from the federal government for schools, that the states first send to the federal government. Confused yet?
        How about the so called Roe v. Wade ruling, that somehow found a woman’s right to privacy in the Constitution, when there doesn’t exist any such thing. It is one thing for the Supreme Court to say that their job is to interpret the Constitution, which by the way, is also not stated in the Constitution. It is a whole different thing for them to somehow find laws where none exist. That is called legislating, and is saved for the legislative branch, as is set forth in that document called, yep, the Constitution.
        The Supreme Court has overstepped their bounds ever since the ruling of Marbury v. Madison, back in, I think 1789, or thereabouts. It was basically a procedural issue of seating a D.C. justice of the peace. I think that it has been called one of the most important cases in Constitutional law. Myself, I think it was the beginning of the downhill failure of parts of the Constitution. Unless politicians are forced, by threat of whatever means necessary, to respect and follow the Constitution, then they are going to ignore it whenever it gets in the way of their own convenience. This is probably why Thomas Jefferson had the quote ascribed to him, whether true or not, that from time to time the tree of liberty must be refreshed with the blood of Patriots and tyrants. While I am not calling for bloodshed, it would be good to remind the liberty ignoring politicians that we have never completely turned our backs on the option.

        Liked by 1 person

        • Excellent comment! Could become a guest post with a little editing.

          You get everything right. “Separation of church and state” should mean that the state is NOT coming against the expression of religion, but the opposite is true.

          Marbury vs. Madison (the first case American law students study) was comparable to the Fox voting himself Chief of Police to the Henhouse.

          It’s time American patriots started to OH WAIT A NEW IPHONE? DROP EVERYTHING! KARDASHIAN WHAT? OMG SQUEE!!

          Liked by 1 person

  11. The writer looks like you would expect: a gross Soyboy with a small package who looks happy to be breaking in his new b*tt plug.

    Liked by 1 person

  12. The 503C is a designation which is controlled by jewry at the top levels and is a fraud by itself. It allows the leftists to dictate the terms for everyone who is required to join those in order to be treated fairly under taxation rules. The entire globalist “humanitarian and relief” movements are nothing more than leftist scams designed to further the aims of globalists who laugh about the millions which their scams bring in from an unsuspecting public. Those which are not directly set up by them are set up through tax-exempt “Foundations” and NGO’s, and are administered through globalist corporations, and others through an overall scam referred to by the leftists as “Independent Sector”.

    At the very top it is controlled by these, or those who are acting as their successors.

    David Rockefeller and Jacob Rothschild

    Like

  13. Here is only one of the myriad of globalist-left organizations administered under related designations, Scroll down to the bottom at the link for an idea about some of those who are truly the ones who are pushing all of this socialist control over “charity”, but doing so for their own purposes. It’s probably closely related to the “Common Purpose” leftists who operate inside the UK and Australia. 503c is just a small subset from these massive frauds.

    https://globalhumanitarianlab.org/about/

    Liked by 1 person

  14. Ann Coulter referred to our own leftist cadres in America who merely are some of the lower-level operatives for some of these types of operations against the American people and OUR nation.

    http://www.anncoulter.com/columns/2017-02-08.html#read_more

    Liked by 1 person

  15. All of these globalists have their own ways of communicating, and under the nice chatter that they put out is a deadly venom. They have their little conferences and international meetings in plush surroundings with the banquets all provided usually at the taxpayers expense from all of our countries. They are at the top of the digital innovations.

    http://blogs.icrc.org/law-and-policy/2016/12/05/digital-transformation-humanitarian-sector/

    Liked by 1 person

  16. Despite all of the nice rhetoric which they put out, they generally in the long run, are found to be empty.

    https://downtrend.com/vsaxena/little-miss-socialist-is-a-fraud/

    Like

  17. One of the biggest satanic charades, and pushers for 503c is that presented by the National Council of the Churches and it’s related off-shoots.

    “Claiming to speak with authority for some 42 million American Christians, the National Council of the Churches of Christ (N.C.C.) includes thirty-three denominations representing most of the major Protestant and Orthodox Churches in the United States. In addition, more than a score of denominations not actually members of the N.C.C. have participated actively in its radical programs.

    Headquartered at 475 Riverside Drive in New York City, the National Council functions through dozens of interlocking departments, grouped under four major divisions, overseeing the N.C.C.’s international operations. The program is of such magnitude that in 1968, alone, the National Council of Churches expended over $19 million on a worldwide network of Leftist projects. In that year, however, the N.C.C. collected $24,819,000 from gullible American Christians and tax-exempt Leftist foundations.”

    http://christianobserver.net/the-national-council-of-churches-ncc-communist-agenda/

    Liked by 1 person

  18. “WASHINGTON: The National Council of Churches expresses opposition to the regrettable Executive Order entitled, “Promoting Free Speech and Religious Liberty,” signed today by President Trump. This executive order does not promote free speech or religious liberty.

    Churches do not face or experience any discrimination because of the Johnson Amendment, the section of the Internal Revenue Code which states that nonprofit 501(c)3 organizations, including churches, cannot “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

    https://nationalcouncilofchurches.us/ncc-urges-churches-to-refrain-from-intervening-in-political-campaigns/

    Like

  19. “WASHINGTON: Today the governing board of the National Council of the Churches of Christ in the USA (NCC) enthusiastically endorsed a sweeping initiative to end racism. This process, beginning with a massive rally on the National Mall in Washington, DC on April 4, 2018, will unfold over several years and will be the most visible and impactful work of the National Council of Churches in its recent history.”

    https://nationalcouncilofchurches.us/national-council-of-churches-endorse-sweeping-initiative-to-end-racism/

    Liked by 1 person

    • “Today the governing board of the National Council of the Churches of Christ in the USA (NCC) enthusiastically endorsed a sweeping initiative to end racism.”

      If the NCCC succeeds in ending racism, that’ll be a first in all of human history.

      Like

  20. Many of the present policies pursued by modern communists and the left [basically the same thing, although some who identify with the left may not be aware of it] may have some of their modern tactics adopted from the National Council of Churches. I’ve not read all of this below, but it gives more on the NCC history and direction. In the later portion it tells about the NCC’s efforts to push leftist-instigated racial policies against blacks and against America.

    Greg Singer, examined the early statements of the NCC itself and said, in his book, “The Unholy Alliance”:

    “… the failure of many Christians to understand
    the true purposes lying behind the formation of the Federal and
    National Councils of Churches has made it possible for them to be
    cajoled into supporting an organic unity and union of the various
    churches for purposes that are, for the most part, not only contrary
    to the Gospel, but actually treasonable in nature to the historic
    message of the Christian church and even to the nation and the

    American heritage.

    This document clearly reveals the “Christian socialism” of Walter
    Rauschenbusch, who was a member of the conference that created
    the Federal Council. It was subjected to revision in 1912 and again
    in 1932. Although the document’s proposals seem mild in the light
    of contemporary social and economic legislation, they contain the
    seed of a strict governmental regulation of all of life in the name of
    the Gospel, and a socialism that was and is essentially communistic.
    Their theological basis was the social gospel of Rauschenbusch,
    George Herron, and Harry F. Ward. Rauschenbusch was keenly
    aware of the necessity of a policy of deception in introducing his
    brand of Christian Socialism into the churches of this country. He
    thus gave it a name that was designed to make it seem evangelical
    in character and not revolutionary at the same time. Calling for
    the Christianization of the social order for the realization of the
    kingdom of God, Rauschenbusch avoided demanding the government
    ownership of the railroads and other public utilities. He simply
    called for governmental controls of various kinds, confident that such
    a program would eventually bring the kind of socialism he wanted.
    He was willing to uphold a policy of gradualism in his program of

    social and democratic revolution. [pg. 24]

    Could a world organization repre-
    senting many different political theories and containing a block of
    Communist-dominated states achieve the moral aims that the

    Council had in mind? [pg 109]

    All too frequently its
    pronouncements on social and economic issues and on peace and
    war were derived from humanistic and Communist sources and
    coated with an evangelical veneer to make them more acceptable to

    the membership of the churches. [pg 172]

    In 1955 the Council’s Division of Foreign Mission said that a new
    vision of a single world mission of the entire church of Jesus Christ
    was necessary and called for a global reorganization of the missionary
    enterprise. 12l This new form was to be interdenominational and inter-
    racial in character and must proclaim the Gospel in deed and words.
    Seemingly innocuous, this pronouncement was really a call to end de-
    nominational missions as such and put the entire project into the
    hands of the National Council. Foreign missions were to become
    foreign mission and the content was to be the social gospel.” [pg 231]

    https://www.garynorth.com/UnholyAlliance.pdf

    Liked by 1 person

  21. I’ve heard the IRS funnels our tax $$$$$$$$ to the Vatican, and/or, the Bank of England, but haven’t seen any proof. If this were the case, the Vatican would simply take more $$$$ out of the donation baskets.

    Like

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