By Misty M.
A Study on the Reasons not to incorporate the Church with the State
October 23, 2012
So you want to establish a Church? Where do you begin? Is it a good idea to incorporate? If you incorporate is your church still a Sovereign New Testament Church? Did Churches always have to incorporate and if not how did they exist?
These are just some of the questions that present themselves when starting a Sovereign Church. In my research it became quickly apparent that starting a church in America has become increasing more difficult. One has to go about it completely led by the Lord to fulfill the call set before him by The Lord Jesus Christ. Our Calling has ceased to be defamed; Christianity is no longer fashionable, and we are often the object of ridicule. We must proclaim that there are absolutes in a world where relativism rules. It is our job to call people to something beyond themselves in a day when self fulfillment has been elevated as the Ultimate God. We have to be willing to stand for biblical correctness even when it does not fit into the realm of Political correctness.
Today Tolerance is the agenda in the political arena. The problem is that we are called to compassionately proclaim that there is a standard for right and wrong, a clear standard of sin in a compassionate way that articulates “Gods Forgiving Grace.”
Most churches in America have organized as "501c3 tax-exempt religious organizations." This is a fairly recent trend that has only been going on for about fifty years. Churches were only added to section 501c3 of the tax code in 1954. For this we can thank then Senator Lyndon B. Johnson who was definitely not an ally of the church. As part of his political agenda, later President Johnson had it in his mind to silence the church and eliminate the significant influence the church had always had on shaping public policy. Although Johnson propagated this as a "favor" to churches, the favor also came with strings attached.
The “Framers” of this country’s founding documents relied heavily upon the writings of the political philosopher, Baron de Montesquieu. He once wrote that:
“A more certain way to attack religion is by favor, by the comforts of life, by the hope of wealth; not by what reminds one of it, but by what makes one forget it; not by what makes one indignant, but by what makes men lukewarm, when other passions act on our souls, and those which religion inspires are silent. In the matter of changing religion, State favors are stronger than penalties.” The Spirit of the Laws, Baron de Montesquieu (1748)
Acceptance of State favors has had disastrous consequences on the churches in America. The I.R.S. itself even states in its publication 1023 that the only reason the church should file is for favors alone. Here in its own publication 1023 it says:
“Although a church, its integrated auxiliaries, or convention or association of churches is not required to file form 1023 to be exempt federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption”.(501c3appl page 30)
When I read this, the first thing that ran through my mind was; what exactly is in this for them? Is one to presume that they are offering these advantages just out of kindness or out of respect for the Church? I would hope that any citizen who has ever had to deal with the government on any kind of personal business would know that this is hardly likely.
What exactly does the state get in return for these advantageous or “favors” that they give to the church through incorporation. The answer lies with in the definition of legal incorporation. Well let’s look at just three definitions that are given from various legal sources.
- "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 and holds them subject to the laws of the state and the limitation of its charter. Its powers are limited by law. It can make no contract not authorized by its charter. Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation. There is a reserved right in the legislature to investigate its contracts and ascertain if it has exceeded its powers" (Hale v. Henkel, 201 U.S. 43).
- "[A corporation is] an artificial person or legal entity created by or under the authority of the laws of a state. An association of persons created by statute as a legal entity.... The corporation is distinct from the individuals who comprise it (shareholders).... Such an entity subsists as a body politic under a special denomination, which is regarded in law as having a personality and existence distinct from that of its several members." Black's Law Dictionary West Publishing Company, 1991; 6th Edition, page 340.
- "A corporation derives its existence and all of its powers from the State and, therefore, has only such powers as the State has conferred upon it. Power is used here to mean the legal capacity to execute and fulfill the objects and purposes for which the corporation was created, and the source of this power is the charter and the statute under which the corporation was organized." Len Young Smith and G. Gale Roberson, Smith and Roberson's Business Law, West Publishing Company, 1966, page 796.
A corporation is created by, and derives its existence from, the State. In contrast, the church is created by, a creature of, derives its existence from, subject to, and obeys the Law of, Jesus Christ. Incorporation involves creation, and the Church simply cannot be created by the State. Furthermore, the Church's ordained purpose of preaching the Gospel can never be illegal, so no special license is required from the State to do so. In my research I came across a book called “The padlocked church.” It was written by a pastor who found out firsthand the power that the state holds once you incorporate with them. I present the following rather length excerpt from that book:
“While being housed in the County Jail on one occasion during the time our church was under siege by the State of Nebraska, the Sheriff came to the general cell where prisoners were housed at 10:00 PM and said, ‘Reverend, get dressed. You’re going with me’.
I felt a little like Niccodemus going to see Jesus by night. I was being taken to see the judge in our case for a private ‘off the record meeting.’
We felt the judge was sympathetic with our cause since he sent all his children to Catholic Schools. He understood the desire for private Christian education. The judge had sought a way to release me and the church, but the corporation gave the State Supreme Court the handle to hold us and we didn't know it.
The judge made a statement that shocked me:
‘Reverend, I believe you are sincere, but you simply do not understand the law.’
I responded, ‘Will you explain it to me?’
The Judge said, ‘The High Court has asked me to have the church property bulldozed and burned as a public nuisance. I don't want to do that.’
I visibly gasped and asked, ‘How can they do this to private property, owned by a church?’
He then reached for the Court Documents that he had on his desk. He showed the documents to me and asked me to read the parties in the case. I slowly read:
The State of Nebraska, et, el, Paul Douglas, Attorney General of the State of Nebraska VS. Faith Baptist Church, a Nebraska Corporation.
He then asked me if that corporation was a heavenly corporation.
I replied, NO.
He asked me, ‘Who created this corporation, God or the State of Nebraska?’ I had to say, Nebraska.
He then asked me, ‘who actually owns the property of the Church?’
Again, I had to say, ‘The Corporation.’
He asked me if we had Trustees. I replied that we did. He then went on to explain that those trustees are actually holding political office for the State to hold in trust for the State all assets of the Corporation.
WOW! Then he said, if you will look at your charter from the State, it will include a clause that the corporation has to obey all the laws of the State. This is what has you snared.”
It is my belief that what happened to Pastor Ramsey will eventually happen to all churches. The U.S. Supreme Court noted the following about the government’s intended purpose for the 501c3:
“The Court asserts that an exempt organization must “demonstrably serve and be in harmony with the public interest,” must have a purpose that comports with “the common community conscience,” and must not act in a manner “affirmatively at odds with [the] declared position of the whole Government.” Taken together, these passages suggest that the primary function of a tax-exempt organization is to act on behalf of the Government in carrying out governmentally approved policies.”
Do you see here where things start to get really worrisome? The above states that a 501c3 must have a purpose that comports with the common community conscience. Whatis the common community conscience? Well the front page of USA Today stated “that Protestants have lost majority status in America”.
The church in the past and the present does not need to seek permission from the government to be exempt from taxes? Churches in America have never been taxable because to be taxable a church would first need to be under their jurisdiction, and therefore under the taxing authority, of the government. The First Amendment clearly places the church outside the jurisdiction of the civil government:
“Congress shall make NO LAW respecting an establishment of religion, nor prohibiting the free exercise thereof.”
Religion cannot be free if you have to pay the government, through taxation, to exercise that freedom. Since churches aren't taxable in the first place, why do so many of them go to the IRS and seek permission to be tax-exempt? It occurs out of:
- Ignorance ("We didn't know any better")
- Bandwagon logic ("Everyone else is doing it")
- Professional advice (many attorneys and CPAs recommend it)
Does the law require, or even encourage, a church to organize as a 501c3? To answer that question let's turn to what the IRS itself has to say. In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 and 1024. However, note what the IRS says regarding churches and church ministries, in Publication 557:
“Some organizations are not required to file Form 1023. These include:
Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group. These organizations are exempt automatically if they meet the requirements of section 501(c)(3).
According to IRS Code § 508(c)(1)(A): Special rules with respect to section 501(c)(3) organizations. New organizations must notify secretary that they are applying for recognition of section 501(c)(3) status. (c) Exceptions. (1) Mandatory exceptions. Subsections (a) and (b) shall not apply to (A) churches, their integrated auxiliaries, and conventions or associations of churches. This is referred to as the "mandatory exception" rule.
Thus, we see from the IRS’s own publication that it is completely unnecessary for any church to apply for tax-exempt status. In the IRS’ own words a church “is automatically tax-exempt.” And what about tax-deductibility? Doesn’t a church still need to become a 501c3 so that contributions to it can be taken as a tax deduction? The answer is no!
According to IRS Publication 526: Organizations That Qualify To Receive Deductible Contributions; You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other than churches and governments, must apply to the IRS”.
In the IRS’ own words a church “is automatically tax-deductible.” In an interview from Kershaw’s book in Caesars Grip Steve Nestor a retired IRS Sr. Revenue Officer stated:
"I am not the only IRS employee who’s wondered why churches go to the government and seek permission to be exempted from a tax they didn’t owe to begin with, and to seek a tax deductible status that they’ve always had anyway. Many of us have marveled at how church leaders want to be regulated and controlled by an agency of government that most Americans have prayed would just get out of their lives. Churches are in an amazingly unique position, but they don’t seem to know or appreciate the implications of what it would mean to be free of government control."
Although not all of our founding fathers were genuine Christians, they nevertheless understood that the Church of Christ is under the sole jurisdiction of its Lord, and that the civil magistrate therefore should not dare to encroach upon that authority. Because of this healthy respect for the Church, the very first sentence of the Bill of Rights reads as follows:
"Congress shall make no law regarding an establishment of religion, or prohibiting the free exercise thereof" (U.S. Constitution, First Amendment).
The establishment clause of the First Amendment means that neither a state nor the federal government can set up a church. It was one of the principles of the sixteenth-century Reformation that the Church and the State are separate governments, and that they are not to either merge with one another or cross the sphere of authority of one another.
The truth is that "incorporated churches" are not, by definition, churches they are non-profit organizations. Any church that has incorporated has deposed Jesus Christ from His rightful position as Head over His own Body and has surrendered that Body to the dominion of the State. When a church accepts the 501c3 status, that church:
- Waives its freedom of speech.
- Waives its freedom of religion.
- Waives its right to influence legislators and the legislation they craft.
- Waives its constitutionally guaranteed rights.
- Is no longer free to speak to the vital issues of the day.
- Becomes controlled by a spirit of fear that if it doesn’t toe the line with the IRS it will lose its tax-exempt status.
- Becomes a State-Church.
501c3 c Churches are prohibited from addressing, in any tangible way, the vital issues of the day. For a 501c3 church to openly speak out, or organize in opposition to, anything that the government declares "legal," even if it is immoral (e.g. abortion, homosexuality, gay marriage etc.), that church will jeopardize its tax exempt status. The 501c3 has had a "chilling effect" upon the free speech rights of the church. Now the problem is that this in direct opposition with our calling to preach the absolute truth concerning Biblical standards.
Incorporated churches are subject to total governmental control over such things like whom they may hire what they may and may not teach and preach because they cannot conflict with public policy nor assault the hearer's sense of mental well-being, self esteem, sexual orientation, etc. The IRS prohibits such organizations from carrying on propaganda, or otherwise attempting to influence legislation. This prohibition extends, not only to the endorsement of a political candidate, but also any other attempts to influence legislation; including taking a public stand against such government-protected abominations as abortion or homosexual marriage. Should the Bible itself one day be ruled by the government to be "politically incorrect," incorporated churches will find themselves with a very serious dilemma.
This is not totally unrealistic because already Oxford University Press has put out the New Inclusive Translation, which is being labeled the politically correct Bible. Look at this example, the term, “Son of Man” will now become, “The Human One” and, “Father” (GOD) is “Father-Mother”. Another example of the politically correct bible trend is the new edition of the popular New Revised Standard Version (NRSV) commentary, The New Oxford Annotated Bible, reinterprets key sections of the Bible to negate or water down orthodox Christian beliefs about homosexuality, Jesus Christ’s sovereignty, and the sanctity of life. The new Annotated Bible, which was edited in part by pro-gay and feminist scholars adopts revisionist interpretations of Holy Scripture such as that God allegedly destroyed Sodom and Gomorrah for the sin of inhospitality; not homosexual sin.
Laws about Hate Speech are being enacted daily. I believe it will not be long before someone sues a church for preaching on a subject like homosexuality, divorce, abortion, single parenting or some other controversial issue of today. Someone will say they felt emotionally attacked because they have committed one the numerous socially accepted sins of today and because they were present during a sermon on the topic they will sue the church. Likely with the help of the ACLU, principalities and rulers of this present world they will win the case. Why and how will this happen?
“In a civil suit, a corporation's defense is limited to the terms specifically enumerated in its charter and articles of incorporation. All other "extrinsic evidence," including the Bible or any historical Christian creeds or standards, will be disallowed in a State court case, because they are "not contained in the body of [the] contract." (Black's Law Dictionary, p. 588).
What does this mean? Basically if a church does not in its article of association write out, word for word, line for line each and every detail on every subject, what the bible says is a sin than it will not be protected from a lawsuit. A church may state that they are a bible based faith but this alone is not enough unless in their articles of association they have covered each and very controversial issue in detail. Let’s say for example that they believe that homosexual marriage would be a sin and therefore as a topic of preaching they would not be protected from lawsuit or censorship from the government unless it was written in their association articles that this is a core value of the church. An example today would be the Catholic Church’s campaign against abortion.
Outside of its own walls, the incorporated church may not stand on the authority of the Scriptures regarding any political or civil issue, because it is bound by the "higher laws" of the State. Consequently, the Christian Church in America, little by little, ceases to be the "salt" and "light" to society that it was commanded to be (Matthew.5:13-16). And all this for a simple tax deduction! Because of money! This directly contradicts Jesus' teaching, "make not my Father's house a house of merchandise" (John 2:16).
My first reaction to this I thought maybe that a church could be very specific when writing the assertion articles but then I realized that fifty years ago one would never of thought gay marriage would be an issue therefore it would not of added it in the church charter. This will just continue to expiate in the future on a wider range of issues as society degrades morally so it would be impossible to foresee what could be a political issue in the future. So I now completely hold to the idea that the sovereign church is the only way to protect against all things government and alike. Why is this the case? Well because whoever is the head of your church is the one whom protects you. The church should look to God for protection. The fact is whomever protects you is whom you serve.
In my research I have come across a few men who have opened sovereign churches. One of which is Pastor Don Elmore, who also happens to be one of my regular customers; he has been a true blessing over the past few weeks. He helped me to understand how the church in America was originally established and to look outside the box of what the established government today is trying to tell God’s people. I believe that God sent him to encourage and enlighten me during this class. It is an example of how God will send His people what they need in and out of season. He will do this for the church just as he does for the individual.
I believe that men like him and Pastor Ramsey are comparable to the men of the reformation whom broke away from the Church of England and made way for the free and sovereign church. The church today must look back at their past and put on their big boy boots and stand and say: “I choose to serve the Lord and not the State”.
We only have two choices in this life on how we will react to anything; that being Faith or Fear. Will we choose to submit our churches to government control while trembling in fear that they make take their stamp of approval from us or shall we choose to live in faith knowing that God will take care of His church and the gates of hell will not prevail. Whom will we choose? Will we serve God or Mammon? This question must be one that the body of Christ needs to examine in this country.
In conclusion, because the majority of churches have taken the 501c3 tax status the church today has been effectively silenced and the disastrous consequences are being felt by the entire nation. One need not look far to see the devastating effects 501c3 acceptance has had to the church. If you want to witness the effects you only have to listen to the evening news or read the newspaper. The morals of America are declining at a rapid pace with news of abortions, murder, homosexual marriage and many other atrocities that appear daily. John Adams stated while he was our President, “The church is the moral compass of society.” But in order to remain a true and faithful compass, the church must remain separate and independent of the influences of that society, particularly its civil government . It must be a free Sovereign church.
Should the church become subordinate, or in any way controlled by the civil government, it can no longer effectively serve as that society’s moral compass . Unless it is respected, no one will listen to what it has to say.
Indeed, few citizens in any society, at any time in history, in any nation, have ever had any genuine respect for any State-Church system. State-Church systems are inevitably compromised and governed by pragmatism, rather than genuine Christian faithfulness. It should surprise no one that the 501c3 church in America has lost its prophetic voice, lost the respect it once held, and is no longer “the moral compass of society.” The situation however is not without hope. There are people whom have been called to help God’s people to obtain freedom. I pray that pastors will seek help in un-incorporating their church. God can and will make a way if only we choose to turn ourselves over to His control and protection.
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