News from the Tennessee Valley Religion

James L. Evans

To be or not to be tax exempt

All Saints Episcopal Church in Pasadena, Calif., is in hot water with the IRS. On Oct. 31, 2004 — the Sunday before Election Day last year — the former rector of the church, the Rev. George F. Regas, preached a vigorous anti-war sermon.

During the sermon, Regas asked congregants to imagine what a debate between President Bush, Sen. John Kerry and Jesus might look like. Jesus, Regas stated, would most certainly have harsh words for the war on terror in general, and the war in Iraq in particular. He also went on to say that Jesus was not too keen on tax cuts for the rich and gutting programs that help the poor.

The Los Angeles Times carried a story about the sermon that characterized the message as "a searing indictment of the Bush administration's policies in Iraq." The proximity of the sermon to the November 2004 presidential election prompted the IRS to send a letter to the congregation warning that its tax exempt status may be in jeopardy because of political activity. According to law, nonprofits are prohibited from engaging in excessive or partisan political activity.

While it is unlikely the IRS will actually revoke the church's tax exempt status, the incident does raise concerns for churches that have a political bent — on the left and on the right. Faith communities have typically had the right to "speak the truth to power," so long as they do not make lobbying a full-time preoccupation and do not have a "vote for" whomever sign on the church marquee out front.

All Saints seems to be within these boundaries, but in the heat of a political season, sometimes things seem to be more than they really are.

On the other hand, there is nothing particularly sacred about being tax exempt. The two main types of tax exemption — property tax and income tax — are both vestiges of a time when Christianity was the official religion of the colonies. During that period, established congregations were funded by tax revenues, and even ministers were on the city payroll. And, of course, church property was tax exempt because the state does not tax itself.

The ratification of the U.S. Constitution, however, brought about a separation of church and state. Congregations and ministers were no longer funded with tax revenues. But with a nod toward the role that churches play in the community, the practice of exempting church property from taxes continued.

The other major exemption churches enjoy, exemption from income tax, is governed by the IRS code, section 501(c)(3). But most churches have never actually filed for this exemption; they were "grandfathered" in as the law was expanded to make room for nonprofits other than churches.

All of which is to say, if local congregations find the privilege of tax exemption is hindering their ability to speak to the powers that be, then simply give up their tax exempt status and say whatever they want. Jesus never said that the church should be free from paying taxes. In fact, he said "render unto Caesar what belongs to Caesar."

And if what Caesar needs from the church is a stern reminder of who God is and what God expects from the powers that be, and if the price for speaking that message is the loss of tax exemption, then it is a small price to pay for being faithful to our calling.

James L. Evans is pastor of Auburn First Baptist Church. He can be reached at

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