From the May 2004 Idaho Observer:

Churches need not be 501(c)(3)

In what was one of the most inspiring presentations about faith and contemporary life, Peter Kershaw discussed the legal and spiritual fallacy of 501(c)(3) tax exempt status for churches at Freedom Law School's Health and Freedom Rally in Irvine, Calif. March 14, 2004.

Aside from the obvious point that churches getting their sanction from God should never lower themselves to contract with the state for privileges of existence, the IRS Code even provides churches that fit certain guidelines with an automatic exemption.

The bottom line is that 501(c)(3) churches either filed for their tax-exempt status out of ignorance or they are for-profit businesses operating in commerce with a government exemption. In either case, 501(c)(3) churches are misguided.

Below is merely a legal outline of Kershaw's argument. An audio-taped recording of Kershaw's presentation in Irvine is available from Freedom Law School for $8 (760-868-4271). It should be heard by pastors of 501(c)(3) institutions so the “ignorance” option may be removed from their churches.

by Peter Kershaw

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).

Churches Are “Automatically Tax-Exempt”

According to IRS Code § 508(c)(1)(A):

Special rules with respect to section 501(c)(3) organizations.

(a) 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.

Thus, we see from the IRS' own publications, and the tax code, 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 501(c)(3) 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, as described below, must apply to the IRS.

In the IRS' own words a church “is automatically tax-deductible.”

Not only is it completely unnecessary for any church to seek 501c3 status, to do so becomes a grant of jurisdiction to the IRS by any church that obtains that State favor. In the words of Steve Nestor, IRS Sr. Revenue Officer (ret.):

“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.”

~from the Forward of In Caesar's Grip, by Peter Kershaw


For further information contact:

Heal Our Land Ministries
1440 State Hwy 248, Suite Q262
Branson, Missouri 65616

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