Supreme Court: Religious Law Allows Clergy to be in Execution Chambers

Law protecting prisoners’ religious rights allows clergy to be present in execution chambers, Court says.

A prisoner scheduled to be executed in Texas requested that he be allowed to have his pastor present to provide “spiritual comfort and guidance in his final moments.” The state of Texas denied the request because it bars chaplains of any religion to enter an execution chamber.

After the denial by Texas, the prisoner sought legal relief for his request only to be denied by a federal district court and a court of appeals. The United States Supreme Court subsequently took up the case.

The Court, in an 8-1 majority, reversed the lower court decisions. Citing the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), it said the restrictions imposed by Texas were not based on “a compelling governmental interest.”

This article will explore the Court’s analysis, and the general implications of the decision for chaplains and prison ministries.

Background

Pablo Castro worked the night shift at the Times Market convenience store in Corpus Christi, Texas. On July 19, 2004, Castro was outside closing up when John Ramirez and an accomplice approached him with a knife. Ramirez stabbed Castro 29 times, searched his pockets, and made off with $1.25. Castro died on the pavement, leaving behind 9 children and 14 grandchildren.

Ramirez fled to Mexico, where he evaded authorities for more than three years. In 2008, he was finally apprehended near the Mexican border. The state of Texas charged Ramirez with murdering Castro in the course of committing or attempting to commit robbery—a capital offense. Ramirez admitted to killing Castro but denied the robbery that made the murder a capital crime. A jury disagreed, found Ramirez guilty, and sentenced him to death.

Texas scheduled Ramirez’s execution for September 9, 2020. Ramirez asked to have his pastor accompany him into the execution chamber. Prison officials denied the request. They did so because, at the time, Texas’s execution protocol barred all spiritual advisors from entering the chamber.

A prior version of the protocol had allowed access for prison chaplains, but at the time, Texas employed only Christian and Muslim chaplains. In 2019, when a Buddhist inmate sought to have his spiritual advisor join him in the execution chamber, Texas declined to grant the accommodation. In response, Texas also amended its execution protocol to bar all chaplains from entering the execution chamber so as not to discriminate among religions.

Turning to RLUIPA

Ramirez filed a lawsuit in federal court. He did not challenge his conviction or death sentence. Instead, he asked that his longtime pastor be allowed to pray with him and lay hands on him while he was being executed. He claimed that RLUIPA, a federal law, requires this accommodation.

Ramirez sought a preliminary injunction ordering Texas to permit his religious exercise if the state went forward with his execution. A federal district court and court of appeals declined to grant such relief. The United States Supreme Court agreed to hear the case on appeal.

Ramirez’s complaint said that he was a Christian and had received religious guidance from Pastor Dana Moore since 2016. Ramirez is a member of Moore’s church in Corpus Christi.

Ramirez explained that he wanted his pastor “to be present at the time of his execution to pray with him and provide spiritual comfort and guidance in his final moments,” and that the pastor be permitted to “lay hands” on him and audibly “pray over” him while the execution was taking place. Ramirez’s grievance explains that “it is part of my faith to have my spiritual advisor lay hands on me anytime I am sick or dying.”

Texas denied this request on the ground that spiritual advisors are “not allowed to touch an inmate while inside the execution chamber.”

In reviewing the case, the Supreme Court described RLUIPA in this way:

No government shall impose a substantial burden on the religious exercise of a person residing in or confined to an institution—including state prisoners . . . unless the government demonstrates that imposition of the burden on that person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.

The Court concluded that any restriction on the ability of Ramirez’s pastor to enter the execution chamber, lay hands on him, and audibly pray for him during the execution procedure would impose a substantial burden on his religious exercise.

The Court further concluded that restrictions imposed by Texas on the presence of clergy during an execution were not based on a compelling governmental interest.

Rejecting Texas’s arguments

Texas argued it had two compelling governmental interests that justified its policy.

First, absolute silence was necessary in the execution chamber so they can monitor the inmate’s condition through a microphone suspended overhead. Prison officials claimed that audible prayer might impede their ability to hear subtle signs of trouble or might prove distracting during an emergency.

The Court agreed that “audible prayer could present a . . . serious risk of interference during the delicate process of lethal injection. . . . But [prison officials] fail to show that a categorical ban on all audible prayer is the least restrictive means of furthering their compelling interests,” as required by RLUIPA.

Second, Texas argued about concerns regarding possible disruptions. Prison officials claimed that if they allow spiritual advisors to pray aloud during executions, the opportunity “could be exploited to make a statement to the witnesses or officials, rather than the inmate. . . . [And] such statements might cause further trauma to the victim’s family or otherwise interfere with the execution.”

The Court agreed that the government has a compelling interest in preventing disruptions of any sort and maintaining solemnity and decorum in the execution chamber. But “there is no indication in the record that Pastor Moore would cause the sorts of disruptions that [prison officials] fear.”

Historical practices with executions

With its decision, the Court briefly summarized the history of audible prayer at the time of execution to affirm the central importance of this practice in the Christian tradition:

As for audible prayer, there is a rich history of clerical prayer at the time of a prisoner’s execution, dating back well before the founding of our Nation. For example, at Newgate Prison—one of London’s most notorious jails—an Anglican priest would stand and pray with the condemned in their final moments. By the early 1700s, that practice had evolved to permit prisoners to be “attended by a minister, or even a priest, of their own communion. Prayer at the time of execution was also commonplace in the American Colonies. . . . And during the Revolutionary War, General George Washington ordered that “prisoners under sentence of death” “be attended with such Chaplains as they choose”—including at the time of their execution. These chaplains often spoke and prayed with the condemned during their final moments. . . . (“Upon the arrival of the criminals at the place of execution, the attending chaplain . . . prayed and recommended them severally to God.”)

A tradition of such prayer continued throughout our Nation’s history. When, for example, the Federal Government executed four members of the conspiracy that led to the assassination of President Abraham Lincoln, the prisoners were accompanied by clergy of various denominations. These “spiritual advisers” ministered to the condemned, and three spoke public prayers shortly before the prisoners were hanged. And in the aftermath of World War II, the United States Army even permitted Nazi war criminals facing execution to be accompanied by a chaplain, who “spoke” prayers on the gallows in the moments before death.

The practice continues today. In 2020 and 2021, the Federal Bureau of Prisons allowed religious advisors to speak or pray audibly with inmates during at least six federal executions. What’s more, Texas itself appears to have long allowed prison chaplains to pray with inmates in the execution chamber, deciding to prohibit such prayer only in the last several years. (citations omitted)

What this means for churches

The ministries of chaplains carry great historical significance in the country and constitute significant and vibrant efforts still today in many parts of the country. This decision is especially relevant to chaplains carrying on that work now and going forward. Likewise, it is relevant to any church with a minister who serves as a prison chaplain, as well as churches with active prison ministries in which ministers visit prisoners, among other services.

Ramirez v. Collier, 142 S. Ct. 1264 (2021)

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Key Tax Dates July 2022

File 8274 and 941 forms and meet monthly or semiweekly requirements.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

July 30, 2022: File employer exemption—Form 8274

Churches hiring their first nonminister employee between April 1 and June 29 may exempt themselves from the employer’s share of Social Security and Medicare taxes by filing Form 8274 by this date (nonminister employees are thereafter treated as self-employed for Social Security purposes).

The exemption is only available to churches that are opposed on the basis of religious principles to paying the employer’s share of Social Security and Medicare taxes.

July 31, 2022: File Form 941

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the second quarter of 2022 by this date. Enclose a check in the total amount of all withheld taxes (withheld income taxes, withheld Social Security and Medicare taxes paid by the employee, and the employer’s share of Social Security and Medicare taxes) if less than $2,500 on June 30, 2022.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Advantage Member Exclusive

Retirement Planning for Pastors and Staff

On-Demand Webinar: Setting successful strategies as your church’s workforce ages.

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Editor’s note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In America, the retirement boom has begun. Yet statistics from annuity.org and elsewhere indicate that most Americans are not financially ready for it.

Unfortunately, this trend rings true in churches as well. But this doesn’t have to be the case. With a little forward thinking, churches can set their pastors and staff up for success during the retirement years.

In this webinar featuring CPA Elaine Sommerville, you will learn what to do–or not do–as your workforces age. Watch now to gain an overview of plans that can assist pastors and staff members with setting aside retirement funds, as well as critical considerations they must make regarding housing, spouses, health insurance and Medicare, and life insurance.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

Key Tax Dates June 2022

Review housing allowance designations, make quarterly payments, and meet monthly or semiweekly requirements.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

June 15, 2022: Quarterly estimated tax payments for certain employees and churches

Filing for certain ministers and self-employed workers

Ministers (who have not elected voluntary withholding) and self-employed workers must file their second quarterly estimated federal tax payment for 2022 by this date. A similar rule applies in many states to payments of estimated state taxes.

Nonminister employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay FICA taxes) are treated as self-employed for Social Security, and accordingly are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they ask their employing church to withhold an additional amount of income taxes from each paycheck that will be sufficient to cover self-employment taxes (use a new Form W-4, Step 4(c), to make this request).

Payments for unrelated business income tax liability

A church must make quarterly estimated tax payments if it expects an unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure your estimated taxes. Quarterly estimated tax payments of one-fourth of the total tax liability are due by April 15, June 15, September 15, and December 15, 2022, for churches on a calendar year basis. Deposit quarterly tax payments electronically using the Electronic Federal Tax Payment System (EFTPS).

June 30, 2022: Review housing or parsonage allowance designations

Now is a good time to review the 2022 housing or parsonage allowances designated for all ministers on staff. If an allowance designated for 2022 is clearly below actual housing expenses, then the church board should consider declaring a larger portion of the minister’s remaining compensation as a housing or parsonage allowance.

A church is free to designate any portion of a minister’s compensation as a housing allowance, but remember that clergy who own their home cannot claim a housing allowance exclusion greater than the fair rental value of the home (furnished, including utilities). Therefore, the allowance ordinarily should not be significantly more than this amount.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Should Your Church Get Political?

If your church wants to get political, it’s important to understand the legal, theological, and pastoral considerations.

Pastors and churches in America have struggled for decades to determine whether their church should get political. How much political involvement should they engage in? Which activities might jeopardize tax-exempt statuses?

What about the theological questions regarding whether churches should participate in the public square?

There are also pastoral questions regarding when or how the engagement of political issues is necessary to disciple congregants.

Christianity Today’s Church Law & Tax and Big Tent Initiative hosted a virtual roundtable in which respected and trusted voices in the fields of law, pastoral leadership, and theology gathered to educate and inform pastors and church leaders nationwide on how God is calling them to lead in the face of the current political climate. Watch now to learn more

Before your church gets political

Watch this video, and discover more on this topic by reviewing the handful of articles and coverage in our Churches and Political Activities collection.

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Can Churches Assist with Medicare Premiums for Eligible Employees?

There are specific rules and other qualifying factors churches must understand.

It is estimated that almost 64 million citizens were enrolled in Medicare in October of 2021, according to the Centers for Medicare & Medicaid Services, and many still remain in the workforce. With an aging workforce staying in the marketplace longer than past years, churches are facing—or will face—the question of how to handle health insurance coverage for employees reaching Medicare eligibility. Upon reaching Medicare eligibility, a person’s health coverage becomes a maze of options for both the employer and the employee.

Churches often desire to encourage an employee to leave a group health-care plan and enroll in Medicare to take advantage of cost savings. Many times, the employee also desires this path because it is less expensive than his or her portion of the cost of the church’s group health-care plan. When discussing Medicare as a health-care option, the topic of the church’s ability to assist with Medicare-related premiums invariably comes up.

While employers may not pay Medicare premiums directly for active employees, they may in some circumstances establish reimbursement plans for the related costs. However, employer assistance with these costs requires great caution and an understanding of multiple, little-known laws.

Navigation of this complex subject is dependent on several factors requiring skilled analysis and well-thought-out planning. The analysis is intricate and easy to misstep. The purpose of this article is to raise awareness of the rules involved and assist a church in knowing when to seek guidance from a benefits professional.

Rules to consider in the analysis

There are two primary sets of rules to consider when deciding whether to assist an employee with Medicare-related premiums and supplemental coverage.

The first is the Affordable Care Act (ACA). Created in 2010, most churches are now accustomed to navigating the ACA’s intricate rules relating to health-care coverage.

The second set of rules, which is not as familiar to church employers, is the Medicare Secondary Payer (MSP) rules.

The ACA and Medicare

Medicare is not a group health-care plan under the ACA, so Medicare reimbursements or payments are considered reimbursements of an individual health insurance plan. Therefore, if a church agrees to pay an employee for Medicare premiums, it is reimbursing an individual health insurance plan. If a church has more than one employee, then the provisions of the ACA kick in, and those provisions generally prohibit the reimbursement of individual health insurance premiums.

In the past few years, two avenues have been approved that allow employers to provide for individual health insurance coverage. These avenues are specific versions of health reimbursement arrangements (HRAs): the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or the Individual Coverage Health Reimbursement Arrangement (ICHRA).

Both HRAs have specific qualifications and operating rules. Reimbursing individual health insurance premiums outside of a qualifying HRA creates an employer-paid health plan subject to the ACA’s penalty of $100 per day ($36,500 per year) per employee.

Additional ACA rules apply to employers with 50 or more full-time equivalent employees because they must offer group health insurance to all full-time employees.

Medicare Secondary Payer rules

Outside of the ACA rules, any arrangement involving Medicare and employees must also comply with the MSP rules. No one should be surprised to learn that the government does not approve of employers transferring their insurance responsibilities to the government. MSP rules define when Medicare can be the primary payer versus when the federal government insists that Medicare operate as a secondary payer behind other employer-provided insurance plans covering active employees.

For an employer with 20 or fewer full- or part-time workers that offers group health insurance plans, MSP rules allow greater latitude in working with employees eligible for Medicare. Medicare rules require an employee to enroll in Medicare when eligible and Medicare serves as the primary payer of medical needs.

But the provisions clearly state that employers of 20 or more employees may not actively encourage or compensate employees for exiting their group health plan in favor of Medicare. The employer must offer the same health-care benefits to those 65-and-older employees that they do to employees under 65. A church’s group health plan must be the primary payer and Medicare the secondary payer. While an employee may choose to exit the group health-care plan in favor of a Medicare option, the employer may not compensate or reward the employee for this decision.

Note. An employer meets the 20-or-more-employee requirement when an employer has 20 or more full-time and/or part-time employees for each working day in each of 20 or more calendar weeks in the current or preceding year.

Potential solutions

So, what are a church’s options for employees who desire to enroll in Medicare?

Churches with fewer than 20 employees that offer group health insurance

A church with fewer than 20 full- or part-time employees (as defined above)—and that offers group health insurance not consisting solely of benefits excepted from the ACA rules—may take the following steps:

  • establish a group health insurance plan for employees not eligible for Medicare; and
  • create an integrated health reimbursement arrangement for those employees enrolled in Medicare Part A and Part B or D that reimburses the premiums the employee pays for Medicare Parts B and/or D only. (This is a specifically authorized method of integrating this type of HRA into an employer’s group health plan.)

Churches with fewer than 50 employees not offering group insurance

A church with no more than 49 full-time equivalent employees and not offering group health insurance may consider establishing an ICHRA or a QSEHRA (see above sidebar). Both types of HRAs may reimburse individual health insurance premiums and the employee’s benefits may be used to pay for Medicare Parts B, C and/or D. However, these plans may not be limited to simply covering Medicare premiums and must comply with nondiscrimination rules.

Churches with 20 or more employees offering group insurance

For employers that offer group coverage and meet the 20-employee rule above, compliance with MSP rules is more challenging. To comply, the health-care options offered to qualifying employees and their spouses (if applicable) may not differ based on whether or not employees are eligible for Medicare. Any HRA must comply with ACA rules. The interplay of these rules makes it difficult—if not impossible—to create a plan providing for the reimbursement of Medicare-related premiums for active employees.

Employer size is the determining factor

In summary, an employee may enroll in Medicare when he or she becomes eligible and may still participate in his or her employer’s group health plan—or choose to leave the employer’s plan.

However, the size of the employer determines which plan provides primary coverage for health expenses and which one provides secondary coverage, and it determines the options available (or not) for the employer to reimburse costs.

Assisting employees with Medicare-related premiums should only be undertaken when a church has actively sought the assistance of a benefits professional skilled in working with these specific rules. Churches and employees may also find assistance through a State Health Insurance Assistance Program (SHIP) that provides free health insurance counseling services. Locate a local SHIP by visiting shiphelp.org or by calling (toll-free) 1-800-633-4227.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

RECOMMENDED READING

Politics and the Church: Activism, Speech, and the Tax Code

Sometimes, the lines blur between politics and the church. This recommended reading – and viewing – list can help.

Sometimes, the lines blur between politics and the church to the point that church leaders can wonder what types of political activities and political speech are allowed under section 501(c)(3) of the tax code.

It’s a question we often receive because of the federal tax-exempt status that churches automatically receive under section 508 of the Internal Revenue Code.

This recommended, carefully-curated members-only reading list, devoted to politics and the church, lays out the do’s and don’ts as described in section 501(c)(3), as well as relevant IRS rulings and court decisions.


Lead Your Church With Confidence – Become a Church Law & Tax Member Today.


The list includes a thought piece on whether your church should get political at all, along with a series of analysis pieces on the tax implications of getting political in the first place.

All are were created in partnership with experts whose hearts are geared to inform church leaders who, in turn, must weigh how God is calling them to speak into elections and other political matters.


Checklist: How Various Political Activities Might Affect Your Church’s Tax-Exempt Status

Which political activities may affect your church’s tax-exempt status, based on IRS guidance.

Last Reviewed: April 25, 2024

Election years frequently prompt a common question among church leaders and pastors: What types of political activities and speech are allowed under section 501(c)(3) of the tax code?

While political activities and speech by churches and pastors are protected by the US Constitution’s First Amendment, the Internal Revenue Code contains specific language that either prohibits or limits certain activities conducted by tax-exempt entities. Violations can lead to excise taxes, the revocation of federal tax exemption, or both. While few public examples exist of the enforcement of these rules over the years by the Internal Revenue Service (IRS), churches and church leaders still should understand the prohibitions and limitations, including any potential tax consequences any violations may trigger.

This chart provides a variety of examples of political activities churches might wish to do and briefly details the related IRS guidance, including the potential effects of those activities on a church’s tax-exempt status. The goal is to provide a quick reference for church leaders that helps them make informed decisions.

To go deeper on these issues, don’t miss “The Tax Implications of Churches and Political Involvement,” by attorney, CPA, and senior editor Richard R. Hammar, and “Churches, Politics, and Constitutional Protections,” by attorney Erik Stanley on ChurchLawAndTax.com’s Recommended Reading page.

ACTIVITY

IMPACT ON TAX- EXEMPT STATUS

BASIS

A church makes contributions to a candidate’s campaign fund

Prohibited

IRS Publication 1828

A church makes public statements of position (verbal and written) in favor of or in opposition to candidates for office through official church publications, at official church functions, or both

Prohibited

IRS Publication 1828

A church’s pastor delivers a sermon series addressing what the Bible says about abortion, criminal justice reform, sexual orientation and gender identity, and other topics with social and spiritual implications

Permitted

First Amendment of the US Constitution

A church provides a nonpartisan forum for all candidates to address the church

Permitted

IRS Publication 1828

A church invites all candidates for a political office to address the congregation and informs the congregation before each candidate’s speech that the views expressed are those of the candidate and not the church, and that the church does not endorse any candidate

Permitted

Revenue Ruling 74-574; IRS Publication 1828

A church invites only one candidate in a political campaign to address the congregation

Prohibited

Revenue Ruling 2007-41; IRS Publication 1828

A church provides an opportunity for a candidate to speak in a noncandidate capacity (for example, as a member of the church, public figure, or expert in a nonpolitical field) without providing equal access to all political candidates for the same office. The church ensures that the candidate speaks in a noncandidate capacity; no reference is made to the person’s candidacy; the church mentions the capacity in which the candidate is appearing (without mentioning the person’s political candidacy); and no campaign activity occurs.

Permitted

IRS Publication 1828

A church distributes a compilation of voting records of all members of US Congress on major legislative issues involving a wide range of subjects; the publication contains no editorial opinion, and its text, design elements, and structure do not imply approval or disapproval of any members or their voting records

Permitted

Revenue Ruling 78-248; IRS Publication 1828

A church distributes a voter guide containing questions answered by all candidates. The questions cover a wide range of topics, but the wording of the questions demonstrates bias on certain issues.

Prohibited

Revenue Ruling 78-248; IRS Publication 1828

A church endorses a candidate (by any variety of ways, including verbal or written statements, references to the candidate’s political party, references to the candidate’s distinctive platform or biography, and/or showing the candidate’s picture)

Prohibited

Int. Rev. News Release IR-96-23; IRS Publication 1828

Church employees carry on campaign activities for a candidate within the context of their church employment

Prohibited

FSA 1993-0921-1; IRS Publication 1828

A church fails to “disavow” the campaign activities of persons under “apparent authorization” from the church by repudiating those acts “in a timely manner equal to the original actions” and taking steps “to ensure that such unauthorized actions do not recur”

Prohibited

FSA 1993-0921-1

A church engages in fundraising on behalf of a candidate

Prohibited

Int. Rev. News Release IR-96-23; IRS Publication 1828

A church conducts a neutral voter registration drive

Permitted

11 C.F.R. § 111.4(c)(4); IRS Publication 1828

A church buys and places newspaper ads urging voters to vote for or against a candidate

Prohibited

Branch Ministries, Inc. v. Commissioner, 99-1 USTC ¶50,410 (D.D.C. 1999), aff’d, Branch Ministries v. Rossotti, 2000 USTC ¶50,459 (D.C. Cir. 2000)

A church website contains information either supporting or opposing candidates for public office

Prohibited

IRS Publication 1828

A church website contains links to candidate-related materials, and does not include any text, design elements, or structure indicating support of or opposition to any of the candidates

Permitted

Revenue Ruling 2007-41; IRS Publication 1828

A church website links to third-party websites containing materials supporting or opposing candidates

Prohibited

IRS Publication 1828

A minister who is known well in the community attends a press conference at a political candidate’s campaign headquarters and states that the candidate should be reelected. The minister does not say he is speaking on behalf of his church. His endorsement is reported on the front page of the local newspaper, and he is identified in the article as the minister of his church.

Permitted

Revenue Ruling 2007-41; IRS Publication 1828

A church maintains a website that includes biographies of its ministers, times of services, details of community outreach programs, and activities of members of its congregation. A member of the congregation is running for a seat on the town council. Shortly before the election, the church posts the following message on its website: “Lend your support to your fellow parishioner in Tuesday’s election for town council.”

Prohibited

Revenue Ruling 2007-41; IRS Publication 1828

A church urges its members to contact members of the state legislature and urge them to reject a proposed bill legalizing marijuana

Prohibited

IRS Publication 1828

A church provides its members with educational materials about the legalization of marijuana and hosts an educational meeting on the topic

Permitted

IRS Publication 1828

A church gives a pro-life advocacy group permission to place pamphlets on vehicles in the church’s parking lot during Sunday worship services. The pamphlets urge congregants to support a “pro-life” slate in the upcoming election.

Unclear based on IRS regulations and current law—but likely prohibited

A church owns space suitable for events and makes it available for rent to the public on a first come, first served basis. A candidate pays the standard fee to host a campaign dinner.

Permitted

IRS Publication 1828

A church sets up a booth at the state fair where citizens can register to vote. The booth only contains the church’s name, the date of the next statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made in any materials or in any statements given by volunteers.

Permitted

IRS Publication 1828

A church maintains a list containing contact information for its members and has never rented it to a third party. The church allows one candidate to rent the list to send campaign information, but declines similar requests from other candidates.

Prohibited

IRS Publication 1828

A church sets up a telephone bank to conduct a “get-out-the-vote” effort and contacts registered voters in its district. Church volunteers are instructed to ask the registered voters about their positions on certain moral issues, and if the voter’s positions align with a specific candidate running for office in the district, to then remind them about the upcoming election, the importance of voting, and the availability of church-sponsored transportation to the polls.

Prohibited

IRS Publication 1828

For a more detailed discussion about political activities and the church, visit ChurchLawAndTax.com’s Recommended Reading page, “Churches and Political Activities,” as well as chapter 12 of Richard R. Hammar’s annual Church & Clergy Tax Guide.

The Tax Implications of Churches and Political Involvement

The tax implications for churches that engage in political campaigns and legislative lobbying.

To maintain their exemption from federal income taxes, churches and other religious organizations must comply with several requirements specified in section 501(c)(3) of the tax code. One requirement is that the church not participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office. Another requirement limits how much a church can lobby for or against legislation, referendums, and ballot measures.

Many churches have violated these requirements in the past with few, if any, adverse consequences. Over the past 30 years, for instance, there has been only one high-profile case involving the revocation of a church’s tax-exempt status letter by the Internal Revenue Service (IRS) due to the church’s engagement in prohibited political campaign activities (a decision that, notably, was later upheld by an appellate court).

Enforcement of the prohibitions on lobbying activities also has been limited at best. Even with such limited enforcement by the IRS, though, the tax consequences for a violation can be significant. As leaders evaluate the ways in which they believe their congregations are called to address political matters, they should carefully note the requirements—and the potential consequences triggered if they violate them.

Background

The participation by churches and church leaders in political campaigns is an American tradition dating back to the founding of the republic. Common examples include:

  • inviting candidates to speak during worship services;
  • distributing “voter education” literature reflecting candidates’ views on selected topics;
  • voter registration activities;
  • enlisting volunteers for a particular candidate’s campaign;
  • collecting contributions for a particular candidate; and
  • statements made by ministers during worship services either supporting or opposing various candidates for office.

Unfortunately, it is not well understood that some of these kinds of activities, as well-meaning as they may be, may jeopardize a church’s exemption from federal income taxation.

This is because section 501(c)(3) of the tax code specifies that a church or other public charity is exempt from federal income taxation only if “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”

Note that there are two distinct limitations here. First, churches may not engage in substantial efforts to influence legislation. Second, churches may not participate or intervene in any candidate’s political campaign, even to an insubstantial degree.

It should be emphasized that none of the political activities is “illegal” for churches to conduct. The primary consequence of church political activity is that the church’s exemption from federal income taxation may be jeopardized.

Evaluating IRS enforcement

To be sure, there have been violations of these limitations by churches with hardly a word of protest from the IRS. That appeared to change in the 1990s, when the IRS for the first time revoked a church’s exemption letter for its involvement in a presidential campaign. However, in the years since, the IRS typically has only made several pronouncements indicating that politically related activities by churches no longer will be ignored.

In part, the IRS’s inaction over the years was due to a provision in a federal law (the Church Audit Procedures Act) that imposes limitations on IRS examinations of churches. The Act provides that the IRS may begin a “church tax inquiry” only if an appropriate “high-level Treasury official” (a regional IRS commissioner, or higher Treasury official) reasonably believes, on the basis of written evidence, that the church is not exempt, may be carrying on an unrelated trade or business, or is otherwise engaged in activities subject to taxation.

In 2009, a federal court in Minnesota ruled the IRS Director of Exempt Organizations (Examinations) was not a “high-level Treasury official” and therefore was not authorized to initiate a church tax inquiry on the basis of a reasonable belief determination that sufficient written evidence existed to warrant a church tax inquiry.

Frustrated by the 2009 federal court ruling, the Freedom From Religion Foundation (FFRF) in 2012 sued the IRS to compel it to enforce the ban on campaign intervention by churches. Two years later, the parties reached a settlement approved by a federal court in Wisconsin. The court’s order said FFRF was satisfied that the IRS “does not have a policy . . . of non-enforcement specific to churches and religious institutions.” A separate brief from FFRF said the organization believed “the IRS has a procedure in place for signature authority to initiate church tax investigations/examinations.”

The message seemed clear: The IRS was ready to monitor political campaign activities by churches, investigate possible violations, and enforce penalties. However, in the years to follow, a group of ministers openly and intentionally defied the campaign prohibition on the ground that it violated their constitutional rights to speak and to exercise their religion—with little, if any, response by the IRS.

While IRS enforcement of churches apparently remains limited, the possibility remains that political activities by churches can trigger IRS scrutiny. It is essential for church leaders to understand the ban on church involvement in political campaigns, the limitations on substantial lobbying activities related to legislation and ballot measures, and then to accordingly evaluate their church’s practices.

Political campaigns

In 1954, US Congress passed the “Johnson Amendment.” It is the basis of the income tax regulations in section 501(c)(3) of the tax code that limit political campaign intervention by tax-exempt entities, including churches. The language provides that neither a church nor any other organization can be exempt from federal income taxation if its charter empowers it “directly or indirectly to 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.” The regulations further provide:

The term “candidate for public office” means an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, state, or local.

Activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate. Treas. Reg. 1.501(c)(3)- 1(c)(3)(iii).

This regulation provides some clarification. In particular, it clarifies that:

  • A “candidate” for public office includes local, state, and national candidates;
  • The prohibited intervention or participation in a political campaign can be satisfied either by the making of oral statements or by the publishing or distribution of written statements; and
  • Statements made in opposition to, as well as on behalf of, a particular candidate are prohibited.

Additionally, church leaders should note the IRS has determined political campaign intervention can be found even in very early stages of elective processes. IRS General Counsel Memorandum 39811.

IRS Guidance on Political Campaign Activities

IRS Publication 1828 (the “Publication”) includes IRS guidance regarding political campaign activities.

Below is a summary of some of the Publication’s most relevant parts for churches with respect to political campaign activities.

Political campaign activity: individual political activity by religious leaders

The Publication acknowledges that the campaign activity prohibition “is not intended to restrict free expression on political matters by leaders of churches or religious organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy.” However, “religious leaders can’t make partisan comments in official organization publications or at official church functions.”

To avoid potential “attribution” of their comments outside of church functions and publications, “religious leaders who speak or write in their individual capacity are encouraged to clearly indicate that their comments are personal and not intended to represent the views of the organization.”

Political campaign activity: inviting a candidate to speak

Many churches have invited political candidates to address the congregation during a worship service. Sometimes the candidate is a member of the church. In other cases, the candidate contacts the senior pastor and asks for permission to address the congregation.

Do such activities jeopardize a church’s tax-exempt status? The Publication addresses this question directly in two separate contexts:

  1. political candidates who address a church congregation as a candidate; and
  2. political candidates who do not address a church congregation as a candidate.

Speaking as a candidate

Churches “may invite political candidates to speak at its events without jeopardizing its tax-exempt status,” the Publication says. “Candidates may also appear without an invitation” at public events hosted by the church.

The Publication notes that when a candidate is invited to speak at a church as a political candidate the church must take steps to ensure that:

    • it provides an equal opportunity to the political candidates seeking the same office;
    • it does not indicate any support of, or opposition to, the candidate (stated explicitly when the candidate is introduced and in communications concerning the candidate’s attendance);
    • no political fundraising occurs;
    • the candidate is chosen to speak solely for reasons other than candidacy for public office;
    • a nonpartisan atmosphere is maintained on the premises or at the event where the candidate is present; and
    • the church clearly indicates the capacity in which the candidate is appearing and does not mention the individual’s political candidacy or the upcoming election in the communications announcing the candidate’s attendance at the event.

The Publication notes that in determining whether candidates are given an equal opportunity to participate, a church should consider the nature of the event to which each candidate is invited, in addition to the manner of presentation.

For example, “a church that invites one candidate to speak at its well-attended annual banquet, but invites the opposing candidate to speak at a sparsely attended general meeting, will likely be found to have violated the political campaign prohibition, even if the manner of presentation for both speakers is otherwise neutral.”

Speaking as a noncandidate

The Publication acknowledges that a church may invite political candidates (including church members) to speak in a noncandidate capacity. For example, some candidates are invited to speak at church services because they are “public figures” (such as “an expert in a non-political field,” a celebrity, or one who has “led a distinguished military, legal, or public service career”). When a candidate is invited to speak at an event in a noncandidate capacity, it is not necessary for the church or religious organization to provide equal access to all political candidates.

However, the church or religious organization must ensure that:

    • the individual speaks only in a noncandidate capacity and the church clearly maintains that noncandidate capacity through its promotions and any distributed materials;
    • neither the individual nor any representative of the church makes any mention of the individual’s candidacy or the election;
    • no campaign activity occurs in connection with the candidate’s attendance;
    • the “individual is chosen to speak solely for reasons other than candidacy for public office”; and
    • the church maintains a “nonpartisan atmosphere,” either “on the premises or at the event where the candidate is present.”

Public forums

Sometimes a church invites several candidates to speak at a public forum. The Publication warns that if such a forum is operated to show a bias for or against any candidate, then it would be prohibited campaign activity since it would be considered intervention or participation in a political campaign. The Publication suggests that when a church invites several candidates to speak at a forum, it should consider the following factors:

    • “whether questions for the candidate are prepared and presented by an independent nonpartisan panel”;
    • “whether the topics discussed by the candidates cover a broad range of issues that the candidates would address if elected to the office sought and are of interest to the public”;
    • “whether each candidate is given an equal opportunity to present his or her views on the issues discussed”;
    • “whether the candidates are asked to agree or disagree with positions, agendas, platforms, or statements of the organization”; and
    • “whether a moderator comments on the questions or otherwise implies approval or disapproval of the candidates.”

Voter education

The tax code notes that churches “are permitted to conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides) if they are carried out in a nonpartisan manner.”

Churches may conduct voter registration and get-out-the-vote drives, but only if “conducted in a nonpartisan manner.” Any voter education or registration activities that favor or oppose one or more candidates “is prohibited.”

During an election season, some churches distribute voter guides, often with information covering how candidates stand on various issues. This type of activity will not jeopardize a church’s tax-exempt status unless the guide “attempt[s] to favor or oppose candidates for public elected office.”

The following factors are considered when evaluating whether a voter guide constitutes prohibited political campaign activity:

    • whether the candidates’ positions are compared to the church’s positions—if so, it constitutes prohibited political campaign activity, and in guidance issued in 2006, the IRS said prohibited comparisons can arise through the content shared, the design and format of the guide, or the manner in which the guide is distributed;
    • whether the guide covers a variety of issues that the candidates would address if elected;
    • whether “the description of issues is neutral”;
    • whether all candidates running for the office are included; and
    • whether the descriptions of the positions use “the candidates’ own words in response to questions” or “a neutral, unbiased and complete compilation of all candidates’ positions.”

Also in 2006, the IRS made an important clarification regarding third-party voter guides. The agency said “[e]ach organization that distributes one or more voter guides is responsible for its own actions. If the voter guide is biased, distribution of the [third-party] voter guide is an act of political campaign intervention.”

Pamphleteering on church premises

The Publication is silent about whether churches can permit individuals (whether church members or not) or outside groups to distribute campaign literature on church property before and after worship services. In understanding how the IRS views political campaign activities (including public forums and, as addressed below, websites), church leaders should exercise caution.

Individuals and outside groups often are not subject to the ban on intervention in political campaigns, and so they can freely distribute campaign literature no matter how biased it may be. However, when they do so on church premises, they are jeopardizing the church’s tax-exempt status since the church, by allowing them to distribute biased campaign literature, may be viewed as indirectly intervening or participating in a political campaign. As a result, church leaders should not assume that they can safely permit others to do on church property what the church itself cannot.

Key point. Many church members have returned to their vehicles in the church parking lot following a worship service to find political campaign literature on their windshield. How does this affect the church’s exempt status? If church leaders were not aware of the pamphleteering, and did not condone or authorize it, there is no problem. However, if a person or group obtains permission from the pastor or other church leader to distribute literature on windshields, and if the literature is biased in favor of one candidate or political party, then the church’s exempt status is jeopardized.

Business activity

The Publication notes certain business activities by churches can constitute prohibited political campaign activity. The Publication does not give an exhaustive list of business activities, but includes the following in a general description:

    • “the selling or renting of mailing lists”;
    • “the leasing of office space”; and
    • “the acceptance of paid political advertising.”

The IRS also notes the possible tax treatment of any income received by the church from such activities.

The agency outlines the following four factors it considers when determining whether such business activities constitute prohibited political campaign activity:

    • “whether the good, service or facility is available to the candidates equally”;
    • “whether the good, service or facility is available only to candidates and not to the general public”;
    • whether any fees charged by the church are at “customary and usual rates”; and
    • whether the church regularly conducts the activity or does so “only for the candidate.”

Websites

Most churches today operate websites. It is common for many to use their sites to share information, statements, and links to other websites. The Publication describes the ways in which a church website can run afoul of the political campaign prohibition. It notes:

    • A church posting content favoring or opposing a candidate for public office “will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate.”
    • A church is responsible “for the consequences of establishing and maintaining” links to other sites, “even if the [church] doesn’t have control over the content of the linked site[s].” The Publication suggests churches should regularly monitor links to other websites to “reduce the risk of political campaign intervention.”
    • A church will not necessarily violate political campaign prohibitions by linking to candidate-related material. However, the IRS will evaluate the “facts and circumstances,” including (but not limited to) “the context for the link on the [church’s] website, whether all candidates are represented, any exempt purpose served by offering the link, and the directness of the links between the [church’s] website and the web page that contains material favoring or opposing a candidate.”

Lobbying activities

A church will lose its tax-exempt status “if a substantial part of its activities” engages in lobbying, according to 501(c)(3) of the tax code. The lobbying limitation was enacted by the US Congress in 1934.

The Publication defines lobbying as “attempting to influence legislation.” It defines legislation as “acts, bills, resolutions or similar items (such as legislative confirmation of appointive offices)” considered by US Congress, state legislatures, or local councils. It also defines legislation to include referendums, ballot initiatives, and constitutional amendments voted on by the public.

However, excluded from the IRS list are activities carried on by executive or judicial offices as well as administrative agencies.

The IRS provides clarification about permissible and prohibited lobbying activities by churches. It notes:

A church or religious organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

However, general efforts to address public policy issues are not classified as lobbying, the IRS says, and may include educational meetings and educational materials if provided “in an educational manner.”

What constitutes “substantial”?

The Publication is vague about how much lobbying constitutes a “substantial” part of a church’s overall activities. The agency says it employs a “substantial part test” for churches, evaluating all “pertinent facts and circumstances” in relation to “a variety of factors.” Among the factors considered:

    • time devoted by employees and volunteers for the lobbying; and
    • money and resources spent by the church for the lobbying.

The IRS has never endorsed a specific percentage in its definition of “substantial.” At least two courts have attempted to do so, with one court concluding activities are not substantial if less than 5 percent of an organization’s time and effort is devoted to lobbying activities. Seasongood v. Commissioner, 227 F.2d 907 (6th Cir. 1955). The other court concluded “substantial” meant when an organization devoted 16 percent to 20 percent of its budget to lobbying activities. Haswell v. U.S., 500 F.2d 1133 (Ct. Cl. 1974).

A federal appeals court in 1972 rejected the Seasongood “5-percent test.” The IRS, in its Internal Revenue Manual (the “Manual”), notes the Seasongood decision “provides only limited guidance because the court’s view of activities to measure is no longer supported by the weight of precedent.” The Manual also says most courts have either avoided using a percentage test or concluded a percentage test is not conclusive.

Unfortunately, this means churches have no clear standard to guide them with respect to whether particular efforts to influence legislation are “substantial.”

Possible tax implications of church political activities

The IRS describes several potential consequences for churches that violate the political campaign and lobbying prohibitions outlined in the tax code.

Potential consequences for political campaign violations

Should a church be found in violation of political campaign limitations, it “jeopardizes both its tax-exempt status . . . and its eligibility to receive tax-deductible contributions. In addition, it may become subject to an excise tax on its political expenditures,” the Publication says.

The excise tax may be imposed along with revocation of the church’s tax-exempt status, or instead of revocation, according to the Publication.

The excise tax entails the following:

    • 10 percent of the church’s political expenditures, levied against the church;
    • 2.5 percent of the church’s political expenditures, levied against “organization managers (jointly and severally) who, without reasonable cause, agreed to the expenditures knowing they were political expenditures” (not to exceed $5,000 for any one expenditure);
    • an additional tax of 100 percent of the church’s political expenditures, levied against the church, if the expenditures are not corrected within the period allowed by law; and
    • an additional tax of 50 percent of the church’s political expenditures, levied against managers (jointly and severally) who refuse to make the correction (not to exceed $10,000 for any one expenditure).

The Publication says the correction of a violating political expenditure involves “recovery of the expenditure, to the extent possible, and establishment of safeguards to prevent future political expenditures.”

The Publication also advises churches to evaluate local and state election laws, which may impose their own limitations and penalties for political campaign activities by tax-exempt entities.

Potential consequences for lobbying violations

Should a church be found to be conducting excessive lobbying activity “in any taxable year may lose its tax-exempt status, resulting in all its income being subject to tax,” the Publication notes.

The Publication also says a religious organization and its managers are subject to excise taxes for the political expenditures. However, the Publication does not explicitly include churches with its remarks about the excise taxes for lobbying violations.

What would losing tax-exempt status mean?

Were a church to experience revocation of its tax-exempt status, whether due to violating political campaign or lobbying limitations, several potential penalties would arise, including the following:

    • the church’s net income would be subject to federal income taxation;
    • the church’s net income would be subject to state income taxation (except in those few states not having an income tax);
    • donors no longer could deduct charitable contributions they make to the church;
    • the church would be ineligible to establish or maintain “403(b)” tax-sheltered annuities;
    • possible loss of property tax exemption under state law;
    • possible loss of sales tax exemption under state law;
    • possible loss of exemption from unemployment tax under state and federal law;
    • loss of preferential mailing rates;
    • a minister’s housing allowance might be affected;
    • the significant protections available to a church under the Church Audit Procedures Act may no longer apply; and
    • the exemption of the church from the ban on religious discrimination under various federal and state civil rights laws may be affected.

These consequences should be considered when deciding whether or not to engage in political activities.

Matthew Branaugh, attorney and content editor for ChurchLawAndTax.com, contributed to this article.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Politics, Churches, and Constitutional Protections

The Johnson Amendment and other tax laws try to limit activities by churches that intersect with politics—but certain constitutional protections allow more engagement than some realize.

Every election year churches confront a dilemma summed up in a question: What can they do or say about the upcoming election and how far is too far?

Many churches earnestly attempt to navigate this dilemma while others are simply silent.

If I were to ask you what your church may legally do during an election year, could you answer with any clarity? Or would you wonder if you really understood what the law says and how it applies to your church?

Unfortunately, articles and guides about the Internal Revenue Service (IRS) regulations on election-year activities by churches often overlook the US Constitution and its safeguards of the free exercise of religion, freedom of speech, and protection from government intrusion into the church. Your church’s ability and freedom to address an election are broad, even under current tax law, but especially considering the constitutional guarantees churches enjoy.

Through exploring and explaining the Johnson Amendment, the legislation behind much of the confusion, leaders will learn more from this article about their constitutional protections—and the cautions to still note—with regard to candidates running for office. Leaders also will learn more about how other tax laws allow churches to engage in some lobbying and advocacy efforts tied to legislative matters and ballot measures.

What is the Johnson Amendment?

The Johnson Amendment is a federal tax law restricting a tax-exempt organization’s interactions with candidates and elections. The Amendment gets its name from Senator Lyndon Johnson, who was the motivating factor in adding the provision to the tax code in 1954.

The history behind the passage of the Johnson Amendment suggests that Johnson proposed the Amendment to silence two powerful, secular nonprofit organizations that were opposing his reelection to the US Senate because they believed he was soft on communism.

The Amendment was part of a massive tax overhaul bill and was inserted into the bill by a voice vote. There were no debates or committee hearings and no meaningful consideration of how the Amendment would impact the constitutional rights of churches.

President Eisenhower signed the tax bill, which included the Johnson Amendment, into law without comment in August 1954. Since that time, the Johnson Amendment has been part of federal tax law.

The Johnson Amendment is the last sentence of section 501(c)(3) of the Internal Revenue Code. It states that nonprofit organizations may not “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.” Section 501(c)(3), of course, applies to churches.

How is the Johnson Amendment enforced?

The IRS enforces the Johnson Amendment along with the rest of the tax code. Its record of enforcement since 1954 has been spotty and uneven. For example, on its website, the IRS states that nonprofit organizations are “absolutely prohibited from directly or indirectly” violating the Johnson Amendment. Yet there is no explanation of what an “indirect” violation of the Johnson Amendment is or could be.

The Johnson Amendment itself prohibits a church from “participating in” a candidate’s campaign but the law contains no clear definition of what “participation” consists of. Despite this vagueness, the IRS warns that a violation of the Johnson Amendment “may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”

The predictable result of the inherent vagueness of the Johnson Amendment, and the ambiguous IRS regulations interpreting and enforcing it, is to chill the speech of America’s churches and pastors.

Just ask any number of pastors, and they will likely tell you they have no idea exactly what is or is not prohibited speech when it comes to candidates or elections. So, most just say nothing, and only an intrepid few may decide to shoot in the dark and hope for the best. This only magnifies the problem. Pastors are frequently intimidated because they do not know what the IRS thinks they can or cannot say.

This chill on speech is further exacerbated by the fact that churches cannot just sue the IRS to have the Johnson Amendment declared unconstitutional. The rules of federal court jurisdiction (when a lawsuit may be brought to court) prohibit lawsuits against the IRS until a provision of the tax code has been enforced against a taxpayer and a penalty has been levied and upheld during an internal IRS appeal process.

The result is that the IRS decides how, when, and with whom it will get into a lawsuit with. And the IRS has studiously avoided a lawsuit over the constitutionality of the Johnson Amendment, preferring a status quo in which the law is never clarified, and the result is self-censorship by most churches. In fact, no court to date has squarely confronted the constitutionality of government regulation of a church’s speech on elections or candidates during a church service or event. Yet this is precisely what the Johnson Amendment claims authority to do.

Moreover, some organizations that advocate for a radical enforcement of the “separation of church and state” take advantage of the vagueness of the Johnson Amendment. One organization even conducted a nationwide advocacy campaign one election year where it asked its supporters to turn in churches to the IRS. Never mind that its view of the Johnson Amendment was so extreme the IRS would not even act on such complaints. Merely the threat, or in some cases an actual complaint followed by a press release, was enough to perpetuate the chill on speech.

Is the Johnson Amendment constitutional?

Numerous legal scholars have written law review articles arguing that the Johnson Amendment is unconstitutional. These arguments focus on the Establishment, the Free Exercise, and the Free Speech Clauses of the First Amendment to the US Constitution.

What follows is a summary of some of the legal arguments for how the Johnson Amendment appears to violate each clause.

The Establishment Clause

The Establishment Clause prohibits excessive entanglement of the government with religion. The IRS cannot enforce the Johnson Amendment without an IRS agent parsing the speech of a church or a pastor’s sermon or other speech to determine if it crossed the line into a Johnson Amendment violation.

The US Supreme Court has held—in more than one case—that a law that requires pervasive government surveillance and monitoring of religion results in excessive entanglement of the government with religion.

Put simply, the government cannot enforce the Johnson Amendment without intruding into the internal activities and speech of a church to determine whether the church violated the law. Such enforcement of the Johnson Amendment would unconstitutionally entangle the government with religion.

The Free Speech Clause

The Free Speech Clause prohibits “content-based” restrictions on speech. This kind of restriction is one where the government must review the content of speech to determine if it violates the law. In cases like this, courts hold the government to the highest constitutional standard in order to justify why it needs to review the content of speech.

The Johnson Amendment certainly requires the IRS to review the content of a church’s speech. In fact, there is no way to enforce the Johnson Amendment without reviewing the content of a church’s speech. This content review, coupled with the vagueness of the Johnson Amendment’s text, gives the government broad censorship power to prohibit speech.

Content-based restrictions on speech are highly disfavored and are usually unconstitutional because these kinds of restrictions give the government far too much power to censor speech it does not like.

The Free Speech Clause also prohibits a speech restriction that creates an unconstitutional condition. Stated simply, the Johnson Amendment forces churches to give up their speech rights in order to retain their tax-exempt statuses—even though the Constitution (by virtue of the First Amendment’s Establishment Clause) requires the government to exempt a church from taxation.

Think about it this way: Would it be okay for the government to tell churches that they can retain their tax-exempt statuses only if they provide free housing for military troops (barred by the Third Amendment) or only if they allow the police to search their buildings without warrants (barred by the Fourth Amendment)? Those kinds of restrictions would be instantly condemned—and rightly so—as unconstitutional. Yet the Johnson Amendment says churches can retain their tax-exempt statuses only if churches forfeit their First Amendment rights of speech—an unconstitutional trade-off.

The Free Speech Clause also prohibits vague restrictions on speech. The reason is that vague restrictions may result in self-censorship and a chill on speech. As we have already discussed, the Johnson Amendment is full of the type of vagueness to create such a chill.

The Free Exercise Clause

The Johnson Amendment also violates the Free Exercise Clause because it expressly discriminates against religious speech and penalizes such speech with civil or criminal penalties.

Why hasn’t the Johnson Amendment been declared unconstitutional?

Given the serious constitutional violations inherent in the Johnson Amendment, why has it not been declared unconstitutional? The answer lies in the IRS’s refusal to allow a direct constitutional challenge to the Johnson Amendment.

Again, most churches self-censor, thereby doing the IRS’s enforcement job for it. Among the handful of churches that have been investigated by the IRS for Johnson Amendment violations, most if not all settled with the IRS to avoid the draconian tax penalties and their consequences.

But outside of those few examples, the IRS has essentially avoided direct enforcement action against churches. Earlier in my career, I represented churches that wanted to create a civil rights “test case” challenge to the Johnson Amendment. Over the course of several years, I represented over 4,000 pastors who preached sermons seemingly violating the Johnson Amendment and sent them to the IRS.

This effort was intended to foster a serious constitutional challenge to the Johnson Amendment, something the Constitution gives citizens the right to do.

These churches were willing to endure the consequences for the right to challenge the constitutionality of the Johnson Amendment. Yet the IRS did not investigate or punish any of the churches. The IRS did not allow one court case. Even so, the law persists to this day despite the attempt to create a constitutional test case.

The IRS prefers the status quo of self-censorship by churches and a chill on speech. It can enforce the Johnson Amendment easily by making threatening statements that result in churches enforcing the law against themselves.

What should happen with the Johnson Amendment?

The status quo is a burden on the constitutional rights of America’s churches and pastors. In the absence of a court challenge to the Johnson Amendment, which does not look to be forthcoming any time in the future, what should happen with the law?

Some have argued that getting rid of the Johnson Amendment would turn churches into pawns of the political parties. Yet the church does not need the government to protect it against itself. We should not allow an unconstitutional law to remain out of a misguided motivation to protect the theological purity of the church. That is not the government’s job anyway.

Others have argued that getting rid of the Johnson Amendment would allow churches to funnel “dark money” to political candidates, campaigns, and parties. Yet the Johnson Amendment applies to far more than just money.

Allowing an unconstitutional speech restriction that entangles the government with religion as a means of preventing political contributions by churches is overbroad. The simple answer is to prohibit political contributions by churches. Congress attempted to do just that when it introduced the Free Speech Fairness Act. The Act would have amended the Johnson Amendment to prohibit political contributions but remove the unconstitutional speech restrictions. The effort stalled, though, and has not moved forward to date.

The answer is not to jettison the Johnson Amendment entirely but to get rid of the provisions that prohibit the free speech and free exercise rights of America’s churches and pastors. Perhaps such an amendment will become politically viable in the future.

What about ballot initiatives and legislation?

In addition to the Johnson Amendment, section 501(c)(3) of the Tax Code also includes a limitation on legislative activities by tax-exempt organizations. This section was added to the tax code in 1934 and states that “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation.” This restriction applies to activities that support or oppose pieces of legislation, such as bills and ballot initiatives.

The lobbying restriction was sponsored by Sen. David Reed, a Republican from Pennsylvania, in an attempt to silence a nonprofit organization, the National Economy League, that had come into direct conflict with Sen. Reed over the issue of benefits to veterans. The National Economy League was lobbying against a bill introduced by Sen. Reed who had made the issue, and his bill, the centerpiece of his reelection campaign to the US Senate.

Unlike the Johnson Amendment, the restriction on legislation is not an absolute prohibition, but just a limitation. The IRS does not define what an insubstantial amount of legislative activity is, but some guidance suggests that more than 5 percent to 15 percent of a church’s overall activities might be considered substantial.

Churches are allowed to directly support or oppose legislation, encourage congregations to vote for or against proposed laws, and speak into broader matters of public policy. None of these activities come close to the legislative limit included in section 501(c)(3).

What should churches do when it comes to an election?

Unless or until Congress amends the Johnson Amendment or a court declares it to be unconstitutional, it is still law. And the law regarding lobbying about legislation remains in place. When it comes to interacting with elections and candidates, churches should consider the following.

Recognize the significant and underappreciated constitutional protections churches have

Church leaders may be surprised by how much their churches may do in an election year. There are valuable resources that will help to cut through some of the vagueness and provide a roadmap as to what is permissible under current law. That’s true with respect to candidates for political office, as discussed above. That’s also true with respect to lobbying efforts related to legislative matters and ballot measures, as also discussed above.

Additionally, there are numerous activities that fall well within the bounds of current IRS guidance and tax law that churches also should contemplate. Such activities range from public forums inviting all candidates to speak, to compilations of voting records (absent editorial comment or approvals/disapprovals of those records), to neutral voter registration drives.

Even though the Johnson Amendment is unconstitutional, churches should appreciate the vast constitutional protections they currently enjoy without threat of losing their tax-exempt statuses. Doing so can help you avoid self-censorship and feel confident that there is a great deal your church may do should its leaders feel called to do so. Moreover, there are legal groups waiting and ready to provide pro-bono representation in the event a legal challenge ever arises.

Each church must decide for itself how to address politics and elections

For far too long, the Johnson Amendment and IRS guidance has made this kind of decision a legal decision, instead of a theological decision. The fact that this is true should be concerning.

Not every church will be called by its theology to speak about an election or candidates, but some will. Pastors and churches know their congregations best. Every church should have the choice to decide what to do for itself, not out of fear of violating the law, but out of its convictions informed by its theology.

Erik Stanley is an attorney at Provident Law, specializing in religious liberties, churches and nonprofits, commercial litigation, and business law, and the former senior counsel for Alliance Defending Freedom. He is an advisor at large for Church Law & Tax.

Key Tax Dates for May 2022

Along with monthly and semiweekly requirements, note quarterly filing and forms pertinent to your church or ministry.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

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Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

May 10, 2022: Employer’s quarterly federal tax return—Form 941

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) may file their employer’s quarterly federal tax return (Form 941) by this date instead of April 30 if all taxes for the first calendar quarter have been deposited in full and on time.

May 16, 2022: File forms 990, 990-T, and 5578

Information return—Form 990

An annual information return (Form 990) for tax-exempt organizations is due by this date for tax year 2021. Form 990 summarizes revenue, expenses, and services rendered. Organizations exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code must report additional information on Schedule A.

Note. Churches, conventions and associations of churches, “integrated auxiliaries” of churches, and church-affiliated elementary and secondary schools are among the organizations that are exempt from this reporting requirement. Organizations not exempt from this reporting requirement must file the Form 990 if they normally have annual gross receipts of $50,000 or more.

Unrelated business income tax return—Form 990-T

An unrelated business income tax return (Form 990-T) must be filed by this date by churches and any other organization exempt from federal income tax that had gross income from an unrelated trade or business of $1,000 or more in 2021.

Certificate of racial nondiscrimination—Form 5578

Annual certification (for calendar year 2021) of racial nondiscrimination by a private school exempt from federal income tax (Form 5578) must be filed by this date by schools that operate on a calendar-year basis.

Fiscal year schools must file the form by the 15th day of the fifth month following the end of their fiscal year. This form must be filed by preschools, primary and secondary schools, and colleges, whether operated as a separate legal entity or by a church.

If an organization is required to file Form 990 (Return of Organization Exempt From Income Tax), or Form 990-EZ (Short Form Return of Organization Exempt From Income Tax), the certification must be made on Schedule E (Form 990 or 990-EZ), Schools, rather than on this form.

Advantage Member Exclusive

Learning From Mars Hill: Who Pilots Your Church?

On-Demand Webinar: Why quiet governance changes run the risk of eroding congregational trust.

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Editor’s Note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In recent years, a growing number of churches have contemplated changing the governance structures contained in their bylaws. For practical reasons, these changes have often moved those structures from ones where voting rights for key decisions reside with members of the congregation to ones where that authority exclusively rests in the hands of a group of elders or the church’s board. To some church leaders, the changes make sense because they can reduce burdens and create efficiencies. But as Christianity Today’s podcast The Rise and Fall of Mars Hill powerfully demonstrates, significant problems can arise in a church when a move to consolidate decision-making power occurs with little or no warning to the church’s members.

In this exclusive webinar for Advantage Members, attorney Erika Cole dives deeply into this trend, examining the roles and purposes of governance, the reasons some churches consider changes, and why leadership must exercise great caution and transparency before ever proceeding with one.

You can download the presentation slides here.

More on this topic:

Find out more on this topic in Erika Coles article, The Dangers of a Quiet Governance Change.

Erika E. Cole, Esq., known as The Church Attorney®, is one of only a handful of attorneys in the nation who practices exclusively in the area of church law. She currently serves as a senior editorial advisor for Christianity Today’s ChurchLawAndTax.com.

The Dangers of a Quiet Governance Change

Subtly shifting who has authority to make key decisions in your church may make sense—but may also erode congregational trust.

In recent years, and without much fanfare, many churches have quietly shifted their governance structures, moving from structures where voting rights for key decisions reside with members of the congregation to structures where that authority exclusively rests in the hands of a group of elders or the church’s board.

To church leadership, the shift may make sense on paper, reducing burdens and creating efficiencies. But making such a shift also threatens to erode the trust of a congregation if it is done for the wrong reasons, or if it is done for good reasons, but mishandled. When such a significant change goes awry—as has been witnessed at a handful of high-profile churches—the consequences can be devastating.

Christianity Today’s podcast The Rise and Fall of Mars Hill powerfully demonstrates the trouble that can arise in a church when decision-making power gets consolidated.

Situations like this one offer an important caution: Church leaders are wise to review and understand their church’s governance model, and why it exists, before making plans to change it. And if they choose to pursue a change, leaders must carefully contemplate how to communicate with their congregations to demonstrate transparency and integrity throughout that process.

What is church governance?

The word “governance” comes from a Greek word meaning “to pilot” or “to steer.” In the context of church operations, governance connotes who has decision-making authority in significant matters such as buying or selling church property, adopting the annual budget, the approval of a merger or acquisition, and the hiring or firing of key leaders.

A church’s governance structure most commonly gets set at the time the church is founded. How it gets set depends on several factors, including denominational affiliations.

The role of bylaws

Many churches incorporate at the time of their founding, but whether they incorporate or not, nearly all will adopt a governing document commonly known as the bylaws. It is within the bylaws that systems and processes for making and ratifying decisions for the church get set.

Generally speaking, one of the following governance models is most often set in a church’s bylaws:

  1. A board-led church. The board is authorized to act on behalf of the congregation. This governing body may be known as the board of elders, the board of trustees, the board of directors, or a similar title. As a general matter, and unless required by state statute or other related measure, the congregation is not advised of, or invited to participate in, the decisions regarding the church’s operations.
  2. A congregation-led church. As defined by the church’s bylaws, the church’s members vote on most, if not all, issues of significance, including major decisions.
  3. A denomination-led church (where the local church is a part of a denominational hierarchy). This usually means that there is a Book of Discipline or similar manual outlining the operations from the denominational level all the way to the local church level. There is usually little wiggle room for how a local church operates as the Book of Discipline outlines the mission, doctrine, structure, and membership.
  4. A healthy church typically should include three prongs of a sound governance ecosystem: (1) the pastoral leadership, (2) the governing board (often known as board of elders, board of trustees, or board of directors), and (3) the congregation. All three prongs can be present under each of the most common governance models.
  5. I have written, reviewed, and revised hundreds of church bylaws in my more than 20 years of representing churches as an attorney. While congregationally governed churches remain the most common model, especially among certain denominations, significant changes are afoot.
  6. More churches of varying sizes and denominations are contemplating—and in many cases adopting through revised bylaws—structures that consolidate the decision-making power to fewer individuals, such as a group of elders or the board of directors.
  7. When the governance structure is changed in a congregation-led church, either eliminating or significantly limiting the congregation’s role in making major church decisions, the implications can be significant. When one of those prongs of a healthy governance ecosystem quietly gets cut out, problems usually arise.
  8. The role of members
  9. Problems arise because church members often are the lifeblood of a church—and their sudden loss of input into church decisions can be jarring.
  10. Take, for instance, my childhood church. Some might say I was born into the church. I grew up in a small rural congregation with fewer than 200 members.
  11. Even though the church was small, the families in that church were significant in the way they connected to each other. They were the most dedicated members I have ever seen. There were lots of Sunday dinners where, quite traditionally, the ladies of the church would prepare food so that everyone could share a meal together. When someone took ill, the first persons to show up at the hospital were likely their fellow church members, with family filing in later.
  12. The church members kept the building clean, provided the worship music, and took care of administrative tasks—all without pay. They also deeply cared about the decisions that affected the church’s operations.
  13. Quarterly business meetings allowed members to vote on issues ranging from scheduling of special church events to whether the budget could support a contemplated purchase. The concept of membership was simple: the people who joined the church (generally noted by baptism and taking the right hand of fellowship) were the members.
  14. My experience vividly illustrates the congregation-led model in action. Churches will define membership different ways and set very different processes for how someone becomes a member. But no matter how it happens, if a church follows a congregation-led governance structure, its members expect to play direct and vital roles in the church’s direction and decision-making.
  15. When that structure is suddenly changed, and with little or no prior notice, members will understandably feel blindsided.
  16. Moving away from the congregation-led model
  17. Why would a church’s leadership move away from a congregation-led structure?
  18. One common reason is the desire to avoid conflict—the “brouhahas” that can erupt during some church meetings.
  19. Another reason is convenience. Many church leaders often want to remove the “red tape” of having to go to the congregation with important decisions. There is truth to this sentiment. It is a more complicated model and it likely takes more time to move matters forward in a congregation-led church.
  20. But many would argue that moving fast doesn’t always mean moving wisely. In fact, the requirements of seeking out a majority or two-thirds of a congregation’s support for major decisions is intentionally designed to ensure no ill-advised actions are made in haste. Perhaps just as importantly, the members—the lifeblood of the church—know what issues are under consideration and provide direct say regarding their outcomes.
  21. A cause of conflict
  22. As more churches contemplate changes to their governance structures, I have watched a corresponding increase in litigation. The lawsuits involve conflicts over the ways a church’s membership is defined, how the governance structure works, and how changes to the definitions of either—or both—were made, especially with little or no communication. The ensuing court battles often are protracted.
  23. In each instance, the question of membership (and, therefore, who has the right to vote on major decisions) has been a foundational decision to be made by the judge or jury asked to decide the outcome of the trial. In my experience, judges are suspicious when they learn that the people who have attended the church regularly and given donations to the church are no longer considered voting members.
  24. Courts are increasingly willing to weigh in on such lawsuits, too. Despite recent decisions from the US Supreme Court affirming the general right for churches to self-govern without government intrusion (the so-called “ecclesiastical abstention doctrine”), there are instances in which courts can make decisions regarding corporate documents when they do not require interpreting church doctrine or polity.
  25. Conflicts erupting from church meetings and elections is one major reason why some churches have shifted to a governance model where decisions generally do not involve the people in the pews. While there are certainly considerations to avoid church meetings going off the rails (Episode 5 of the Church Law podcast gives excellent tips on this specific issue), removing the congregation from decision-making should not be a first resort since it is likely to create a new series of problems.
  26. The decline of Seattle’s Mars Hill Church offers another cautionary tale with respect to governance and alterations made to decision-making structures. The church never used a congregation-led governance structure. However, a quiet change to further consolidate power within its elder-led model further illustrates how such an approach can go wrong.
  27. Founded in 1996 as a home Bible study, Mars Hill grew to more than 12,000 people at 15 locations in weekly attendance. After a series of internal conflicts and troublesome behaviors of its lead pastor, Mark Driscoll, the church experienced a dramatic collapse in 2014.
  28. One of the decisions initiated by Driscoll was to revise the church’s bylaws, taking its elder-led model of governance and further consolidating it into a smaller group of elders and pastoral leaders that included himself. As a result, this quietly increased power to the leadership role, which turned out to be implosive.
  29. The damaging repercussions of Mars Hill’s change were many, as Episode 7 of The Rise and Fall of Mars Hill podcast recounts. Fewer voices could speak into the church’s direction. And major decisions required convincing fewer people for approval. Ultimately, the church fell apart, not because of the governance change alone—but certainly the collapse of the church was enabled by the change.
  30. The issue of how a church defines (or redefines) its governance model, and to what degree it involves the membership, is a matter more important than many church leaders may have thought. If a church makes the decision to alter its governance structure in a manner that limits the voices at the table when critical decisions are made, then there are several key considerations.
  31. Six key considerations
  32. Pastors and boards should understand at least six key matters if they are considering changing from a congregation-led model to a board-led model.
  33. First, leadership should make a detailed assessment of the church’s current governance (its articles of incorporation, bylaws, and any denominational documents). Learn the church’s current legal structure, and what must be followed to implement a change if one is desired. Church leaders must make sure they don’t break any legal or fiduciary duties under the current model (because doing so will invalidate any action they take).
  34. Second, a review of the corporate requirements in the jurisdiction in which the church is based will be essential. While the law gives churches wide latitude to govern in a way that best suits the church, many states require congregational votes in certain instances, no matter the governance structure. Your church’s leadership will not want to run afoul of such regulations.
  35. Third, if a congregation-led model is currently set by the bylaws, consider (or reconsider) the reasons why.
  36. Fourth, church leaders should spend time evaluating the board- and elder-led governance models. What are the desirable characteristics of each model? What might be the downsides? Are there alternative ways of accomplishing what is desired within the current congregation-led model instead?
  37. Fifth, consider how the church should bring about discussion, deliberation, and a decision about a potential change. How will church leadership share the possibility with the congregation? What requirements are set out in the bylaws dictate how a change can be adopted? What potential fallout within the church may result? Will this change be communicated to the congregation? When? And consider what role the congregation will play in effectuating this change (per state regulations and the governance-related requirements discussed above).
  38. Finally, if a decision to shift from a congregation-led model to an elder- or board-led model is reached, leaders must be prepared for numerous legal and administrative tasks. For instance, the church’s articles of incorporation and other corporate documents will need to be reviewed and likely revised to ensure they work in harmony.
  39. Extreme caution is needed
  40. While The Rise and Fall of Mars Hill podcast highlights many cautions for a church that wants to remain healthy, one of the most significant points any church leader should walk away with is this: A change in a church’s governance structure without full transparency and extreme caution can have disastrous outcomes.
  41. Additional Insights and Cautions

    For more information on this important topic, listen to Erika Cole’s interview on the Church Law podcast with Mike Cosper, creator and host of The Rise and Fall of Mars Hill. Advantage Members can sign up for Cole’s Church Law & Tax webinar on April 27, which will cover church governance structures and the cautions churches should consider before making subtle, sudden changes.

  42. Quietly attempting to shrink who has a voice in major decisions regarding church operations is likely to be a cause for concern. A methodical examination of the sincere reasons for such a change, along with a detailed review of the internal governing documents and state law on the role of the congregation in certain decisions, should be conducted.
  43. Whether you need to carefully review your governing documents or if you are considering altering your governing model, here is one thing you should always do: Seek the guidance of seasoned legal counsel with knowledge of church governance matters.
Erika E. Cole, Esq., known as The Church Attorney®, is one of only a handful of attorneys in the nation who practices exclusively in the area of church law. She currently serves as a senior editorial advisor for Christianity Today’s ChurchLawAndTax.com.

Church Formation Basics

Church formation basics gives leaders insights into how a church is formed, why it matters, and how it guides future decisions.

Last Reviewed: October 23, 2023

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Church formation basics is important because how a church is legally formed directly affects how it operates.

From articles of incorporation to bylaws to tax status, church leaders must understand how their church is formed and how that formation shapes the decisions they make, and the ways they make those decisions.

In this helpful, hands-on video, attorney Lisa Runquist, a longtime advisor for Church Law & Tax, delves deeper into the formation processes for churches and explains how the pieces that are essential to formation become instrumental to how those churches function, both internally and externally for years to come.

Download the presentation slides to follow along and take notes as you watch.

Editor’s Note. This video is exclusive to Church Law & Tax members only. However, you can sign-up here to watch this video for free.

Lisa A. Runquist has more than 40 years of experience as a transactional lawyer, both with nonprofit organizations and business organizations.
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Key Tax Dates April 2022

Filing returns, key quarterly deadlines, exemptions, and more.

Monthly requirements

If your church reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly with a bank.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

April 18, 2022: Tax returns, amended returns, extension, exemption from Social Security, and quarterly payment

Individual tax returns

Federal income tax and self-employment tax returns by individuals for calendar year 2021 are due by this date.

Amended federal income tax returns

Last day for most taxpayers to file an amended federal income tax return (Form 1040X) for calendar year 2019 (unless you received an extension of time to file your 2019 return). See the instructions for Form 1040X on the IRS website.

Extension for file tax returns

Filing Form 4868 gives taxpayers until October 15 to file their 2021 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by April 15, 2022, to avoid interest and penalties.

Exemption from Social Security coverage

Last day to file an exemption from Social Security coverage (Form 4361) for most eligible clergy who began performing ministerial services in 2020 (deadline extended if applicant obtains an extension of time to file Form 1040).

Quarterly estimated tax payments for certain employees and churches

Ministers who have not elected voluntary withholding and self-employed workers must file their first quarterly estimated federal tax payment for 2022 by this date (a similar rule applies in many states to payments of estimated state taxes).

Nonminister employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay Social Security and Medicare taxes) are treated as self-employed for Social Security purposes, and are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they ask their employing church to withhold an additional amount of income taxes from each paycheck (use a new Form W-4 to make this request) that will be sufficient to cover self-employment taxes.

A church must make quarterly estimated tax payments if it expects an unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure your estimated taxes. Quarterly estimated tax payments of one-fourth of the total tax liability are due by April 15, June 15, September 15, and December 15, 2022, for churches on a calendar year basis. Deposit quarterly tax payments electronically using EFTPS.

April 29, 2022: Employer exemption

Churches hiring their first nonminister employee between January 1, 2022, and March 31, 2022, may exempt themselves from the employer’s share of Social Security and Medicare taxes by filing Form 8274 by this date (nonminister employees are thereafter treated as self-employed for Social Security purposes).

The exemption is only available to churches that are opposed on the basis of religious principles to paying the employer’s share of Social Security and Medicare taxes.

April 30, 2022: Employer’s quarterly federal tax returns

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the first calendar quarter of 2022 by this date.

Enclose a check in the total amount of all payroll taxes (withheld income taxes, the withheld employee’s share of Social Security taxes, and the employer’s share of Social Security taxes) if these taxes were less than $2,500 on March 31, 2022.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Key Tax Dates March 2022

Monthly and semiweekly requirements for depositing payroll taxes.

Monthly requirements

If your church reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly with a bank.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Navigating Vaccine and Mask Mandates

An attorney explores the best courses of action for churches to take.

Several years before the COVID-19 pandemic struck, I examined the question of what rights the government had to require vaccinations, particularly with regard to children. In a 2015 article for Church Law & Tax, I offered these reasons why parents may choose not to vaccinate:

Some have done so for religious reasons, some because of their personal beliefs, some because they are concerned about possible side effects from the vaccinations themselves, and a few for medical reasons.

Since then, the question of how parents choose to handle vaccinations has rapidly expanded in light of the pandemic. State governments, as well as the federal government, have explored ways to mandate the vaccine developed in response to COVID-19. Similarly, the federal government and state governments have worked to determine how other precautionary measures, such as masks, can be mandated.

These developments have posed unique challenges for churches and church leaders, especially those congregations that run nurseries, daycares, and schools. Do churches and church-run schools fall under government-mandated requirements, whether pertaining to the COVID-19 vaccination or masks? This article examines this question and provides nine considerations regarding how churches should respond.

Background

When I wrote the 2015 article, it was clear that vaccine laws were in the purview of state governments. Each state’s law significantly varied. The state laws in effect at that time, which appear to have changed little since then, were almost exclusively focused on requiring children to have certain vaccinations in order for them to attend public schools. The required vaccinations were—and still are—for common diseases such as measles, mumps, chicken pox, and the like, many of which have had vaccines available for more than 50 years.

All states allowed medical exemptions to vaccinations, and the vast majority also provided for religious exemptions. A few allowed a broader personal exemption. For a religious exemption to be available, some states required that an individual belong to a religious organization that holds these beliefs; some required physician counseling as part of the religious exemption; and at least one state gave the local school authority the right to determine if there was actually a valid religious exemption. In other states, the officials took the exemption claim at face value.

The controlling law still is principally based upon a 1905 case in which the United States Supreme Court held that it is within the police power of each state to enact a compulsory vaccination (specifically addressing smallpox). Further, the Court stressed that it is up to the legislature, rather than the courts, to determine if vaccination is the best method of protecting public health and safety (Jacobson v. Massachusetts, 197 US 11 (1905)).

Even though this case was brought by an adult, the Court made approving references to the various state laws requiring smallpox vaccinations for children to attend public schools.

The Court also noted: “The safety and the health of the people of Massachusetts are, in the first instance, for that commonwealth to guard and protect. They are matters that do not ordinarily concern the national government.” Although there may be a reason to involve the federal government in some instances, this was acknowledged to be the exception.

Smallpox was ultimately eradicated, but other outbreaks of concern, particularly measles, have since arisen and often involved religious communities. In 1991, for example, unvaccinated students attending two church schools became ill from the measles, although the epidemic did not start with either church.

Prayer did not keep the disease at bay, and it spread to the students’ families as well. Among those infected, 486 belonged to the two churches, as did 6 children who died from the virus.

Despite the religious exemption, and to stop the spread, public officials “did something that had never been done before or since: They got a court order to vaccinate children against their parents’ will. Children were briefly made wards of the state, vaccinated, and returned to their parents,” according to the New York Times.

This was obviously an extreme and unusual situation. In fact, even in the 1905 Jacobson case where the state made the smallpox vaccine compulsory, the penalty for noncompliance was not the imposition of an unwanted vaccine, but rather, a $5 fine for adults (equivalent to $158.41 today). Children could be exempted with a note from their physician.

COVID-19 pandemic: an overview

As noted above, prior to the global pandemic’s arrival in 2020, most vaccine concerns and laws focused on requiring children to be vaccinated before they could attend public schools. Some state vaccination laws expanded to include vaccination requirements for students of private schools and colleges and universities, along with some healthcare workers.

This focus changed when COVID-19 began spreading worldwide throughout 2020. The old, the infirm, and those with underlying health conditions found themselves most at risk of becoming sick and dying.

Initial uncertainties about the severity of the virus for the general population, coupled with COVID-19’s rapid spread worldwide, led to significant concerns throughout the country.

Government entities developed mandates aimed at limiting the spread of the virus. This initially included limiting the ability of people to engage in activities outside their homes, designating some businesses as essential and closing others, limiting the number of unrelated people who could associate, requiring that everyone stay at least 6 feet apart, and requiring masks (both inside and outside).

The thought was that if everyone stayed at home for 14 days, it would prevent much of the spread and allow medical institutions to not be overwhelmed. Churches, among other entities, were required to comply with these mandates.

Concerns over unequal treatment for churches

The treatment of churches since that time have varied from state to state.

Many states recognized that religious organizations were essential and allowed them to begin to open on the same basis as other organizations.

However, with some states, the determination of what was essential appeared inconsistent. Big-box stores continued to operate but the small stores were shuttered; mass protests, liquor stores, movie studios and casinos were allowed, but not churches. For example, California banned all indoor religious services (including home Bible studies), despite allowing similar activities for other operations.

There was no change until after five appeals to the United States Supreme Court. The Court stated in Tandon v. Newsom (April 9, 2021):

This is the fifth time the Court has summarily rejected the Ninth Circuit’s analysis of California’s COVID restrictions on religious exercise. . . . It is unsurprising that such litigants are entitled to relief. California’s Blueprint System contains myriad exceptions and accommodations for comparable activities, thus requiring the application of strict scrutiny. And historically, strict scrutiny requires the State to further “interests of the highest order” by means “narrowly tailored in pursuit of those interests.” . . . That standard . . . really means what it says.

The bottom line is that, although states have a right to issue appropriate mandates to protect the health and safety of its citizens, churches must be treated equally to other institutions and cannot be subjected to more stringent restrictions.

State mandates vary greatly and continue to shift

To date, no state has taken the step of forcing their residents to get vaccinated. However, to strongly encourage people to get vaccinated, many states have taken positions that make it hard to remain unvaccinated. This has included requiring proof of vaccinations or a “vaccination passport” for activities such as eating in public, attending concerts and plays, or even continuing to be employed in various industries (including working for the government, health care institutions, and schools).

On the other hand, a significant number of states have taken steps to eliminate all mandatory vaccination policies. This includes prohibiting state agencies from requiring employees to be vaccinated, or requiring proof of vaccination to receive services, or issuing vaccine passports. Some have prohibited private businesses from discriminating on the basis of vaccination status or from enforcing vaccine mandates.

There has been pushback from both sides of the issue. Consider the following examples:

  • The Norwegian Cruise Line sued Florida over the state’s prohibition of vaccine mandates by private businesses.
  • Indiana University was able to require nonvaccinated individuals to submit to weekly testing to attend in-person classes (Klaassen v. Indiana University).
  • The new Virginia governor recently signed an order making masks optional (although he still encourages vaccination). Several school districts in the state, however, have stated that they still consider masks to be mandatory.
  • In Illinois, a number of public school districts have chosen to make masking optional, despite a state mask mandate.

The positions taken by states are not static, but they continue to change on a regular basis in response to the evolution of the pandemic and the pushback (including lawsuits) on any governmental actions either requiring or prohibiting mandates.

Federal vaccine mandates and the power to enforce

This brings us to the position that has been taken by the federal government and the recent decisions by the United States Supreme Court.

Before he took office, President Biden stated that he did not intend to mandate that all citizens receive a COVID-19 vaccine. Then, in April of 2021, his administration also ruled out having any type of a passport to verify vaccination status based on privacy and discrimination concerns.

However, as the months progressed, a significant number of citizens continued to refuse the vaccine. The federal government responded with vaccination mandates targeting a significant number of employees in the workforce:

  • By executive order, President Biden required that all federal government employees be vaccinated by November 22, 2021, unless granted a medical or religious exemption. A preliminary injunction was issued on January 21, 2022, enjoining the implementation or enforcement of the order until the case is resolved on its merits (Feds for Medical Freedom, et al v. Joseph R Biden, Jr. et al, District Court Southern District of Texas, No. 3:21-cv-356. January 21, 2022).
  • A separate executive order from the President required that all federal contractors be vaccinated by January 18, 2022. A preliminary injunction was issued in December suspending the order.
  • The Secretary of Defense issued an order requiring military personnel to be vaccinated. This order is still active.
  • The Occupational Safety and Health Administration (OSHA) issued an emergency order requiring employees of all businesses with 100 or more employees (affecting about 84 million Americans) to either obtain a COVID-19 vaccination or to undergo weekly medical testing at their own expense.
  • The Secretary of Health and Human Services (HHS) announced that any facility participating in Medicare and Medicaid funding must ensure that its staff was vaccinated against COVID-19 unless the person was exempted for medical or religious reasons.

The OSHA and HHS mandates were challenged on legal grounds and recently considered by the United States Supreme Court. The resulting decisions provide further insights into the legitimacy and effect of government actions during the pandemic.

OSHA’s action

In a per curiam opinion issued by a majority of the Court, it acknowledged the huge effects that OSHA’s emergency order would have on the states, employers, and millions of Americans. However, the decision was based entirely on whether OSHA, as an administrative agency created by Congress, had been given the authority by Congress to make such a decision:

The question, then, is whether the Act [creating OSHA] plainly authorizes the Secretary’s mandate. It does not. The Act empowers the Secretary to set workplace safety standards, not broad public health measures. . . . Permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization.

The Court also noted there was a majority vote of the US Senate disapproving this particular regulation on December 8, 2021.

The Court went to great lengths to avoid finding that the police power being exercised was arbitrary or oppressive, but it made its decision solely on the basis that Congress did not authorize OSHA to issue its broad mandate (Nat’l Fed’n of Indep. Bus. v. Dep’t of Labor, Occupational Safety and Health Admin., 595 U.S. _____ (2022)).

HHS’s action

The Court’s majority took a similar approach with the HHS action. In Biden v. Missouri, the Court concluded HHS (unlike OSHA) had been delegated, and long exercised the authority to issue requirements to maintain and enforce an infection and prevention and control program designed to prevent the transmission of communicable diseases in healthcare facilities. Therefore, injunctive relief was not granted, and the matter was returned to the lower courts for further action.

Do local and state mandates follow proper procedure?

One consideration that Nat’l Fed’n of Indep. Bus. v. Dep’t of Labor, Occupational Safety and Health Admin. and Biden v. Missouri brings up for actions taken at the local and state levels is whether mandates are properly issued.

In some states and localities, mandates have not been issued by the legislature or council, but by the governor or mayor. Often this was pursuant to an emergency powers authorization. If there was no emergency powers authorization, the same objection could be made as was made to the OSHA regulations.

But even if there was such an emergency authorization, questions arise regarding how long an emergency lasts and whether a legislature intends for this power to last beyond a year or two, much less indefinitely.

Private mandates and voluntary compliance

In May 2021, the US Equal Employment Opportunity Commission (EEOC) stated that employers have the option to require their employees to be vaccinated unless an employee is covered by a medical or religious exemption.

Several private employers have instituted such a policy, even though it is not required by the government.

Relatedly, many colleges and universities have gone even further by requiring that their students receive the vaccine before attending in-person classes. Some have gone so far as to prevent their students from visiting off-campus facilities.

Various entertainment venues have also required proof of vaccination or a recent negative test of all performers and attendees.

In many instances, employers and venues also require masks to be worn, except when eating or drinking.

As noted above, some states have mandated these policies and others have prohibited them (with varying degrees of success). Local municipalities have also varied in what is mandated.

After the Supreme Court’s decision regarding OSHA’s emergency order, some large businesses, including Starbucks and General Electric, withdrew vaccine mandates for employees despite President Biden’s request that they voluntarily comply with what OSHA’s emergency order proposed.

Boeing dropped its mandate in December 2021. Several others, including Nike and Columbia Sportswear, announced they will immediately fire employees who refuse to vaccinate.

Other businesses and nonprofits now have to decide whether they will mandate masks or vaccines even if there are no longer any government mandates allowed by law.

How churches should respond

Opinions differ regarding which types of precautions and preventive measures should be followed, much less required.

And, as can be seen above, there is a morass of state, local, and federal rules, regulations, mandates, and numerous court opinions to sort through.

With that said, here are nine considerations for church leaders to contemplate throughout the remainder of the pandemic and beyond.

Stay informed about local and state mandates

Church leaders should first determine what, if any, mandates exist in their state, as well as their local municipality. This should be an ongoing process for the foreseeable future unless and until the pandemic ends.

Church leaders must stay informed of local and state positions in order to comply with the law. Church leaders who disagree with a mandate (whether requiring or prohibiting masks or vaccines) might consider taking action, such as has been done by California churches that appealed to the United States Supreme Court. Additionally, church leaders should contact local and state legislative representatives to express their positions.

Although the church itself should not do so, interested individuals might also consider encouraging the selection of local representatives who support their positions.

Weigh the costs of noncompliance

Churches have been declared by the United States Supreme Court to be essential. As a result, churches are no longer prohibited from opening their doors. Many people believe that the ability to attend services in person is not only preferable to online attendance but essential to being able to fully implement their faith.

Of course, as noted above, some states and localities may still mandate masks and other measures. Your church will need to decide whether having in-person services is something it believes to be beneficial to your congregants, and if so, whether or not to comply with any applicable mandates or implement its own requirements.

Church leaders must evaluate what consequences, if any, may be faced for noncompliance. Church leaders also should communicate it is important for individual attendees to take precautions they deem necessary for themselves, especially in situations involving underlying health conditions.

Continue or upgrade online services

Many churches launched online church services when the pandemic started. Some members prefer this, especially those who are elderly or have medical issues that would put them at high risk.

Many churches will continue to broadcast services online even if they have opened their doors for in-person services. Some churches, though, may require some technical assistance if the church has not already set up such a system.

Decide what policies are necessary, reasonable, and practical to deploy

Private entities have generally been allowed to make their own rules concerning their facilities—rules that can go beyond what is otherwise required by local or state mandates. If your church is not in an area that still requires masks, but the church wants to continue this requirement, this is allowed in most locations.

In California, at least one large church set aside different services and locations with varying requirements so that their congregants could select their preferred choice: mask, no mask; singing, no singing; vaccine required, no vaccine required.

Of course, continuing to offer online services provides the most protection for the most vulnerable. But if your church is not large enough to provide this type of option, then you may need to determine which option(s) you believe are best for your church and will allow you to meet the needs of the majority of your congregation.

If you decide to meet in person, will you have different policies depending on whether the service or activity is indoors or outdoors?

Furthermore, if your church decides it will open only to those who have been fully vaccinated, how will it monitor this? Are you going to rely upon the honesty of each person as to whether he or she received the vaccinations your church deems necessary? Will someone stand at the door to check in each person as he or she arrives? And, will your church also need to contemplate similar requirements for other vaccinations?

Similarly, if your church requires masks in a locale where a mask mandate does not exist, how will it enforce such a policy with congregants and guests? What tools and training will church leaders receive regarding how they approach someone who isn’t willing to abide by the church’s policy?

One church I am aware of actually had someone taking the temperature of each person who wished to attend and had them sign a release. However, that got old really fast, and the church no longer does this.

Leaders must balance between what is necessary, what is reasonable among their congregants, and what is practical to deploy.

Understand the issues of mandating employees get vaccinated

Can your church legally require pastors and employees to be vaccinated? Again, your church needs to review its state’s law. As with any other employer, your church is likely able to require vaccinations, with the same possible medical and religious exemptions, in most—but not all—states. It might sound odd that an employee of a church could claim a religious exemption if the church was otherwise requiring vaccination, but it still should be considered.

One consideration that all employers, including churches, should not overlook: If an employee receives the vaccination based solely on the employer’s mandate, and gets injured from it, that individual may have a plausible lawsuit to bring against the employer. Although I am not aware of such a claim being made to date, I would anticipate it as a possibility.

With the OSHA emergency order, an employer could have responded to a lawsuit by arguing that it was simply following the law. However, with this rule overturned—unless there is a similar state law still in effect—it is incumbent upon the employer to make a determination on whether to require vaccination. Again, this is likely to depend on your state law.

Evaluate the pros and cons of requiring masks for children

The question of whether masks are appropriate for children is also an important question, especially for churches that run nurseries, daycares, and schools, as well as your church’s Sunday school program. From a legal standpoint, unless your state or locality requires or prohibits mask-wearing, the individual church will need to decide whether to require them for children. If not legally required, the church might allow the parents to decide whether or not their child should be masked.

Know the mandates for children being vaccinated

Similarly, churches must grapple with whether vaccine requirements should extend to children. Unless prohibited by your church’s state, the church or church-run school may decide if students should be vaccinated. Since attending the school is voluntary, a requirement that any students choosing to attend the school be vaccinated remains permissible in most locations.

Whatever position the church or church-run school decides to take, it should communicate it to parents, especially before enrollment.

Be prepared to handle requests for religious exemption

What should your church do when it receives a religious exemption from a congregant? What should your church do if a congregant asks you to provide a letter supporting his or her claim of a religious exemption?

Any claim for religious exemption should be taken seriously. However, if someone has a sincere religious objection to vaccination, it is not sufficient for them to copy a letter prepared by someone else. This is a real challenge, since many people do not have confidence enough in their ability to write such a letter and would rather rely on a form letter. Some reports suggest employers reviewing religious exemption letters do not find the requests sincere when a form letter is used.

It can be hard to put into words why someone believes they are entitled to a religious exemption. It should be based on personal beliefs and backgrounds, not just a regurgitation of statements objecting to the vaccine and prepared by someone else.

If the church has firm religious beliefs against taking the vaccine, it should take time developing a form letter explaining these beliefs in a way that a nonbeliever can understand.

This letter then could be given to any congregant requesting such a letter from the church to use in addition to the congregant’s personal letter, and would normally not be personalized unless the church was aware of some special situation involving the particular individual.

Essentially the church would normally not be “vouching” for the sincerely religious beliefs of the congregant, but it would set forth the position of the church itself. Of course, if the church does not have such religious beliefs, then it should simply inform the congregant that it will not provide such a letter.

Know when to seek legal counsel when compliance is not possible

Lastly, for churches in states where mandates continue to be enforced, some have taken a very hostile position in their enforcement and application of their mandates. As a result, religious organizations may find themselves in the cross hairs of the state. Leaders should always consider if there are ways to meet mandates without violating sincere religious beliefs, which may mean going out of the way to comply. When compliance is not possible, either for practical or theological reasons—or both—leaders should consult with qualified local legal counsel to determine how to proceed.

Lisa A. Runquist has more than 40 years of experience as a transactional lawyer, both with nonprofit organizations and business organizations.

Key Tax Dates February 2022

Forms 941, 1098-C, 1095-C, and 1094-C are due this month.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022, the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly. Monthly deposits are due by the 15th day of the following month.

Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022, the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

February 10, 2022: Employer’s quarterly federal tax return due

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) may file their employer’s quarterly federal tax return (Form 941) by this date instead of January 31 if all taxes for the fourth calendar quarter (of 2021) have been deposited in full and on time.

February 28, 2022: IRS forms due

Filing IRS 1098-C for reporting vehicle sale or donation

Churches file Copy A of Form 1098-C with the IRS by this date to report the sale or use of a donated vehicle. Generally, you must furnish Copies B and C of this form to the donor no later than 30 days after the date of sale if box 4a is checked, or 30 days after the date of the contribution if box 5a or 5b is checked. If box 7 is checked, do not file Copy A with the IRS and do not furnish Copy B to the donor. You may furnish Copy C to the donor. The donor is required to obtain Copy C or a similar acknowledgment by the earlier of the due date (including extensions) of the donor’s income tax return for the year of the contribution or the date that the return is filed. If filing electronically, this form is due by March 31, 2022.

Filing 1095-C and 1094-C for applicable large employers and ACA compliance

Applicable large employers, generally employers with 50 or more full-time employees (including full-time equivalent employees) in the previous year, must file a Form 1095-C for each employee who was a full-time employee of the employer for any month of the previous calendar year by this date. Generally, the employer is required to furnish a copy of Form 1095-C (or a substitute form) to the employee.

The employer also files a Form 1094-C transmittal form with the IRS (including copies of each Form 1095-C). The purpose of this form is to ensure that applicable large employers are complying with the shared responsibility provisions of the ACA. Forms 1094-C and 1095-C must be issued by March 31, 2022, if issued electronically.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Advantage Member Exclusive

2022 Webinar Schedule

EXCLUSIVE WEBINAR | Join Attorney and CPA Richard Hammar and finish the 2022 year well.

Editor’s note. Only Advantage Members have access to this schedule. Learn more on how to become an Advantage Member or upgrade your membership.

Among the many benefits of your Church Law & Tax Advantage Membership is access to exclusive webinars.

During last year’s series, we hosted a handful of webinars exclusively for Advantage Members. For instance, attorney Erika E. Cole offered insights on how church leaders considering mergers ought to approach legal and ministerial questions. In addition, attorney and CPA Frank Sommerville drew on his more than 30 years of legal and accounting experience to answer members’ employment related questions. You can watch these past webinars and others on demand.

This year, we plan to continue covering current events and topics that will help you lead your church and its various ministries with confidence.

Details and registration links to upcoming Advantage Member and free webinars will be added to this schedule throughout the year. Bookmark this page to stay updated when a new webinar is announced. You can also catch up on webinars you might’ve missed from this series here.

UPCOMING WEBINAR

We are currently making plans for our next webinar. In the meantime, we encourage you to catch up on our most recent webinar below. Also, be sure to check out any webinars you might have missed from this series. They are available to watch on-demand.

Finishing 2022 Well

Getting year-end tasks right–and setting up 2023 for success. Watch now to learn everything you need to know to finish the 2022 year-end well.

IRS Bumps 2024 Business Use Mileage Rate to 67 Cents Per Mile

The IRS increases the 2024 business use mileage rate, but reduces the rate for medical or moving purposes.

The Internal Revenue Service (IRS) has released the 2024 optional standard mileage rates. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Effective January 1, 2024, the rates are:

  • 67 cents per mile driven for business use. This is an increase of 1.5 cents from the rate set in 2023.
  • 21 cents per mile driven for medical or moving purposes. This is a decrease of 1 cent from the rate set in 2023.
  • 14 cents per mile driven in service of charitable organizations. This rate remains unchanged and can only be changed by an act of Congress.

Note: The rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.


Don’t wait! Start 2024 on a good footing with a Church Law & Tax Advantage Membership and gain access to cohorts, webinars, product discounts, and more, including full access to trusted content from our trusted team of legal, tax, finance, HR and technology advisors.


Limitations created under Tax Cuts and Jobs Act of 2017

Under the Tax Cuts and Jobs Act of 2017, taxpayers cannot:

  • claim a miscellaneous itemized deduction for unreimbursed employee travel expenses and,
  • cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. See Moving Expenses for Members of the Armed Forces for more details

Taxpayers can calculate the actual costs of using their vehicle rather than using the standard mileage rates. Taxpayers can usually only use the standard mileage rate in the first year a car is available for business use. In later years, taxpayers can choose either the standard mileage rate or actual expenses.

Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals). This applies if the standard mileage rate is chosen.

What does the business mileage rate increase mean for churches?

Increased amounts of reimbursement represent increased budget expenses, and that means adjusting budgets in ways that affect other ministry spending.

Conversely, eliminating or reducing reimbursements shifts the burden to pastors and employees using personal vehicles for church-related business.

Note: Unreimbursed employee business expenses are not deductible under the Tax Cuts and Jobs Act of 2017 (the “Act”). As a result, pastors and employees with unreimbursed mileage cannot seek tax relief on next year’s federal income tax returns. The act allows for a reinstatement of the deduction for unreimbursed employee business expenses after 2025.

You may also want read through this Q&A with CPA and Church Law & Tax Senior Editorial Advisor Michael Batts.

One final note:

Churches with an accountable reimbursement arrangement can reimburse eligible employees who use their vehicles for church-related business. Employees and pastors must properly track and document their business miles under these arrangements.

Unreimbursed employee business expenses are not deductible. Therefore, employees can no longer calculate a mileage deduction on their annual tax returns. Current

 

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