All of us are familiar with non-profit charitable organizations. Many of us know that these organizations qualify as “exempt” under Section 501(c)(3) of the Internal Revenue Code (IRC). Many organizations such as the Red Cross, the Boys and Girls Club, the Boy Scouts of America, the American Heart Association, Planned Parenthood, PETA and many others all enjoy exempt status.
This exemption is quite valuable to an organization in two primary ways. First, donations made to an exempt organization are not considered taxable income to the organization. And second, money donated to an exempt organization is tax deductible to the donor. This makes exempt organizations much more attractive to donors than non-exempt ones.
For example, say you want to support a missionary effort in Africa and you have $1,000 to donate. There are two organizations to which you are considering making a donation. One is exempt and one is not. If you give your money to the non-exempt organization, the donation is not deductible to you and is taxable to the organization.
For many of us, that means that we would have to earn $1,200 pre-tax in order to net the $1,000 to give to the non-exempt organization. Then, when the organization receives the money, the IRS taxes the non-exempt organization just like any other business. So, by choosing to donate to the non-exempt organization, you had to earn $1,200 in order to provide the organization with $800 they could use.
However, if you donate to the exempt organization, your thousand dollar donation actually costs you only $800 because it saves you $200 on your income tax. Plus, the organization gets to keep the entire $1,000. That’s quite a difference.
Finally, exempt status provides another huge benefit to an organization. It gives it legitimacy because people assume real charities will be exempt from the federal income tax.
The IRS defines exempt purposes as:
- Charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.
- The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
The IRS further defines how to qualify as tax-exempt under section 501(c)(3) of the Internal Revenue Code:
- An organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3).
- None of its earnings may be diverted to any private shareholder or individual.
- It may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities.
- It may not participate in any campaign activity for or against political candidates.
- In order to be recognized as “exempt” under the Internal Revenue Code, an organization has to complete an application to the IRS that explains why it should be exempt. This application is reviewed by people within the IRS. These reviewers are supposed to approve or disapprove the organization solely on the basis of whether it is qualified under the law to be exempt.
IRS Denies Tax Exemption to Texas Religious Group Because Prayer, Bible Reading Boost the Republican Party is the title of an article that appeared in the Epoch Times.
This article sets forth the statements of Stephen A. Martin, director of the IRS Office of Exempt Organizations Rulings and Agreements, in explaining why he denied the application by Christians Engaged to be a tax-exempt organization. Mr. Martin stated:
- “You do not qualify as an organization described in IRS Section 501(c)(3). You engage in prohibited political campaign intervention.
- “You are also not operated exclusively for one or more exempt purposes within the meaning of Section 501 (c)(3), because you operate for a substantial non-exempt private purpose and for the private interests of the (Republican) party.”
- “Specifically, you educate Christians on what the Bible says in areas where they can be instrumental, including the areas of sanctity of life, the definition of marriage, biblical justice, freedom of speech, defense, and borders and immigration, U.S. and Israel relations.”
- “The Bible teachings are typically affiliated with the Republican party and candidates. This disqualifies you from exemption under IRS Section 501(c)(3).”
Mr. Martin is probably surprised to hear that many Americans are outraged by his statements. He is in effect saying that Christians Engaged doesn’t qualify for tax exempt status because they teach principles that would lead people to vote Republican.
It’s a good bet that Mr. Martin is surrounded by colleagues at the IRS who share his anti-Republican Party views and only want non-profits that support the Democratic Party and its ideas. If Christians Engaged were pushing ideas “typically affiliated with the Democratic Party and its candidates”, is there any doubt that their application would have been approved?
Like the infamous Lois Lerner who blocked the applications of any group that might seem conservative, the action of Mr. Martin is a great example of the way that unelected IRS bureaucrats are determined to impose their own political agendas on the rest of us, who they believe are not as smart as they are.
Certainly Mr. Martin knows about Planned Parenthood—an organization that enjoys tax exempt status. Does anyone believe that the people who donate to Planned Parenthood don’t have a political agenda and that Planned Parenthood doesn’t try to help the Democratic Party?
Theodore Parker was a Unitarian church minister whose writings influenced Abraham Lincoln. He said, Facts are true, independent of all human opinion.
The facts in this case are that Mr. Martin did not follow the law. He substituted his own personal bias for the law. He denied Christians Engaged their exempt status because they teach principles that will lead people to vote Republican. He said so himself.
To be fair, it would be equally wrong to deny a group’s application for exempt status because they teach Democrat principles. While some today are applauding Mr. Martin’s action, it a certainty that if the current system remains in place, the day will come when an organization is denied exempt status because they teach Democrat principles.
The facts are that Mr. Martin did not follow the law but used the law to prevent an organization becoming an exempt activity because of his desire to help the Democratic agenda and not “independent of all human opinions.”
Mr. Martin is the poster boy for the reason to eliminate the IRS, the federal individual and corporate income tax, the estate tax and the gift tax and replace it with the FAIRtax. The FAIRtax is the best way to fund the federal government and ensure that bureaucrats like Mr. Martin cannot substitute their own bias for what the law says.
The FAIRtax is collected anonymously at the cash register on the retail purchase of new goods and services. There are no forms to file, and the government no longer has any legitimate need for any of your personal financial data.
We all need to remember the words of St. Thomas Aquinas, “To bear with patience wrongs done to oneself is a mark of perfection, but to bear with patience wrongs done to someone else is a mark of imperfection and even of actual sin”.
There’s only one way to eliminate the possibility that you will see all of your personal information on the internet--Pass the FAIRtax! To do anything less than demand passage of the FAIRtax is “a mark of imperfection and even of actual sin.”
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”