Unincorporated Associations Are Not Unregistered New Testament Churches
By Dr. Greg J. Dixon
This is from a website chock full of information about non-501(c)3 congregations and more.
In a court case in Indiana, where a church held themselves out as an unincorporated association in a property dispute, the judge in his ruling designated the church as an unregistered Baptist church, because of the way the church had styled the case.
Washington Circuit Court Judge Roger D. Davis in point Number 22 of his decision of March 21, 2005 said that “______Church” is an unregistered Baptist church.” On October 30, 2007, the Court of Appeals of Indiana used the same language in defining Name Withheld (Editor’s note: See the end of the article for the Cause numbers.)
By doing so, the court has done a great disservice to all of the New Testament churches that are trying to be obedient to Christ in the area of church polity and practice, especially in the State of Indiana. Thankfully, the case sets no precedent because it didn’t go to the Supreme Court of the State. Nevertheless, we feel that it is important that we set the record straight because it involves the doctrine of the New Testament church, and many are following this position and are giving out information in error on this vital issue.
The subject that we are dealing with, in my opinion, is the most confusing subject among preachers and church folks, and even attorneys that we have to deal with constantly at the Biblical Law Center. For instance, often preachers say to us, “Our church isn’t a 501(c) (3) church because we aren’t incorporated.” We will ask, “Does the church have a bank account, Employee ID Number (EIN), trustees, Constitution and By-laws, conduct an annual business meeting, give tax deductible receipts, file tax-exempt forms, file for mercantile permits, support missionaries through an incorporated missions board, or is the church listed in a Denomination or Incorporated Fellowship Directory, etc.?” If the answer to any of these is “yes,” then even if the church is not incorporated, it has the trappings of a corporation; and besides this, by its very existence it is considered a tax-exempt organization by the Internal Revenue Service according to Publication 1828 – Tax Guide for Churches and Other Tax-Exempt Organizations.
We do not have the space in this article to try and prove to the skeptics that all of the above are the trappings of corporate activities, and that there are many court cases and examples to give evidence of these facts. Many of them are in my book The Trail of Blood Revisited (Faith Publications – 5th Printing).
The next error that we keep hearing is the erroneous idea that churches are automatically tax-exempt. Well, this isn’t true, either. Let’s examine this issue further.
The IRS considers a church to be a legal entity called an “unincorporated association” or “religious society,” even if it isn’t incorporated and will treat it as any other non-profit organization or “public-charity” under Section 501(c) (3) of Title 26 of the Internal Revenue Code at Sec. 508
Special rules with respect to section 501(c) (3) organization
(1) Mandatory exceptions. – (a) and (b) shall not apply to-
(A) churches, their integrated auxiliaries, and conventions or associations, or . . .
First you will notice that all churches, whether incorporated or not, are considered to be 501(c) (3) tax-exempt public charities according to the IRS. Churches, regardless of doctrine, whether incorporated or unincorporated, are treated the same by the IRS. They do not have to file any forms for “tax-exemption.”
But it does not say that they have a “Mandatory Tax-Exemption.” Under (1) it says “Mandatory exception.” Now there is a big difference between “exemption” and “exception.” For one, “exemption” is not mandatory, only the “exception” is mandatory. But before we look at the difference, let’s notice the status of the “association.”
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