Churches paying taxes


MARY REICHARD, HOST: It’s Thursday the 21st of March, 2019. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. First up, an update to a story we first told you about last year.

With tax day right around the corner, churches and nonprofits are facing a deadline they’ve never had to worry about before.

REICHARD: Yes, thanks to some unintended consequences in last year’s tax code rewrite, nonprofits now have to pay taxes on certain employee benefits.

Republicans tried to fix the problem with a new bill, but so far it’s gone nowhere.

So what’s next for churches, nonprofits, and the IRS? WORLD Radio’s Kristen Flavin has our story.

KRISTEN FLAVIN, REPORTER: With less than a month until the April 15th tax deadline, churches and nonprofits are frantically working to get their paperwork in order.

The Republican tax reform bill passed in 2017 tried to reduce deductions companies take for things like entertaining clients and employee meals. In an attempt to treat nonprofits equally, they imposed a new tax on the value of some employee benefits. Things like parking, meals, and transportation. Churches ended up caught in the middle.

Republican Senator James Lankford of Oklahoma says that glitch shouldn’t have happened. So he’s trying to fix it.

LANKFORD: The hope is at least we can provide greater clarity and to be able to push back and say this should only apply to these largest of large groups on unrelated business income.

Lankford and Republican Senator Mark Walker of North Carolina introduced the LIFT Act last year. It would repeal the new provision in the tax code that applies to churches and nonprofits.

But when the bill never made it out of committee, Lankford sought to prove it had bipartisan support. He teamed up with Senator Chris Coons, a Democrat from Delaware, to re-introduce the legislation.

It’s a measure that Travis Wussow of the Southern Baptist Convention’s Ethics and Religious Liberty Commission describes as non-controversial.

WUSSOW: This is a common-sense fix to the bill. There’s no reason Congress can’t do this very quickly using unanimous consent. And that’s what we’re continuing to ask for.

Lankford says what isn’t common sense is sending IRS officials to check on church parking lots.

LANKFORD: That’s not really a good use of time, nor is it an adequate income source for the Federal Treasury. It’s just a nuisance for those entities.

But Lankford isn’t optimistic the LIFT Act will pass before churches and nonprofits have to file their 2018 taxes.

LANKFORD: We don’t have enough cooperation from the House of Representatives at this point to be able to deal with any changes in the tax or any corrections from the previous tax reform bill.

Lankford says the issue has become politicised. He says many Democrats are unwilling to pass the LIFT Act because they didn’t vote for the Republican tax plan that caused the problem.

LANKFORD: I get where they are politically, the problem is this affects people in nonprofits, charities, all those things around the country. They just want the relief.

But Lankford says he’s going to keep working to find a way to lighten the load.

LANKFORD: We’re hoping to find other legislative solutions if we can’t get that passed to at least provide clarity.

The IRS gave churches and nonprofits until March 31st to restructure their parking lots to reduce or eliminate the number of staff parking spots. And it’s likely the tax will only apply to very large churches and nonprofits.

Wussow says administrators should make as many changes as they can to avoid the tax filing requirement.

WUSSOW: I think it does provide a safe harbor for a lot of churches. I’m not sure if it’s “most” but it’s a lot of churches.

And in the meantime, Wussow says it’s important for Congress to keep in mind that this impacts more than just churches.

WUSSOW: The coalition that opposes this tax is much broader than just faith groups. It includes virtually every nonprofit in every sector. And a number of other national groups that represent nonprofits are working to appeal this provision. And those are groups that cut across the left-right divide. So, we’re continuing to ask Congress to set politics aside and pick this measure up and pass it quickly.

Reporting for WORLD Radio, I’m Kristen Flavin.


(Photo/Creative Commons)

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.

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One comment on “Churches paying taxes

  1. Jason Leininger says:

    This story has a questionable character about it, it lists almost no specifics – who are the particular non-profits, who are the particular churches. I’ve visited countless church parking lots, it is extremely rare to see how this code would apply. Additionally, the law applies to 501c3 orgs. – what may not be known is that many churches are not 501c3’s. Many were started well before that particular designation existed in the code, and so they are under different designations all together, and for the vast majority of churches, they don’t file any tax papers with the IRS at all.
    I’m baffled why this is making the news – is it stir up controvsey? Is it to put fear into people who have nothing to fear? Is it to cause confusion among people who don’t know the full extent of the law?
    The lack of clear cases of impact and import, is a case in point that this is a non-issue for the vast majority of churches and non-profits. What may be more of a clear story is how this nebulous rule is being blown out of proportion to incite fear and/or resistance to the tax code modification. This is more about political posturing than real news.

    PS – It’s the Republicans who wrote the code, and now they want to put it on the Democrats for not modifying it…. pure posturing – not real import to churches or non-profits, unless you can cite clears cases, and not a lobbying group. Honestly, its disingenuous to keep going to lobbying groups for comments – they are so far removed from reality and on the ground ministry.

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