IRS policies on church tax exemptions aren’t just potentially making America poorer – they also illegally discriminate against atheists, a lawsuit alleges.
American Atheists and several other secularist groups claim that the Internal Revenue Service gives preferential treatment to churches and religious organizations who seek or have 501(c)(3) non-profit status compared to secular non-profit organizations. The groups say this violates non-believers’ Constitutional rights because it treats churches differently than non-churches and equates to government support of religion.
Under current IRS policy, churches automatically qualify for 501(c)(3) status, though nonreligious 501(c)(3)s must go through an extensive application process to get the same tax benefits. In addition, religious organizations do not have to fill out annual Form 990 returns reports, which detail charities’ finances so the IRS or nonprofit watchdogs can identify possible fiscal wrongdoing and law-breaking. Critics, who have recently renewed their calls for religious exemption reform, say that these filing differences cost the U.S. government from some $17 to $71 billion annually.
Though American Atheists’ first filed their federal lawsuit in December 2012, oral arguments in the case began late this week.
“We find it discriminatory, so we’re suing,” American Atheists spokesman Dave Muscato tells Newsweek. “The way that this is set up, we all pay for it. We’re all supporting churches for what they do.”
In court filings, the advocacy group argues that a 1961 U.S. Supreme Court opinion that “neither the federal government nor state governments can ‘constitutionally pass laws or impose requirements which aid all religions as against non-believers, and neither can aid those religions based on a belief in the existence of God, as against those religions founded on different beliefs’” supports their claims. American Atheists is also arguing that church-only tax breaks, such as the “parsonage exemption,” which lets clergy members write off housing expenses from their taxable income, aren’t constitutionally kosher, since “non-religious entities may not take any deductions for the housing or living expenses of their employees or volunteers.”
IRS policies also discriminate against donors to non-religious organizations, American Atheists alleges. Non-religious nonprofits must identify, on Form 990, contributors who give more than $5,000, or 2 percent of the organization’s total contributions and grants. But religious non-profits don’t have to disclose mega donors, because they don’t have to fill out a 990. These policies, plus the expense and labor required to meet 501(c)(3) filing requirements, gives churches a “fundraising advantage” and put atheists at risk. “Because there’s a lot of stigma about atheism, many people talk to us and say they would donate more but don’t want their name publicized in that way,” Muscato says.
Court proceedings are set to continue in the coming weeks.
The IRS did not immediately reply to requests for comment, though the agency often does not comment on pending litigation.
When asked previously about the issue, an IRS spokesman sent Newsweek an e-mail linking to a tax guide for religious nonprofits.