Thursday, March 7, 2019

More Stuff on Exemption for Houses of Worship

Markwhittaker

 

Mark Whitaker was Assistant Pastor at New Bethel Baptist Church and also running for local office when the sign depicted above appeared at his church shortly before the election last November, according to an article in the Virginian-Pilot.  Mr. Whitaker's felony trial was pending and he was eventually convicted, which would have made him ineligible to serve had he won the election -- he did not so that issue was moot.  There was some question regarding whether votes cast for Mr. Whitaker would even be counted since his conviction was expected before election day.  As a literal matter, the sign only informs voters that votes for Mr. Whitaker would be not be automatically disregarded.  Campaign intervention or no?  Whether it is or isn't, is beside the point, according to an op-ed in RealClear Policy today:

Tax exemptions are the equivalent of government subsidies under the commonly accepted “tax-expenditure theory,” relied upon by the U.S. Supreme Court. Legally, under the theory, tax exemption is considered as much a benefit as an outright grant or the tax-deductibility of contributions to nonprofit organizations.

Under this reasoning, the government can attach certain conditions to its subsidies — to a grant, to tax exemption, to eligibility for tax deductions. It does this all the time, of course. If nonprofit organizations do not want to voluntarily consent to a condition, they don’t have to do so; they can decide to simply forego the benefit.   The state can bargain about that with them.  According to the “unconstitutional-conditions doctrine,” however, “even if a state has absolute discretion to grant or deny an individual a privilege or benefit,” as summarized by New York University Law School professor Richard A. Epstein’s 1993 “Bargaining with the State,” “it cannot grant the privilege subject to conditions that improperly ‘coerce,’ ‘pressure,’ or ‘induce’ the waiver of that person’s constitutional rights.” Conditions can’t be used to coerce corporations’ rights, either, including nonprofit ones.

In other news affecting Houses of Worship, it seems the effort to repeal the "Nonprofit Parking Tax," about which Houses of Worship seem more concerned than other nonprofits, is picking up bipartisan support.  Lawmakers from both sides of the isle and in both Houses of Congress signed on to the reintroduction of the Lessening Impediments From Taxes (LIFT) for Charities Act two days ago.  Fortunately, this is one tax proposal about which it cannot be said lawmakers are being paid by the word:

SECTION 1. REPEAL OF INCLUSION OF CERTAIN FRINGE
BENEFIT EXPENSES IN UNRELATED BUSINESS TAXABLE INCOME.

(a) IN GENERAL.—Section 512(a) of the Internal Revenue Code of 1986 is amended by striking paragraph (7).

(b) EFFECTIVE DATE.—The amendment made by this section shall take effect as if included in the amendments made by section 13703 of Public Law 115–97.

Darryll K. Jones

 

https://lawprofessors.typepad.com/nonprofit/2019/03/more-stuff-on-exemption-for-houses-of-worship.html

| Permalink

Comments

Post a comment