Equal treatment is easier to preach than practice – particularly when tax dollars are at stake.

Aldersgate United Methodist Church, a small congregation in the coastal city of Rockland, Maine, applied for a property tax exemption on its church building, parking lot, and surrounding grounds, but the City refused to exempt the parking lot. Why? Because the applicant is a church.

The City of Rockland is enforcing Maine’s tax exemption statute to the distinct disadvantage of churches, and costing at least one congregation thousands of dollars annually in additional taxes – taxes which other charitable organizations do not pay. Rockland justifies demanding those additional tax dollars, first, by playing on Maine’s flawed statutory scheme and, second, by interpreting “charitable” to the exclusion of churches.

Maine’s tax exemption statutory scheme is fundamentally flawed. The statute broadly exempts property owned by and used for not-for-profit groups, including charities, hospitals, fraternities, child care centers, and veterans groups. The parking lots of these organizations are tax-exempt, no questions asked. But the statute treats “houses of religious worship” differently: they are limited to the exemption of their church building, furniture, burial plots, and a portion of the parsonage.  No other not-for-profit is similarly limited. Such an unseemly dicing of religiously-owned property could be overlooked – if the broader charitable exemption were available to all charitable organizations equally.

But in Rockland, Maine, not all charities are created equal.

The City of Rockland admitted that all of Aldersgate’s property – including the parking lot – would be exempt if Aldersgate met the criteria of a charitable institution. Charities operate for the public benefit, train the hearts and minds of their hearers, relieve suffering, and, in sum, lessen the burden on the government. The City insists that Aldersgate does not meet these qualifications. But if this church does not qualify, the City would be hard-pressed to find an organization that does.

Aldersgate, like most churches, is a place of worship, instruction, and education, and seeks to train the hearts and minds of all who choose to attend. Attendees are taught how to live moral and healthy lives as productive citizens of the Rockland community, thereby lessening the burden on the government. Aldersgate offers financial support and counseling to the downtrodden, hurting, and hopeless. It relieves the distress of the indigent and hungry, sending volunteers to work in soup kitchens and build homes for the homeless. Aldersgate provides community services such as baptisms, weddings, and funerals. It makes its church building and parking lot available free of charge to numerous public groups, including local orchestras, addiction-recovery societies, and community festivals. Any one of these factors alone would be sufficient to exempt a secular institution.

The social and intangible benefits a church provides to society are incalculable, as discussed here. But unwarranted taxation drains church coffers and decreases the services churches can provide to their communities. The law should be no respecter of persons, or charities. Aldersgate should enjoy at least the same tax treatment and benefits granted to similar not-for-profit charitable organizations.

ADF is representing Aldersgate United Methodist Church as it speaks up against discrimination in tax treatment. It is time for Maine to end its uncharitable discrimination and put equal treatment into practice.

This tough economy is hitting everyone. From unemployment to Wall Street bailouts to rocketing gas prices, it seems that everyone is hurting for cash. Apparently, local governments are no exception.  Across this nation, local taxing authorities are trying to increase their coffers by denying property tax exemptions for churches. If you are not careful, your church could be next.

One such battle is taking place in Concord, New Hampshire, involving Liberty Assembly of God. Their story should serve as a warning to all.

The church has existed in its current building for more than 15 years. It’s your typical church. It has services on Sunday mornings and Wednesday nights. A music minister leads the people in singing. It runs a food pantry and even has the occasional person who sleeps through the pastor’s sermons.

Unfortunately, this church came upon hard times. Attendance dropped, and consequently, the church was not using every room as it had before. For example, instead of using four rooms for Sunday school classes, they now only needed to use two.

One day, city officials decided to inspect the church to see if it was being used for religious purposes. These officials conducted a room-by-room analysis, even going through the drawers in the rooms! The city was looking for evidence to support its claim that if any single room was not being used for a religious purpose, it should be taxed.

Unfortunately, the city concluded that not all of the rooms were currently being used for a religious purpose, and stripped the church of its full tax exemption. When asked how the city could possibly come to this conclusion, Kathryn Temchack, the city’s director of real estate assessments, said it was because the rooms were not in good order or use. The following are actual quotations from Ms. Temchack’s deposition as to why she denied the tax exemption:

* She testified that, although the storage of a desk and a musical keyboard could serve a religious purpose, the Church’s storage of such items did not serve a religious purpose “because of all the other junk that’s sitting around it.”

* When asked if the cleanliness of how things are stored play a part in determining whether items are being used for a religious purpose, she said, “it could be. I think there would be some kind of order to it if it was being used for a religious purpose, that you would expect to see tables, chairs, religious posters, a cross, an altar, something of that magnitude here that would say that there’s something religious happening. Bibles. I see just a bunch of stuff sitting in a room.”

* When asked if the storage of a keyboard served a religious purpose, she said, “it’s just not so much the storage of the keyboard. It’s the appearance of the area that it’s in. It’s the condition of those rooms, that it just appeared to be not in use or organized for any type of use.”

* When asked if the storage of a box for the PowerPoint projector (used during worship services) could serve a religious purpose, she testified, “I think it’s the condition of this room. If it’s being used for storage, it’s like how would you know? I don’t know how anyone would know where anything was in this room or how you would find anything in this room. It’s the condition of what’s in the room of the property itself. It’s just a bunch of stuff.”

Apparently, Ms. Temchack took seriously her mother’s admonition that cleanliness was next to godliness!
ADF is representing this church, as the city’s actions pose a real danger for churches, especially struggling ones. The danger here is that, at least according to some tax assessors, if a church ceases to use a room for a religious purpose, it can no longer claim a tax exemption for that room. For instance, the city officials in Concord stated that it could tax a church closet if it was not being used for a religious purpose!

The caution for churches is to make sure to use the property God has entrusted to their care. If they don’t, a tax assessor like the one in New Hampshire might very well try to collect some taxes from them.

If your tax exemption is being challenged because the taxing authority does not believe your church’s use of the space serves a religious purpose, or if you have any questions about your legal rights, please contact the Alliance Defense Fund.

As I recently posted, there are very good reasons why churches should be tax exempt. One Nashville church, though, found that its attempts to reach out to the poor and needy in the community resulted in a very large property tax bill. Their case is an example of the increasing attacks on church tax exemption.

Christ Church Nashville is a large, vibrant congregation in Nashville, Tennessee.  The church completed an addition to its church building in 2004. The addition was designed for the purpose of outreach to the community. It contained an indoor playground, a chapel, a café connected to a bookstore, and an indoor gymnasium with a fitness center. Christ Church’s desire in constructing these facilities was to become a gathering place for the community. The church reasoned that there were people surrounding its campus that would not normally come into a traditional church, so it sought to open itself to those people as a place of gathering and religious outreach.

The fitness center operated on a suggested donation of a very small amount, and  immediately became a favorite place for youth in the community. It was staffed by a full-time pastor who saw many youth involved in drugs and destructive social behavior turn their lives over to Christ through the ministry of the fitness facility.

The café/bookstore was staffed by a full-time pastor and became a favorite place for many individuals in the community. Stories abound of people who sought refuge at the café and bookstore during difficult times in their lives. The pastor would counsel them, give them books from the bookstore to help them in their struggles, and even provide food free of charge to the hungry.

In 2007, a representative of the taxing authority toured the facility and made a determination that the café/bookstore and the fitness center were “retail” areas and should be taxed. The taxing authorities did not see these areas of the church for the mission-oriented areas they were. The church never made any money on either the fitness center or the café/bookstore. In fact, the church gave away much more than it took in. And for good reason – these areas were not moneymakers for the church. They were ways to reach out to the community to share the love of Christ with those in the vicinity of the church. Yet because the taxing authorities refused to see the value of what the church was doing, they slapped the church with tens of thousands of dollars in property taxes.

The church appealed the taxes and is being represented by ADF. This case is important because it represents a direct attack on the tax-exempt status of a church that wanted to reach out beyond the four walls of the church to draw in the community. The government should not be allowed to tax churches simply because it thinks, in its own judgment, that a church is not fulfilling a religious mission or purpose.

We continue to fight on behalf of Christ Church Nashville to protect it from arbitrary taxation. If your church is facing something similar, or you know of a church that is, please contact ADF.  We stand ready to defend the Church’s right to be free from taxation—free of charge.

Why is your church tax exempt?  Why should it continue to be tax exempt? If I were to sit down and ask you these questions, would you have a clear and coherent answer? I suspect this is something we seldom think about. After all, tax exemption for churches has always been given and we assume, because of its historical longevity, it always will be given.

The fact that most Americans cannot explain why their church is tax exempt indicates a forgotten history and is emblematic of a society that has systematically devalued the church as a beneficial societal institution.

Whenever I litigate a case about church tax exemption or Pulpit Freedom Sunday, the inevitable media comments go something like this: “Churches should pay taxes just like everyone else! They have tons of money, so why can’t they pay their fair share? Why should churches get a free ride? Make them pay!” Comments like these are more prevalent today than any other time I can remember.

Cases involving local governments attempting to tax churches are also becoming more prevalent. For example, ADF recently litigated and won a case against the City of Mission, Kansas, for attempting to impose a “driveway tax” on churches. Or consider the case of Liberty Assembly of God in New Hampshire which was slapped with a property tax bill simply because the local taxing authorities rifled through the church buildings and concluded that because some rooms were “untidy,” the church was not using them for a religious purpose.

So why should churches be tax exempt? There are very sound and valid reasons for church tax exemption. First, there is the “social benefit” theory of tax exemption. This recognizes the fact that churches provide great benefits to society by their good works. Churches minister to the poor and needy in the community, provide numerous social services for the downtrodden among us, and reach out to the “least of these” in thousands of different ways. The social benefit theory justifies tax exemption for churches as a kind of bargain – churches provide needed services, so they are entitled to tax exemption.

One corollary of the “social benefit” theory that is often overlooked is what I have termed the “intangible benefit” theory of tax exemption. This highlights the intangible and often unseen benefits provided by churches to the community. Things like reduced crime rates resulting from transformed lives, suicides prevented when people surrender to Christ, and people with destructive behavioral patterns that harm the community changing into hard-working and virtuous citizens who contribute to the well-being of the community. It is difficult to put a price tag on these types of intangible benefits provided by churches, but there is no question that they exist.

An interesting study conducted a few years ago attempted to put a value on the economic worth of one church. The study estimated that the First Baptist Church of Philadelphia provided over six million dollars of economic value to the community, a figure that is nearly ten times the church’s annual budget.

It is easy to see the benefits provided by churches. In fact, churches provide more social services and intangible benefits to the community than they would ever pay in taxes. It makes no sense to tax churches because the tax dollars taken from the church reduce the amount of benefits it can provide to the community. In a very real sense, taxing churches harms society.

But there is also a constitutional reason why churches are tax exempt. Our history is one of an unbroken practice of exempting churches from taxation. Churches were exempt from the very first time the tax code was passed at the federal level, and have remained exempt in every iteration of the tax code ever since. Every state in America also exempts churches from property taxes. When the U.S. Supreme Court decided a case regarding the property tax exemption of churches, called Walz v. Tax Commission, it stated that providing a tax exemption for churches was a less intrusive option under the Constitution than requiring churches to pay taxes.

That makes sense when you stop and think about it. As the Supreme Court said in a very early case, “The power to tax involves the power to control.”  Taxation is, in essence, a very strong assertion of control by a sovereign over its subjects. Exempting churches is a way to ensure that the state cannot control churches.

Overall, there are very good reasons why churches are tax exempt. We need to remember these reasons and proclaim them to others in society who reflexively shout that the Church should pay its fair share. We should take up the cause of passionate defenders of church tax exemption like Kentucky State Representative Whittaker. During the debates on the Kentucky Constitution in 1890, he loudly proclaimed, “Let an untaxed Gospel be preached, in an untaxed church-house, from an untaxed pulpit; let the emblem of a crucified, but risen Christ be administered from an untaxed altar, and, as the spire points heavenward, . . . let it stand forever untaxed.” Amen.

About a year ago, I wrote about a new lawsuit filed by ADF on behalf of two churches in Mission, Kansas.  The City of Mission had instituted a new tax that was assessed against all property owners, including churches, and that calculated the tax based on the number of trips in and out of the driveway of the property.  The new assessment was dubbed the “driveway tax” and in the cases of churches was calculated in a most bizarre way.  The City took the amount of seats in a church’s auditorium and multiplied each seat  by 5.8 trips per seat per week.  The driveway tax was assessed based on those total number of trips in and out of the driveway of the church.  In reality, this was a tax on church attendance because it was based on how many times people attended church.

After the lawsuit was filed, the case got some good media attention.  Fox News did a piece on the case which you can see here.  The City made the decision to defend against the lawsuit and we went through a time of discovery where documents about the driveway tax were exchanged and depositions were taken.  Shortly after we filed a motion for the court to decide the case without a trial, the City made the decision to stop fighting and to settle the case.  The settlement exempts churches and other non-profit organizations from the driveway tax, something the City should have done in the first place.

The settlement is a great victory for the churches in Mission.  The City of Mission had forgotten to respect the tax exemption given to churches and may have forgotten the reasons why churches have those exemptions in the first place.  Churches are exempt for good reason.  Churches provide benefits to the community in the services they provide to the poor and needy.  In this respect, they “pay” more in how they minister to the community than they ever would in taxes.  But churches also provide intangible benefits to the community of making good citizens.  Churches are in the business of taking lives that are ruined, desperate, and headed for destruction of themselves and others around them and turning those lives around by the power of the Gospel.  People who were hurting themselves and others around them through their actions now are contributing members of society because of the power of Christ working in their lives.  The benefit to society from the ministry of churches is incalculable.  For every dollar a church pays in taxes, there is one less dollar that a church cannot use to fulfill its mission to propagate the Gospel and reach out to the least among us.  That’s why when governments tax churches they are in reality harming society by restricting the good work that churches do that benefit society.

The City of Mission forgot this important aspect and failed to treat the churches within its borders as vital partners in the community.  Thankfully, the City has done the right thing in exempting churches from this new and bizarre tax.  Other cities and counties need to know that churches are indispensable to an ordered and prosperous society.  Taxing churches harms society.  It’s like shooting your own foot before going on a journey of a thousand miles.

If you know of a similar situation where ADF might be able to help, please let us know at (800) TELL-ADF.