An unprecedented tax faces churches and religious organizations beginning Jan. 1 for such matters as parking by staff members. Photo by Art Toalston
Repeal of tax measure on churches appears to fail in Congress
WASHINGTON (BP) – The U.S. House of Representatives approved legislation Dec. 20 to reverse a year-old law that calls for churches to file tax returns
for the first time in American history, but it appears unlikely the effort will go any further in this Congress.
The House voted 220-183 in a nearly party-line vote for a bill that included repeal of a 2017 tax cut's provision -– Section 512(a)(7) – that required houses of worship and nonprofit organizations to pay a 21 percent tax on such employee benefits as parking and transportation. Only Republicans voted in favor of the proposal, and all but three of those opposing the legislation were Democrats.
The House's action, however, apparently will fall short of ultimate nullification of the controversial provision. The Senate does not appear to have the votes to approve the House-passed measure, Southern Baptist policy specialists said.
"We are disappointed that despite strong leadership from Senators James Lankford [R-Okla.] and Chris Coons [D-Del.] and Congressman Mark Walker [R-N.C.], and strong bipartisan support for fully repealing the nonprofit parking tax, Congress was unable to do so this year," Travis Wussow said. "We will continue to work on this issue in the 116th Congress and continue to call on members of both parties to set politics aside and get this done."
Wussow is general counsel and vice president for public policy of the Southern Baptist Ethics and Religious Liberty Commission (ERLC).
The provision in the Tax Cuts and Jobs Act that became law last in December 2017 not only leveled a tax on churches and nonprofits but burdened them with accounting and compliance costs not previously required, its foes said. If the section is not repealed, the cost to the charitable sector would be a congressionally estimated $1.7 billion over 10 years, according to a November letter from a diverse coalition of opponents led by the ERLC.
The ERLC – joined by 32 other organizations – sent a letter Nov. 13 to leaders of two congressional committees and some other members asking them to repeal the church tax provision before the end of the year. The measure "will hopelessly entangle the [Internal Revenue Service] with houses of worship, simply because these houses of worship allow their clergy to park in their parking lots," the ERLC and its allies said in the letter.
In the letter, the coalition said the First Amendment is the basis for not requiring houses of worship to file tax returns. It "allows houses of worship to operate independently from the government and shields houses of worship from government interference and intrusive public inspection into their internal, constitutionally protected" activities, according to the letter.
Walker, a Southern Baptist, applauded the House's approval in the new Retirement, Savings, and Other Tax Relief Act of language from a bill he introduced.
"Never in our nation's history have we placed a tax on places of worship, always respecting the sanctity of our religious liberty," Walker said. "In this season of giving, our charities and churches should be encouraged to know that the House is dedicated to stopping new taxes and compliance fees that threaten to impede the life-altering work they perform in each of our communities."
In addition to ERLC President Russell Moore, the coalition letter's signers included: Leith Anderson, president, National Association of Evangelicals; Daniel DiNardo, archbishop, Galveston-Houston, and president, U.S. Conference of Catholic Bishops; Erik Stanley, senior counsel, Alliance Defending Freedom; David Nammo, chief executive officer (CEO), Christian Legal Society; Jerry Johnson, president, National Religious Broadcasters; Dan Busby, president, Evangelical Council for Financial Accountability; Shirley Hoogstra, president, Council for Christian Colleges and Universities; Donna Markham, president, Catholic Charities USA; Nathan Diament, executive director for public policy, Union of Orthodox Jewish Congregations of America; Anwar Khan, president, Islamic Relief USA; Gerald Causse, presiding bishop, The Church of Jesus Christ of Latter-day Saints; Jerry Silverman, CEO, The Jewish Federations of North America; and Michael Smith, president, Home School Legal Defense Association.