American Atheists is Suing the IRS, Claiming That It Gives Preferential Treatment to Religious Groups

The IRS loves churches.

How do I know this? On Pulpit Freedom Sunday back in October, more than 1,500 churches openly defied the law and endorsed a candidate for President. The IRS sat back and did nothing about it. Why? Bureaucracy. There was no one in the office who had the authority to initiate the audits, they said. It didn’t sound like they were in a rush to find someone to fill that position, either.

Last month, the Freedom From Religion Foundation sued the IRS over this. They said that Douglas Shulman, the IRS Commissioner, was violating the Establishment Clause of the Constitution by not doing his job and enforcing the “you can’t endorse a candidate from the pulpit” rule. (They also said Shulman violated their Equal Protection rights.)

The preferential tax-exemption that churches and other religious organizations obtain, despite noncompliance with electioneering restrictions, amounts to more than $100,000,000,000 annually in tax-free contributions made to churches and religious organizations in the United States.

In other words, if churches are taking in so much money, tax-free, they should not be allowed to break the law and endorse political candidates. It was the IRS’ job to make sure that happened, and even when the churches flaunted their violations of the law, the IRS pretended like nothing was happening.

We’re still waiting to see how that lawsuit plays out.

Tonight, American Atheists announced that they, too, are suing the IRS, but for a different reason: They say Shulman is giving preferential treatment to churches and religious organizations (PDF):

[American Atheists, Atheists of Northern Indiana, and Atheist Archives of Kentucky] seek an injunction and declaratory relief to stop Defendant in his capacity as Commissioner of the [IRS], and hence the IRS, from giving preferential treatment to religious organizations and churches under I.R.C. § 501(c)(3) in violation of Plaintiffs’ rights to the Equal Protection of the Laws required by the Due Process Clause of the Fifth Amendment, the First Amendment, and the Religious Test Clause of Article VI, § 3 of the Constitution to the United States of America.

Ok… let’s put this lawsuit in English (courtesy of a math teacher who has no legal training but claims to know how to read):

Religious groups (including churches) are tax-exempt, just like non-profit groups. Usually, groups that are tax-exempt have to submit an application to receive that benefit (Form 1023) or pay a large fee ($850). Religious groups don’t have to do that.

Furthermore, churches don’t have to tell the IRS what they do with the money they take in. So are they doing things that actually benefit the public and, thus, warrant a tax-exemption? Who knows. Other non-profit groups, on the other hand, have to file that paperwork meticulously.

Churches also get other special benefits the rest of us don’t: Pastors, for example, can deduct the cost of mortgage payments and homeowners insurance from their taxable income. Churches don’t have to withhold income tax from salaries paid to pastors. There’s no limit to the size of these deductions, either. Considering how many pastors there are who live in multi-million dollar mansions, it’s pretty obvious a lot of churches take advantage of this rule.

Those tax deductions we’re not getting from the religious world cost our country an estimated $71,000,000,000 a year.

American Atheists has urged the IRS to classify them as a religious group so they can get access to those same benefits, but the IRS has said no each time.

That, AA claims, is discrimination:

… American Atheists was forced to undergo expense to apply for 501(c)(3) tax exempt status that churches and most religious organizations are not forced to undergo.

… American Atheists is forced to expend time and money making accurate annual filings with the IRS each year or risk losing tax-exempt status or being subject to other sanctions for non-compliance. Most religious organizations and churches are not.

It would violate the sincerely held belief system of American Atheists to seek classification as a “religious organization or church” from the IRS. It, therefore, files its informational return each year while enduring discriminatory treatment.

Thus, American Atheists is forced each year to disclose information about its employees, volunteers, and donors — members of the most hated minority in America today that is subjected to great prejudice and discrimination — whereas churches and many religious organizations need not make such disclosures.

Overall, AA argues, the IRS gives unfair preferential treatment to religious groups and discriminates against atheists.

It prevents AA from getting donations larger than $5,000 because they would then have to disclose the donors’ names, something churches don’t have to do. This gives churches a “fundraising advantage.”

The filing fees to retain 501(c)(3) status are expensive — something churches don’t have to pay but atheist groups must.

Atheist groups have to pay their staff more money since they can’t deduct anything for housing expenses like churches can.

AA is asking the Court to rule that all tax codes treating churches differently from other non-profit groups are unconstitutional.

Do they have any chance of winning? Dave Silverman and AA’s Legal Director Edwin Kagin are betting on it:

“American Atheists receives tax-exempt status under Internal Revenue Code 501(c)(3),” said American Atheists President David Silverman, “but because the organization is not classified as religious it costs American Atheists, along with all other secular non-profits, significantly more money each year to keep that status. In this lawsuit, American Atheists and the other plaintiffs are demanding that all tax-exempt organizations, including those characterized as religious by the IRS, have the same requirements to achieve tax-exempt status.

“Religious organizations and churches are treated differently from secular organizations,” explained American Atheists National Legal Director Edwin Kagin. “The exemptions are applied in a way that discriminates solely on the basis of whether an entity’s members express beliefs and practices accepted as religious. The IRS treats your organization better if you profess belief in a supernatural deity.”

For what it’s worth, these kinds of lawsuits don’t always go very far, but the argument makes sense. It’s a lot easier for religious groups to operate, under our current laws, than atheist ones. If the government is giving preference to religious groups over non-religious groups, for any reason, there’s a problem.

About Hemant Mehta

Hemant Mehta is the editor of Friendly Atheist, appears on the Atheist Voice channel on YouTube, and co-hosts the uniquely-named Friendly Atheist Podcast. You can read much more about him here.