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January 27, 2023

Religious Groups Think New Tax On Churches Is Blasphemous

Religious groups are starting to catch wind of a new tax quietly imposed by Republicans on churches and synagogues—and they are pissed.

Yes, you read that correctly: a new tax imposed on churches.

Politico reports:

[Republicans’] recent tax-code rewrite requires churches, hospitals, colleges, orchestras and other historically tax-exempt organizations to begin paying a 21 percent tax on some types of fringe benefits they provide their employees.

That could force thousands of groups that have long had little contact with the IRS to suddenly begin filing returns and paying taxes for the first time.

Some of the fringe benefits affected would include those for transportation, meals provided to workers, and possibly gym memberships.

In this instance, Republicans wanted to treat nonprofits the same as for-profit organizations, which saw tax breaks for their employees’ fringe benefits taken away in the Tax Cuts and Jobs Act in order to defray some of the cost of the law’s tax cuts, according to Politico.

Because [nonprofit] organizations don’t pay income taxes, lawmakers couldn’t take away fringe-benefit deductions. So instead they created a 21 percent tax on the value of some of nonprofit employees’ benefits.

The tax isn’t going over too well with religious organizations, including the Evangelical Council for Financial Accountability, one of more than 600 churches and other groups that have recently signed a petition demanding its repeal, according to Politico.

“What we’re talking about is an income tax on the church for providing parking to its employees — that’s what we’re talking about,” said Mike Batts, chairman of the board of the Evangelical Council for Financial Accountability, which is circulating the petition denouncing the tax. “It’s absurd.”

Galen Carey, vice president of government relations at the National Association of Evangelicals, told Politico that the cost of compliance, especially for churches with small staffs or volunteer accountants or bookkeepers, is going to be a “huge headache.”

“We don’t need this kind of hassle,” he added.

The Jewish Federations of North America said it will likely pay $75,000 in taxes this year because of the provision, according to the article.

Politico noted that the Treasury Department and the IRS are working on regulations that detail how the tax, which went into effect on Jan. 1, 2018, will work. Nonprofits are required to pay the new tax quarterly.

[Politico]

Image: iStock/AWSeebaran

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