Photo by Sebastian Pichler on Unsplash
As we’re all very aware, questions of financial transparency have recently become tremendously salient to the church and its members.
There are, of course, ways to remedy the issue of financial transparency. The church could voluntarily release financial information. Or Congress could change U.S. tax law to require churches—like virtually every other tax-exempt organization—to file a Form 990, which would then be released to the public.
NonBelief Relief wanted to help spur this second option. NonBelief Relief was a charitable organization formed by the Freedom From Religion Foundation. Its charitable mission was to provide humanitarian-style aid, improving the world and the situation of people here. It also had a secondary purpose: to challenge the constitutionality of the tax law requiring non-church tax-exempt organizations to file information returns, but exempting churches from that requirement.[fn1]
And how did it plan on doing that? Well, a tax-exempt organization that is required to file a Form 990 and fails to do so for three straight years automatically loses its exemption. So NonBelief Relief refused to file a Form 990 for three years, and automatically lost its exemption. It proceeded to file suit in the D.C. Circuit, requesting that the court hold that (a) the church exemption from filing was unconstitutional, and (b) its exemption had been unconstitutionally revoked.
About two weeks ago, the court dismissed its complaint. The reasons are fairly technical, so I’m not really going to go into them. It’s enough to say that the law makes it really hard to challenge the constitutionality of tax laws without some kind of very specific injury, an injury the court said NonBelief Relief was not currently facing.
The court went on to suggest how NonBelief Relief could have standing to challenge the constitutionality of the provision. The court essentially said NonBelief Relief would have to pay taxes it owed, sue for a refund, and, in that suit, make its constitutional claims. And maybe NonBelief Relief will follow that path, though I’m not convinced that, as a legal matter, they would win the suit.
Effectively that means that, if we want churches to face the same disclosure requirements that other tax-exempt organizations face (and we do. Really), it’s going to require legislative change. I suspect the judiciary isn’t the way we’re going to get there.
[fn1] You may remember that the Freedom From Religion Foundation did its share of constitutional litigation. Notably, I blogged A. Ton. about its (ultimately futile) challenge to the parsonage allowance.