The Washington Post’s exclusive story on David Nielsen’s whistleblower complaint to the IRS with respect to The Church of Jesus Christ of Latter-day Saints “saving its excess surplus donations instead of using them for charitable works” deserves a more technical explanation of the law surrounding tax-exempt organizations. First, let’s establish some foundational points: 1) the primary purpose of a charity’s activities is to accomplish one or more tax-exempt purposes; and 2) the tax-exempt purposes include religious, charitable and educational, among others. It bears noting that religious organizations are granted a high level of deference relative to other charities as it relates to fulfilling their tax-exempt religious purposes. The First Amendment’s Religion Clauses — Establishment Clause and Free Exercise Clause — prohibit the government from making laws establishing religion or prohibiting the free exercise of religion. Accordingly, religious organizations are deemed charities without having to go through the formal application process required of other charities and are generally exempt from annual filing requirements. What’s more, the IRS provides considerable latitude to religious organizations and presumes their validity if they bear basic tenets of a religion (e.g. a creed or form of worship, a formal doctrine, etc.). Historically, religious organizations operate […]
