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Magick and the Law

Or the Proper Way to Obtain
Legal Recognition of Your Church

Pete Pathfinder

Via the Wiccan/Pagan Press Alliance

With the separation between church and state rapidly eroding in the present political climate, and with the needed operating funds becoming scarcer, the need for a church to qualify for tax-exempt status becomes more pressing. Because the clergy in Wicca usually do not receive a formalized resident seminary training, we are often unaware of how the law treats this important subject, what our rights in the matter are, and how we can go about securing those rights.

I give an overview of the subject, based on the experience of the Aquarian Tabernacle. This does not, however, replace the advice of an attorney or accountant. Laws vary from state to state, and the information given by the IRS, by there own admission, cannot be relied upon.

There are various kinds of tax-exempt organizations that can seek an official IRS Letter of Determination of their status, from volunteer fire departments, schools; church auxiliaries right up to the churches themselves. Note the distinction between churches" and church organizations." The later may be anything from a Ladies Rosary Society to a Food Bank functioning under a church (the former is clearly defined). For some reason I am not privy to, CoG was set up not as a church but as a related organization. Under our Federal constitution, churches specifically have some advantages in government treatment that other church-related organizations do not have. If CoG had sought recognition as a church it would not be required to file an annual report of its finances with the IRS; as a related organization, it must file an annual Form 990 reporting the financial dealings. In some states if a church describes itself as a house of worship and education" rather that using the term charitable" organization, it can avoid restrictions otherwise imposed on charities, designed to assure charitable distribution of most of the funds so raised and limiting administrative costs.

There is an anomaly here. Because of the language of the Constitution and pertinent court decisions, if a group defines itself specifically as a church," and meets most of the criteria set up by the IRS to judge churches, it is automatically exempt and does not need a determination letter to be considered a tax-exempt organization. The IRS hastens to suggest, however that it might be useful for such a group to apply for (and receive) a determination letter anyway. Use the IRS publication 557, Tax Exempt Status for your Organization," as a guide. It is available free from any IRS office. Page 8 lists the organizations that are not required to obtain a determination to qualify.

Commissioner Jerome Kurtz of the IRS has publicized the following criteria that determine if a group qualifies as a church. Because people who are thinking in terms of the mainstream religions created these guidelines, Kurtz issued a qualifier: We are aware that few, if any religious organizations—conventional or unconventional—could satisfy all of these criteria. For that reason, we do not give controlling weight to any single factor."

The fourteen points are:
1) a distinct legal existence
2) a recognized creed and form of worship
3) a definite and distinct ecclesiastical
government
4) a formal code of doctrine and discipline
5) a distinct religious history
6) a membership not associated with any other
church or denomination
7) a complete organization of ordained ministers
ministering to their congregations
8) ordained ministers selected after completing
prescribed courses of study
9) a literature of its own
10) established places of worship
11)regular congregations
13)Sunday Schools for religious instruction of the young.
14) schools for the preparation of its ministers.

It is obvious that Wiccans cannot meet all these criteria; nonetheless some Wiccan groups, notably Circle, have received a Letter of Determination from the IRS. I'm certain there are others as well.

Let's review the most important point: a distinct legal existence." This relates to how the group has formed itself with respect to the laws of the state. The most common form is nonprofit incorporation, which can take two forms. You can incorporate as a nonprofit corporation of the ordinary type, or has a Corporation Sole (the form usually taken by larger denominations such as the average Catholic Diocese or the Church of Christ of the Latter Day Saints (Mormons)). The advantage of a Corporation Sole is that it cannot be dissolved by the state or its incorporators, and continues its legal existence ad infinitum. An ordinary corporation may have its charter revoked, it may dissolve itself, or `go out of business' by direction of the court. As I understand Corporation Sole, none of these things can happen to it—it is formed in perpetuity. Incorporation requires a Certificate of Incorporation, or Charter, to be filled with the Secretary of State in your state capital, usually accompanied by a set of bylaws governing the corporation. The charter must include specific things, such as nonprofit status, and (to satisfy the IRS) the provision that, if dissolved, the assets will go to another qualifying IRS Section 501(c)(3) group. Another requirement of the documents is a self-prohibition against lobbying or influencing legislation which, if absent, is a clear disqualification.

Incorporation is not the only vehicle to create a formal and distinct legal existence. Articles of Association forming a non-incorporated organization are also suitable, although they do not grant certain liability limitations inherent in a corporation. Bylaws are also required in this case, together with the limitations on disposition of assets, nonprofit character and restriction against lobbying. The Universal Life Church chartered many groups in this manner. But today, affiliation with the ULC seems to be the kiss of death as far as the IRS is concerned. While many had originally formed under the ULC as a convenient vehicle acceptable to the general public, many abuses by ULC charters and the intemperate comments of Rev. Kirby Hensley Jr., its founder, have labeled it a tax protester group" and therefore risky.

After the formation of a legal entity, it is necessary for the church to get an Employer Identification Number (EIN), the equivalent of a personal Social Security number. Obtain a form SS-4 from the IRS; it is self-explanatory. Remember the church is answering the questions, not yourself, so don't use your own SS number or other personal information. Check Nonprofit Organization" under item 10 (and Corporation" if you have incorporated). Under item 14, Nature of Principle Business Activity, put House of Worship and Religious Education; avoid the use of terms which relate to `charity' unless it will be your principle focus.

The IRS will send you a number that identifies your church to the government. This is necessary even if the church has no intention of employing anyone. It is like a Social Security number for the church, a form of registration with Uncle Sam letting him known you exist. It is essential to any recognition of tax-exempt status regardless of any Determination Letter. Despite Wiccan custom, letting the government know you exist is essential. Whether you file a Form 1023 with the IRS and seek a formal Determination Letter, or rely on your constitutional right to an automatic exemption is up to you. If you do file, do it with the help of a competent tax attorney or certified public accountant. You will be asked to substantiate the other applicable points out of the 14, and prove that your group is in fact a functioning church. They tend to suspect everyone of tax avoidance schemes.

The one matter that the IRS will not attempt to examine is the credo of a particular religion. The Order of the U.S. District Court for the Eastern District of California, No. S-1954 (Universal Life Church vs. USA) clearly set forth the official policy regarding doctrine of any religious group.

The Employer Identification Number of the church should be used on all bank accounts opened in the name of the church. On the account and the checks, always include the name of the church followed by a notice like a Washington not-for-profit religious corporation" to make it clear that it is an exempt account rather than a personal one. Only funds of the church should be deposited, and only clearly legitimate church expenses paid from it. Take pains to avoid the appearance of personal use, combining of personal funds, or payment of personal bills.

The church should not attempt to pay any living expenses or salary to or for any officer or minister of the church without the advice of an accountant, as this becomes a very sticky area. Such things are legal and can be done, but take care to avoid inurement that would destroy the tax exemption. The Local Pursewarden's Manual recently written by Tiller and issued by CoG for Local Council Pursewardens is an excellent guide. If in doubt, ask your accountant before doing anything.

Some states regulate the activities of nonprofit organizations and charitable groups. To avoid these unnecessary entanglements with government, declare to be a church, a house of worship and religious education, and nothing else. Keep it simple. Constitutional guarantees of separation of church and state usually won't be overrun by the state when charity doesn't enter the picture. Of course, any church can collect monies for charitable purposes—this is implicit in the nature of a church. But by avoiding the mention of charity in your charter, you will usually escape the legislation intent to regulate groups like Community Chest, the Lung Association and others less respectable, who have made a business of raising hugs sums of money and spending most of it on administrative expenses and salaries, putting only a little to actual charitable use. Churches are guaranteed such an exemption here in Washington state, and I'm certain many other states do so, too. I hear California meddles in church affairs, but if they do, it is probably based either on the church using the term charitable," or a failure to challenge the constitutionality of the action in court.

This is a basic outline of the salient points involved in creating a legal entity for your church and doing some of the required registration. Some jurisdictions may require registration of the church with state, country, or municipal officials, and registration of ministers in order to be able to solemnize marriages. Check this out in your locale. If you are required to register, legally all that can be required is that you supply the requested information. It is illegal for any agency of any level of government to impose any restrictions or requirements on you. If you experience such abuses, report them to CoG. New York City had such restrictions until Judy Harrow, former CoG first officer, went to bat. Now any of us can register in New York City to perform weddings, thanks to Judy!

Any questions or experiences relating to these matters can be directed to me. I am happy to be of service, and I value your input as I am writing a handbook on this subject. Pete Pathfinder, P.O. Box 57, Index, WA 98256.