Institutions Politics

Atheists challenge IRS over nonprofit finances

Logo of the Internal Revenue Service

(RNS) Nonbelievers are challenging the Internal Revenue Service’s special exemptions for religious organizations in a federal court in Kentucky, saying churches and other religious groups should have the same financial rules as other nonprofit groups.


Logo of the Internal Revenue Service

courtesy of U.S. Dept. of Treasury via Wikimedia Commons/Public Domain

Logo of the Internal Revenue Service

If they prevail, it will change the tax-exempt status of churches and other religious organizations, and require the same transparency of donors, salaries and other expenditures that secular nonprofits must currently meet.

“This is a very strong case,” said Dave Muscato, public relations director for American Atheists, a national advocacy group and lead plaintiff in the case. “It seems to be straight-up discrimination on the basis of religion.”

American Atheists is joined in the suit by Atheists of Northern Indiana and Atheist Archives of Kentucky. Oral arguments were heard Thursday (Nov. 21) in the U.S. District Court for the Eastern District of Kentucky in Covington.

The case centers around who must file IRS Form 990, an annual reporting statement that provides information on a group’s mission, programs and finances.

Current tax law requires all tax-exempt organizations to file a Form 990 financial report — except churches and church-related organizations. A few state, political and educational organizations are exempt as well if their annual revenues fall below certain amounts.

This means the IRS treats religious organizations differently than it does all other organizations, the suit holds. It claims the IRS policy is a violation of the First Amendment and the due process promised under the Fifth Amendment.

IRS spokesman Anthony Burke said the agency’s policy is not to comment on pending litigation.

The suit argues that religious organizations receive preferential treatment because they do not have to withhold income tax from compensation to clergy, reveal staff salaries, or disclose the names of donors who give more than $5,000.

The plaintiffs allege that because they must reveal the names of major donors, they are hindered in the amount of money they can raise.

“We have donors who tell us, ‘I would like to give more than this but I don’t want people to know I am an atheist,’” Muscato said. “That is hurting us to be held to that different standard.”

The suit also alleges that, because religious organizations do not file Form 990, there is little proof that the organizations’ activities benefit the public and should therefore be tax-exempt. It holds that such “subsidization of religious entities” costs taxpayers $71 billion per year.


About the author

Kimberly Winston

Kimberly Winston is a freelance religion reporter based in the San Francisco Bay Area.


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  • Ahhh the cute little atheists are mad. Too bad the donors don’t have enough integrity and courage to admit their foolishness. Boo hoo.

  • Isn’t it funny that in the process of trying to destroy organized religion that the atheist in effect has made a religion?

  • Tradition enshrines injustice – nothing is more socially respectable.
    “If your daddy stole, and his daddy stole, then you have inherited the “right” to steal.”

  • Bob, First, thanks for calling all atheists cute. I’m actually an anti-theist, but I’m very used to believers being wrong. The comment leads one to suppose you’re attracted to box sexes though. Although I’m into one woman, don’t worry, that’s alright with me as well, I don’t have a rule book of hate that guides my beliefs. As far as not having enough integrity and courage, you mean like people who make childish comments but don’t have enough integrity and courage to use their real full name? Or maybe it is the bi-sexual attraction you’ve got going on that is holding you back from being open and honest? I urge you, don’t hide from yourself and others, be strong and stand up for what you really are. And we both know what that is.

  • Church-State separation is what we already have. What this is proposing is to bring the church under the authority of the state. This suit assumes that the state has some sort of constitutional authority to tax churches.

    Real Church-State separation says that the state has no more authority to tax a church than a church has authority over the state to collect tithes from it.

  • This suit says nothing that would infer constitutional authority over churches by the state. By accepting that legal status from the State that creates a tax advantage and requires the rest of the public to subsidize their activities through foregone taxes, these institutions are accepting the oversight that comes with it, and there is no legitimate argument for that being any less than secular institutions that have not for profit status under the tax code, including disclosure of salaries, donors, and verification of charitable activities. So if you are concerned about interference by the state, there is nothing requiring a religious institution to file for tax exempt status and they would therefore have no requirement to file a Form 990. It is a choice the institutions are making of their own free will.

  • If they were a religion, they’d get the same treatment. The whole point of this lawsuit is that they get inferior treatment only because they aren’t a religious organization. That’s a straightforward first amendment violation.

  • The atheists most certainly are NOT making a religion out of their beliefs. They don’t believe in supernatural elements. They don’t believe in magic.

    What atheists ARE building is community. That is something they have lacked – for centuries. Starting with the Catholic Inquisition non-believers have been demonized and ostracized. So, they have lacked a voice.

    Humans are social creatures. They have social needs that brings them together. Both religious & non-religious people have an inherent desire to be with others, to help others, to improve the world around them so that future generations may benefit from those who preceded them..

    Humanity is learning that they can build community and look after each other without using magic and fairy tales as the glue that binds them. Rather they are learning that they can be good without God.

  • Foolishness, like NOT believing in talking snakes, men living inside of whales and the world being about 6,000 years old, and the ones who DO believe in those things are the opposite of foolish I suppose.

  • He also called atheists ‘little’ which didn’t seem to bother you as much..?

    ‘…attracted to box sexes..’ – what does this mean? Guessing you meant to use the word ‘both’?

    Quite a leap of logic from being offended by a perceived or is it projected (sexist?) slight, to calling someone else a bi-sexual (is that meant to be a slur or a compliment?).

    Is it normal and acceptable for atheists to be prejudiced?

    I would expect someone who defines himself as an ‘anti-theist’ to be prejudiced. It’s kinda in the name really, isn’t it?

    Generally, when one says ‘First’ (sic) it is accepted that there will be a second point and that it will be referenced accordingly.

    Just trying to add some constructive criticism to assist you in expressing yourself more effectively.

    I must just note that anti-theists seem to get things wrong fairly regularly; even in one comment box?

    A just another minor note, if you would bear with me; Bob seemed to say that ‘the cute little atheists are mad’, although you appear to have inferred from his comment that ‘all atheists’ are cute?

  • I have probably inflamed a couple of old tiffs and opened myself up for some rebuke or other. Guessing it will be around spelling, grammar and being a retard or stupid person for having the audacity to tease an atheist. My own fault really. It is widely understood that atheists have little to laugh about.

    However, while making light I would like to voice my opinion on the special status that churches hold in the USA (and a few other places). A non-prophet organisation and a non-profit organisation should be dealt cards from the same deck. Not because they are both religions but because they satisfy the requirements (all the requirements) of a not for profit organisation. In my country, the reference is a section 21 company (or trust etc) and all comers MUST (apologies) lodge and run there organisation following the exact same laws.. Zero differentiation. This is the proper fiscal control requirement. Zero exceptions. I can not accept that churches should be allowed to muddy the water and then expect to be exempt from detailed scrutiny. If your affairs are inappropriately managed the n you should be forced to rectify within one tax period. End of story. Your salaries, your donors, your family links, the obscenely expensive ministry toys and houses all available from a link on the front page of your website. In my country the fellow directors or trustees may not be connected persons (from a tax not mafia perspective). How can true accountability be had when the trustees are mummy, brother, uncle and dad. It borders on being downright dodgy. Flame suit on.

    For clarity I am a Xian.