MrJonno wrote:Whole problem with tax exceptions for charitably organisations is unless there is a very strict definition of what is charitable you simply get mass tax evasion.
The tax exemption is generally not defined as "charitable," it's defined as "non-profit," which is much easier to determine. There are many forms of non-profit organizations that are "charitable" in nature, and each one has to file mandatory tax returns every year showing how the money is spent. This includes churches. The IRS will challenge, from time to time, particular expenses claimed as administrative or operating costs when they are out of line with similar costs for other like organizations, but the latitude is wide. For example, a pastor of a megachurch may make a paltry salary, but the congregation may provide him with a home, cars, clothes and other items that he uses personally, but which are not his, but rather they belong to the congregation. That's what happened to Ted Haggard, and when he was booted from "his" church, all the "stuff" he had stayed behind.
The non-profit status of churches is something that can, at least in theory, be revoked if the money collected is used improperly or distributed as "profits" to members or administrators.
It's all relatively tightly run, but so long as a church doesn't make a profit according to the accounting requirements of the IRS, it remains a tax-exempt charitable organization, to a large extent.
As for those who donate to non-profit organizations, be they churches or the Sierra Club, their donations are deductible against their income taxes for public policy reasons, which mainly consists of a public recognition that charitable giving is a good thing and that non-profit organizations do service to the community, in one way or another, that far exceeds what would be collected by the IRS taxing such donations.
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