Abstract

ABSTRACT In a democracy characterized by the separation of church and state, what role does the federal government play in regulating the activities and the financial transactions of churches and other religious nonprofit organizations? What are the current federal requirements regarding tax exemption for churches, tax deductibility of donations to churches, and political activity by churches, and are these requirements justified? Rather than interfering with the free exercise of religion, does the federal government actually come closer to violating the establishment clause of the First Amendment by providing inappropriate tax benefits to churches and clergy? This paper discusses tax laws and federal court decisions relating to these and other issues.

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