Southern Gospel’s Big Misrepresentation

TaxFreeExemptI mentioned in my final post of 2014, that I would be featuring some ‘hard hitting’ commentary in 2015 as it relates to the Southern Gospel music industry.  The first in this feature covers Southern Gospel’s biggest misrepresentation.

When did a Christian entertainment industry transform in to this ‘ministry’ designation that began in the 1970’s and still runs rampant today.  One of the biggest misrepresentations is that artists use this ‘ministry’ designation to actually register their group as a 501(c)3 tax exempt organization with the Internal Revenue Service.

If my readers remember, I am an accountant in my day job.  Tax season is upon us and I thought this would be a perfect topic to address as individuals begin thinking about another tax year.

????????????????????????????????????????In order to qualify as a tax exempt organization with the IRS one must meet the following criteria:

  1. An organization must be organized and operated exclusively for exempt purposes.
  2. None of its earnings may inure to any private shareholder or individual.
  3. It can’t be an action organization or influence legislation.
  4. It may not participate in any campaign for or against political candidates.

If an organization qualifies under the federal guidelines, then contributions received are considered tax-deductible.

My first issue with this, is how can any artist touring/performing every weekend receiving income from performance fees and product sales and uses this income as their full-time employment wage ever consider this income tax exempt?

When did touring/performing full-time in a music group (even in a Christian music industry) automatically become a religious based tax exempt organization?

Are the wages received by the members of the group considered employment wages and therefore taxable to those specific members, leaving only the entity itself tax exempt?  If so, there are still ways to accomplish this without using the religious tax exemption.

I do want preface this post by saying I searched the IRS tax exempt status of certain Southern Gospel musical artists and found at least a dozen that are set up as either a tax exempt public charity or tax exempt private foundation.  I also want to state that of the dozen I found I can’t guarantee that those designations are still being used by the artists found.

TaxExemptionRevoked250_250I am not attacking those artists that may use this designation, I guess I am just trying to understand and am surprised the IRS would even grant it considering how the income is generated.  On a side note, I am surprised many churches in the USA haven’t been stripped of their tax exempt status for breaking #4 on the criteria list, but I digress.

So what are your thoughts?  As a listener of this music, do you have a problem with how certain artists classify the income they make?  Do you have arguments one way or the other on why you would or would not support a tax exempt status of a Southern Gospel artist?

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6 thoughts on “Southern Gospel’s Big Misrepresentation

  1. Amen and Amen! A lot of churches participate in politics…and I’m guessing some of the same SG groups who don’t mind talking politics from the stage.

    I guess this explains why SG entertainment loves the ministry designation vs. entertainer designation. Follow the cash…

    I wonder if I can start a Southern Gospel Engineering firm…hmmm. If I set my office up in a church and generate all my income in the church I should be fine not paying taxes. I see a raise in my future.

  2. Until the NCAA and their nearly billion dollars a year are no longer tax exempt, the IRS shouldn’t be worrying about southern gospel music.

  3. I have to admit I don’t know a lot about the regulations except I believe even the IRS recognizes a difference between churches or ministries taking a stand on issues, but not candidates. There are multi-million dollar corporations that are incorporated as a non-profit corporation (such as hospitals) and in some cases their employees make a lot of money, but their personal income is not supposed to be tax-free. I found out recently while checking out costs for copyrighted songs, a non-profit religious 501c(3) gets a big advantage, for example live-streaming their worship services. I am not in favour of fraud and abuse, but to legally and ethically pay less to Uncle Sam, definitely in favor.

  4. This is a good topic, I’d like to hear this out. Also another one for me, i find that singing is not a ministry. I only find 5 in the bible, Ephesians 4:11.

  5. Regarding whether or not singing can be a ministry, I’d like to mention what I believe is a type in the Old Covenant that can be applied to the New Covenant. In 1 Chronicles 15:27-28, it is recorded that the Levites bore the Ark of the Covenant before King David and the singers were in that procession, which included music, dancing, trumpets, etc. The Ark of the Covenant contained the Law (the Word of the Lord for that day). Under the New Covenant, singing and music often prepares the heart for ministry – to receive the Word of the Lord. In Ephesians 4:11, the Apostle Paul is speaking of the office works of the Holy Spirit (apostle, prophet, pastor, teacher, evangelist). Notice he does not say that God ONLY establishes those positions and nothing else. So, I agree that singing can be a talent, rather than a ministry, but I also believe there have been some singers who are / were indeed ministers (ie, a musical evangelist, etc.). 1 Corinthians 12 sums up the importance of ALL members of the body, whatever their positions.

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