By Collin Slowey

The passing of the 2017 Tax Cuts and Jobs Act has had several unintended, negative consequences for charities and faith-based nonprofits. One effect has been the destabilization of national charitable giving rates, due to changes to the standard deduction. Another major, negative aspect of the new law is the creation of the so-called “church parking tax.” This provision has elicited strong protests from prominent figures throughout the sacred sector. Different branches of the government have since reacted to the tax in different ways, and as the status of the law continues to change, it is important for churches and faith-based organizations to have a thorough understanding of how this issue affects them.

Though the 2017 revisions of the tax code were designed to help the American economy, they have created a host of issues for the nonprofit and faith-based organization sector. One particularly concerning issue is a provision that makes the money organizations spend on employee parking benefits taxable by 21%.

This church parking tax has negatively impacted a number of congregations and charities. Brian Walsh from the Faith & Giving Coalition explains that unlike for-profit businesses, which can pass off fringe taxes to their customers, nonprofits have virtually no margin for error. As a result, such a tax “can [have] a huge impact financially.” In one survey, Independent Sector estimated the cost to nonprofits’ missions at an annual average of $12,000. Some have paid significantly more: the average among the Jewish Federations of North America for this past year was $75,000.

The implications of the church parking tax are more than just financial, though. Specifically, the tax is drawing many of the organizations it affects into a new and uncomfortable relationship with the government.

Institutions and organizations have not always been afforded the same freedoms as individuals in the U.S. This is unfortunate, because, as the Center for Public Justice (CPJ) Guideline on Political Community puts it, “The social diversity of human life demands just treatment, which in turn calls for public policies that sustain ‘structural pluralism’ not just the rights of individuals in relation to government.”

Nevertheless, despite its faults, the American political system has historically accorded much freedom to civil society and nonprofit organizations. Moreover, these organizations’ taxes have been limited: since they pour their income into their services, into the communities they serve, it makes sense to exempt them from normal business taxation. Churches and faith-based organizations have been left even freer, following the dictates of the First Amendment. This freedom resulted from a recognition that the government’s power should be limited when it comes to religion because, in the words of the CPJ Guideline on Religion, “[n]o human authority can stand in the position of God or otherwise establish the terms of human responsibility to God.”

Now, however, a multitude of faith-based organizations, including many that have never filed with the IRS before whatsoever, are being treated like profitable businesses. This reveals a lack of understanding of, and respect for, the sacred sector.

There have been various efforts to repeal the church parking tax, but none have succeeded yet. With so many purportedly pro-church figures in Congress and the current administration, it is difficult to understand how a provision as harmful to nonprofits as this one could find its way into law and remain established for so long. One problem is that some legislators appear to be using the tax as leverage to push for other changes in the tax code, with standstill as the result. It is also telling that the federal government will raise $1.7 billion over the next decade if the tax remains in place—a lot of money and a strong incentive not to repeal the law.

Lawmakers understandably have many interests and issues to balance, but it is a shame that our nation’s religious congregations are being used as a bargaining chip in political games—or worse, as a mere source of profit. It is worth remembering that the tax is harming a wide variety of nonprofits with diverse ideological perspectives and missions, too. Repealing it would not favor churches; it would likely benefit the entire independent sector.

In the meantime, it is imperative that faith-based organizations and other nonprofits proactively address the issue themselves. Many congregations are unaware of whether or not they will fall under the tax, so it is essential that they find out what their financial responsibilities are. The IRS has released interim guidance on the provision, according to which organizations may find they are eligible for relief. Churches should delve deep into this material. Organizations would also do well to remove any “reserved” parking spot signs on their property.

It is unfortunate that the 2017 tax code revisions, which were created by a Congress and administration supportive of religious freedom and seeking to help American workers, have caused such a headache for the sacred sector. Treating churches and other nonprofits like businesses and burdening them with a fringe tax is unjust and contrary to American legal precedent. Hopefully, the government will arrive at a reasonable solution soon. Meanwhile, pastors and nonprofit administrators should educate themselves on this issue and do what they can to minimize their financial liability.

Collin Slowey is a former intern with the Center for Public Justice and a political science student at Baylor University.