A local historic church in our community has stopped doing weddings because they prefer not to be asked to do services for same sex couples. They are a 501(c)(3) organization and I assume that such action may put them in trouble with the IRS for discrimination. Would they benefit if they changed their organization to 508(c)(1)(A)?
First, let’s clarify the tax status of the church. It is exempt from federal income tax as an organization described in section 501(c)(3) of the Tax Code. That is the same section that describes universities, hospitals, museums, community foundations, private foundations, United Ways, and the myriad of other charities. A church is exempt from the requirement to file for recognition of its 501(c)(3) status by the IRS, which is required of virtually all other charities, under the provisions of section 508(c)(1)(A) of the Code. Section 508(c) is not a section that by itself grants tax exempt status; it only grants the right of a church to be treated as a 501(c)(3) charity even if it does not apply separately for recognition of that status from the IRS.
A lot of people think these two sections apply to two different types of organizations, but that is simply not true. We had another question recently from a person who was convinced that he had created 508(c)(1)(A) church and refused to believe that the church was actually a 501(c)(3) church. Section 508 does not grant exemption; it merely eliminates the requirement of a church to file for IRS recognition of its 501(c)(3) exemption.
The IRS is not likely to take adverse action against the church because, as a matter of church doctrine, it does not wish to perform same sex marriages. Under the First Amendment, the government does not impose religious beliefs on churches. It has denied church status for organizations whose doctrine requires use of illegal drugs, and presumably would deny church status if the organization’s doctrine required human sacrifice. But it doesn’t impose penalties or deny church status for differences in beliefs.