I apologize if this post is long.
I've heard the argument many times throughout the years that churches should lose their nonprofit status, and while I've heard many emotionally charged debates, I've never heard a legal argument as to why to tax churches or where to draw the line.
Legally speaking, churches are defined as "social welfare organizations" as a 501(c)(3) organization so long as no part of the church's income goes to the benefit of "any private shareholders or individuals", and any surplus must essentially sit in the bank to be used for a nonprofit purpose, and if it isn't, the church is at risk of losing its nonprofit status or ending up in "the big house." Along with that, anyone who earns a salary from a church must also pay income taxes.
Finally, churches are the only 501(c)(3) organizations. Among other things, charitable and scientific organizations are listed. I find it hard to distinguish between a scientific and religious nonprofit, and why one should pay taxes while the other shouldn't. I see them both as contributing to the social welfare of America (scientific nonprofits advancing knowledge, churches providing social programs/aid).
There's a lot more I could say about this topic (such as laws regarding lobbying), but I'll address those things if they come up.
So, what do you believe should be the legal requirements for a church to be a nontaxable nonprofit?
I think that so long as churches continue to only spend their income on overhead and social welfare, they should be allowed to maintain their nonprofit status, and any income used otherwise (i.e. lobbying) should be taxed.