Christian Coalition wins church tax battle

MONTGOMERY, Alabama — One of the toughest battles going on during the Legislature’s final meeting day was between the Christian Coalition and the Alabama Education Association over some churches not paying sales taxes. The battle was won by the Christian Coalition in the closing minutes of the session.

“Being a neophyte there, I think we did pretty good,” new state Chairman Randy Brinson said.

Brinson, a Montgomery physician, took over the state Christian Coalition after its previous leaders split from the national Christian Coalition and started a new group. This was his first legislative session as the leader.

AEA Executive Secretary Paul Hubbert said the battle over church taxes is not likely to be repeated in future legislative sessions, even though it means the loss of an undetermined amount of state sales taxes that pay for public schools and colleges.

“With all the furor being raised, nobody wants to vote against churches, so I suspect we’ll drop it,” Hubbert said in an interview.

The legislative battle stems from tax attorneys getting churches to set up “united appeal” organizations that don’t have to pay sales taxes under the state tax code. Then that tax break is used by the churches to avoid paying sales taxes when they have big building projects where the sales taxes on building materials could total six figures.

It’s an issue that concerns state Revenue Commissioner Tom Surtees, even though an administrative law judge for his department has upheld the practice.

Surtees said all churches were paying sales taxes until tax lawyers developed “a new spin” on the united appeal exemption. He said some mega-churches have started paying lawyers thousands of dollars to set up the united appeal organizations and avoid paying sales taxes. But smaller churches can’t afford high-priced lawyers and are still paying taxes.

Surtees said it creates an unfair tax situation that can either be fixed by exempting all churches from sales taxes or exempting none. “This administration leans toward exempting all of them,” Surtees said.

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