Sioux Falls, USA - South Dakota's Department of Revenue and Regulation has asked churches to follow a 1939 law and pay taxes on some items purchased outside the state.
The issue is whether churches must pay use taxes on items such as candles, bibles, sacramental wine, bread, song books and other liturgical items.
The state action strikes some as excessive.
"When people put money in the offering plate, they're hoping it's going for the working of the church," said Kermit Staggers, a former state legislator who called the department's action a "gross violation" of the separation of church and state.
"I think it's opening up a whole can of worms," said Gary Nesdahl, executive director of the Association of Christian Churches of South Dakota.
"If you identify a church as a business and they have to fall under all regulations, we're looking at a different church. We're sort of flying in the face of tradition," said Nesdahl, whose group represents about 1,000 of the 2,000-plus churches in South Dakota.
The state is just trying to make sure churches and other nonprofit organizations are meeting their tax obligations, said Jane Page, assistant director of the Revenue Department's Business Tax Division.
"We're not looking at churches as businesses," Page said. "(But) churches have never been exempt from sales or use tax when they purchase items like a business."
The Revenue Department says a use tax must be paid when such items are purchased outside the state. A letter from the department has ordered the churches to obtain a tax license. And if a church owes back taxes, the state wants to collect for the past three years, waiving interest and penalties.
Page said "quite a few" churches have applied for the tax licenses.
Church leaders from a dozen denominations planned to talk with a Revenue Department official Tuesday.
Churches have never been exempt from the 1939 law, which also covers individuals. The statute says people should be paying tax on clothes or other items bought out of state.
Nesdahl said the use tax is unenforceable at that level.
"If they can't enforce it uniformly, should it even be on the books?" he said. "(But) our biggest problem is not with the (use) tax, the biggest problem is with the Department of Revenue trying to bring us under their purview."
The thought of state auditors going into a church and looking at its revenue is extremely disturbing, said Staggers, who called the state's decision to go after churches unprecedented.
"Auditors are not going to go after institutions where there's no money to be gotten," he said. "Somebody in the Department of Revenue thinks churches provide an opportunity."
Legislation or a constitutional amendment should be passed to exempt churches from the tax, Staggers said.