The corporation sole is experiencing explosive growth as a direct result of aggressive promotional efforts, primarily through the internet, by dozens of corporation sole sales companies. Thousands of new corporation soles have been formed in the past several years, and that growth continues.

The corporation sole is being recommended by its promoters as a way of organizing “churches” and for other “ecclesiastical” purposes. If really used for such purposes, one may be able to justify doing so on a purely "legal" basis, since the corporation sole is a valid and legally recognized corporate entity.

A major problem, however, lies in the fact that all the corporation sole promoters misrepresent the legal attributes of the corporation sole. Rather than recommending it for exclusively legitimate religious functions, corporation sole peddlers also sell it as an attractive vehicle for personal and business use. This allegedly includes tax immunity, asset protection, estate planning, etc. Of the thousands of corporation soles that have been formed in recent years, the vast majority appear to be shams that have little if any legitimate religious purpose.

No doubt there is at least a small percentage of recently formed corporation soles that have been organized by legitimate pastors and ministers who have no intention of using the corporation sole to game the system. In point of fact, corporation sole peddlers often specifically target real churches because they provide multiple sales opportunities. After they convince the pastor to reorganize as a corporation sole, then they turn their attention on selling individual members of the church their own corporation soles, as well.

Corporation sole peddlers claim that anyone who has a "ministry" legally qualifies to have a corporation sole and, thereby, obtain all the alleged tax benefits. But what is a "ministry?" According to corporation sole peddlers "ministry" includes just about every conceivable activity that a Christian or, if you're not a Christian a "religious person" (corporation sole peddlers aren't especially picky about their clientele), would ever engage in, including investments and profitable business ventures.

Upon an exhaustive review of a plethora of corporation sole marketing materials, it quickly became apparent to me that the terms "church" and "ministry" are really just being used for a cloak, as a front, as window-dressing to disguise (and not so cleverly) the actual intentions of the corporate sole peddlers. The claims being made about the corporation sole by its touters often have little or nothing to do with real churches, and more to do with twisting and completely redefining well-understood words and phrases.

There's nothing new about this hoax. Corporation sole promoters are just putting a new twist on an old tax scam -- the religious ordination mill. For many years people have sought so-called religious ordinations from religious ordination mills, such as the Basic Bible Church Of America, generally for no other reason than to obtain some mythical tax advantage.

The IRS began issuing Revenue Rulings some years ago (e.g. Rev. Rul. 78-232, Rev. Rul. 81-94, Rev. Rul. 89-74), warning about religious ordination mills and "mail order churches." The IRS has long made it clear that participation in sham ministerial ordinations, and sham church schemes, would result in the most unpleasant of consequences.

The theories that corporation sole promoters are peddling today are no different than the theories that the clients of mail order churches tried using decades ago. Many of those folks went to jail, and many more lost all their assets to the IRS. The results are proving no more favorable for purchasers of the corporation sole.

 

Logical Problems

It is not my intention here to pass judgement upon the ideology of corporation sole promoters. Some of them (at least those few that aren't common hucksters and swindlers) have a genuine passion for personal liberty and the reestablishment of constitutionally-constrained and limited civil government. On that point we would have something in common.

However, corporation sole peddlers universally suffer from an inability to think logically or to reason cogently and in a way that is intellectually honest. They suffer from reasoning that is driven by ideological wishful thinking, rather than objective thinking. Drawing any conclusions based upon wishful thinking often has disastrous consequences.

Another form of logic commonly employed by corporate sole peddlers is known as "hasty generalization" and "weak analogy." Here's just one example, in the form of a syllogism:

• Position Statement: All churches are automatically tax exempt.
• Position Statement: Many corporation soles are churches.
• Conclusion: All corporation soles are automatically tax exempt.

Both position statements are true. The conclusion, however, is false. It should be apparent why such logic is flawed; but many folks who purchase a corporation sole have missed it altogether.