I dare say that John 20:21-23 is one of the most misunderstood and misapplied passages in the entire Bible, partly due to a translation error. In understanding this passage, as correctly translated, context is everything, not only as that relates to the entire book of John but also as it relates to parallel passages in the other gospels.
If you look at the 4 gospels, there is at the end of each some sort of version of what has been called, “The Great Commission.” Matthew’s is in Matt. 28:19-20, which is essentially, go make disciples of all nations, etc. Mark’s is in Mark 16:15-18, which is similar, go into all the world and preach the gospel, whoever believes and is baptized will be saved, whoever does not believe will be damned, etc. Luke’s is in Luke 24:44-49, which is essentially, it behooved Christ to suffer and rise again the third day, and that repentance and forgiveness of sins will be preached in His name to all nations, beginning at Jerusalem. But when we look at John’s gospel, we don’t seem to see that, unless it is in John 20:21-23, which says:
21. Again Jesus said, "Peace be with you! As the Father has sent me, I am sending you."
22. And with that he breathed on them and said, "Receive the Holy Spirit.
23. If you forgive anyone his sins, they are forgiven; if you do not forgive them, they are not forgiven."
The context of this one verse, John 20:23, upon which the entire theology of confession rests, is the preaching of the gospel and of repentance and forgiveness of sins by the apostles as they were sent by Jesus in all the world with the good news that Christ died for our sins and rose again. As they preached and people repented and believed the good news, their sins were forgiven and they were saved, just like when Peter preached on the day of Pentecost when 3000 heard and believed. They were told to repent and be baptized for the remission of sins, not confess their sins to Peter or any of the apostles (Acts 2:38). After that, Peter could declare to them that their sins had been forgiven, but he could also declare to anyone not believing the gospel that their sins were not forgiven, i.e., they were retained.
In addition to context (going into all the world, not sitting in a confessional booth inside a church house), we must consider a proper translation of the tense of the verbs used. It is their sins “have been forgiven [or remitted]”—past tense—so it was not the apostles themselves who did the forgiving (just as we say it is GOD, not the priest), but it was God in fulfillment of His promise of eternal life to everyone who believes. So, the order would be…a believer preaches the gospel to a nonbeliever…the nonbeliever believes the gospel…God forgives his sins… the original believer tells the new believer that his sins are forgiven…and the new believer goes on his way rejoicing, and telling some other nonbelievers the same message.
The foregoing is what we see played out throughout the Book of Acts. Nowhere do we see an example of someone going to a priest or apostle, confessing his sins, and being granted absolution. That is an invention of man to place men in bondage to other men, sinners in bondage to other sinners, something God never intended. In all of the N.T., there is not one word written by Peter, Paul, John, James, Jude or any other writer supporting the idea that sinners confess to a priest or anyone else to obtain forgiveness, unless of course their sin was against the one whose forgiveness is sought. The only two verses that are even remotely supportive are James 5:16 and 1 John 1:9 and neither of them mention an apostle or a priest, the latter one saying only HE, God, is faithful to forgive.