Expert: Dan Hotchkiss - 3/12/2009

Question
I am starting Christian ministry and would like to know how to legally operate. We have developed our website, mission statement, etc. and are now actively working in the ministry. I would like people to be able to donate to the work and deduct it if necessary. We pay for the work from our own money now and we’re nervous about allow others to donate to the ministry without knowing if we can accept the donations. We operate from our home at the moment. Eventually we will have a church building operating as a traditional church. For now it just the us and our website. Any  help would be a blessing.

Answer
Greetings,

You are right to hesitate before accepting gifts till you are sure your donors can deduct them. You may also want your ministry to be exempt from state and local taxes. Here is a website you should visit to get started on the federal exemption:

Federal income tax: http://www.irs.gov/pub/irs-pdf/p4220.pdf

Your state will have its own rules for how to establish exemption from sales and property taxes. You can start hunting for your state's rules at http://www.usa.gov/Agencies/State_and_Territories.shtml

Because the consequences of taking deductions to which you are not entitled can be quite severe, I would advise you to consult an attorney with experience working with nonprofits in your state, even if you intend to file the papers yourself.

Best wishes,

Dan