AboutHarvey Mechanic Expertise US Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
I am sure that this question has been asked of you before but...
Does a Church need to file for 501c3 or are Churches exempt as the IRS Publication 557 hints: Some organizations are not required to file Form 1023 These include: • Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school,mission society, or youth group.
• Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later).
These organizations are exempt automatically if they meet the requirements of section 501(c)(3).
That seems to me to be as clear as mud.
Is there anyway this could be explained in simple terms as this question comes up over and over.
I am involved in a small study group which is seeking to grow by planting a new church. We have been told all kinds of stories ranging from "yes, you absolutely must be incorporated and you must file for the 501c3" to "No, Churches are exempt from both, incorporation and 501c3". The Pub 557 "seems" to indicate that a Church is exempt from filing, but is that correct? Can members claim their tithe on their tax returns if the Church does not have a 501c3? Can the Church own property?
Thank You in advance!
Answer See instructions to Application for Exemption
www.irs.gov/pub/irs-pdf/i1023.pdf
in the right column on the first page under "From 1023 not
necessary" discusses who does not need to file and among those is
a church. Therefore, you are correct that, as long as your
church is properly established for IRS purposes as a church (for
example the congregation is not just one family), then donations
to the church are deductible.
---Start of Excerpt--
Therefore, where churches are involved, although an organization
must satisfy the requirements for exemption under IRC 501(c)(3),
it need not either notify the Service that it claims exemption or
be the subject of a Service determination that it is exempt. Reg.
1.508-1(a)(4) clearly provides that a church that does not apply
for exemption by filing Form 1023 nevertheless may be exempt
under IRC 501(c)(3) if it meets the requirements of that section.
Consequently, a church (or other organization described in IRC
508(c) that has been revoked), may claim to be exempt for future
years without going through the process of applying for
recognition of exemption under IRC 501(c)(3), nor does it need a
Service determination that it is exempt under that subsection.
As stated on page 5 of IRS publication 1828 "Churches that meet
the requirements of IRC section 501(c)(3) are automatically
considered tax exempt.
---End of Excerpt-- http://ftp.irs.gov/pub/irs-tege/eotopicm88.pdf
on page 4
---
See "Tax Guide for Churches and Religious Organizations"
www.irs.gov/pub/irs-pdf/p1828.pdf on page 27
--start of excerpt ---
Certain characteristics are generally attributed to churches.
These attributes of a church have been developed by the IRS and
by court decisions. They include: distinct legal existence;
recognized creed and form of worship; definite and distinct
ecclesiastical government; formal code of doctrine and
discipline;
distinct religious history; membership not associated with any
other church or denomination; organization of ordained ministers;
ordained ministers selected after completing prescribed courses
of study; literature of its own; established places of worship;
regular congregations; regular religious services; Sunday schools
for the religious instruction of the young; schools for the
preparation of its ministers.
The IRS generally uses a combination of these characteristics,
together with other facts and circumstances, to determine whether
an organization is considered a church for Federal tax purposes.
The IRS makes no attempt to evaluate the content of whatever
doctrine a particular organization claims is religious, provided
the particular beliefs of the organization are truly and
sincerely held by those professing them and the practices and
rites associated with the organization's belief or creed are not
illegal or contrary to clearly defined public policy.
--end of excerpt ---
All states allow churches to own real property.
As to charitable deductions:
See IRS Publication 526 "Charitable Donations"
www.irs.gov/pub/irs-pdf/p526.pdf
see the middle column at the top of page two
---start of excerpt ---
Deductible As
Charitable Contributions
Money or property you give to:
• Churches, synagogues, temples,
mosques, and other religious
organizations
• Federal, state, and local
governments, if your contribution is
solely for public purposes (for
example, a gift to reduce the public
debt)
---End of Excerpt--
Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com
