Tax Law (Questions About Taxes)/Church

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Question
The IRS tax guide for churches, states that it must have a distinct legal existence.  I am not sure what this means.  Does it have to be incorporated?  Also, must the pastor be an ordained minister?

Also, we live in the state of PA,  does the state of PA require a church to be incorporated?

Thank you

Answer
Peggy,

Thanks for your question.

If you are looking at IRS Publication 1828, you probably see the IRS list of 14 factors that are characteristic of a church, distinct legal existence and ordained clergy being two of these factors.  A church does not have to meet all 14 requirements, but these factors are all considered in the determination. So it is a balancing act, considering all these factors, does it appear to be a church?

The requirement to form a corporation is one of the more controversial ones, as some contend that the church is ordained by God and is not created by the state.  As a result, you aren't likely to run into problems if you are not incorporated.

On the ordination issue, the IRS is not going to tells church who can and cannot be a minister.

Hope this helps.

John Stancil,CPA  

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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