What is a Church According to the IRS?

irs

Anyone can start a church. In most cases, the new church will be considered tax exempt by federal, state, and local government.

The IRS lists the following generic (albeit very Christian sounding) characteristics of a church:

The term church is found, but not specifically defined, in the Internal Revenue Code. With the exception of the special rules for church audits, the use of the term church also includes conventions and associations of churches as well as integrated auxiliaries of a church.

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 members

If a group of people generally exhibit these characteristics they are considered a Church by the IRS. State laws are different from federals laws and vary from state to state.

A Church is not required to file for 501c3 status to be tax exempt. 501c3 status does grant certain additional benefits to the church, BUT it is not required for tax exemption.

The IRS handbook for churches states:

Congress has enacted special tax laws applicable to churches, religious organizations, and ministers in recognition of their unique status in American society and of their rights guaranteed by the First Amendment of the Constitution of the United States. Churches and religious organizations are generally exempt from income tax and receive other favorable treatment under the tax law; however, certain income of a church or religious organization may be subject to tax, such as income from an unrelated business.

The IRS church handbook states:

Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions. To qualify for tax-exempt status, such an organization must meet the following requirements:

■ the organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes,
■ net earnings may not inure to the benefit of any private individual or shareholder,
■ no substantial part of its activity may be attempting to influence legislation,
■ the organization may not intervene in political campaigns, and
■ the organization’s purposes and activities may not be illegal or violate fundamental public policy.

Churches that meet the requirements of IRC section 501c3 are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.

Now, get out there and start a church. You can do it!

If you need ordained, check out the Universal Life Church.

Bruce, surely it is more complicated than that? I assure you, it is not. I’ve thought about starting a new sect, The Church of Bruce Almighty®. Donations would be tax-deductible and my church could buy buildings, property, cars, and other essential ministry tools and not pay tax.

Only in America…

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