Tax exempt churches

[Patriotdiscussions]

Does anyone have a clue why religious organizations DBA a church file 501c3 status when they are exempt from taxes anyway?



Automatic Exemption for Churches
Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.

IRS publication 1828

[darling]

Belts and suspenders.

[jg]

From the article at http://www.davidbealaw.com/files/articl ... e501c3.pdf
"There are some advantages to seeking a letter from the IRS determining that the church
is exempt under 501(c)(3). An IRS determination letter can aid the church in proving it
qualifies for certain exemptions from local real estate transfer taxes, property taxes, or
sales and use taxes. A determination letter can also be very useful to a member of the
congregation who is being audited and must prove that his contributions to the church
were in fact deductible. "

See also the article at http://uschurchlaw.com/legal-services/5 ... exemption/

The burden of proof for entitlement to exemption is on the organization as described at
http://www.irs.gov/irm/part7/irm_07-025-003.html
"7.25.3.6.3 (02-23-1999)
Burden of Proof

As noted by the court in Church of Spiritual Technology v. United States, 26 Cl. Ct. 713 (1992), which upheld denial of an organization’s application for recognition of exemption, in demonstrating their entitlement to exemption, churches and other religious organizations are subject to the same burden of proof requirements as other organizations.

The court in Church of Spiritual Technology cited a long line of authority holding that the applicant bears the burden of showing it is entitled to exemption. In Harding Hospital, Inc. v. United States, 505 F.2d 1068, 1071 (6th Cir. 1974), the court stated that "ncome tax exemption must be strictly construed, with any doubts to be resolved in favor of the taxing entity. Consequently, determinations of the Commissioner are presumed correct."

Similarly, the court cited Welch v. Helvering, 190 U.S. 111, 115 (1933), and modern cases following its stricture that "[P]laintiff thus bears the burden of proving its entitlement to an exemption." See also, Bubbling Well Church of Universal Love, Inc. v. Commissioner, 670 F.2d 104, 106 (9th Cir. 1981); Freedom Church of Revelation v. United States, 588 F. Supp. 693, 696 (D.D.C. 1984)."

Having a determination letter is useful to protect from the IRS later making a determination that the religious organization did not qualify as a church at the time of the application.
Applying and getting a determination letter documents the status and clarifies the status of the organization (whether as a church or a ministry) or allows for the determination that the organization is tax exempt even when it may not be certain that filing for exemption is required.

Churches can satisfy the burden of proof by voluntarily applying for exemption and demonstrating their entitlement to exemption.

[AndyK]

Probably one of the BEST responses (other than in verse) in months.

Thanks. [Now, where did that "applause" smilie go?]

[Patriotdiscussions]

We do understand that in order to get 501c3 you must incorporate correct. We also know that which the state creates it controls. Why would the house of god ask permission to exist from our servants?

[AndyK]

We do understand that in order to get 501c3 you must incorporate correct.
Wrong. Incorporation is not required for 501c3
We also know that which the state creates it controls.
Really? You may know that, but it would be interesting for you to provide some legitimate justification for that all-inclusive statement
Why would the house of god ask permission to exist from our servants?
Perhaps because this not a theocracy. And, how is applying for 501c3 status "asking for permission to exist?

Could you please reference the sites from which you are gleaning all of these inane, incorrect, and questions and theories? It would be much easier to rebut the nonsense.

[Patriotdiscussions]

We do understand that in order to get 501c3 you must incorporate correct.
Wrong. Incorporation is not required for 501c3
We also know that which the state creates it controls.
Really? You may know that, but it would be interesting for you to provide some legitimate justification for that all-inclusive statement
Why would the house of god ask permission to exist from our servants?
Perhaps because this not a theocracy. And, how is applying for 501c3 status "asking for permission to exist?

Could you please reference the sites from which you are gleaning all of these inane, incorrect, and questions and theories? It would be much easier to rebut the nonsense.

A. When the IRS recognizes tax exempt status, it is specifically for a
named entity - usually a corporation, sometimes a trust or association.
If the corporation does not exist yet, it cannot submit a 501(c)(3) ap-
plication. You need to incorporate first.


http://www.form1023help.com/id3.html





First Things First. Does The Organization Have an Appropriate Legal Form?
For the Internal Revenue Service (the IRS) to recognize an organization's exemption, the organization must be organized as a trust, a corporation, or an association.
Is the organization a trust, corporation, or association?
Yes | No

http://www.irs.gov/Charities-&-Non-Prof ... on-Process


Notice that those 3 things are organized UNDER state law.

[AndyK]

Perhaps you should review the official IRS publications regarding 501( c ) ( 3 ) . There is a specific statement there as to why many churches (or equivalent religious organizations) apply for exempt status even though it's not required.

Do your own research. This forum doesn't exist to engage in sophistry with self-proclaimed 'patriots'. If you actually need information, ask, don't challenge.

Also, there are quite a few REAL patriots (as in military veterans or others who have placed their lives on the line for their country) here who get seriously annoyed with fops using the term without any justification.

[rogfulton]

Also, there are quite a few REAL patriots (as in military veterans or others who have placed their lives on the line for their country) here who get seriously annoyed with fops using the term without any justification.

Andy, your vocabulary is getting soft. I don't think fops is the word most of us who have served would choose.

[JamesVincent]

Also, there are quite a few REAL patriots (as in military veterans or others who have placed their lives on the line for their country) here who get seriously annoyed with fops using the term without any justification.

Andy, your vocabulary is getting soft. I don't think fops is the word most of us who have served would choose.

Agreed.

You do not have to incorporate to be a 501(c)(3) organization. Having a name does not make you a corporation. And being a corporation does not make you a 501(c)(3). IIRC, and I have dealt with it in the past, most churches do not file for and become 501(c)(3) because they are churches, they do so because a lot of churches operate different charities that do require them. (This may be the explanation you were referring to Andy but since I didn't need to read it, I didn't). As a church they can operate many other outside charities that are not strictly part of the church and those charities are not covered under the law of the churches exemption, however, they are still non-profit charities. Things like soup kitchens, clothes donations, missions to provide services to the elderly or handicapped, etc., are not necessarily church related but are still being done by the church. When you donate to a church items like clothing, food, etc. they accept those as part of a charity, not necessarily as part of the church. And when you donate them you are allowed a tax writeoff for yourself if you choose to use it since you have donated to a non-profit.

A good example you might want to look at is Catholic Charities, an actual division of the Catholic Church. They operate many different organizations in many different places around the country, maybe even the world, I'm only familiar with the US. These charities serve many different functions that have absolutely nothing to do with the church, including therapeutic care for low income children and missions across the country to provide assistance for shut ins. None of which falls under the church itself so it needs to be a separate 501(c)(3) to be a non-profit.

[AndyK]

Minor terminology clarification:

501(c)(3) is always non-profit; but not vice versa.

For example Educational Testing Service (those nasty College Boards people) is non-profit. However, they are NOT 501(c)(3).

The major distinction is that arms-length contributions (donations / tithes / whatever) to a 501(c)(3) can, in most cases, be included in the itemized deductions on federal income tax returns.

Donations to run-of-the-mill non profits are merely gifts with no tax consequences.

Why is that? In theory, a 501(c)(3) is performing a service to society (except for the innate religious component of churches) which reduces the burden, and associated expense, on government.

Example: Church-run soup kitchens, to some degree, decrease the need for government welfare programs.

At least, that's the theory and the original justification. As with many aspects of the tax laws, things become convoluted over time.

[LPC]

A. When the IRS recognizes tax exempt status, it is specifically for a named entity - usually a corporation, sometimes a trust or association.
If the corporation does not exist yet, it cannot submit a 501(c)(3) application. You need to incorporate first.

Still wrong.

Trusts and associations are not corporations. And trusts and associations do not "incorporate." Only corporations incorporate.

So your initial statement was wrong, and your attempt to clarify (or weasel out of) your initial statement is also wrong.

Care to go 0 for 3?

[Arthur Rubin]

A. When the IRS recognizes tax exempt status, it is specifically for a
named entity - usually a corporation, sometimes a trust or association.
If the corporation does not exist yet, it cannot submit a 501(c)(3) ap-
plication. You need to incorporate first.


http://www.form1023help.com/id3.html





First Things First. Does The Organization Have an Appropriate Legal Form?
For the Internal Revenue Service (the IRS) to recognize an organization's exemption, the organization must be organized as a trust, a corporation, or an association.
Is the organization a trust, corporation, or association?
Yes | No

http://www.irs.gov/Charities-&-Non-Prof ... on-Process


Notice that those 3 things are organized UNDER state law.

You contradict yourself. A "trust" or "association" is not a corporation. And, if you want to be logical, one could assume that tax law would be written to provide benefits to those charitable organizations which are required (under their charter / bylaws / ...) under law to act only for "charitable" purposes. If required by law to do something, they must be organized under law.

[LPC]

Minor terminology clarification:

501(c)(3) is always non-profit; but not vice versa.

For example Educational Testing Service (those nasty College Boards people) is non-profit. However, they are NOT 501(c)(3).

The major distinction is that arms-length contributions (donations / tithes / whatever) to a 501(c)(3) can, in most cases, be included in the itemized deductions on federal income tax returns.

If we're getting technical, then I should point out that a 501(c)(3) organization is tax exempt, so does not need to pay income tax (except on unrelated business taxable income), but for a contribution to an organization to be tax deductible by the donor, the organization has to be described in section 170(c), and sections 501(c)(3) and 170(c) are similar, but not identical.

Organizations formed and operated in the United States exclusively for what are broadly known as "charitable" purposes should qualify under 170(c) if they qualify under 501(c)(3), and the differences in the two sections usually arise in other applications of 501(c)(3). (One difference is that a 501(c)(3) organization can be foreign, but a 170(c) organization must be domestic. Another difference is that the purpose of "testing for public safety" is mentioned in 501(c)(3) but not 170(c).)

Charitable gift tax deductions are described in section 2522(a), and charitable estate tax deductions are described in section 2055(a), and those sections are also similar to (but not identical with) sections 501(c)(3) and 170(c).

[Pottapaug1938]

My Boy Scout troop is a 501 (c) (3) organization; thus, our income is exempt from taxation while donations to us are tax-deductible. We are NOT incorporated.

[Number Six]

A common sense reason for why "churches" should not have a right to be exempt from government licensing and filing is that many of them would be unaccountable to any but their most wealthy members. Even with licensing and filing many of them have misused their privileges, can you imagine how much worse they would be without any government regulations? http://www.christianpost.com/news/grass ... sts-48383/

[Patriotdiscussions]

A. When the IRS recognizes tax exempt status, it is specifically for a
named entity - usually a corporation, sometimes a trust or association.
If the corporation does not exist yet, it cannot submit a 501(c)(3) ap-
plication. You need to incorporate first.


http://www.form1023help.com/id3.html





First Things First. Does The Organization Have an Appropriate Legal Form?
For the Internal Revenue Service (the IRS) to recognize an organization's exemption, the organization must be organized as a trust, a corporation, or an association.
Is the organization a trust, corporation, or association?
Yes | No

http://www.irs.gov/Charities-&-Non-Prof ... on-Process


Notice that those 3 things are organized UNDER state law.

You contradict yourself. A "trust" or "association" is not a corporation. And, if you want to be logical, one could assume that tax law would be written to provide benefits to those charitable organizations which are required (under their charter / bylaws / ...) under law to act only for "charitable" purposes. If required by law to do something, they must be organized under law.

What I said was, why does a house of god have to ask permission from the state to exist?

I did single out corporations, however trust and associations also need the states permission to exist.

Am I wrong? You know a 501c3 trust dba a church in your state that did not get permission from the state to exist?

[Patriotdiscussions]

A common sense reason for why "churches" should not have a right to be exempt from government licensing and filing is that many of them would be unaccountable to any but their most wealthy members. Even with licensing and filing many of them have misused their privileges, can you imagine how much worse they would be without any government regulations? http://www.christianpost.com/news/grass ... sts-48383/

Yes, common sense and government regulation go hand in hand.

[JamesVincent]

What I said was, why does a house of god have to ask permission from the state to exist?

I did single out corporations, however trust and associations also need the states permission to exist.

Am I wrong? You know a 501c3 trust dba a church in your state that did not get permission from the state to exist?

Try re-writing that one and think about what you're asking. You are asking if we know a 501(c)(3) that did not get permission to exist where, by definition and common sense, a 501(c)(3) has to have been filed and approved for it be one. Has absolutely nothing to do with the state since it is a Federal Tax exemption.

If you are asking if a church has to be approved by the state the answer is no, it doesn't. To enjoy the benefits of being a 501(c)(3) or any other benefits from being registered it does have to be registered and filed but you can have a church gathering without a state's approval.

[Patriotdiscussions]

You ever take the time to look for a non 501c3 church gathering? Hahahaha good luck.