Q: Do Churches Need to Get Tax-Exempt Status?
GREAT question, and one we get fall the time!
In a nutshell - No...a church does not need to obtain tax-exempt status from the IRS. Here's what the IRS says:
Churches (including integrated auxiliaries and conventions or associations of churches) that meet the requirements of section 501(c)(3) of the Internal Revenue Code are automatically considered tax exempt and are not required to apply for and obtain recognition of exempt status from the IRS. Donors are allowed to claim a charitable deduction for donations to a church that meets the section 501(c)(3) requirements even though the church has neither sought nor received IRS recognition that it is tax exempt. In addition, because churches and certain other religious organizations are not required to file an annual return or notice with the IRS, they are not subject to automatic revocation of exemption for failure to file. See Annual Return Filing Exceptions for a complete list of organizations that are not required to file."
But the big question is: are you truly considered a church by the IRS? You might consider yourself a church, but the IRS does not. So what's the difference? Well - if you see that little part in the paragraph above that says, "Churches...that meet the requirements of section 501(c)(3) of the Internal Revenue Code," that's the part you really need to pay attention to, or you're opening yourself in for a world of hurt.
You can't just say "I'm a church!" and then tell everyone you're tax-exempt and ask for donation. There are conditions which you'll need to prove and maintain, in order to qualify.
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.
The IRS generally uses a combination of characteristics, together with other facts and circumstances, to determine whether an organization is considered a church for federal tax purposes, and whether they must file for tax-exemption as a faith-based organization vs. 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 you meet most (the IRS likes to see about 13 of the 14) of the criteria listed above, then you are considered a church, for the most part, and could get away with not filing an application for tax-exempt status.
But if you do not exhibit any or most of the attributes listed above, then you're not a church...and you should definitely file an application to obtain tax-exempt status.
Additionally, IRS recognition of tax-exempt status and that legal recognition provides reliance to church leaders, members and contributors that a church is recognized as exempt from taxation and is eligible to receive tax-deductible contributions.
So just to be safe, even if you do fall within the characteristics listed above, you should really consider obtaining federal tax-exempt status.
The good news is, there are special discount programs and lower fees available right now! If you're interested in learning more, please call: 1.865.408.8833 or email us This email address is being protected from spambots. You need JavaScript enabled to view it. and we'll be happy to chat or message you back!