Small Church -Never Applied for Tax Exempt Status - How is this done?

[zeros]

Small church has operated without a tax exempt status for a few years. Where do you go and how is it done to get tax exempt status? Simple procedure?

[Uncle Sam]

Church Exemption

Religious organizations that are affiliated with religious faiths are automatically
granted exemption and don't need to apply. However, if they engage in any
for-profit activity (called "unrelated business taxable income) they would need
to complete Form 990-T annually.

Normally, in order to obtain an exemption from IRS, the proper procedure is to
officially form in their respective state, apply for an EI#, and complete either
Form 1023 (for a 501(c)(3)), or Form 1024 for any other 501(c) entity.

After the IRS completes its review of the 1023(4) application, it sends a
confirmation letter acknowledging the exemption.

Once received, depending upon the individual state involved, the exempt
entity can then apply for the state sales tax exemption.

[Gene V]

Uncle Sam right on target.

Here is a letter from IRS on the subject.

http://www.irs.gov/pub/irs-wd/12-0001.pdf

[Golden Rocket]

User Fee

Last involvement I had with getting tax-exempt status was for a cemetery association, and IRS wanted hundreds of dollars in "user fees" to process Form 1023 and sent it back to us. User fee was more than cemetery annual revenue, so the association just said "forget it". It is my understanding that donations to the cemetery association cannot be guaranteed to be deductible, but is not automatically NON-deductible.

Since a church really doesn't have to apply, would the IRS charge them a user fee?

[kpangelinan]

Small church has operated without a tax exempt status for a few years. Where do you go and how is it done to get tax exempt status? Simple procedure?

If it meets the IRS' definition of a church, then why shoot for the starts with an official tax exempt status....they are very difficult to get these days. I've gotten a few accepted last year and they were not fun at all.

Only reason to get one for a church would be for maybe grant programs or something, but all their donations are still tax deductible if they meet the IRS' definition of a church, regardless of size, which isn't hard to do if they are anything like a church.

[zeros]

Church Repairs - Deductibility?

If it meets the IRS' definition of a church, then why shoot for the starts with an official tax exempt status....they are very difficult to get these days. I've gotten a few accepted last year and they were not fun at all.

Only reason to get one for a church would be for maybe grant programs or something, but all their donations are still tax deductible if they meet the IRS' definition of a church, regardless of size, which isn't hard to do if they are anything like a church.

The church needed large repairs and an individual wanted to contribute a substantial amount to cover the expense. That's how the question came up as to tax exempt and deductibility. Based on the answers, I would say that it would be allowed under an audit. They do have a EFIN.

[MAMalody]

The issue here could be where is the auditor. Without the official 501(c)(3) recognition the door is open for the IRS to not grant the deductibility of contributions. Normally, it is not a problem if the church is associated with some denomination, or does not appear to be a "fringe" church of some type or has no complaints against it. Generally, recognition for a denominational church is pretty much a breeze to file (except for the fee), however, an independent church is a different story. My guess would be that if the church follows the normal documentation rules for the contribution that brought up the issue, you should be okay.

[kpangelinan]

The church needed large repairs and an individual wanted to contribute a substantial amount to cover the expense. That's how the question came up as to tax exempt and deductibility. Based on the answers, I would say that it would be allowed under an audit. They do have a EFIN.

Go to the pubs....it's pretty simple to meet the IRS' definition of a church and I've never seen an audit in 15 years of practice. You also do not need an EFIN...that says nothing as to the deductibility of contributions.

[erchess]

EFIN or EIN?

I think EFIN was originally a typo. I think Zeros meant to say EIN. I also agree that the op contains nothing else relevant to EINs which are irrelevant for tax deductability purposes but are necessary if the church has employees or contractors.

[zeros]

Erchess: EIN is Correct

I think EFIN was originally a typo. I think Zeros meant to say EIN. I also agree that the op contains nothing else relevant to EINs which are irrelevant for tax deductability purposes but are necessary if the church has employees or contractors.

Yes, you are correct, EIN is what I meant. I must have been thinking of the tax season.....

[Snaggletooth]

Fringe Church

Without the official 501(c)(3) recognition the door is open for the IRS to not grant the deductibility of contributions. Normally, it is not a problem if the church is associated with some denomination, or does not appear to be a "fringe" church of some type or has no complaints against it.

I think maybe the trouble comes in not so much because a church is non-denominational, but when people create a "church" to give legality to otherwise shady activities including misdirected tax deductions.

My most profound memory is a "church" about 50 miles away which served as a facility for bingo and other gambling activities. This was in a state line community and the activities were otherwise illegal in both states. Neither state wanted to prosecute because of the church/state issue. IRS finally shut them down -- not because of illegal activities, but for tax evasion.

Other "fringe" churches range from independent groups comprised of refugees from mainstream denominations to such groups as the Unification Church and the Church of Scientology. The latter I believe has had ongoing problems with the IRS, whether deserved or not.