The 501c3 Church

The IRS has its own definition of a church. 501c3 church status can be obtained but it is not a given. We have had numerous clients over the years who have applied for church status but for whom the IRS has said, “We’ll give you 501c3 status as a mission, ministry, or a bible fellowship, but we will not grant your church status.” Now, if these churches did not have 501c3 status and had given tax-deductible receipts to its congregants, believing they were churches, would those receipts have been valid? Absolutely not. Upon an audit, those congregants’ deductions would have been disallowed by the IRS.

So, does a church need IRS tax-exempt status? No, if it falls in line with what the IRS says is a church (click here for IRS guidelines). But, Yes, if a church wants to be guaranteed that the tax-deductible receipts which it gives to its congregants are valid. If the IRS would determine that the “church” is not a “church” by IRS guidelines, then those tax-deductible receipts are not valid. Most churches, in order to be certain that their tax-deductible receipts are valid, prefer to have IRS church status, protecting their congregants from possibly having their offerings being disallowed as tax-deductible. There are also other advantages to having 501(c)(3) status. Click here to see what advantages a church has if it gets 501c3 status.

Unlike the IRS, the California Franchise Tax Board does require incorporated churches to apply for and obtain tax-exempt status. Failure to do so results in an $800 per year assessment of the franchise tax.

A church cannot support a candidate for election or legislation from the pulpit or by a pastor in his official position. This is true whether or not the church has 501c3 status.

Need to know more? Ready to get your church 501c3 status today? Call Us at 800-293-7490 for a free consultation and to get started.