Church and 501(c)(3)


D

Dick Adams

The entity involved is a store-front church in an
impoverished neighborhood. Its expenses exceed its revenues
and are covered by contributions from its Board of Directors.
It does not qualify for a group exemption.

Per the instructions for the 1023 package, a church may be
considered as tax exempt under 501(c)(3) without filing a
1023 package. However, most funding sources require a
"Letter of Determination" from grant applicants. SO:

1) Is a church exempt from the filing fees on Form 8718?

2) Since I suspect the answer to (1) is "You're joking", has
anyone circumvented this for external funding purposes by
writing an equivalent "Letter of Determination"?

3) The church has been in existence for six years and has
not been incorporated. They had less than $10,000 in
revenues in each of the last four years. May they use
that four year window or must they use the projected
four year window after incorporation.

Dick
 
A

Andrew Goldstein

Dick Adams said:
The entity involved is a store-front church in an
impoverished neighborhood. Its expenses exceed its revenues
and are covered by contributions from its Board of Directors.
It does not qualify for a group exemption.

Per the instructions for the 1023 package, a church may be
considered as tax exempt under 501(c)(3) without filing a
1023 package. However, most funding sources require a
"Letter of Determination" from grant applicants. SO:

1) Is a church exempt from the filing fees on Form 8718?

2) Since I suspect the answer to (1) is "You're joking", has
anyone circumvented this for external funding purposes by
writing an equivalent "Letter of Determination"?

3) The church has been in existence for six years and has
not been incorporated. They had less than $10,000 in
revenues in each of the last four years. May they use
that four year window or must they use the projected
four year window after incorporation.
Unfortunately Dick, you are correct in answering your own
question. To further compound it many corporate gift
matching and other programs are administered by individuals
with no authority and no ability to read and understand.
The code, and the regs, and the instructions to the 1023
quite clearly explain that a Church is by definition exempt.
Donations to churches are by definition deductible and
Churches are not required to seek formal recognition.

Your case is not unusual. You need to make the decision as
to whether or not such donations will ever be significant
enough to justify the user fee and more importantly the time
and effort of a volunteer or fee of a paid professional to
prepare and pursue the 1023.

Good luck.
 
Ad

Advertisements

S

Stuart O. Bronstein

Dick Adams said:
The entity involved is a store-front church in an
impoverished neighborhood. Its expenses exceed its revenues
and are covered by contributions from its Board of Directors.
It does not qualify for a group exemption.

Per the instructions for the 1023 package, a church may be
considered as tax exempt under 501(c)(3) without filing a
1023 package. However, most funding sources require a
"Letter of Determination" from grant applicants. SO:

1) Is a church exempt from the filing fees on Form 8718?
Not as far as I know or have been able to determine by
looking at the Code.
2) Since I suspect the answer to (1) is "You're joking", has
anyone circumvented this for external funding purposes by
writing an equivalent "Letter of Determination"?
I suspect that when they say "Letter of Determination" they
mean the one issued by the IRS. It might be a lot easier,
faster and cheaper to get one issued by the state - it
certainly is in California.
3) The church has been in existence for six years and has
not been incorporated. They had less than $10,000 in
revenues in each of the last four years. May they use
that four year window or must they use the projected
four year window after incorporation.
If done properly, I think you can do it either way. What
they're primarily looking for is to be sure that money comes
from proper places in the proper proportions, and that it is
spent for proper purposes. If you apply as an ongoing
organization, the IRS won't come out, if at all, for several
years to check the books to make sure those numbers are all
within the legal guidelines.

But if you apply as a new organization, they will come out
sooner to check the books.

Stu
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads


Top