We are
often asked what kind of organization we
are.
The simple answer is we are a church.
However some people remain confused
about what legal status a church has in
the USA, for example we are occasionally
sent requests similar to the below example;
“Please
send us a copy of a document confirming
your status as a non-profit organization.
Examples
include 501c3 determination letter, declaration
made to the Prefecture de Police, and proof
of registration with Charity Commission
for England.”
Strictly speaking,
a church is not
a “non-profit organization” (i.e. a charity)
as some assume, so it is factually incorrect
to place churches and charities in the same
category as they are substantially different
types of bodies.
Churches do often engage in secondary
benevolent activities and missions, but
this not the reason churches are excluded
from taxation under the laws of the United
States.
Churches are primarily religious
bodies and religious activity, religious
association, and religious worship are protected
from regulation, including taxation, by
federal and state laws in the United States.
This seems to confuse many people
who are used to working with charitable
groups.
They often lump churches and charities
together.
It may help to think of it in terms
of fundamental rights.
In the United States organizing for
charitable purposes is not a protected right;
it is a privilege that can be, and is, regulated
by government.
But,
organizing for religious purposes
is
a protected right and government is prohibited
under the First Amendment of the United
States Constitution and related legislation
from regulating or interfering with religious
exercise.
Taxation
is considered a form of regulation and is
therefore prohibited where religion and
churches are concerned.
How is a Church Different than a 501(c)(3)
Non-profit Charitable Organization?
The Church
of America is a church.
A
church is an ecclesiastical body with an
exclusively religious function.
Churches
in the United States have an exceptional
and unique tax status.
This has been true since the First
Amendment of the Bill of Rights of the U.S.
Constitution was ratified in 1791. The First
Amendment includes language that protects
the free exercise of religion.
It mandates:
“Congress
shall make no law respecting an establishment
of religion, or prohibiting the free exercise
thereof; or abridging the freedom of speech,
or of the press; or the right of the people
peaceably to assemble, and to petition the
Government for a redress of grievances.”
Pursuant to the above
-- Section 508(c)(1)(A) of the Internal
Revenue Code as enacted by Congress provides
that churches are not required or expected
to apply for recognition of Section 501(c)(3)
status in order to be recognized as free
from federal taxation or to receive tax
deductible contributions.
Now let us look at
what the federal government says about churches
and taxation more closely:
Churches are Not
Expected to Apply for
501(c)(3) Exemption
In order to be considered
for tax-exempt status by the IRS an organization
must fill out and submit IRS Form 1023 (Application
for Recognition of Exemption Under Section
501(c)(3) of the Internal Revenue Code).
However,
note what the IRS says regarding churches,
in Publication 557:
“Some
organizations are not required to file Form
1023. These include:
“Churches,
interchurch organizations of local units
of a church, conventions or associations
of churches, or integrated auxiliaries of
a church ...
These organizations are exempt automatically
if they meet the requirements of section
501(c)(3). “
Churches Are Automatically Tax-Exempt
According
to IRS Code § 508(c)(1)(A):
“Special
rules with respect to section 501(c)(3)
organizations.
(a) New organizations
must notify secretary that they are applying
for recognition of section 501(c)(3) status.
(c) Exceptions.
(1) Mandatory
exceptions. Subsections (a) and (b) shall
not apply to—
(A) churches,
their integrated auxiliaries, and conventions
or associations of churches. “
This is referred to
as the "mandatory exception" rule. Thus,
we see from the IRS’ own publications, and
the tax code, that it is unnecessary and
unexpected for any church to apply for 501(c)(3)
tax exemption.
In
the IRS’ own words a church is “exempt automatically”
from federal tax laws.
Churches Are “Automatically Tax-Deductible”
And what about tax-deductibility?
Doesn’t
a church still need to become a 501(c)(3)
so that contributions to the church can
be taken as a tax deduction?
The
answer, as we will see is No.
According
to IRS Publication 526 “Charitable Contributions”:
“Organizations
That Qualify To Receive Deductible Contributions
“You
can deduct your contributions only if you
make them to a qualified organization. To
become a qualified organization, most organizations
other than churches and governments,
as described below, must apply to the IRS.
“
“Examples.
The following list gives some examples of
qualified organizations.
•
Churches, a convention or association of
churches, temples, synagogues, mosques,
and other religious organizations.”…
IRS Publication 526
states again in ‘Table 1’ that contributions
made to churches are deductable:
“Examples
of Charitable Contributions… Use the following
lists for a quick check of contributions
you can or cannot deduct.
Deductible as Charitable Contributions:
Money
or property you give to:
•
Churches, synagogues, temples, mosques,
and other religious organizations.”…
In the IRS’ own words
a church is automatically tax-deductible.
Churches Have a
Mandatory Exception from Filing
Churches are not expected
to seek 501(c)(3) status.
In the words of Steve Nestor, IRS
Sr. Revenue Officer (ret.):
"I
am not the only IRS employee who’s wondered
why churches go to the government and seek
permission to be exempted from a tax they
didn’t owe to begin with, and to seek a
tax deductible status that they’ve always
had anyway”; “Churches are in an amazingly
unique position".
The IRS again states:
“a
church, its integrated auxiliaries, or a
convention of churches is not required to
file Form 1023 [“Application
for Recognition of Exemption Under Section
501(c)(3)”] to be exempt from federal
income tax or to receive tax deductible
contributions " -- (Tax Exempt Status
for Your Organization, IRS Publication 557).
And according to the
Federal Tax Code under the heading “Charitable,
etc., contributions and gifts”:
“Any
charitable contribution to—
(i)
a church or a convention
or association of churches, …
shall be allowed to the extent that
the aggregate of such contributions does
not exceed 50 percent of the taxpayer’s
contribution base for the taxable year.
“-- United States Code, Title 26,
§ 170(b)(1)(A)(i).
[Notice
the word “shall” is used to indicate that
the deduction is mandatory, and not discretionary.]
The reason why churches
enjoy this exceptional tax status is stated
in
IRS Publication 1828,
“Congress
has enacted special tax laws applicable
to churches, religious organizations, and
ministers in recognition of their unique
status in American society and of their
rights guaranteed by the First Amendment
of the Constitution of the United States.
Churches and religious organizations are
generally exempt from income tax and receive
other favorable treatment under the tax
law.”
Income Taxes at the State and Local Level:
Neither the county
nor the city where the Church of America’s
Central Rectory is located have income tax
ordinances in place.
The State of Florida
does not have a personal income tax:
“Florida
does not impose personal income, inheritance,
gift taxes or intangible personal property
taxes”.
-- Florida Department of Revenue,
Tax Information for New Residents, Page
2 (Doc. No. GT-800025 - R. 10/09).
Conclusion
The Church of America
is automatically excepted (i.e. "generally
exempt") from federal income tax, and contributions
to the Church are automatically tax deductible
under existing federal law.
No documentation is required for
a church tax exemption at the federal, state
or local level, so none exists, but if you
wish to make a formal request, the Church
can provide you with an affidavit on Church
letterhead signed by the Church's pastor
indicating that the Church of America is
a bona fide church and the creation
date and including a copy of the relevant
sections of the Internal Revenue Code that
apply to churches. This is usually
enough proof of the Church’s tax status
to satisfy any legal requirements for documentation
that you may encounter. If you wish
to make a formal request for an affidavit,
please send your formal request on your
organization’s letterhead to the address
shown below:
Church of America
Minister of External Affairs
1982 Vienna Ave, Dept 703
Deltona, Florida
[postal code: 32725]
