How can you get a tax exemption for a religious organization?

Answer 1

You have to incorporate and acquire a tax ID. There is a set of IRS forms that are filled out to validate the tax exempt status. Obviously, these things are not just given out lightly, or forgotten or not checked on. Unfortunately, it may not be past many of the IRS reps to determine your churchlyness by using their own standard of what a religion shoould be. You start by being an organization that qualifies under the Code 501, in structure and intent. An organization claiming exemption as a Section 501(c)(3) organization that was organized after 1969 must file an application on Form 1023, Application for Recognition of Exemption Under Section 501(c)(3), for recognition of exemption with its key District Director. The following organizations are not required to file an application for recognition of exemption with the IRS:

l churches, their integrated auxiliaries, and conventions or associations of churches, such as men's or women's organization, religious school, mission society, or youth group;

l organizations having annual gross receipts normally not more than $5,000, and that are not private foundations; and

l subordinate organizations, other than private foundations, covered by a group exemption letter.

For purposes of the exemption from filing Form 990, Return of Organization Exempt From Income Tax, an integrated auxiliary of a church is an organization that is a tax-exempt organization that is not a private foundation, is affiliated with a church or a convention or association of churches, and is internally supported. For consistency, the rules with respect to the exemption from filing Form 1023 also conform to that definition. Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious schools, mission societies and youth groups are not required to file an application for recognition of exemption with the IRS.

An organization that is not a private foundation does not have gross receipts that are normally more than $5,000 if:

l During its first tax year the organization has gross receipts of $7,500 or less;

l During its first two tax years the aggregate gross receipts of the organization are $12,000 or less; and

l For an organization that has been in existence for at least three tax years, the aggregate gross receipts of the organization during the immediately preceding two tax years, plus the current year, are $15,000 or less.

Although a church is not required to file an exemption application, it is not immune from the IRS's examination of its books and records to determine its exempt status.

An organization that is exempt from the filing requirements should file Form 1023 with the District Director if it wants to formally establish its exemption. Doing so assures potential contributors that their contributions are deductible.