Eligibility: Religious

Many churches (IRS definition covering most religions) and religious organizations are tax -exempt and my participate in Valley Gives. The following is excerpted from IRS Guidance 1828:

It’s important to distinguish churches from other religious organizations. Therefore, when this publication uses the term “religious organizations,” it isn’t referring to churches or integrated auxiliaries. Religious organizations that are not churches typically include nondenominational ministries, interdenominational and ecumenical organizations, and other entities whose principal purpose is the study or advancement of religion.
Churches and religious organizations may be legally organized in a variety of ways under state law, such as unincorporated associations, nonprofit corporations, corporations sole and charitable trusts.

Tax-Exempt Status
Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC Section 501(c)(3) and are generally eligible to receive tax-deductible contributions. To qualify for tax-exempt status, the organization must meet the following requirements (covered in greater detail throughout this publication):

  • the organization must be organized and operated exclusively for religious,
    educational, scientific or other charitable purposes;
  • net earnings may not inure to the benefit of any private individual or shareholder;
  • no substantial part of its activity may be attempting to influence legislation;
  • the organization may not intervene in political campaigns; and
  • the organization’s purposes and activities may not be illegal or violate
    fundamental public policy.

Recognition of Tax-Exempt Status
Automatic Exemption for Churches
Churches that meet the requirements of IRC Section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.

Although there is no requirement to do so, many churches seek recognition of tax-exempt status from the IRS because this recognition assures church leaders, members and contributors that the church is recognized as exempt and qualifies for related tax benefits. For example, contributors to a church that has been recognized as tax exempt would know that their contributions generally are tax-deductible.

Church Exemption Through a Central/Parent Organization
A church with a parent organization may wish to contact the parent to see if it
has a group ruling. If the parent holds a group ruling, then the IRS may already
recognize the church as tax exempt. Under the group exemption process, the
parent organization becomes the holder of a group ruling that identifies other affiliated churches or other affiliated organizations. A church is recognized as tax exempt if it is included in a list provided by the parent organization. If the church or other affiliated organization is included on the list, it doesn’t need to take further action to obtain recognition of tax-exempt status.

An organization that isn’t covered under a group ruling should contact its parent organization to see if it’s eligible to be included in the parent’s application for the group ruling.

Religious Organizations
Unlike churches, religious organizations that wish to be tax exempt generally must apply to the IRS for tax-exempt status unless their gross receipts do not normally exceed $5,000 annually.

Employer Identification Number (EIN)
Every tax-exempt organization, including a church, should have an employer identification number whether or not the organization has any employees. There are many instances in which an EIN is necessary.