Quite often we hear church leaders say “We have our Tax Number.” This indicates they believe the church has a “number” they can give out, which they believe validates them as an organization exempt from federal taxes. Their is no such number.
The only number(s) your church will ever have are:
- A Federal Employee Identification Number (F.E.I.N). Every citizen has a Social Security Number, which is used as a taxpayer I.D Number, and the FEIN is simply an “Identifier Number” used by the IRS to keep track of the church; and any other business for that matter.
- A state issued Corporation Number; issued when the church incorporates;
- When the church has employees, the state will also likely issue an Identifier Number to keep track of the church as an employer and as a legal entity;
- In some states, the church is exempt from paying state sales tax and, after application, would be issued a number for that purpose.
An occasional exception to the above would be if the church is relational to, and “Covered” by, an organization having a “Group Exemption” Letter. The law allows for associations or groups of affiliated churches to apply for recognition for exempt status as a group. In addition to time limits for filing, the central organization must gather and file considerable information both initially, and then annually thereafter, with the IRS.
Otherwise, there is no such thing as a “Tax Number.” Some churches do use the church’s FEIN [Federal Employers Identification Number] on their receipts, and there is certainly nothing wrong in doing so; But having an FEIN really means nothing in regards to being “tax exempt.”
What does it take to be “Tax exempt?” The church is not required to file Form 1023 with the IRS. See –What is 501(c)(3)? The church is automatically exempt. However, the court has ruled, “exemption from Federal income taxation is a privilege provided as a matter of legislative grace, not a right.” The church does NOT have to apply to the Federal government to be tax exempt [see 508(a) of the Tax Code], the church is tax exempt IF we understand, abide by, and play by the rules. NOTE: For purposes of clarification, we are discussing the Church in this article. The “Para Church” organization IS required to file the IRS Form 1023 in a timely manner, [within 27 months] in order to be recognized and approved as a 501(c)(3) tax exempt organization.
Deductibility of contributions is determined under sections 509 and 170. Section 508 speaks to reporting requirements, and 508(a) requires all new non-profit organizations (except the church) to file IRS Form 1023 for recognition of exempt status within 27 months of their organization. NOTE: 508 (c) exempts churches from the requirement of filing the IRS Form 1023.
SUMMARY: If the church is structured and functioning according to the above – it is automatically 501(c)(3), and receipts can be given from the first day of its organization
See the article we wrote earlier, and is now on our Web Page, under What is the 501(c)(3)? for more information on what is required of the church, to be able to issue receipts, enabling contributors to reduce their tax obligation.
If this discourse is of interest to you, please see Chapter 10 in The Church Administration ‘How To’ Manualfor more specific information. There are Worksheets and Forms at the end of the chapter to enable you to maximize Housing Allowance, and minimize personal income taxes. A Disc is included with the purchase of this manual, with the Worksheets and Forms. This Manual, endorsed by three CPA’s, an EA and two attorneys, was updated again in January, 2011, for the 12th time, since its original publication in 1991.
The above information is provided as a service to the Body of Christ by ADMINISTRATIVE ASSISTANCE
Copyright © 2003 by Administrative Assistance
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