Most churches, by nature of a stated mission for religious purposes, qualify for tax-exempt status. But without the official designation of a 501(c)(3), many of the benefits of tax-exemption are lost. We have seen that some churches want to consciously abstain from anything that connects them to a government entity. However, you are subject to IRS regulations whether or not you officially apply for tax-exemption. In addition, if someone makes a contribution to your church without 501(c)(3) status, then the burden of proof is on the taxpayer to show that your church operates in a manner compliant with tax-exempt practices.
Here are the general qualifications for 501(c)(3) status from the IRS:
- The organization must be organized and operated solely for exempt purposes, with earnings not going to a private individual or shareholder.
- The organization must not use a substantial amount of its activities in an attempt to influence legislation or campaign for political candidates.
- The organization must not be operated for private interests. If one person has substantial influence over the organization, they may be subject to a personal excise tax.
The IRS Web Site has a step-by-step explanation of what you need to do to apply for tax-exemption with a 501(c)(3) status.