do's_and_don'ts_for_churches_and_religious_org[1]

Do’s and Don’ts for Churches and Religious Organizations 2003 Nationwide Tax Forums “Church” • Generally, place of worship - not defined in Internal Revenue Code • Includes: – temples, mosques, synagogues, etc. – conventions and associations of churches – integrated auxiliaries of a church 2003 Nationwide Tax Forums Religious Organization • Includes: – nondenominational ministries – interdenominational and ecumenical organizations – entities whose principal purpose is the study or advancement of religion 2003 Nationwide Tax Forums “Church” • Must comply with requirements of §501(c)(3) • Form 1023 not required Religious Organization • Must comply with requirements of §501(c)(3) • Form 1023 required if gross receipts > $5,000 • Listed in Publication 78 • Not listed in Publication 78, unless Form 1023 filed • Exempt from filing Form 990 • Cannot make lobbying election • Must file Form 990 or 990-EZ • Can make lobbying election 2003 Nationwide Tax Forums Jeopardizing Tax Exempt Status • Inurement and private benefit • Substantial lobbying activity • Political campaign activity 2003 Nationwide Tax Forums Lobbying ... attempting to influence legislation. • Measurement methods – “Substantial Part” test - violation results in excise tax and revocation of exemption, – “Expenditure” test - violation results in excise tax and/or revocation of exemption • Only applicable to religious organizations - must make election on Form 5768. 2003 Nationwide Tax Forums Political Activity Direct and indirect candidate support: • Contributions • Participation in campaigns • Public statements for/against a particular candidate Absolute Prohibition! 2003 Nationwide Tax Forums Unrelated Business Income • Trade or business activity – Regularly carried on – Unrelated to exempt purpose 2003 Nationwide Tax Forums Unrelated Business Income Exceptions • Substantially all work performed by volunteers • Activity conducted primarily for convenience of members • Trade or business involves sale of donated merchandise 2003 Nationwide Tax Forums Unrelated Business Income Examples • • • • • Advertising Gaming activities Sale of merchandise & publications Parking lot for general public Rental income, if – Debt-financed – Personal property 2003 Nationwide Tax Forums Inurement/Private Benefit • Inurement to insiders such as ministers, church board members, officers, employees, etc., is absolutely prohibited. • Private benefit must be incidental to either insiders or outsiders. 2003 Nationwide Tax Forums Annual Filing Requirements Church • Form 990 not required Religious Organization • Form 990-EZ or 990 required depending on gross receipts & assets • Form 990-T: gross income from unrelated trade or business m $1,000 • Form 990-T: gross income from unrelated trade or business m $1,000 • Employment tax returns required • Employment tax returns required for all employees except ministers for all employees 2003 Nationwide Tax Forums Recordkeeping Requirements • Must maintain records that: – Justify right to exemption – Enable filing accurate tax and information returns • Includes: – organizing documents & bylaws, minute books, property records, general ledgers, member lists, offerings collected 2003 Nationwide Tax Forums Contact Information • http://www.irs.gov/eo – for forms, publications or general information on exempt organizations. • EO Customer Service (toll-free): 1 (877) 829-5500 – for general questions or assistance with applications or exempt organizations forms. 2003 Nationwide Tax Forums Publications • 517 - Social Security and Other Information for Members of the Clergy and Religious Workers • 526 - Charitable Contributions • 557 - Tax-Exempt Status for Your Organization • 598 - Tax on Unrelated Business Income of Exempt Organizations • 1771 - Charitable Contributions: Substantiation and Disclosure Requirements • 1828 - Tax Guide for Churches and Religious Organizations • 3079 - Gaming Publication for Exempt Organizations 2003 Nationwide Tax Forums