ChurchSafety

Churches can lose their tax-exempt status by participating in certain activities or failing to meet the requirements of the IRS. Moreover, churches cannot assume that all of their income is exempt from taxes. Restrictions and guidelines apply. Carefully read through these simple tips on the subject, then move on to the Step-by-Step resource, "Protecting Your Church's Tax-Exempt Status" so that you might fully understand the requirements of your church's tax-exemption.

Seek recognition. By obtaining recognition of your church tax-exemption provides some ease of understanding. You know you'll qualify for related tax benefits, and donors can be assured their contributions are tax deductible.

Do you qualify? Richard Hammar explains that the IRS has six factors that must be present in order for a church to qualify as a 501(c)(3) organization:

1. The church must be a corporation;

2. The church must be organized exclusively for exempt purposes;

3. The church must be operated exclusively for exempt purposes;

4. None of the church's earnings may inure to the benefit of private individuals;

5. The church must not engage in substantial efforts to influence legislation;

6. The church must not intervene or participate in political campaigns.

Keep your exemption safe. It is possible to lose your tax-exemption. Violating any of the rules can threaten your status. One such rule is political involvement, described in further detail in the download "Protecting Your Church's Tax-Exempt Status."

Adding a new business. Many churches are starting businesses like coffee shops and bookstores. Make yourself aware of the tax law requirements before you open to the public.

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