IRS Publication 1828 (last revised August 2015), Tax Guide for Churches and Religious Organizations, explains the benefits and the responsibilities under the federal tax system for churches and religious organizations. Here is a list of the topics discussed:
- Tax-Exempt Status
- Jeopardizing Tax-Exempt Status
- Unrelated Business Income Tax
- Employment Tax
- Special Rules for Compensation of Ministers
- Payment of Employee Business Expenses
- Recordkeeping Requirements
- Filing Requirements
- Charitable Contributions – Substantiation and Disclosure Rules
- Special Rules Limiting IRS Authority to Audit a Church
Definition of Church
Certain characteristics are generally attributed to churches. These attributes of a church have been developed by the IRS and by court decisions. They include:
- distinct legal existence;
- recognized creed and form of worship;
- definite and distinct ecclesiastical government;
- formal code of doctrine and discipline;
- distinct religious history;
- membership not associated with any other church or denomination;
- organization of ordained ministers;
- ordained ministers selected after completing prescribed courses of study;
- literature of its own;
- established places of worship;
- regular congregations;
- regular religious services;
- Sunday schools for the religious instruction of the young; and
- schools for the preparation of its ministers.
The IRS generally uses a combination of these characteristics, together with other facts and circumstances, to determine whether an organization is considered a church for federal tax purposes.
The IRS makes no attempt to evaluate the content of whatever doctrine a particular organization claims is religious, provided the particular beliefs of the organization are truly and sincerely held by those professing them and the practices and rites associated with the organization’s belief or creed are not illegal or contrary to clearly defined public policy.
Because special tax rules apply to churches, it’s important to distinguish churches from other religious organizations. The term “religious organizations” as used in the IRS Publication does not refer 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.