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What is a church or religious organization?

Forming a church or religious organization

Tax ID Number (EIN)

Tax Exempt Status

 

 

Annual Filings

 

IRS Guide

Disclosure Requirements

 

 

 

 



 

 

 

 

To be treated as a church or religious organization that is exempt from federal government oversight, the organization must be considered a "church," an "association of churches" or an "integrated auxiliary of a church." 

 

Church

To determine if an organization is a "church" the IRS uses a combination of the following attributes, together with other facts and circumstances:

  • is a legal entity formed as a corporation, association or trust
  • operates according to a creed or form of worship
  • operates under a formal code of doctrine or discipline
  • has a distinct religious history
  • has a separate membership not associated with another church or denomination
  • is an organization of ordained ministers
  • has established places of worship
  • has a regular congregation
  • holds regular religious services

 

The IRS does not make evaluate the content of the doctrine or creed so long as the beliefs are truly and sincerely held and the beliefs or creed are not illegal or contrary to "clearly defined public policy."  For example, the IRS would not recognize and organization as a church if its creed required the illegal selling or distribution of controlled substances.

 

Association of Churches

An association of churches is simply that, an association where all of the members are churches.

 

Integrated Auxiliary of a Church

The definition from the IRS website is as follows:

 

The IRS will treat an organization that meets the following three requirements as an integrated auxiliary of a church.  The organization must:

  • Be described both as an Internal Revenue Code section 501(c)(3) organization and be a public charity under Code section 509(a)(1), (2), or (3),
  • Be affiliated with a church or convention or association of churches, and
  • Receive financial support primarily from internal church sources as opposed to public or governmental sources.

Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy the first two requirements above are considered integrated auxiliaries whether or not they meet the internal support requirement.

 

To read more about the IRS definition of churches and religious organizations, refer to IRS Publication 1828. Tax Guide for Churches and Religious Organizations

 


 

Forming a church or religious organization

 

 

Incorporating a church -- Ecclesiastical Corporations 

 

While most nonprofit organizations incorporate under the Nonprofit Corporation Act, churches must incorporate under the General Corporations Act, Sections 450.178 through 450.186 of the Michigan Compiled Laws (MCL). The following special requirements apply to ecclesiastical corporations:

 

  • The purpose must be the teaching and spreading of religious beliefs and principles;
  • There must be 3 incorporators; and
  • It must be a membership corporation

 

Because an ecclesiastical corporation must be formed under a different statute and the requirements are not the same as for a nonprofit corporation, different forms are required to form an ecclesiastical corporation. 

 

To form the ecclesiastical corporation, file Form # 503.

 

To amend the articles of incorporation, file Form #516.

 

To restate the articles of incorporation of an ecclesiastical corporation, file Form # 512.

 

Some forms remain the same for ecclesiastical corporations, such as the certificate of correction and the change of address or resident agent.

 

Some forms remain the same for ecclesiastical corporations, such as the certificate of correction and the change of address or resident agent. To read more about these filings go to the "Forming a Public Charity page of this website.

 

Religious Organizations

If the charity will have a religious purpose but does not intend to operate as a church, then it must incorporate under the Nonprofit Corporation Act and will fall under the requirements of that Act.  For more information on corporation requirements go to the Michigan Corporations page of this website.

 


 

Tax ID Number (EIN)

 

Once the organization is formed, either by incorporating, forming an association or executing a trust document, it needs to obtain a federal identification number known as the Employer Identification Number (EIN), sometimes referred to as the Tax Identification Number (TIN). Every legal entity needs such a number, whether or not they have employees. The EIN can be obtained immediately either on the IRS website or by telephone (1-800-829-4933), or you may apply for the number by mail by submitting IRS Form SS-4. There is no charge for the EIN, regardless of the option chosen. For information on all of these options, go to the IRS website.

 


 

Tax Exempt Status

 

Churches are exempt from the requirement to apply for tax exempt status as a 501(c)(3) organization. If an organization operates as a church as defined by IRS rules, then it is exempt without the making application for recognition. However, a church may wish to apply for recognition so that they will have a determination letter in their possession documenting the tax exempt status.

 

For a much more detailed discussion of IRS rules as they relate to churches and religious organizations, go to IRS Publication 1828, Tax Guide for Churches and Religious Organizations.

 

 

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Charitable Organizations and Solicitations Act 

While this law requires most charities to be licensed to solicit or receive charitable contributions "duly constituted religious organizations or a group affiliated with and forming an integral part of a religious organization" is not subject to the license requirement. While exemptions for churches and ecclesiastical corporations are typically exempted from the license requirement, organizations who claim religious purposes may or may not be exempt. To obtain a determination from the Attorney Generalís Charitable Trust Section as to whether licensing is required submit the Initial Charitable Trust/Charitable Solicitation Questionnaire, along with required attachments.

 

While the church or religious organization may be exempt from the charitable solicitation license requirement, any professional fundraisers used by the church or religious organization is subject to the professional fundraiser license requirements. For more information go to the Charities page of the Attorney General's website.

 

Supervision of Trustees for Charitable Purposes Act

This law that requires registration of charities holding assets in Michigan exempts religious organizations from the registration requirement. For a determination from the Attorney Generalís Charitable Trust Section as to whether charitable trust registration is required submit the Initial Charitable Trust/Charitable Solicitation Questionnaire, along with required attachments.

 

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Annual Filings

 

If a church or religious organization is incorporated in Michigan, it has the same annual filing requirement with the Michgian Department of Labor and Economic Growth, Corporation Division, as other corporations. Failure to file the Annual Information Update will result in automatic dissolution of the corporation.

 

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IRS Guide

 

IRS Publication 1828, Tax Guide for Churches and Religious Organizations provides a great deal of information that will be helpful to both churches and religious organizations.

 

 

 

Lobbying & Political Activity

The strict rule is that churches are prohibited from engaging in partisan politics. Churches and religious organizations are allowed to engage in lobbying and advocacy for causes, but such activities must not be a substantial part of their activities.

For more information go to the IRS website and to IRS Publication 1828, Tax Guide for Churches and Religious Organizations. Also go to the Lobbying, Advocacy & Political Activity page of this website.

 

Disclosure Requirements

 

Churches, associations of churches and integrated auxiliaries of churches are exempt from applying for tax exempt status on IRS Form 990 and are exempt from filing IRS 990s. However, if such an exempt organization chooses to file the forms, then the same disclosure rules apply to churches, associations of churches and auxiliaries as to other charitable organizations.

 

Disclosure to the general public

The IRS requires that the following documents be made available for public inspection and copying by those who request them:

 

      • The organizationís Form 1023, Application for Recognition of Exemption, along with all documents the organization submitted in support of its application
      • The IRS ruling letter
      • IRS 990s, including all schedules, attachments and supporting documents filed for three years following the due date or the filing date of the return, whichever is later
      • IRS 990-T, if filed by the organization


NOTE:  Schedule B, Schedule of Contributors, submitted by public charities is exempt from the disclosure requirement. 

 

For more information on disclosure requirements go to the following IRS resources:

 

 

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While charities are exempt from some reporting requirements, they are usually not exempt from many fundraising and special event regulations, such as raffle and Bingo licenses, liquor licenses and local ordinances. For more information, go to

 

Also, as noted above under the Michigan Attorney General Oversight topic, professional fundraisers used by churches and religious organizations are subject to the professional fundraiser license requirements. For more information go to the Charities page of the Attorney General's website.

 

 

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A charity is religious in nature and qualifies for exemption from the charitable solicitation license and reporting to the IRS if it is a group of religious people, or church members, trying to live by the beliefs of their religion by helping others.

 

A charity is only considered a religious charity if it is carrying out an evangelical purpose: spreading the word of their religion through teaching, preaching, prayer or other religious acts. It is not sufficient to be a group of religious people carrying out a charitable purpose to help others, even though one of the beliefs of the religion may be to help others.