The issue of what constitutes a church for the IRS tax exemption purposes has recently been considered in a novel context: Is a congregation that holds only internet and radio worship services a church entitled to IRS tax benefits? The U.S. Court of Appeals for the Federal Circuit found that the “electronic ministry” did not meet the IRS’s definition of a church.
To get the IRS tax benefits of being a church, an organization — which includes synagogues, mosques, and similar congregations — must have at least some of the following (IRS Pub 1828, Tax Guide for Churches and Religious Organizations):
- Distinct legal existence;
- Recognized creed and form of worship;
- Internal ecclesiastical government;
- Formal code of doctrine;
- Distinct religious history;
- Membership not affiliated with another church or denomination;
- Ordained spiritual leaders who have completed a prescribed course of study;
- Literature of its own;
- Congregation that meets regularly;
- Regularly held religious services;
- Program of religious instruction for young people;
- Established place of worship; and
- Schools for the preparation of ministers.
The IRS looks at all the facts and circumstances in deciding whether an organization qualifies as a church. An organization need not show all of these factors, and no single factor is determinative.
The Federal Circuit panel considered these IRS criteria, as well as the associational test, which defines a church as an organization whose members meet regularly for organized worship. Quoted in a Law.com article, Arthur Rieman, managing attorney of the Law Firm for Non-Profits, said the ruling “leaves open the question of whether worship services that use modern versions of Internet chat rooms would constitute significant association to meet the association test.”
With congregating and association being defined differently in the age of social media, this issue is unlikely to disappear.
On the IRS treatment of churches, check out CEB’s Advising California Nonprofit Corporations §3.33 (3d ed Cal CEB 2009).
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