I was working on the essay questions for Lesson XI in the Third Degree course. One of the questions asked about charitable donations and that put the wheels spinning in my little brain. You see, I have a PhD in accounting, am a CPA and I teach the Taxation of Individuals and Taxation of Corporations and Partnerships courses on the university where I'm a professor.
Some mistakenly believe that for all charitable contributions to be tax deductible they must be made to Internal Revenue Code (IRC) §501(c)(3) corporations. While that is generally true it is not completely true. There are many good reasons for a church to incorporate, but doing so to obtain tax-exempt status is not one of them.
Churches (including integrated affiliated bodies) that meet the requirements of §501(c)(3) of the IRC are automatically considered tax exempt and are not required to apply for and obtain recognition of exempt status from the IRS. Donors are allowed to claim a charitable deduction for donations to a church that meets the §501(c)(3) requirements even though the church has neither sought nor received IRS recognition that it is tax exempt. In addition, because churches and certain other religious organizations are not required to file an annual return or notice with the IRS, they are not subject to automatic revocation of exemption for failure to file.
If you want to read more about taxes and churches then IRS Publication 1828, Tax Guide for Churches and Religious Organizations, is a good place to start.
I have been writing a manual for the students in my graduate Non-Profit Financial Management Course (LS 608) and have finished the first three chapters:
The first chapter spells out exactly what requirements an organization has to meet to be considered tax exempt. I give the students in my class (which starts this coming Friday and I'm not quite ready yet) a free PDF copy of the manuscript so please email me if you would like a copy too. Be happy to email a copy back to you.
Peace my friends,