Does the IRS View Churches and Religious Organizations Differently?

By December 31, 2020 Church
Does the IRS View Churches and Religious Organizations Differently?

On the surface, the terms “church” and “religious organization” may appear synonymous. However, the IRS differentiates between churches and religious organizations in several key areas. Groups hoping to organize as either type of organization should seek legal advice before doing so.

Churches vs. Religious Organizations

Instead of a strict definition of the term ‘church,’ the IRS tends to make determinations on a case-by-case analysis. When deciding whether an organization is a church or not, the IRS considers the group’s individual circumstances, IRS regulations, court decisions, and other facts about the organization. However, the following attributes generally apply to churches:

  • Have an established place of worship, regular congregations, and regular religious services;
  • Recognize its own creed, doctrine, discipline, and governance; and
  • Selects ministers who have completed a course of study.

Religious organizations do not have the same attributes as churches. Examples of religious organizations that might be recognized by the IRS include nonprofit religious broadcasting stations, as well as “nondenominational ministries, interdenominational and ecumenical organizations, and organizations whose main purpose is to study or advance religion.”

The IRS and Tax-Exempt Status

Nonprofit organizations classified as churches are not required to:

  • seek formal recognition of their status from the IRS, or
  • submit annual information returns to the IRS.

Churches typically are not required to formally request exempt status from the IRS. Instead, the IRS automatically recognizes the 501(c)(3) status of a church. However, church leaders may consider filing an Application for Recognition of Exemption with the IRS to avoid confusion about the church’s tax-exempt status or to obtain documentation that can be used as proof of the church’s exempt status.

The IRS does require religious organizations to submit an Application for Recognition of Exemption to gain 501(c)(3) tax-exempt status.

Understanding How the IRS Views Churches and Religious Organizations

Members of churches and religious organizations may have their own opinions about the organization’s tax-exempt status. However, because the law treats the two differently, it is important to understand which category applies to your ministry.

Provident Law’s church and nonprofit attorneys are here to answer questions and to aid in establishing and crafting policies governing nonprofit governance. We recognize how essential the missions of nonprofit and religious organizations are for society, and we stand ready to counsel and serve the churches and nonprofit organizations of Arizona. Contact us to learn more.