Recently the Billy Graham Evangelistic Association (BGEA) after 66 years serving as a ministry changed their tax status from a religious nonprofit to an association of churches. Samaritans Purse is currently changing their tax status for the same reasons. Liberty Counsel, a law firm that defends religious liberty, changed their tax status in 2006 to a church integrated auxiliary. Why would these leading Christian religious organizations change their tax status? Aren’t all 501(c)(3) nonprofits the same?
Having “church” status is the strongest legal and tax foundation for ministries. It means there are specific exemptions in federal law excluding churches, church ministries, and association of churches from having to file a 990 tax return (See 26 USC § 6033), special IRS audit protections (See 26 USC § 7611), and employment rights that other nonprofits do not have.
It is not hard to qualify as a church. Many ministries can make the change to organize and operate as a church.
Some examples of IRS approved “church” status that were not part of any denomination include the following: Salvation Army, who offer thrift stores, camps, job training, and housing. Young Life, a ministry focused on youth, is not part of any denomination and meets at recreations areas and camps.
Two recent IRS approvals that raised eyebrows and demonstrate great latitude in qualifying for “church” status include First Church of Cannabis, approved by the IRS in 2015 even though Cannabis is an illegal drug as defined by Indiana State Law and Federal Law. Our Lady of Perpetual Exemption, started as a joke by HBO’s John Oliver, was also approved as a church by the IRS.
If you are worried about protecting your First Amendment rights and your ministry is not a church or church ministry, contact us today.