What can cause a church to lose its tax-exempt status?

Under the substantial part test, a church or religious organization that conducts excessive lobbying activity in any taxable year may lose its tax-exempt status, resulting in all its income being subject to tax.

How can a church be tax-exempt?

To be recognized as tax-exempt, a religious organization other than a church must apply for and obtain an IRS determination letter recognizing its exempt status. With limited exceptions, religious organizations other than churches must also file an annual information return, the Form 990 series.

When a church gives money to an individual?

The church is not permitted to act as a “flow-through” entity through which donations can be made to individuals while also qualifying for a tax deduction. Additionally, if the designated individual is a staff member, the amount could be considered compensation to the recipient.

Are churches automatically exempt from paying taxes?

Churches usually have an automatic tax exempt status; however, you should make sure that your organization is classified as a church with the IRS.

Should churches be exempt from paying taxes?

Churches and religious organizations are generally exempt from income tax and receive other favorable treatment under the tax law; however, certain income of a church or religious organization may be subject to tax, such as income from an unrelated business.

Why are churches still tax exempt?

Why Churches Are Tax Exempt In America. Religious institutions are exempt from taxation because our government has not been given the power to govern religion. This is an expression of the basic principles behind the founding of this country—that is, there is an Authority above the government that has established rights apart from the government,…

What is the tax exemption for a church?

Churches and other houses of worship in the United States are ordinarily exempt from paying taxes under Section 501(c)(3) of the tax code, having complied with various legal requirements such as registering with their states as nonprofit organizations.