Do you know your congregation’s tax status with the IRS?

Some congregations believe they have tax-exempt status due to their participation in Illinois Mennonite Conference (IMC). While that may have been true at one time, it is no longer the case. IMC has individual 501(c)(3) status, not group status. That means that congregations do not have tax-exempt status just because they belong to IMC.

If you believe your church is tax-exempt because they are a part of IMC, you may not actually be considered tax-exempt by the IRS. Please double check your status to ensure that you are, indeed, tax-exempt.

Churches are not required to formally file for an exemption with the IRS. Churches can accept tax-deductible donations and function as a tax-exempt organization (no need to file a 990, etc) without official exemption.

However, without an official exemption, congregations cannot get written proof of tax exemption from the IRS. The IRS can only issue a tax-exempt letter for congregations that are officially registered individually or as part of a group (which is not an option for IMC congregations).

If you find you are not officially tax-exempt, your church can do one of two things:

1. Continue current practice and have no official IRS sanctioned recognition as a non-profit. Daily functions are ok, but the church would not be able to add things like online donation capabilities and the church could never “really consider” itself as a non-profit.

2. Apply for separate 501(c)(3) status using form 1023 (http://www.irs.gov/pub/irs-pdf/f1023.pdf). Churches are exempt from the usual 27-months from organization date to apply. There is an $850 application user fee which is listed on the 1023 form on page 12. You can use this link to find these other useful publications (http://www.irs.gov) some of the useful publication could be 557, 1828, 1771 and 4220 (http://www.irs.gov/pub/irs-pdf/p4220.pdf).