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Churches and Form 990

How do you know if your tax exemption status is still valid with the IRS?

Question:
How do you find out if your tax exemption is still valid? I was told the IRS is making changes and if you are not active in their system as of October 9, 2009, you won't be able to operate as a church!

Answer:
This question probably arose from a misunderstanding related to filing a Form 990 series information return. Most typesof nonprofit organizations are required by law to fileeither Form 990 (or the simpler Form 990-EZ for smaller organizations)if their "gross receipts" (revenues) normally exceed the threshold amounts published by the IRS in the instructions to the forms.Organizations not required to file Form 990 or 990-EZbecause their revenues are below the threshold amounts must still file an annual electronicForm 990-N with the IRS to advise the IRS that the organization still exists. Organizations that are required to file either Form 990, 990-EZ or 990-N and don't do so will have their exempt status automatically revoked by the IRS after failing to file for three consecutive years. Churches, associations of churches, integrated auxiliaries of churches, certain foreign missions organizations and certain other specifically-listed types of nonprofit organizationsare exempt from filing Form 990, 990-EZ or 990-N, regardless of their size. Furthermore, churches, associations of churches and integrated auxiliaries of churches are exempt from federal income tax as 501(c)(3) organizations whether they file an application for exemption with the IRS or not. Accordingly, while it is true that the IRS will revoke the exempt status of some nonprofits that fail to file Form 990, 990-EZ, or 990-N, that is not true with respect to churches.

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Posted:
October 27, 2009

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Connie

February 06, 2012  12:45pm

If our pastor decides to buy his own house, what tax ramifications would there be if we rented out the parsonage?

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Scott

January 31, 2011  7:16pm

Kathy, Churches are exempt from all taxes. You should not be paying sales tax on anything you purchase for the church. Most larger stores will have a form that you fill out and they will keep your exemption on file.

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Kathy

October 05, 2010  9:34am

Since we don't have to file 990 and such, As a church and a 501 (c)(3) organization, is it correct that we pay sales tax on anything we purchase for the church even though we have a tax I.D. number, but if the church as fundraiser sales we would not have to charge sales tax?

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