Jump directly to the Content

Coffee Shop Founded by a Pastor Fails to Qualify for Tax-Exempt Status

A predominantly commercial enterprise will not qualify for tax-exempt status if its principal activities are indistinguishable from competing for-profit entities, even if it engages in occasional or insignificant activities in furtherance of its religious mission.

Last Reviewed: March 10, 2021
Key point. The operation of a coffee shop as a church outreach to the community will not constitute a basis for tax-exempt status if the operation of the coffee shop is overly commercialized to the extent that the religious purpose is minimal.

The IRS ruled that a "coffee shop" founded by the pastor of a church for personal evangelism in an urban area did not qualify for tax-exempt status since it was indistinguishable in operation from secular, for-profit coffee shops.

A nonprofit corporation (the "Corporation") was formed for the following four purposes:

  1. Proclaim earnestly the gospel message and to urge its personal acceptance.
  2. Promote prayer, Bible study, missions, Christian fellowship, evangelism, Christian service and encouraging, in every possible way, a lifetime commitment to Christ.
  3. Provide a forum in which the Gospel of Jesus Christ can be discussed with non-believers outside of a formal church setting.

Join now to access this member-only content

Become a Member

Already a member? for full access.

Related Topics:
  • August 22, 2017
  • Last Reviewed: March 10, 2021

Related ResourcesVisit Store

Politics and the Church
Politics and the Church
Tax and legal guidelines faith-based organizations need to know before jumping into the political fray.
Protecting Your Tax-Exempt Status
Protecting Your Tax-Exempt Status
Understand the requirements of your tax-exempt status.
2021 Church & Clergy Tax Guide (Book)
2021 Church & Clergy Tax Guide (Book)
The most comprehensive and authoritative tax guide available.
20 Finance Questions Churches Ask
20 Finance Questions Churches Ask
Richard Hammar answers relevant tax and finance questions for church leaders.