This Week's LessonWeek of July 28
This lesson introduces the issue of Your Church's Tax Exemption Number. You can review the Executive Summary to obtain the key points or read the Weekly Lesson for a more thorough presentation of this topic. Start by completing the following interactive quiz to test your knowledge.
A church board asks the church treasurer if the church has a "tax exemption number," and if so, what it is. The church treasurer is not sure how to respond.
Instructions Click on the correct answer for each of the following questions.
Church treasurers sometimes wonder if their church has a "tax exemption number" proving that it is exempt from federal and state taxes. Tax exemption numbers are the focus of this week's lesson.
Federal tax exemption
As we learned in last week's lesson, churches are not required to apply to the IRS for formal recognition of tax-exempt status. They are automatically presumed to be exempt, so long as they comply with the various requirements for exemption set forth in the tax code. However, obtaining official recognition of exemption from the IRS is desirable because it will make it easier for donors to substantiate their deductions for charitable contribution deductions that they make to their church. If the church has never obtained recognition of exempt status from the IRS, it may be required to prove that it qualifies for exemption if a member's contributions are questioned by the IRS in an audit. How does a church obtain recognition of exemption from the IRS? There are two options.