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Why Business Jargon May Trip Up Church Exemptions

IRS ruling reveals potential problems when ministries are too commercial.

Why Business Jargon May Trip Up Church Exemptions

Business-savvy church leaders sometimes use business jargon to describe their activities and efforts. A recent IRS denial of exemption for a nonprofit religious organization shows why doing so excessively can be problematic.

In a denial letter released March 8, 2013, the IRS addressed the application for 501(c)(3) exemption by a religious organization that described itself as having three divisions: a Ministry Division, a Consulting Division, and a Merchandising Division. While some aspects of the activities carried out by the organization's divisions as described in the ruling are common among religious nonprofits, the terminology used to describe them is not.

A variety of facts formed the overall basis for the IRS's denial, but we believe it can be reasonably inferred from the language in the denial that the IRS was particularly troubled by the organization's use of business ...

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Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

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Posted:
  • October 30, 2013

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