Updated IRS Reporting Requirement Applies to Church Preschools
Updated IRS Reporting Requirement Applies to Church Preschools
Publicizing racial nondiscrimination policy can now also be fulfilled through a website statement.

The Internal Revenue Service (IRS), through new guidance issued in May, has added another way for private schools to publicize their racially nondiscriminatory policy to the general community. In IRS Revenue Procedure 2019-22 (2019), the agency says a website statement is now a suitable method for providing such a public statement.

This development should be noted by all privately run schools and preschools, including ones operated, supervised, or controlled by churches and other religious organizations.

Background

Each year, a private school must file a certificate of racial nondiscrimination (IRS Form 5578) with the IRS, and maintain supporting records documenting compliance with the policy, in order to retain its tax-exempt status. The certificate is due by the fifteenth day of the fifth month following the end of the organization’s fiscal year. This is May 15 of the following year for organizations that operate on a calendar-year basis. For example, the Form 5578 for 2019 is due May 15, 2020.

A private school is defined as an educational organization that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly conducted. The term includes primary, secondary, preparatory, or high schools, as well as colleges and universities, whether operated as a separate legal entity or an activity of a church.

Key point. The term school also includes preschools, and this is what makes the reporting requirement relevant for many churches. As many as 25 percent of all churches operate a preschool program.

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Posted:
June 26, 2019
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