Special tax rules exist for churches, religious organizations, conventions, and associations of churches in the federal tax system and are defined in the Internal Revenue Code (IRC).
Like a charity organization, churches and various church-controlled organizations are exempt from federal income tax under ICR Section 501(c)(3), which permits such organizations to receive tax-deductible contributions.
To qualify for this exemption, churches and church-controlled organizations must meet these requirements:
• Operate exclusively for religious, educational, scientific, or charitable purposes
• Net income cannot benefit a private individual or stakeholder
• Related activities may not influence legislation
• The organization may not partake in political campaigns
• The organization’s operations can’t be illegal
If these things line up correctly, churches and church controlled organizations are automatically considered tax-exempt and are not required to file tax exemption status with the Internal Revenue Service (IRS).
However, all tax-exempt organizations should have a tax ID number, or what’s called an Employer Identification Number (EIN for short).
If you’re wondering how to obtain your nonprofit Employer Identification Number, you’ve come to the right place.
An EIN will allow your church or church-controlled organization to do several important things, even if the church or auxiliary organization doesn’t currently have any employees.
An EIN will allow your church or church-controlled organization to do the following and more:
• Open a bank account in the name of the organization
• Be listed as a subordinate in a group ruling
• Furnish returns with the IRS, such as Forms W-2 and 1099
For these reasons, it’s important to obtain your nonprofit Employer Identification Number (EIN) whether you’re a church, church controlled organization, convention, or associations of churches including integrated auxiliaries.