I spent one day in Tampa at a seminar put on by a CPA firm from TN (Chitwood & Chitwood) They specialize in church compliance. By the end of the day, it was amazing to me what our churches will face from audits (and resulting penalties)from non-compliance.

Have any of you gone to one of those? Are you aware of all the changes the IRS has made with respect to bookkeeping requirements and forms to be filed? Most of the churches there with me that day were not listed as a 501 (3) C and were not aware they did not have that status.

Scary stuff folks. And they say ignorance is no excuse for not filing the forms etc. Elders, bookeepers & preachers can be held personally responsible for fines & penalties.

Has anyone been through an audit yet?? And survived ??

Cynthia O'Brien

-- Anonymous, November 25, 2000

Answers

Scott and Cynthia.....

That is an interesting "potential" contradiction. Could you both work on clarification and get back to us???

I certainly agree that it is wise to do so to avoid further problems....but that is a potential contradiction that could lull some churches into a poor choice.

Thanks!

-- Anonymous, November 26, 2000

Hello,

I'm in the process of filing for 501c3 in order to start new churches in St. Louis. In the process of filling out the paperwork, there was something there that seems to contradict the information you were being given.

The instructions for the paperwork explicitly state that churches are not required to file the paperwork to be considered 501c3, but that it is a good step to take so that donors know for sure that such a church has been recognized by the government for charitable donation purposes. Has that changed? Because that was in this summer's paperwork.

God bless, Scott

-- Anonymous, November 26, 2000

Smoe house churches don't file with the IRS at all, and the members don't ask for tax deductions.

The IRS changed its policies? Were the policies changed by the executive branch or by congress.

How come is it that the bit about the bill of rights that congress shall make no law regarding the establishment of religion gets interpretted as 'separation of church and state.' Now, they try to keep religion out of government, but the government puts rules on religion. It looks like they are ignoring the bill of rights on this one.

But the Bible says submit to rulers. It doesn't say that we resist rulers when they go against the constitution. Rome had turned its back on its unwritten constitution before Christ was born.

Btw, if a church incorporates, can elders and individual church members be free of being held individually responsible?

-- Anonymous, November 26, 2000

Scott, I will dig out all the books and manuals I have and check my notes. I also it was overwhelming to say the least! I do remember he held up a letter of determination from the IRS and said if you don't have this, you aren't tax exempt.

Danny, Yes I will clarify. I'll research it and get back to you. It is too important *not* to know about this.

Link, I don't remember the details of corp vs unincorp but will research it.

Cynthia

-- Anonymous, November 26, 2000

Be very careful. About 5 years ago some supposed "experts" on church compliance sent scare brochures touting their seminar. We paid $900 to have them tell us we were not in compliance. We went to a local CPA and were told we were ok.

-- Anonymous, November 26, 2000

Here is the source for why I stated my understanding that churches are not required to file for 501(c)3, although it is a good idea to have it done to have confirmation of a church's status. The following publication is available in print or online at www.irs.gov. I hope this helps bring clarity.

Scott Jewell

Publication 557- Tax-Exempt Status for Your Organization (Rev. November 1999)

Chapter 3 - Section 501(c)(3) Organizations (excerpt from here) Organizations Not Required To File Form 1023

Some organizations are not required to file Form 1023. These include: 1. Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. 2. Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later).

These organizations are exempt automatically if they meet the requirements of section 501(c)(3).

-- Anonymous, November 27, 2000

Scott, I find it interesting that on form 1023 under *Purpose of Form* below the second paragraph where it states churches are not required to file this form....in small print is the following:

Even if the above organizations are not required to file form 1023 to be tax exempt, these organizations may CHOOSE to file form 1023 in order to receive a determination letter that recognizes their section 501 (3) (c) status.

Section 501 (3c) status provides certain incidental benefits such as: Public Recognition of tax exempt staus Adavance assurance to donors of deductibility of contributions Exemption from certain state taxes Exemption from certain Federal taxes Nonprofit mailing privileges, etc

Then on the instructions for schedule A to be sent with the 1023 again the IRS repeats : Although a church, it's integrated auxilliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from Federal Income Tax or to receive tax-deductible contributions, such an organization may find it advantageous to obtain recognition of exemption.

I do have in this manual a copy of the Letter of Determination and it states in an addendum: You are required to make available for public inspection a copy of your exemption application, supporting documents, and this exemption letter.

I heard on the news that there is a church in FL being seized by the IRS and the members were locked inside protesting. I never heard anymore about it. That was a week or two ago.

Cynthia

-- Anonymous, November 27, 2000

Cynthia,

Yes it does say all that. It's kind of scary. You don't really have to have this to receive the benefits, but if we haven't recognized your status we may come back to say that you never had it (my interpretation). I think having the status is a relief of mind, but each church must decide which way it wants to go.

Scott

-- Anonymous, December 01, 2000