What tax rules apply to churches?
Just like all other organizations described in section 501(c)(3) of the Internal Revenue Code, churches are generally exempt from income tax, able to raise funds through tax-exempt bonds, and eligible to receive tax-deductible contributions. Unlike other 501(c)(3) organizations, however, churches are not required to file a Form 1023, Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code, and they do not have to file a Form 990, Return of Organization Exempt from Income Tax. The following tax code rules apply to all 501(c)(3) organizations, including churches: –a complete prohibition on inurement of net earnings to insiders; –a complete prohibition on political activity; –a tax on lobbying activity that is a substantial part of its activities; –a tax on income earned from activities unrelated to its exempt purpose; –employment taxes; and, –charitable contribution deduction and substantiation rules. An organization’s tax-exempt status can be
