(c) Trade or business The term “trade or business”, when used with reference to self-employment income or net earnings from self-employment, shall have the same meaning as when used in section 162 (relating to trade or business expenses), except that such term shall not include—
(4) the performance of service by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order;
(5) the performance of service by an individual in the exercise of his profession as a Christian Science practitioner; or
(6) the performance of service by an individual during the period for which an exemption under subsection (g) is effective with respect to him. The provisions of paragraph (4) or (5) shall not apply to service (other than service performed by a member of a religious order who has taken a vow of poverty as a member of such order) performed by an individual unless an exemption under subsection (e) is effective with respect to him.
The IRS generally uses a combination of these characteristics, together with other facts and circumstances, to determine whether an organization is considered a church for federal tax purposes.
The term church is found, but not specifically defined, in the Internal Revenue Code. With the exception of the special rules for church audits, the use of the term church also includes conventions and associations of churches as well as integrated auxiliaries of a church.
Certain characteristics are generally attributed to churches. These attributes of a church have been developed by the IRS and by court decisions.
They include:
Under “Other Section 501 (c)(3) Organizations states….”Although a church, its integrated auxiliaries, 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, the organization (church) may find it advantages to obtain recognition of exemption.” In other words, churches, integrated auxiliaries, and association of churches do not have to apply to be tax exempt from the IRS.
Therefore, if a church or ministry forms a 501(c)3 corporation with the state, they "sign away" in a "legal contract" the rights of their organization under the constitution. You must remember that the corporation is a "commercial enterprise" (public entity). This is the main reason the state regulates it.
Charitable Contributions states…”You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization most organizations other than churches and governments, as described below, must apply to the IRS.” Examples. The following list gives some examples of qualified organizations. Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.”
Application for Recognition of Exemption Under Section 501(c)(3) of the InternalRevenue Code. Instructions for Form 1023 states bottom right of page one… “Form 1023 not necessary. The following types of organizations may be considered tax exempt under section 501(c)(3) even if they do not file Form 1023. Churches… Integrated auxiliaries of churches and conventions or associations of churches.”
The First Amendment guarantees freedoms concerning religion, expression, assembly, and the right to petition. It forbids Congress from both promoting one religion over others and also restricting an individual’s religious practices. It guarantees freedom of expression by prohibiting Congress from restricting the press or the rights of individuals to speak freely. It also guarantees the right of citizens to assemble peaceably and to petition their government.
Special Rules with respect to section 501(c)(3) Organizations
c)Exceptions
(1)Mandatory exceptions Subsections (a) and (b) shall not apply to—(A)churches, their integrated auxiliaries, and conventions or associations of churches
IRS Code Section 6033 (a) exempts religious organizations from the need for filing returns of ANY KIND!
IRS Code Section 6033 (a) (2) (A) (i) provides for mandatory exceptions to filing requirements for religious organizations and states that filing requirements shall NOT apply to "churches", their integrated auxiliaries, and conventions or associations of churches. The definition of integrated means a part of a whole. The definition of auxiliary means a part that is helping or assisting another part. Since a self-supported ministry is definitely a part of the church, which is also assisting the church, it stand to reason that a self-supported ministry would therefore qualify as an integrated auxiliary to the Church.
Dissolution or Termination of Church
In terminating the church/ministry's existence, there is a form published just for that action. The number of the form is Form 9660 E. It addresses Title 26 USC Section 6043 (b) and the responsibility thereunder. The title of this form is Liquidation, dissolution, Termination, or substantial contraction of organizations exempt or formerly exempt under section 501 (a). The Church is in 501 (c) (3), and every organization in (c) is also in (a). You will find in the instructions at the bottom of the page that the church, the integrated auxiliaries and/or conventions or associations of churches are exempt from filing this form.
This completes the initial consideration for the establishment, operation and termination of a church/ ministry. They believe this in fact, a church/ministry established using the above information and based on the information provided, with the establishment of a church/ministry, the church/ministry can do three things. 1. Originate 2. Operate... and 3. Terminate - without any responsibility to ANY agency, civil government or otherwise; to gain their approval, sanction, or any other blessings, with regard to recognition of exempt status (which is your inherent right).
Q&A In regards to Church Tax Inquiries and Examinations
Under section 7611 of the Internal Revenue Code, the Internal Revenue Service may begin a church tax inquiry only when the appropriate Regional Commissioner (or higher Treasury official) reasonably believes, on the basis of facts and circumstances recorded in writing, that the organization (1) may not qualify for tax exemption as a church; (2) may be carrying on an unrelated trade or business (within the meaning of section 513); or (3) may be otherwise engaged in activities subject to tax. Information received by the Internal Revenue Service at its request may not be used to form the basis of a reasonable belief to begin a church tax inquiry, unless the Service's request is made within the procedures of section 7611, is a request permitted by these questions and answers to be made without application of the procedures of section 7611, or is a request to which the procedures of section 7611 do not apply.
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