IRS Says Irrevocable Trust Is Responsible For Taxes
Here is what the IRS website says itself in quotes, "An irrevocable trust is a trust which the grantor has no control over" and cannot be repealed or annulled. "The trust will be responsible for reporting income on form 1041."
Every word on the IRS website is extremely important and meaningful. Quite openly the IRS states one is RESPONSIBLE for reporting income - it never said it was MANDATORY unless one has received income. However, a trust properly setup as an FBO (Faith Based Organization) does not receive income, it receives grants/donations/etc. Additionally, Steve Nestor, Senior IRS Agent (Ret) has gone on record to state: "I am not the only IRS employee who’s wondered why churches go to the government and seek permission to be exempted from a tax they didn’t owe to begin with, and to seek a tax deductible status that they’ve always had anyway. Many of us have marveled at how church leaders want to be regulated and controlled by an agency of government that most Americans have prayed would just get out of their lives. Churches are in an amazingly unique position, but they don’t seem to know or appreciate the implications of what it would mean to be free of government control."
To further state the point, a mandatory tax-except entity like a 508(c)(1)(A) will not need to file unless they wish to voluntarily become a 501(c)(3), in which rigorous reporting and receipt tracking will be required by the IRS.
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