Proof of Non-Profit Organization Needed

Proof of Non-Profit Organization Needed

We've often had people come across a message similar to this: “Please send us a copy of a document confirming your status as a non-profit organization. Examples include 501c3 determination letter or proof of registration with your local attorney general.”

When we are asked what kind of organization we are. The simple answer is we are a church established under a trust. However some people remain confused about what legal status a church has in the USA, so we reply with an answer like this: "The organization qualifies itself as a CHURCH - deeming it as automatically exempted (i.e. "generally exempt") from federal income tax; as well as, contributions to the church are automatically tax deductible under existing federal law. No documentation is required for a church tax exemption at the federal, state or local level, so therefore none exists, but if you wish to make a formal request, we can provide you with an affidavit on our letterhead signed by the head of our organization indicating that the we are a bona fide church, the creation date and include a copy of the relevant sections of the Internal Revenue Code that apply to churches."

If one wishes to make a formal request for an affidavit, please send the formal request on the organization’s letterhead to the address shown below:

TRUST NAME
ADDRESS
CITY, STATE ZIP"

This is usually enough proof of the trust/church's tax status to satisfy any legal requirements for documentation that one may encounter.

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If anyone requires more information in regards to one's tax non-obligatory status, here are the cited sources that we send to parties not aware of a 508(c)1(A) and it's automatic tax-exempt status:

Churches are Not Expected to Apply for 501(c)(3) Exemption
In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 (Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code). However, note what the IRS says regarding churches, in Publication 557:

"Some organizations are not required to file Form 1023."

These include:

Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church ... These organizations are exempt automatically if they meet the requirements of section 501(c)(3)."

Churches Are Automatically Tax-Exempt
According to IRS Code § 508(c)(1)(A):
“Special rules with respect to section 501(c)(3) organizations.
   (a) New organizations must notify secretary that they are applying for recognition of section 501(c)(3) status.
       (c) Exceptions.
         (1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—
            (A) churches, their integrated auxiliaries, and conventions or associations of churches. “

This is referred to as the "mandatory exception" rule. Thus, we see from the IRS’ own publications, and the tax code, that it is unnecessary and unexpected for any church to apply for 501(c)(3) tax exemption. In the IRS’ own words a church is “exempt automatically” from federal tax laws.

Churches Are “Automatically Tax-Deductible”
Doesn’t a church still need to become a 501(c)(3) so that contributions to the church can be taken as a tax deduction? The answer, as we will see is No. According to IRS Publication 526 “Charitable Contributions”:

"Organizations That Qualify To Receive Deductible Contributions
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.

The following list gives some examples of qualified organizations.
"Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations."
IRS Publication 526 states again in ‘Table 1’ that contributions made to churches are deductible:

“Examples of Charitable Contributions
Use the following lists for a quick check of contributions one can or cannot deduct.

Deductible as Charitable Contributions
Money or property one gives to:
• Churches, synagogues, temples, mosques, and other religious organizations."
 In the IRS’ own words a church is automatically tax-deductible.

Churches Have a Mandatory Exception from Filing
Churches are not expected to seek 501(c)(3) status. In the words of Steve Nestor, IRS Sr. Revenue Officer (ret.):

"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”; “Churches are in an amazingly unique position."

The IRS again states:

“a church, its integrated auxiliaries, or a convention of churches is not required to file Form 1023 [“Application for Recognition of Exemption Under Section 501(c)(3)”] to be exempt from federal income tax or to receive tax deductible contributions " -- (Tax Exempt Status for Your Organization, IRS Publication 557).

And according to the Federal Tax Code under the heading “Charitable, etc., contributions and gifts”:

“Any charitable contribution to—
(i) a church or a convention or association of churches, …
shall be allowed to the extent that the aggregate of such contributions does not exceed 50 percent of the taxpayer’s contribution base for the taxable year. “-- United States Code, Title 26, § 170(b)(1)(A)(i). [Notice the word “shall” is used to indicate that the deduction is mandatory, and not discretionary.]"

The reason why churches enjoy this exceptional tax status is stated in IRS Publication 1828,

“Congress has enacted special tax laws applicable to churches, religious organizations, and ministers in recognition of their unique status in American society and of their rights guaranteed by the First Amendment of the Constitution of the United States. Churches and religious organizations are generally exempt from income tax and receive other favorable treatment under the tax law.”

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