How the US government can prevent “churches” from being treated like real churches by the IRS

The Family Research Council is a conservative advocacy group with a “biblical worldview.” Although there’s a Department of Church Services that works with churches of several evangelical Christian denominations that share its views, it doesn’t represent any single denomination. Although his activities are mainly focused on this Politics, advocacy, government lobbying and public communicationsThe Internal Revenue Service approved the council's request to be treated as an “association of churches” in 2020.

Concerned that the IRS made a mistake in allowing the recommendation and similar groups To be designated churches or church associations, Democratic members of the House of Representatives sent the Secretary of the Treasury and IRS Commissioner Letters in 2022 and 2024 expressing alarm. House Democrats pointed to an apparent “abuse” of the tax code and called on the IRS to “determine whether existing guidance is sufficient to prevent abuse and what resources or congressional action are necessary.”

As Professor of non-profit lawI imagine that some groups that are usually not churches or church associations wish to be named this technique to avoid the otherwise essential scrutiny of whether or not they are a nonprofit organization. At the identical time, another groups that ought to qualify as churches could have difficulty doing so due to the IRS's outdated testing for that status.

Together with my colleague Ellen P. AprillI recently published an article It sets out two important arguments for a revision the federal tax law church definitions.

No 990s means less control

All non-profit organizations, including churchesyou receive the identical basic advantages under federal tax law. This implies that they should not have to pay taxes on their income Donors can deduct the worth of their gifts deduct out of your taxable income – provided you declare the deductions in your tax return.

Unlike other tax-exempt charities, churches are usually not required to file 990 forms. This means the general public doesn’t have access to the churches' staff salaries, board membership and funding details, that are included on this publicly available tax form that every one other charities are required to fill out annually. The availability of 990 forms increases the transparency and accountability of the nonprofit sector.

And churches and church organizations are unlikely to be audited by the IRS. Federal law requires that a senior IRS official “reasonably believes“The church or association has violated federal tax regulations before an investigation is initiated. This implies that an official should have reason to imagine that the organization has violated federal tax laws before receiving information from the organization.

This standard is higher than what’s required before an audit can begin for all other tax-exempt organizations and, indeed, all taxpayers. For everyone else, the IRS is free to initiate an investigation based solely on suspicion of a violation and even based on random sampling.

Also in contrast to other tax-free charities, churches and church associations are robotically authorized for his or her tax exemption. You don't must apply for this.

Why churches receive special treatment

Congress has passed laws providing grants to churches and what it calls “integrated auxiliaries” and “conventions or associations of churches.” special protection based on the First Amendment The US Constitution protects religious freedom.

Churches include places of worship with a size of a handful of parishioners Megachurches with 10,000 or more people attending weekly services. According to the IRS, houses of worship of all faiths, including synagogues, mosques and temples, are considered churches.

Integrated additional devices are church schools and other organizations affiliated with churches or conventions and supported primarily by internal church sources slightly than by the general public or government.

Congresses or associations of churches are organizations whose members are places of worship of a single denomination or multiple denominations. Most denominational bodies, equivalent to the Executive Committee of the Southern Baptist Convention and the U.S. Conference of Catholic Bishops, are likely conventions or associations of churches, although the IRS doesn’t publish an inventory of such organizations.

Not every religious non-profit organization falls into certainly one of these categories.

For example this University of Notre Damewhere I teach law students and conduct legal research, and World visiona world humanitarian group, are each religious organizations that don’t fall into either of those categories. This is sensible because Notre Dame and World Vision are primarily concerned with activities apart from promoting a non secular community or coordinating the activities of churches inside a single denomination.

The IRS has been around for a very long time was based on a 14-factor test to tell apart churches from other religious nonprofit organizations. Examples of those aspects include ordained ministers, a proper doctrine of the religion, a certain variety of members, and a daily congregation that attends religious services.

It will not be essential that every one aspects apply to pass this test.

But for nearly as long, courts were uncomfortable with this test since it relied heavily on the standard characteristics of Protestant Christian churches. because the US Federal Court explained in a 2009 ruling. This system may subsequently not be suitable for places of worship of other faiths, particularly given the increasing diversity of religion communities.

These courts as a substitute have a “Association test.” It focuses on whether the organization’s parishioners commonly hold worship services and meet in person on other occasions.

With the expansion of virtual and televised church servicesan update to this test is overdue.

Suggested solutions

Aprill and I like to recommend that the IRS change its definition of churches to the definition adopted by the association Some courts made rulings as early as 1980. As the US Federal Court explained In this 2009 ruling, that test focuses on whether a bunch of believers commonly gathers for worship. Given advances in technology, the IRS also needs to make clear that this test might be met by attending religious services remotely using interactive teleconferencing apps equivalent to Zoom.

This definition would even be more appropriate for congregations of all faiths, as some faiths don’t prioritize lots of the aspects included in it the IRS testB. a proper code of belief or the duty of members to not be related to other places of worship or faiths. And it will higher reflect how some Americans attend religious services today.

We recommend that the IRS re-examine its church affiliation assessment and that Congress pass laws that may change the definition of church associations. The recent law could limit church associations to organizations representing a single denomination, as Congress likely originally intended.

This latter change would make it tougher for religious organizations primarily involved in bringing churches of various faiths together to work toward achieving that status through advocacy or other activities, and would exacerbate the associated lack of transparency and accountability. We imagine Congress, not the IRS, should make this variation as narrowing the definition could create potential political tensions.

We don’t imagine that the changes would affect the special role of churches in our society. In fact, the revised church eligibility test would higher reflect each the increasing diversity of faiths in our country and technological advances.