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Reclassification (First Payment)
In essence, by Reclassifying, you will keep all of your First Amendment religious rights, continue to operate according to your Biblical faith, protect the privacy of your donors, and maintain all of the IRS Tax Code Exceptions for churches.
Churches and Religious Organizations are Not Created Equal
“Because special tax rules apply to churches, it’s important to distinguish churches from other religious organizations. Therefore, when the IRS uses the term “religious organizations,” it isn’t referring to churches or integrated auxiliaries of churches.” – Internal Revenue Service, Publication 1828
Most religious nonprofit organizations have applied to the IRS for 501(c)(3) tax-exempt status, thinking this was the only option. However, a better way has been included in the Form 1023 Application for Recognition of Exemption. Many religious organizations have discovered the many benefits. Even well-known religious organizations reclassifying as “churches” or “conventions or associations of churches” has been a trend for decades.
The Salvation Army was founded in London in 1865, had its first US branch in 1880, had been tax-exempt in the US since 1933, and was reclassified as a “convention of churches” in 1955 after 75 years of US operation. The Navigators were reclassified as a church in 2005 after 72 years. Focus on the Family was reclassified as a church in 2016 after operating for almost 40 years. Billy Graham Evangelistic Association was reclassified as an “association of churches” in 2015 after 66 years. Family Research Council was reclassified as an “association of churches” in 2020 after 37 years.
Many other popular religious organizations have also reclassified with approval from the IRS, including Ethnos360, Voice of the Martyrs, Campus Crusaders, Precept Ministries, World Vision, Liberty Counsel, and American Family Association.
The reasons for reclassification among these dozens of popular religious organizations vary but these three reasons are a common thread:
- They want to operate according to their biblical faith as an organization.
- They want exemptions in the federal tax code that apply only to churches or associations of churches such as mandatory exemption from yearly Form 990 tax-return filing and exemptions from paying into public insurance programs that pay for abortion, contraception, or other medical services to which the organization is conscientiously opposed.
- They want to protect the confidentiality of their donors since 501(c)(3) tax-exempt organizations are required to disclose to the IRS the names and addresses of donors giving over a certain amount in the year.