How to Keep Your Church from Losing Its Tax Exemption Without Knowing It

The Unseen Risk That Could Put Your Ministry's Tax-Exempt Status at Risk

It can be very bad for your church if it loses its 501(c)(3) tax-exempt status. It puts your financial stability, donor trust, and mission effectiveness at risk. But many churches lose this important status without warning or even knowing it because of common but avoidable legal and operational mistakes. For decades, Church Law and Strategy has been helping churches navigate the complicated rules that govern tax exemption. Our tried-and-true methods, legal knowledge, and compliance frameworks have prevented many ministries from having to pay a lot of money to get their licenses back and have allowed them to confidently carry out their missions. This essay talks about the main reasons churches lose their tax-exempt status without knowing it and explains how Church Law and Strategy may protect your ministry.

The Most Common Reasons Churches Can't Get Tax-Exempt Status

• Not filing the necessary IRS forms every year
• Not filing IRS Form 990 series returns for three years in a row is one of the most common reasons for automatic revocation.
• Doing too many unrelated business activities
• If you don't manage your activities properly, making money from things that aren't relevant to your exempt purpose could put your position at risk.
• Not following the rules for political campaigns
• If you do more political campaigning or partisan activity than what is allowed, you could lose your tax-exempt status.
• Not keeping records and running things properly
• The IRS will look into your business if your board doesn't do a good job of overseeing things, your meeting minutes are incomplete, or your finances aren't clear.
• Using assets in the wrong way
• Using church property for personal gain or non-charitable reasons is against the guidelines for tax exemptions.

Signs That You Might Be in Danger

• No recent Form 990 filings on record
• Making more money from unrelated businesses without filing taxes
• Board or leaders don't know what their governance duties are
• Donor misunderstanding or less giving
• IRS notices or reasons for an audit

How Church Law and Strategy Keep You from Paying Taxes

• Full Compliance Audits: Our church's legal audit and compliance report shows where there are problems and hazards in files, governance, and operations.
• Legal Advice for Business: Our church 501(c)(3) compliance legal services help ministries understand complicated IRS laws and changes to the law.
• Strengthening Governance: We offer legal services for church governance to make sure that bylaws, board practices, and record-keeping are all in line with the law.
• Training and Support That Never Ends: We give your leaders the tools they need to keep their exemption and answer IRS questions.

Final Thought

Don't put things off until it's too late. It's too important to your church's tax-exempt status to take a chance on it by not paying attention or not knowing. As your trusted partner, Church Law and Strategy is ready to assist you in finding hazards, making sure you follow the rules, and securing the future of your ministry.

Links

• Church 501(c)(3) Compliance Attorney
• Church Legal Audit and Compliance Report
• Church Governance Attorney

Links to Other Sites

• IRS Tax Exempt Organization Search: https://www.irs.gov/charities-non-profits/tax-exempt-organization-search
• IRS Political Campaign Restrictions: https://www.irs.gov/charities-non-profits/charitable-organizations/political-campaign-activities
• Nonprofit Risk Management Center: https://www.nonprofitrisk.org/