Church and the IRS

Discussion in 'Other Christian Denominations' started by Rev. Lowery, Dec 23, 2005.

  1. Rev. Lowery

    Rev. Lowery
    Expand Collapse
    New Member

    Joined:
    Nov 21, 2005
    Messages:
    344
    Likes Received:
    0
    As I understand it Churches are automatically tax exempt and there is no need to file 501(c)3.
    But if I am reading the IRS website right. In order for a donor to have his donation considered tax exempt the organization must be 501(c)3 and the donation needs to be either quid pro quo $75.00 or greater.

    So if my ministry just has a TIN and we are not 501(c)3 are donations tax deductible?

    Its all very confusing and we are holding a fundraiser on Jan. 7 2006 and I made up posters that say donations in excess of $25 are tax deductible was I wrong?

    Rev. Jerry D. Lowery D.D.
    True Christ Ministries
     
  2. Rev. Lowery

    Rev. Lowery
    Expand Collapse
    New Member

    Joined:
    Nov 21, 2005
    Messages:
    344
    Likes Received:
    0
    Heres the IRS text on the subject.........


    Charitable organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with section 170.

    A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution in excess of $75. A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity. For example, if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution portion of the payment is $60. Even though the part of the payment available for deduction does not exceed $75, a disclosure statement must be filed because the donor's payment (quid pro quo contribution) exceeds $75. The required written disclosure statement must:

    Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity, and
    Provide the donor with a good faith estimate of the value of the goods or services that the donor received.
    The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when the associated contribution is actually received.

    No disclosure statement is required when:

    The goods or services given to a donor meet the standards for "insubstantial value" set out in Rev. Proc. 90-12, 1990-1 C.B. 471, and Rev. Proc. 92-49, 1992-1 C.B. 987 (as updated);
    There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop); or
    There is only an intangible religious benefit provided to the donor. The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context.

    A penalty is imposed on a charity that does not make the required disclosure in connection with a quid pro quo contribution of more than $75. The penalty is $10 per contribution, not to exceed $5,000 per fund-raising event or mailing. The charity can avoid the penalty if it can show that the failure was due to reasonable cause.

    Donors taking a deduction under section 170 are required to obtain contemporaneous written substantiation for a charitable contribution of $250 or more. To be "contemporaneous" the written substantiation must generally be obtained by the donor no later than the date the donor actually files a return for the year the contribution is made. If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), this written substantiation (acknowledgment) must include a good faith estimate of the value of the goods or services. The donee is not required to record or report this information to the IRS on behalf of a donor. The donor is responsible for requesting and obtaining the written acknowledgement from the donee. Although there is no prescribed format for the written acknowledgment, it must provide sufficient information to substantiate the amount of the contribution. For more information, see Publication 1771.

    They might aswell be speaking German....

    Rev. Jerry D. Lowery
     
  3. billwald

    billwald
    Expand Collapse
    Banned

    Joined:
    Jun 28, 2000
    Messages:
    11,414
    Likes Received:
    0
    If you congregation wishes to deduct tithes then you must register as a 401c3. If not, then not.
     
  4. Me4Him

    Me4Him
    Expand Collapse
    Banned

    Joined:
    Dec 28, 2004
    Messages:
    2,214
    Likes Received:
    0
    "MOST" folks can't Itemizing deductions to take advantage of the tax breaks they offer, this means "Charity" donation won't be deducted.

    Most can only file a "Straight form", standard deductions.

    I do "believe" you have to be a 501 member to be recognized by the IRS.
     
  5. Rev. Lowery

    Rev. Lowery
    Expand Collapse
    New Member

    Joined:
    Nov 21, 2005
    Messages:
    344
    Likes Received:
    0
    Ok thank you I'll write a letter to state that my fliers are incorrect and that donations are not tax deductible.

    I hope I dont get into trouble.......


    Rev. Jerry D. Lowery D.D.
     
  6. rsr

    rsr
    Expand Collapse
    <b> 7,000 posts club</b>
    Administrator

    Joined:
    Dec 11, 2001
    Messages:
    10,073
    Likes Received:
    101
    You may have jumped to a conclusion; churches are in fact tax exempt whether they register for 501(c) status or not.

    However ... someone may be asked to prove the charitable status, which could lead to some problems in verification. Or not.

    In addition, because of the complex tax code, it is not wise to say that contributions are tax deductible; some people, because of their circumstances, may not be able to claim a deduction even though it would otherwise be legitimate.

    You made reference to donations of $25 or greater ... The rules require that donations exceed the value of whatever might be offered in return. Thus, if the event creates a benefit of $25 (catering, etc.), only amounts above that are deductible.

    Given your situation, I think it's best to forego the wording about tax deductibility — unless you're offered a large amount. In that case, I would talk to an attorney. Because of the low marginal tax rates, I seriously doubt anyone would be more inclined to give you a $50 donation because it's tax deductible.

    But then, my advice is worth what you paid for it ...
     
  7. Rev. Lowery

    Rev. Lowery
    Expand Collapse
    New Member

    Joined:
    Nov 21, 2005
    Messages:
    344
    Likes Received:
    0
    This is the Notice that will be posted at the fundraiser..

    _________________________________________________
    Notice

    The Fliers for this fundraiser stated a donation of $25 would qualify as a tax-deductible donation. We apologize for the error True Christ Ministries is not a 501(c)3 tax-exempt organization and we will not be. We feel the government should have no say so in the religious beliefs and practices of Americans. As far as we know it is possible to have your donation be tax deductible but it would be up to the donor to file the proper forms and inform True Christ Ministries of what they need from us to do so. We will be sure to try and keep detailed records of who donates to True Christ Ministries but only at your request / approval.

    Again we apologize for any inconvenience.


    Thank You,
    True Christ Ministries

    _________________________________________________

    This should cover any problems we may have right ??????
     

Share This Page

Loading...