Religious Tax Reclassification for Public Charities
Churches, synagogues, mosques, temples, and other houses of worship have long enjoyed Section 501(c)(3) public charity status, with resulting exemption from IRS Form 990 filings, availability of clergy housing allowances, and religious liberty protections. When, why, and how should other faith-based organizations affirmatively seek IRS reclassification as a “church” – or as an “association of churches” or “mission society” – with similar tax and other legal benefits? The following article addresses such questions extensively, including applicable tax considerations, corporate governance aspects, legal requirements for housing allowance, employment discrimination aspects, and other resulting implications. We hope this deep-dive guidance will help those who are interested in religious tax reclassification. This article was co-authored by W&O Partners Sally Wagenmaker, Ryan Oberly, and Paul Winters and was previously published in Thomson Reuters’ Taxation of Exempts Journal (Jan./Feb. 2022)