Tax Exempt 501(c)(3)

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sonyatch
Posts: 21
Joined: Mon Aug 07, 2017 11:09 am

Tax Exempt 501(c)(3)

Post by sonyatch »

We are a small but growing congregation. We formed about 12 years ago and have never filed for tax exempt status but as we grow, the subject comes up more often as purchases are made. We are in Alabama. We have an EIN, a Constitution and By-laws, and we are incorporated. I do our bookkeeping as a volunteer (as are the majority of our staff workers) and I am not an accountant. I can find and complete the forms but I wonder if anyone here has any advise for me before I go down this road.

Thank you

NeilZ
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Location: Dexter NM
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Re: Tax Exempt 501(c)(3)

Post by NeilZ »

sonyatch wrote:
Thu Sep 24, 2020 11:14 am
We are a small but growing congregation. We formed about 12 years ago and have never filed for tax exempt status but as we grow, the subject comes up more often as purchases are made. We are in Alabama. We have an EIN, a Constitution and By-laws, and we are incorporated. I do our bookkeeping as a volunteer (as are the majority of our staff workers) and I am not an accountant. I can find and complete the forms but I wonder if anyone here has any advise for me before I go down this road.

Thank you
I'm assuming you mean 'Tax Exempt' when it comes to paying state sales tax. The question from the state is often, does the IRS recognize your congregation as a 501(c)(3), if so, you should have a letter from the IRS. Having an EIN only means that you are an employer that withholds employee taxes and pays Federal employer taxes.

You didn't say if you are a member of a denomination. Very often denominations have what is known as a 'blanket' IRS designation that each church in the denomination is a 501(c)(3) corporation. If so, I would obtain a copy of that letter from the denomination, it eliminates a lot of paperwork at the state level in some cases.

The trouble lies in the fact that you're in Alabama. A Google search brought me to the FAQ (Frequently Asked Questions) section of the Alabama Department of Revenue which had this:
Are churches exempt from sales and use taxes?
No. Religious organizations and institutions, including churches, church hospitals, etc., are not exempt from the payment of sales and use taxes.

If Alabama residents purchase items through mail order sales or other direct marketing alternatives, are these sales taxable?
Yes. Retail sales of tangible personal property delivered into Alabama from an out-of-state location are subject to Alabama use tax, regardless of the method of ordering the item – i.e. via mail-order catalogs, cable tv shopping, the Internet, by telephone, etc.
So ... it doesn't look like getting Tax Exemption is possible.
Neil Zampella

Using PC+ since 1999.

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