|501 (c) 3 Charter|
Thank you for contacting the Nonprofit & Tax Exempt Division regarding your 501(c)(3) tax exemption. Our board of directors oversee three parent group organizations with ICCAN being the newest. They have been faithfully taking the gospel message to many nations since 1976. During this time, our charter division has helped numerous churches and various types of ministries in the US obtain their (1) State Nonprofit Incorporation, and (2) Federal Tax 501(c)(3) Exemption. Chartered through our Fellowship, these non-profit organizations continue to serve the Lord daily and meet many needs.
Jan Harbuck is among a handful of individuals in the nation to hold an earned Ph.D. in Church Law. This is why you should take advantage of her years of experience and training as a Church Tax/Law Specialist & Consultant. Along with her team of experts, we go to the limit to help you “get started right” in establishing a solid ministry.
WHY DO YOU NEED A 501(c)3 STATUS
Certain events in recent years have triggered a vast reshaping of public opinion toward local and national ministries impacting their actions well into the next millenium. The IRS has increased its demands on evangelical churches, ministerial associations, etc. In 1989 the IRS audited more than 3,000 non-profit, tax-exempt organizations [ie. 501(c)(3)’s] in an effort to ensure compliance.
Most beginning ministries concerned with legal and tax issues consult a local attorney and/or CPA, but often find these professionals lacking adequate knowledge of IRS non-profit regulations. Ministries everywhere now realize that chartering a ministry is a specialized field.
One of ICCAN’s most significant functions is helping members to PROPERLY CHARTER their churches and ministries. This is done by requesting subordinate status under the ICCAN Fellowship (A properly organized Convention of Churches) for churches and making available group exempt status 501(c)3 for ministries (non-church religious organizations) under it's sister group Paragon Christian Alliance Int'l, Inc. founded in 1976 and fully recognized by the IRS. Both organizations are governed by the same Board of Directors & Statement of Faith.
Charter specialists at our office will review your corporation or organization papers and furnish information to help you qualify for non-profit, tax exempt status. If you have not started the process, we do it all for you! We prepare your state non-profit incorporation, set up your governing bylaws and obtain your EIN number from the IRS. What we can do for you in thirty days could easily take you one to three years if you act alone!
We urge you to have your ministry properly evaluated, chartered and recognized by the IRS before you ask for donations. Please do not risk jeopardizing your ministry and reputation in the community.
May God bless you as you walk in His will.
QUESTIONS AND ANSWERS...
1) Q: What is a Charter? Ans: A charter is an official certificate issued to a ministry upon approval. This document, suitable for framing. Such approval affords a ministry legal standing with the community, the state, and the Internal Revenue Service; and is a necessary pre-requisite when applying for grants. This legal charter guarantees the recipient that his or her ministry meets IRS criteria, and is under general (not specific) supervision.
NOTE: Church Affiliation is different in that is affiliates the church with the ICCAN fellowship for the sake of fellowship, but does not issue the 501(c)(3) status from the IRS. Churches are automatcially considered a 501(c)(3) by the IRS, however, it may benefit the church to seek official status under ICCAN or directly from the IRS. If you have questions, please ask contact our office.
(2) Q: Is it really necessary to have a charter? Ans: Any church, evangelistic ministry, mission, etc. soliciting donations is a prime target for trouble if audited by the IRS. At the whim of an IRS auditor, a non-exempt religious organization may be deemed liable and fined as an ordinary business for back taxes. Sadly, its contributors would also be charged for back taxes because of the organization’s failure to obtain a charter recognized by the IRS. NOTE: Churches are automatically considered a 501(c)(3), as well as organizations having gross receipts of normally not more than $5,000 each taxable year. They are not required to file for exempt status. HOWEVER, these organizations may choose to do so in order to receive specific benefits; i.e., public recognition of tax-exempt status, advance assurance to donors of deductibility of contributions, exemption from certain state taxes, exemption from certain Federal excise taxes, nonprofit mailing privileges, & the ability to apply for grants, etc.
(3) Q: Is there a cost for a charter? Ans: Yes. There is a one-time set up charge, and thereafter a required low monthly charter fee. The charter is automatically renewed on March 28th of each year as long as the ministry remains in good standing. (Additional Cost if needed: prepare bylaws and prepare state non-profit incorporation in compliance with IRS codes)
(4) Q: How do we obtain a charter?
Ans: We’ve made it easy. Just fill out the forms in this packet. Complete and mail them to us as soon as possible. When your completed forms arrive we will begin work on them and let you know if we have any questions. After your paperwork has been processed, it is evaluated by our Charter Dept. Once approved, your ministry charter is sent to you immediately. In most cases, the approval date is the day you signed the charter agreement.
(5) Q: How long does it take to get a charter? Ans: Assuming your paperwork is complete and in order, it takes approximately thirty days from the date your charter application is received. (Note: No charter application can be processed until your Application for Ministerial Credentials has FIRST been approved).
(6) Q: Am I required to file ministry reports with ICCAN? Ans: Yes. At the end of each year a financial summary report is due and sent to our office. Primarily for your benefit, this ensures you are in compliance with IRS 501 (c) 3 rulings. However, ICCAN does not manage your funds or tell you how to operate you ministry. Each ministry is autonomous and sovereign. ICCAN does not claim right to ownership of the property of the chartered church or ministry.
(7) Q: Must I become a member of ICCAN to receive a charter? Ans: Yes. If you are the president of the church or ministry, you are required to hold credentials with ICCAN at the Licensed or Ordained level. Primarily for accountability & liability purposes, this policy provides benefits for the credentialed minister as well.
(8) Q: Is the ICCAN Office available if I have IRS or accounting questions? Ans: Yes. We are always available to assist you. And more importantly, we lift up you and your ministry in prayer. Another great benefit of being part of an International Fellowship … you are not alone.
YOUR BOARD OF DIRECTORS
The IRS requires all chartered ministries have a board. Although each ministry is autonomous and sovereign, a minimum of 5 board members is required before approval is granted. Only two of these 5 members may be related by blood or marriage; and the president and treasurer must not be related by blood or marriage.
A ministry may begin with three board members, adding two more within the first year. The first three MUST be President, Secretary and Treasurer.
TYPES OF CHARTERS...
Local Church: Increasingly more in demand, this charter protects the church, and helps eliminate potential conflicts that may arise from the community, the state, and the IRS.
Local Mission: The local mission is similar to the local church, but differs in purpose. Like a church, a local mission must have regular services, may begin in a home or building, but ministers primarily to the poor, orphans, street people, abused women and children, outcasts, etc. A mission may offer rooms for rent, distribute food and clothing, and offer educational or Bible studies, etc. Because a local mission is a non-profit tax exempt organization, it may charge a reasonable fee for its services; however, it cannot require payment from a person unable to pay. Doing so places the mission in danger of losing its exemption should such an act be reported to the IRS (Mission Society also available).
Evangelistic: This charter is granted (though not limited) to ministries such as evangelists, Bible teachers, religious charitable organizations such as Equestrian Ministries, and music/singing ministries. Holding an evangelistic charter allows a ministry to receive donations while traveling anywhere in the USA. If tapes, books or other items are to be sold or given away, this information must be stated in the charter application.
Educational (ie. Church School, Academy, Bible College, Seminary): This Charter is unique, and is not offered by most Associations to its members. Many churches, individual ministers, Bible teachers, and others have long awaited an opportunity to begin an academy, Bible college, or seminary. This educational charter now makes it possible. The institution must not be racially discriminatory, and must clearly outline its purpose, curriculum, etc.
Christian Counseling Center: Because of the many marital and family issues which plague our society — not only in the church, but throughout the nation, more ministries are specializing in counseling. A Christian counseling center may be part of an established church, or operated independently. Due to the inherent liability associated with this type of ministry, it is vital to charter a Christian Counseling Center. Some states have attempted to interfere with such centers because of their competition with licensed professionals in the fields of psychology and counseling. The Christian Counseling Center is considered a religious and charitable organization by the IRS; and therefore may charge a reasonable fee for services rendered. Some centers use the sliding scale fee system. However the counseling center, like other non-profit organizations, cannot require payment from a client who declares that he/she cannot pay. To do so endangers the center of losing its exemption should the IRS learn of such an act. If required, Counselors must have a degree and be licensed by the state in which they operate. They are required to carry liability insurance.
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