Is Your Online Church Viewed as a Church by the IRS?

By Chaston Asbury

Read Time: 3 Minutes

Answering the call of God to go into ministry is one of the most important decisions that you will ever make. In the midst of this new world we find ourselves in, many men and women of God have answered that call. We have seen new churches and ministries come to the spiritual and humanitarian aid of those in need, and StartCHURCH has been blessed to be a part of that.

Here’s why that’s important to know: if your organization is not correctly classified based on its activities, you may be at risk of facing major issues down the road. The good news is, you can prevent this and fully protect your church!

Today I will give you the information you need to determine the classification of your organization, so you can protect what God has called you to lead.

Ministry vs. Church Status

At StartCHURCH, we have seen many pastors and ministry leaders use a definition of a church organization vs a ministry organization based on the the name they call them. However, the IRS outlines these differences another another way. Let's look into the code:

Church organizations are described in 509(a)(1) and 170(b)(1)(A)(i). Ministry organizations are described in 509(a)(1) and 170(b)(1)(A)(vi). 

It is important to know that churches and ministries, while they still fall under section 501(c)(3) of the Internal Revenue Code, are classified differently by the IRS. Failure to fall under the correct classification will result in issues in your organization's future. These issues usually result in trouble with annual filings, incorrect purpose and language in your articles of incorporation, hindrances with funding, and more. 

To learn more about the differences between running a church organization and a ministry organization, please review our blog, Am I Running a Church or Ministry? 

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What about online churches?

The IRS considers the 14/15 Point Test to determine whether or not a nonprofit organization meets church classification. To read the entire test, click here. 

In short, the IRS defines church organizations as organizations that hold regular worship services, at an established place of worship, with a regular congregation and membership. 

Online churches may meet some of the requirements to be considered a church, but the lack of an established place of worship will most likely sway the IRS to classify the organization as a ministry, 170(b)(1)(A)(vi).

To learn even more on this topic and to perform your own IRS audit, read our blog Your 5-Point Compliance Checklist.

If you would like to learn more about starting an online church, click here.

Take heart

If the Lord has called you to start an online church, and you have just realized that online churches are not considered church organizations to the IRS, do not be discouraged! You can still carry on all of the activities that you were initially planning to do. 

• Hold online worship services
• Create online small groups and bible studies
• Establish ministry training programs
• Organize community outreach events
• Create online content like sermon videos, podcasts, and worship music

Your online church ministry will still be considered a tax-exempt organization! This means that individuals can give donations to your organization and receive charitable giving receipts!

The main difference in operating a ministry versus a church is that ministries will have to file annual 990 reports. Organizations required to file Form 990 must submit the return by the 15th day of the 5th month of their fiscal year. For instance, if your ministry's fiscal year ends on December 31st, you are required to file your ministry's Form 990 by May 15th of the following year. If your fiscal year ends June 30th, you are required to file Form 990 by November 15th of the same year.

For more information about Form 990, click here.

God Will Determine Your Steps

Proverbs 16:9 says, "A man's heart plans his course, but the LORD determines his steps."

Maybe it was in your heart to start a church, but you weren't sure what it would be like after COVID-19. I would encourage you to seek the Lord, and if he is telling you to plant an online church, follow his guidance! Let Jesus determine your steps, and let StartCHURCH help you!

The StartRIGHT Service empowers you to select the correct governing structure for your organization. A structure that protects your vision and your ministry while staying in compliance with IRS regulations. Give us a call at 877-494-4655 or click the link below to schedule a call with a specialist. We will be pleased to assist you!

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