Paypal Compliance

[LykosTemple]

Simply put: Does anyone here have a minister's or ULC associated account? With certain laws having been passed, my unobtrusive little "donation" button on my web page, I have accidentally classified my "church" as an official NPO, and that hadn't been my intent. Currently, my "church" is in the planning stage, and we are officially NOT a NPO. But now, Paypal is asking for "further information," and I was wondering if anyone else had had the same situation suddenly pop up.

As I said above, I'm not really looking for legal advice, only "similar situation" advice. What did you do to satisfy Paypal? If you want, you can reply privately; I don't mind.

[Bro. Hex]

Simply put: Does anyone here have a minister's or ULC associated account? With certain laws having been passed, my unobtrusive little "donation" button on my web page, I have accidentally classified my "church" as an official NPO, and that hadn't been my intent. Currently, my "church" is in the planning stage, and we are officially NOT a NPO. But now, Paypal is asking for "further information," and I was wondering if anyone else had had the same situation suddenly pop up.

As I said above, I'm not really looking for legal advice, only "similar situation" advice. What did you do to satisfy Paypal? If you want, you can reply privately; I don't mind.

Since your classifying of your "church" as an NPO occurred "accidentally",

why not just tell PayPal that "you made a mistake",

and that you are not "yet" a sanctioned NPO?

[Dorian Gray]

For a paypal account a manage for a Professional Organization I do development for i have had to submit that kind of info before. I just uploaded the files they asked for and was good to go.

[Rev Joe]

I thought that churches are tax-exempt by default and that the 501c3 designation was only needed if contributors wanted to deduct charitable contributions or if you wanted to apply for a grant. There are many churches that are not 501c3 and are still considered tax-exempt.

[Bro. Hex]

There are many churches that are not 501c3 and are still considered tax-exempt.

By whom?

Not by the I.R.S.

Edited April 10, 2010 by Hexalpa

[Rev Joe]

By whom?

Not by the I.R.S.

Churches Need Not Apply

In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 and 1024. However, note what the IRS says regarding churches and church ministries, in Publication 557:

Some organizations are not required to file Form 1023. These include:

Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group. These organizations are exempt automatically if they meet the requirements of section 501©(3).

Churches Are “Automatically Tax-Exempt”

According to IRS Code § 508©(1)(A):

Special rules with respect to section 501©(3) organizations.

(a) New organizations must notify secretary that they are applying for recognition of section 501©(3) status.

© Exceptions.

(1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—

(A) churches, their integrated auxiliaries, and conventions or associations of churches.

This is referred to as the "mandatory exception" rule. Thus, we see from the IRS’ own publications, and the tax code, that it is completely unnecessary for any church to apply for tax-exempt status. In the IRS’ own words a church “is automatically tax-exempt.”

http://www.trinity-edu.com/page.html?id=41

[mdtaylor]

Simply put: Does anyone here have a minister's or ULC associated account? With certain laws having been passed, my unobtrusive little "donation" button on my web page, I have accidentally classified my "church" as an official NPO, and that hadn't been my intent. Currently, my "church" is in the planning stage, and we are officially NOT a NPO. But now, Paypal is asking for "further information," and I was wondering if anyone else had had the same situation suddenly pop up.

As I said above, I'm not really looking for legal advice, only "similar situation" advice. What did you do to satisfy Paypal? If you want, you can reply privately; I don't mind.

You don't have to provide anything, if you don't want to. An individual can accept a donation from anyone. Although Paypal has the right to refuse to service the donation transaction.

Donations that are not associated with a charity or nonprofit organization are not subject to these requirements, but all donation transactions are subject to review and must comply with all of PayPal’s Acceptable Use Policies.

They ask for such documentation to allow them to reduct the fees to qualified charitable organizations.

[Bro. Hex]

Churches Need Not Apply

In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 and 1024. However, note what the IRS says regarding churches and church ministries, in Publication 557:

Some organizations are not required to file Form 1023. These include:

Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group. These organizations are exempt automatically if they meet the requirements of section 501©(3).

Churches Are “Automatically Tax-Exempt”

According to IRS Code § 508©(1)(A):

Special rules with respect to section 501©(3) organizations.

(a) New organizations must notify secretary that they are applying for recognition of section 501©(3) status.

© Exceptions.

(1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—

(A) churches, their integrated auxiliaries, and conventions or associations of churches.

This is referred to as the "mandatory exception" rule. Thus, we see from the IRS’ own publications, and the tax code, that it is completely unnecessary for any church to apply for tax-exempt status. In the IRS’ own words a church “is automatically tax-exempt.”

http://www.trinity-edu.com/page.html?id=41

While this is all very interesting, and I genuinely appreciate this information, isn't the "burden of Proof" on the "church" or on the "individual representing the church"? Isn't the person operating a church without the benefit of 501© (3) certification, leaving both himself/herself AND his/her church "wide open" to the possibility of "seizure of assets" at-any-time, should the IRS decide to question the status of this church. Maybe it would be perfectly safe to rely upon the "content of a pamphlet" for your protection, and I agree that it is unlikely that a seizure would occur as long as the size of your "operation" remains financially in the general vicinity of a "mom and pop store". But if you are talking a many-membered church handling "serious money" I wouldn't recommend running the risk.

[mdtaylor]

I thought that churches are tax-exempt by default and that the 501c3 designation was only needed if contributors wanted to deduct charitable contributions or if you wanted to apply for a grant. There are many churches that are not 501c3 and are still considered tax-exempt.

That is correct. The fact is...

Tax exempt

Non profit

501c3

Are all different animals and have nothing to do with each other except: You can't be one without being the other first, but you can be the other without being one, and the third is just something different that requires being BOTH of the others first.

[pope_cahbet]

Churches Need Not Apply

In order to be considered for tax-exempt status by the IRS an organization must fill out and submit IRS Form 1023 and 1024. However, note what the IRS says regarding churches and church ministries, in Publication 557:

Some organizations are not required to file Form 1023. These include:

Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men’s or women’s organization, religious school, mission society, or youth group. These organizations are exempt automatically if they meet the requirements of section 501©(3).

Churches Are “Automatically Tax-Exempt”

According to IRS Code § 508©(1)(A):

Special rules with respect to section 501©(3) organizations.

(a) New organizations must notify secretary that they are applying for recognition of section 501©(3) status.

© Exceptions.

(1) Mandatory exceptions. Subsections (a) and (b) shall not apply to—

(A) churches, their integrated auxiliaries, and conventions or associations of churches.

This is referred to as the "mandatory exception" rule. Thus, we see from the IRS’ own publications, and the tax code, that it is completely unnecessary for any church to apply for tax-exempt status. In the IRS’ own words a church “is automatically tax-exempt.”

http://www.trinity-edu.com/page.html?id=41

---

Okay, I was going to post a response to an earlier post, but I see someone else already made the same points I was going to make and answered the question I was going to ask. How do I delete this response? ( )

Edited May 8, 2010 by Tim Gatewood

[revjerry]

I thought that churches are tax-exempt by default and that the 501c3 designation was only needed if contributors wanted to deduct charitable contributions or if you wanted to apply for a grant. There are many churches that are not 501c3 and are still considered tax-exempt.

PayPal requires a financial statement and a faxed copy of your 501 ©3. About 3-4 months ago they sent me a request for all that crap and I just pulled the "Donate" button. I figure if somebody wants to donate they can mail a check.