Church or Ministry

WHAT IS THE DIFFERENCE BETWEEN A CHURCH AND A MINISTRY?

Individuals come into the denomination Universal Life Church as ministers and may decide they want to do more and consider starting a congregation - which is really a new religious organization unto itself. Many people may not understand that a congregation is the same as a new church or religious organization. The term congregation only implies affiliation with a church or denomination, which in this case is the Universal Life Church. The denomination is Universal Life.

The formation of a congregation and its classification as either a church or ministry is what will be discussed here - the difference between a Church and a Ministry.

A church and a ministry can be almost identical in formation, and the difference would be mostly in how closely it relates to already established and recognized churches or ministries. This does not mean that some new organization could not be formed in some manner that has not ever existed before - it may. We are discussing only the classification of the new entity here as either a church or ministry.

Depending upon what the founders of the new organization wish the new religious organization to be, that would determine whether, when, and which Forms the new organization should file with the Internal Revenue Service for either recognition of exempt status or application for exempt status.

Within a religious viewpoint, my statements are representations of my personal experience gained from making mistakes and learning from them. Some statements are clearly "value statements," and may or may not be accepted by the reader.
Determining whether a new organization is a church or ministry for the purpose of classification has a factual basis in the use by the IRS of 14 Points, which will be published at end of this discourse. This use of the 14 Points is very important for individuals to understand, and they are the guideline for a decision the IRS must make when new organizations submit either Form 1023 or Form 1024.

This discussion aims to inform and educate our ministers and members with the processes involved in forming a new organization. Each new organization has its special aspects and no discourse could be complete for every situation.

No assumption of complete disclosure is made by this discourse and it is intended for wide familiarity with the process rather than step-by-step filing requirements. Please consult IRS Forms, Publications, and Instructions and/or seek competent legal advice and guidance on the process of filing. The IRS is willing to go the extra mile in helping new organizations form and file properly for its appropriate classification and status.
Deciding upon whether a new congregation is a church or a religious organization is very important to understand. Depending upon the decision by the individuals founding the organization as to whether it is going to be a church or a ministry, the decision must be made as to whether the organization is...

Required to file or not... for tax-exempt status... Form 1023 is for Churches; Application for Recognition of Exemption.

Churches are automatically exempt by law upon formation, and need not file any forms to the IRS. This raises the concern as to whether a new organization is to be considered a church for classification purposes or a religious ministry. Both classifications may be exempt from Federal taxation; the difference in the classifications involves a ministry having to file for exempt status and a yearly Informational Return where a church has no such requirements.

Just saying that a particular organization - even with the word Church in its name - is a church does not necessarily mean that the IRS will agree with that classification. Obtaining exempt status is not a difficulty for organizations or the IRS since it is a matter of organization, formation, and operation, but classification of the new organization is where there may be an honest disagreement. A ministry must apply for exempt status while a church is automatically granted that status by law.

The potential for abuse rests in the classification of church, because it is automatically exempt upon formation. Because of the abuses by significant numbers of new organizations claiming church status improperly, the IRS found it necessary to develop guide lines to aid in the classification process of which organizations would receive the classification of church, and which would receive the classification as religious organization usually termed a ministry.

Tax-exempt status is dependent upon whether a new organization is "organized and operated" for an exempt purpose, which may or may not be religious in nature, but must be one of the classifications set out by law as of benefit to society. Initial classification sets the course of a new organization. Serious consideration and planning on the part of the founders of new organizations is needed to determine whether the new organization is intended to be either a church or a ministry.

The ULC Catalog has several books to help you on the right path in in your goal to form a church or create a ministry group, along with guides on the tax regulations of such. The ULC had problems with this early in it's formation as such we have created ULC Case Law to inform of our past legal cases.