Tax Planning and Compliance for Tax-Exempt Organizations, 6th Edition

CHAPTER 3Religious Organizations

• 3.1 Types of Religious Organizations
  • (a) Ideology or Dogma Not Essential
  • (b) Examples of Qualifying Organizations
  • (c) Peripheral Religious Activity
  • (d) Secular Groups
  • (e) Pseudoreligious Groups
• 3.2 Churches
  • (a) Special Aspects of a Church
  • (b) Definition of Church
  • (c) Conventions and Auxiliaries
  • (d) IRS Examination Protection
• 3.3 Religious Orders
• 3.4 Religious and Apostolic Associations

The first type of 501(c)(3) organization listed in the statute is religious. An organization whose primary purpose is to conduct religious activities qualifies for exemption. However, the regulations do not define religious purposes, presumably to maintain the separation of church and state, and the Internal Revenue Manual (IRM) says the term “is not subject to precise definition.”¹

The legal history of this issue reported in the IRM is instructive and starts with a Supreme Court decision, Reynolds v. United States, in 1878. The case was seeking protection for the practice of polygamy by contesting a new law making that practice a crime. The Court said, “While the [laws] cannot interfere with mere religious belief and opinions, they may with practices.” In the next case cited, Cantwell v. Connecticut, the Supreme Court in 1940 said that the First Amendment embraces two concepts: freedom to believe and freedom to act. “The first is absolute but, in the nature of things, the second cannot be.”

More recent applications of constitutional doctrine are Bob ...