Legal Setup for a New Church · Part 5 of 5
Step 5: Apply for 501(c)(3) status
The final step — and the one where churches and other ministries are treated very differently. Here’s what that means for you.
With your ministry incorporated, holding an EIN, and governed by bylaws and policies, you’re ready for the last step: 501(c)(3) tax-exempt status. But before you file anything, read the next section carefully — because whether you even need to apply depends on one key question.
First: are you a church, or a ministry?
This is the single most important distinction in this step, and the IRS draws it sharply.
If you’re planting a church
Churches that meet the 501(c)(3) requirements are automatically tax-exempt. You are not required to file Form 1023, and donors can deduct their gifts even without an IRS letter.
You’re also not required to file an annual Form 990 — so you’re not subject to automatic revocation.
Even so, many churches choose to apply for an official determination letter (more below).
If you’re starting a ministry (not a church)
A parachurch or other religious nonprofit that isn’t a church generally must apply with the IRS to be recognized as tax-exempt.
And it must file a Form 990 every year — missing three years in a row means automatic loss of exempt status.
So for a ministry, this step is not optional.
Are you perhaps already covered?
If your new work is part of an existing church that already holds a determination, or falls under a denomination’s group ruling, you may already be exempt — with no separate application needed. Check your parent church’s or denomination’s status first, before you file anything on your own.
Why apply anyway? The benefits
Even though a church isn’t required to apply, an official determination letter unlocks real, practical benefits:
Donor confidence
A determination letter is the proof donors and grant-makers often ask to see before giving.
Grants & banking
Many foundations and banks require it before awarding funds or opening certain accounts.
State tax breaks
Depending on your state, you may also become exempt from certain property and sales taxes (applied for separately at the state level).
Nonprofit discounts
Vendors that offer nonprofit pricing (software, services) typically require the letter as proof.
How to apply
If you do apply, here’s the path:
- File IRS Form 1023 (or the shorter Form 1023-EZ, if you pass its eligibility worksheet). Both are filed online through Pay.gov.
- Submit your supporting documents — your certificate of formation / Articles of Incorporation, your bylaws, and your EIN. (This is why Steps 1–3 came first.)
- Pay the user fee — currently $600 for the standard Form 1023, and a lower fee for the streamlined Form 1023-EZ.
Be honest and specific about your actual activities; the full Form 1023 is long and detailed, and the IRS reviews it closely. Once approved, you’ll receive a determination letter confirming your status — keep it permanently with your other formation documents.
The ongoing duty most people forget: Form 990
If you’re a recognized ministry (not a church), getting the letter is only the beginning. You must file a Form 990-series return every year. The rule is strict: miss three consecutive years and the IRS automatically revokes your status — with no exceptions. (If a return comes due while your application is still pending, file it and mark it “Application Pending.”) Plan now for who will prepare and file your Form 990 on time each year.
A tip if you’re planting with the SBC
Before paying for and preparing a full Form 1023, ask your state Baptist convention or sending church whether you can be covered under a denominational group ruling, or whether they’ll help you obtain your own determination letter. This can save significant time, cost, and paperwork — and it’s exactly the kind of help the SBC family is built to provide.
Helpful links & resources
Federal (IRS) — free and official
- IRS — Churches & automatic tax-exempt statusConfirms churches are automatically exempt and need not apply or file Form 990.
- IRS — Organizations not required to file Form 1023Spells out the church exception (and why many still apply).
- IRS — Instructions for Form 1023The full application’s instructions, including the Appendix A conflict-of-interest sample.
- IRS — Automatic revocation of exemptionThe three-consecutive-years Form 990 rule, explained by the IRS.
- IRS Publication 1828 — Tax Guide for Churches (PDF)The definitive church-specific tax guide.
Other helpful resources
- Foundation Group — Does a church need 501(c)(3) status?A clear discussion of the benefits and the church exception.
- Foundation Group — Form 990 preparationHelp understanding and filing the annual return.
A word of caution
The full Form 1023 is complex, and mistakes cause delays or denials. For anything beyond a simple case, consider having a CPA or attorney experienced with churches and nonprofits prepare or review it. Confirm current forms and fees on IRS.gov, and remember that property and sales-tax exemptions are applied for separately through Florida. This article is general information, not legal or tax advice.
🎉 You’ve completed the legal setup
- Incorporated your ministry with the state.
- Obtained an EIN from the IRS.
- Drafted bylaws to govern it.
- Developed policies to protect your people.
- Addressed 501(c)(3) status — applied, or confirmed your church’s automatic exemption or group-ruling coverage.
Legal Setup for a New Church, Part 5 of 5 — within the Slavic Church Planting & Missions Hub. This article is general educational information, not legal or tax advice. Churches and other ministries are treated differently by the IRS; forms, fees, and rules change. Confirm current requirements on IRS.gov and with a qualified professional before applying.