Governance Structures and Governance Structures and Unique Tax - - PowerPoint PPT Presentation
Governance Structures and Governance Structures and Unique Tax Issues for Unique Tax Issues for Religious Organizations Religious Organizations April 29, 2011 Stuart J. Lark, Esq. J. Hugh Jones, Esq. Holme Roberts & Owen LLP 90 S.
#213127v4
Stuart J. Lark, Esq.
Holme Roberts & Owen LLP 90 S. Cascade Ave., Suite 1300 Colorado Springs, CO 80903 (719) 473-3800
2
3
I.R.C. 501(c)(3): Organized and operated
Colorado state law defers to federal law The U.S. Supreme Court has held that these kinds
4
No tax definition of “religion,” “religious
Courts avoid deciding whether various beliefs or
Southern Church of Universal Brotherhood
Not religious versus not bona fide
5
Colorado Constitution: “Property . . . used solely
Longstanding liberal rule of construction
6
Maurer v. Young Life, 779 P.2d 1317 (Colo. 1989) “Although not all the activities conducted on the
7
Statutory religious property tax exemption
Exempt property may be used for any religious
Denial shall be based only upon ground that:
8
YMCA of the Rockies
Mountain camp activities in a “Christian
Clear Christian mission and motivation Voluntary participation Chaplain program Long term strategy for mission No distinctly religious requirements for employees
9
Colorado statute exempts: “All sales made to
“Charitable organization” is defined to include
10
“Regular [religious] functions and activities” Broad interpretation: All activities motivated by a
Narrow interpretation: Only activities with
In 2009, Colorado Supreme Court held that courts
Consistent with Maurer and broad interpretation
11
Sales and use taxes may also be imposed at the city
A number of “home rule municipalities” have their
City of Pueblo exempts “charitable organizations,”
12
Villa Pueblo Towers
A senior residential facility operated by a Catholic
No required activities Argued that entire operation is a religious activity
13
Can there be separate religious exemptions? Should a religious exemption be limited to
Should there be an exemption for exclusively
Do different approaches to accomplishing a
14
Church
IRS has created 14-point checklist Some courts have adopted the associational test
radio and internet at set times, during which listeners could call and interact with the pastor, did not satisfy the associational test
Religious Order
IRS has identified 7 characteristics
Minister of the Gospel
IRS has identified 4 common duties
Definitions based on theological tenets Diversity of religious beliefs
15
Colorado exempts all services performed:
(a) In the employ of (1) a church, (2) a convention
(b) By a duly ordained, commissioned, or licensed
16
Colorado Supreme Court has interpreted the church
Upheld use of 7-point test to determine whether an
“Church congregations normally cross all sex and
17
Colorado Supreme Court has also interpreted the
The court said: “It is the organization’s activities,
This interpretation calls into question the status of
18
Compensation paid by a church or religious order
Taxed under the Self-Employment Contributions
Not subject to income tax withholding
19
Ministers may exclude from gross income (1) the
Housing allowance must actually be used to rent or
The fair rental value language was added as part of
20
In 2009, the Freedom From Religion Foundation
In 2010, the U.S. Tax Court held that a minister
21
Under § 4(b)(2) of ERISA, “church plans” are
A “church plan” is defined as “a plan established or
22
Churches and certain other religious organizations
Apply for and obtain recognition of tax-exempt
File annual information returns
23
IRS may only initiate an examination of a church if
24
Federal laws State/local laws
Limited religious exemptions
Other protected classifications with religious
Church autonomy/ministerial exception
Minister employment cases (e.g., gender
25
Colorado requires charitable organizations
Exemption for churches and certain other religious
Nationally, approximately 40 states require
Churches must register in 1 state Religious organizations must register in
26
No government shall impose or implement a land use
In 2006, the Tenth Circuit upheld the claims of a church
In 2008, a Boulder jury found that the Boulder County
27
In addition to the regular classes of visas, religious
A key issue in qualifying for a religious worker
28
Should the housing allowance be limited to a specific
Should churches remain exempt from filing exemption
Should church tax audit protections be eliminated with
29
30
Grants (government or private): No funds
may be used for any activity or material with religious content
“Secular Ministry” Opportunities Inconsistent Policy Implementation Use of Public Facilities or Exempt Bonds: Facilities may not be used for
religious worship or instruction
Grants/Charitable Campaign: Recipient
respect to employment on the basis of religion
Disclosure on 990’s: Related parties and
directors/officers exemption
Faith-Based Employment: Can a religious
if it enters into contracts agreeing not to discriminate on religion and/or that its activities are not religious?
Church Exemptions: How will the conduct
Will the organization have to be identified on the 990 of a related organization?
Property Tax: How would such
representations affect eligibility for property tax exemption?
Minister’s Housing Allowance: Do
activities constitute ministerial services if they are not religious worship or instruction and contain no religious content?
31
Document how policies and activities express and
Articulate doctrinal and expressive basis for