If you are a church or ministry, having a tax exempt status is extremely important. But can you lose it? What if you are doing something currently that is jeopardizing your church tax exempt status? How about earning interest on your church income? Is this illegal? The Christian Law Association shares a story as well as some insight on this topic to help provide clarification for churches and ministries on what you are allowed to do with your income as a church. The Christian Law Association has been providing free legal assistance to Bible-believing churches and Christians who are experiencing difficulty in practicing their religious faith because of governmental regulation, intrusion, or prohibition in one form or another.
Can You Lose Your Church Tax Exempt Status?
Can a church in America lose its tax exempt status if it earns interest on its church income?
Legal insight for your church. Here’s a word from attorney David Gibbs, Jr.
A church had accumulated some funds that were not going to be spent for several months. So the pastor suggested that the church money be placed in a certificate of deposit where it could at least earn some interest. One of the deacons feared that the income earned would threaten the church’s tax exempt status. So the pastor contacted the Christian Law Association for clarification on this point. One of our attorneys explained that there is no danger to a church’s tax exempt status when receiving any sort of passive income. Passive income is when the tax exempt organization simply lets someone else use the money, its property, or its name, and receive some payment back for the privilege, without actually becoming involved as an organization. Churches and ministries have every right, without threat to their tax exempt status, to earn income on their church funds.