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What is the difference between the non-profit we operate with and the 501(c)3?
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A Private Express Association is also a non-profit, and if it is based on a true private membership or religious order, does not pay tax on spiritual activities. A 501(c)(3) strict designation obtains tax-exempt status by asking the IRS’ permission, and the IRS typically applies a 14-point test that is based on a traditional corner church. A religious order on the other hand, is based on Internal Revenue Code section 508(c)(1)(a), which creates a mandatory exception for a ministry. There is no long application to the IRS, or answering dozens or hundreds of questions. Still, there must be a legitimate spiritual organization in order to be tax-excepted.
Additionally, a 501(c)(3) is usually organized as a non-profit corporation and thus must follow State laws that usually require three Directors. Federal law specifically requires three or more Directors for a non-profit corporation. Thus, there are required meetings, minutes, and resolutions. A Private Express Association, since it is an office held by one person, has no required board of directors, meetings, or resolutions.
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Can I as an individual be a religious order?
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No. First, a religious order is not a person, it is an Office, filled by a person. Second, a religious order is the asset-management arm or vehicle of a mission or religious society, so there must be at least three people who sincerely hold the same spiritual or religious beliefs and practices.
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Can a religious order protect my assets?
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The key word here is “my.” If you truly give assets to a religious "order", they are no longer yours. For further details contact us for a more in-depth explanation.
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Is the religious order automatically tax-exempt?
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A religious order is not in itself tax-exempt. IRC Section 508(c)(1)(a) states that a religious order is excepted from tax payments. Remember that there are two entities – (1) incorporated and (1) unincorporated. Contact us for further explanation.
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Can a religious order own and manage businesses, and not pay taxes on the business income?
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No. Any non-religious business activity must be reported and the tax paid. A religious order can certainly own a business, yet there are many rules and laws that must be followed.
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Can I receive tax-free income as a minister of a religious order? What about a stipend and expenses?
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As with all ministries who pay their ministers a salary, the salary must be reported and tax paid. However, the religious order can pay for all of your travel and other expenses that are part of your spiritual service, can pay a stipend (basic living expenses – rent, utilities, food, etc.), and can provide insurance and other benefits. Any payment above those reasonable amounts must be reported as income.
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Can I use the religious order for estate planning, to leave gifts to my children?
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No. The property you place into a religious order is no longer yours – it belongs to the spiritual society, and you cannot take it back. If you dissolve the religious order, the property must be given to another non-profit. The religious order is a corporation for holding and managing the property and assets of a ministry. You cannot mix estate planning with it.
You can, however, name a family member to succeed you as the Officer of the religious order. They would then have the right to use societies property in their spiritual activities. For example, the religious order can own a house, and that can be the minister’s residence, and be part of his or her stipend. Still, the minister can never sell the house and keep the money. With a religious order, the property is dedicated to the eternal use of the mission/spiritual organization, and that commitment must be taken seriously.
You are free to own your own property and assets outside the religious order, and to pass those on to your children in a separate Will or Revocable Living Trust.
