The "legal" status of a local church
Editor's note — April 25, 2026. This article first appeared July 15, 2021. It has been corrected and updated since. The IRS publication referenced is 1828, not 1028. § 508(c)(1)(A) waives specific filing and notification requirements within § 501(c)(3); churches remain a class of § 501(c)(3) organization. The list of federal burdens has been narrowed to what § 501(c)(3) actually imposes. A section has been added on the July 2025 consent judgment in National Religious Broadcasters v. IRS. The article's central claim — that the church's existence and authority do not derive from the civil magistrate — stands.
"I am not the only IRS employee who’s wondered why churches go to the government and seek permission to be exempted from a tax they didn’t owe to begin with, and to seek a tax deductible status that they’ve always had anyway”; “Churches are in an amazingly unique position".
- Steve Nestor, IRS Sr. Revenue Officer (ret.)
Many churches today follow what has recently become a standard for legally defining and recognizing their gathering. Many believe that in order to become recognized as a tax-exempt ministry or church they must file for nonprofit status with the Internal Revenue Service (IRS). This process is an application for a request to be recognized as a 501(c)(3) nonprofit organization. § 501(c)(3) imposes substantive requirements on every organization that qualifies under it, including churches: the church must be organized and operated exclusively for one or more of the exempt purposes named in the statute, no part of its net earnings may inure to any private individual, no substantial part of its activities may consist of attempting to influence legislation, and it must not participate or intervene in any political campaign on behalf of or in opposition to a candidate for public office. The annual Form 990 information return that other § 501(c)(3) organizations must file does not apply to churches; § 6033(a)(3)(A)(i) exempts them. Federal tax law does not dictate church polity, meeting frequency, agenda, sermon content, or the recording of services. Those concerns trace to state nonprofit corporation statutes and apply equally to any incorporated church, regardless of its IRS posture. Although the federal tax code recognizes churches as a class of § 501(c)(3) organization, the church is not constituted by nonprofit incorporation. The church is a gathering of redeemed people to glorify God through worship. We must also consider what was rightly established in the first amendment to the U.S. Constitution:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
What many people do not know is that the United States government lawfully recognizes that they do not have authority over local congregations that gather as the church, nor should the Church be taxed by the government. Thoughtful effort has been made with both the U.S. Constitution and U.S. Code to protect local churches from government overreach. Churches, their integrated auxiliaries, and conventional or associations of churches are mandatorily exempt from taxation from the United States government without needing to take any action (see 26 U.S. Code § 508(c)(1)(A) - Special rules with respect to section 501(c)(3) organizations). This means that without ever requesting recognition from the government, churches are automatically considered tax-exempt and may receive deductible contributions without filing Form 1023. § 508(c)(1)(A) does not, however, place churches in a tax category outside § 501(c)(3). Churches remain a class of § 501(c)(3) organization, and the substantive operational rules of § 501(c)(3) — no private inurement, no substantial lobbying, and the political-campaign restriction — apply by their own terms. The federal courts have read § 508 this way consistently. In Branch Ministries v. Rossotti (D.C. Cir. 2000), the IRS revoked a church's exempt status for political activity, and the court rejected the argument that § 508 placed churches in a category immune from such revocation. The point that survives is narrower than is sometimes claimed and still weighty: churches are not required to seek the state's recognition in order to exist, gather, teach, ordain, hold property, or receive offerings. The civil magistrate recognizes the church; he does not constitute it. § 508(c)(1)(A) reflects that distinction at the federal level by removing the church from the queue at the IRS counter.
Update: National Religious Broadcasters v. IRS (E.D. Tex. 2025). On July 7, 2025, the IRS entered a consent judgment in National Religious Broadcasters v. IRS in the Eastern District of Texas. In a federal court filing, the agency stated that houses of worship may speak with their congregations about political candidates and elections, through their customary channels of communication on matters of faith, without endangering their tax-exempt status. This is the first time the IRS has stated such a position openly in nearly seventy-five years of Johnson Amendment enforcement. The settlement technically binds the agency only as to the plaintiff churches. Because the IRS made its interpretation public in a court filing, the practical risk of revocation for sermons and ordinary congregational teaching that touches on candidates or elections has been substantially reduced. The political-campaign restriction at § 501(c)(3) is still law. A church that endorsed a candidate in paid advertising, funded a campaign, or operated as a political committee in disguise would not be protected by this consent judgment and would still face the statute. The change is in agency posture toward customary pulpit speech, not in the operational rules of § 501(c)(3).
What is the legal status of a church? Churches are rightly identified, recognized, and exempted from oversight and taxation under 26 U.S. Code § 508(c)(1)(A).
The Church is local gatherings of freed individuals all over the world, people who have been redeemed by the blood of Jesus, gathered together to worship God, scattered to proclaim his kingship to the nations, and to ensure others are rightly brought under submission to his rule (Psalm 2:7-8; Matthew 28:19-20).