![]() Reclassification occurs when an organization’s purpose and activities change in such a manner that it warrants a need for its tax-exempt status to be classified differently. Let’s take a closer look at reclassification, reinstatement, and reconsideration. Such instances necessitate a reinstatement. While there are several reasons as to why this may have happened, the most common is when a tax-exempt organization (other than a church) does not file Form 990 for three consecutive years. ![]() There is also an instance in which a ministry may have had its tax-exempt status revoked or suspended. Changes that necessitate a reconsideration process include any modifications to a ministry’s governmental structure that would require updates to the articles of incorporation and/or bylaws.Īt times, changes made to funding or activities may warrant a change in how your ministry is classified from when it received its tax-exempt status, which is known as a reclassification. ![]() At StartCHURCH, we call this situation a reconsideration. It’s a natural indicator of a healthy organization when such changes need to be made.įor example, for organizations that have received their federal tax-exempt status, it is best practice for them to notify the IRS of any significant changes in order to keep their 501(c)(3) status up-to-date and compliant. These three terms describe when significant changes have been made within an organization over the course of time or through growth. You will be able to sleep at night and have peace that you are doing everything possible to keep your organization protected.Īre you ready to find out how you can update your records? Let’s dig in! “The 3 Rs” of church complianceĪt StartCHURCH, we define “the three Rs” of church compliance as reconsideration, reclassification, and reinstatement. In this blog, I will share a few scenarios that will shed some light on what you can do to ensure your organization is in compliance and up to date with the new laws and rulings that have been passed recently. Many organizations complete their initial paperwork to start, but they often don’t know that there is necessary maintenance to those documents to truly keep you in compliance. ![]() Has your church or organization been in existence for over two years? Have you made any significant changes to your structure? Are you thinking of starting a school, daycare or maybe even a cafe or bookstore in your building? Have you updated your governing documents recently? Do Churches Need to Update the IRS? By Stevonne German ![]()
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