The current understanding of not for profit organizations is, for the most part, limited to Internal Revenue Code Title 26, Sec. 501. Little known is the law for religious organizations under Internal Revenue Code Title 26, Sec 508. These entities may be referred to herein as Faith Based Communities (FBC) and/or Faith Based Organizations (FBO). There is little written about the availability of this law as it applies to religious entities. The purpose of this summary is to provide a brief introduction to Internal Revenue Code Title 26, Sec 508 in lay terms, for leaders of religious organizations who are not tax professionals. 
Internal Revenue Code Title 26, Sec 508 was codified in the Internal Revenue Code (IRC) in order to formally establish the doctrine of freedom of religion which had been a tacit standard upon which America was founded and governed since before it gained its independence in 1776.  A Faith Based Organization is, by the very nature of its creation, a religious, non-profit, tax-exempt organization. 
Throughout this summary you will find links to further information, including technical references for your professional advisor to research and for you to refer to as needed. We wish to educate both religious leaders and tax professionals on this widely underutilized tax law. It is generally unknown to tax practitioners simply because law schools and accounting schools do not teach it.
Internal Revenue Code Title 26, Sec 508 refers specifically to “churches” “their integrated auxiliaries” and “conventions or associations of churches.” The tax code however does not define these terms. It also does not define the term “religion.” These terms have developed meaning through practical application as affirmed by IRS rulings and case law (i.e. law suits between the IRS and not for profit entities).  The result is a very broad based meaning for qualifying organizations. For instance, two FBC’s that received “Church” status include “The Salvation Army” and “Young Life”.
Filing an application for non-profit status with the IRS is not required.  This avoids the burdensome Form 1023 with its $850 filing fee as well as the scrutiny of the IRS upon application. You may recall the 2013 scandal where the IRS attacked conservative groups with long and burdensome approval periods and requirements. (One organization was required to provide 26,000 pages of documents for scrutiny).
There is no proscription against political speech from the pulpit as there is when an organization agrees in writing to be subject to such limitations as a result of obtaining certification under Internal Revenue Code Title 26, Sec 501.  Our political and legal system are seguing toward restrictions of any sort of “hate speech” (read: preaching against any sin specified in scripture such as homosexuality)  rendered from the pulpit.
Internal Revenue Code Title 26, Sec 508 entities, since they are not of record with the IRS, are not exposed to public scrutiny. In the case of Internal Revenue Code Title 26, Sec 501, all applications and subsequent correspondence is available to any who request it. 
The problem for practitioners and churches is that the federal income tax laws use the word ‘‘church’’ in many different provisions without defining it.  The IRS and various courts have used different approaches to determine whether an organization is a church, but these approaches have been inconsistent.  The dilemma was described several years ago as one that has ‘‘puzzled the Service, courts and scholars.’’  The outcome of Faith Based Communities and/or Faith Based Organizations relying solely on IRS determination on their tax exempt status has been restrictions and waiving of First Amendment rights.
See also US Constitution First Amendment. “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.” See also reg. Title 42 of U.S. Code § 2000bb, Religious Freedom Restoration Act. “The Congress finds that—
All other section references are to the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder.
See Blacks Law Dictionary 9th Edition for legal definition of “Free”….<1) Having legal and political rights…2) Not subject to the constraint or domination of another…3) Characterized by choice, rather than by compulsion or constraint…4) Unburdened…5) Not confined by force or restraint…6) Unrestricted and unregulated…7) Costing nothing…..>
See also reg. section 508-(c)(i)(a). This exemption and many of the other exemptions discussed herein also apply to ‘‘a convention or association of churches’’ or an ‘‘integrated auxiliary’’ of a church.
 See Fordham Law Review Volume 45 Issue 5 1977. “Because of First Amendment religious freedom concerns, Congress has never passed any statute anywhere which defines what a church is (beyond saying “a church or convention or association of churches”, which is like saying that the definition of a duck is “one or more ducks”).
 See Rev. Rul. 59-129, 1959-1 C.B. 58, the IRS ruled that The Salvation Army was a church or a convention or association of churches within the meaning of U.S. Code Title 26 Subtitle A - Chapter 1 - Subchapter B - Part VI - § 170(b)(1)(A)(i). No explanation was provided for the ruling.
See also reg. section 501-(c)(3)… “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”
 See christianpost.com, “Tony Miano, currently a pastor and formerly a Los Angeles Deputy Sheriff, was fingerprinted, interrogated, and had DNA samples drawn after speaking on 1 Thessalonians, which mentions “sexual immorality” and cites homosexuality along with “fornication” as examples of what is against “God’s law.”(2013)
 See also reg. section 6104(a)(1)(a). “If an organization described in section 501 (c) or (d) is exempt from taxation under section 501 (a) for any taxable year or a political organization is exempt from taxation under section 527 for any taxable year, the application filed by the organization with respect to which the Secretary made his determination that such organization was entitled to exemption under section 501 (a) or notice of status filed by the organization under section 527 (i), together with any papers submitted in support of such application or notice, and any letter or other document issued by the Internal Revenue Service with respect to such application or notice shall be open to public inspection at the national office of the Internal Revenue Service.”
 See Whelan, Charles M., ‘‘Church’ in the Internal Revenue Code: The Definitional Problems,’’ 45 Fordham L. Rev. 885 (1976) (questioning consistency of use of the word ‘‘church’’ in the code); and Bruce R. Hopkins, The Law of Tax-Exempt Organizations, section 10.3, at 320 (9th ed. 2007) (discussing the inability to provide a formal definition of church).
 See, e.g., TAM 200437047 (‘‘both the courts and the Service agree that there is no bright-line test as to whether an organization is a . . . church); and Foundation II, 104 A.F.T.R. 2d 2009-5424, 5434 (Cl. Ct. 2009).
 Louthian, Robert and Thomas Miller, 1994 EO CPE Text: ‘‘A. Defining ‘Church’ — The Concept of a Congregation.’’
What is a Faith Based Business?
A Faith Based Organization is a corporation whose primary purpose or activities are religious or religiously motivated.
Can anyone set up a 508?
Who is a 508 for?
For any person who wants to set up a Faith Based Organization whose primary purpose or activities are religious or religiously motivated.
How is the 508 formed?
Once you have chosen your initial board of directors, we take care of the rest.
Are there different types of 508’s?
Yes. A 508 may be a
May a 508 ordain and license its own leaders?
Yes. A 508 FBC MAY ordain and license its own leaders.
What comes with the 508 filing?
How long does it take to setup a 508?
Within 20 days.
Does the registered agent have to sign the 508 articles?
Yes, but the signature does not have to be original.
Who serves as the registered agent?
Our registered agent services is offered by Higher Heights Outreach. The first year of registered agent service is included with the 508 filing. After the first year Higher Heights Outreach charges a $150 per year fee to serve as the registered agent.
Is a Washington Corporation good for my state?
Yes! Washington Corporation’s work in all 50 states. If used in another state you may need to register as a foreign corporation depending on your states laws and the type of activity.
Why incorporate your Faith Based Business in Washington?
Washington is a very popular location for non-profit organizations because we have both Non-Profit Registration and the Charities Program administered by the same agency, the Secretary of State. Many states restrict religious expression. Washington allows religious organization’s to exercise religion equal to what a natural man or woman can do.
Benefits of a Washington Charity?
Washington is unique in offering a charities registration exemption letter to FBB’s. The letter acknowledges that FBB’s do not have to report for any fund raising. The Secretary of State lists the FBB as tax exempt and able to raise money from the public.
What are the annual fees to keep my Washington Non Profit active?
$10 a year in Washington. California is $800.
The 508(c)(1)(a) Faith Based Organization (FBC) is a religious, non-profit, tax exempt organization. The 508(c)(1)(a) FBC is separate and distinct from a 501(c)(3) and unincorporated FBC’s. The 508(c)(1)(a) is applicable in all 50 states and recognized internationally under the Hague Convention of the United Nations Charter.
Since its inception in 1954 with the Johnson Amendment, the 501(c)(3) has been promoted and advertised by many as the only option to organizing a FBC. This is fatally incorrect. Federal law, IRS publications, and court cases all confirm and establish the rights and protection of the 508(c)(1)(a) FBC. (Please see legal information.) link to legal
The 508(c)(1)(a) FBC enjoys a “mandatory exception” from all the restrictions a 501(c)(3) FBC has including free speech restrictions, IRS reporting requirements, rules and regulations that the IRS may from time to time prescribe and providing testimony under oath.
The Faith Based Organization (FBC) was once a strong influence in our nation and can be again. Every FBC should be free to worship and preach without restriction by government. Something can’t be true and false. Either the FBC has the right to free speech or it does not. Take time to review the law , and court cases related , to better understand the rights and benefits of the 508(c)(1)(a) FBC.
26 U.S.C. § 6033(a)(3(a) with Highlight
If a Faith Based Communities (FBC) is organized under section 26 U.S.C. §501(c)(3), that FBC is restrained from speaking on politics. This means the FBC is legally restrained from preaching on political issues. By law there should be no advocating for a position on a referendum, initiative, or political candidate on any level. There are also reporting requirements and costs including accounting and reporting a yearly Form 990.
1) FBC application for a “determination letter” grants authority from the FBC to the IRS for income, expenses, and preaching.
2) All 501(c)(3) FBC are prohibited from free speech. By law, a 501(c)(3) FBC is exempt from taxation only if it is “organized and operated exclusively for religious… purposes…. which does not participate in, or intervene in (including the publishing or distribution of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” See 26 U.S.C. § 501(c)(3).
The heavy price 501(c)(3) organizations pay is not just waving constitutional rights in formation. Particularly egregious, is agreeing to comply with all future rules and regulations the IRS, not congress, enacts. Many FBC’s have realized only too late what they have done. Once you contract with the IRS and waive your rights as a FBC to be a 501(c)(3), you can’t argue 1st Amendment Free Speech protection regarding political issues. Over and over again 501(c)(3) FBC have lost this court battle. Why? Because FBC’s have the choice to be a 508(c)(1)(a) or 501(c)(3). People and corporations can waive their rights.
3) Look clearly at USC 26 6033a Returns by Exempt Organizations. All tax exempt non profits excluding the 508(c)(1)(a) “shall file an annual return, stating specifically the items of gross income, receipts, and disbursements, and such other information for the purpose of carrying out the internal revenue laws as the Secretary may by forms or regulations prescribe, and shall keep such records, render under oath such statements, make such other returns, and comply with such rules and regulations as the Secretary may from time to time prescribe”
4) What is the penalty? The penalty for a 501(c)(3) FBC that violates federal law political restrictions is losing tax exempt status. In addition all donations given to that FBC by any taxpayer will no longer be tax deductible. See BRANCH MINISTRIES VS IRS211 F.3d 137 (D.C. Cir. 2000) and JACK LANE TAYLOR VS IRS 2000.
See Reference #9 - Exemption from tax on corporations, certain trusts, etc
Ministries that will rely on grant money should keep or establish a 501(c)(3). Many Faith Based Communities (FBC) have outreach programs that utilize grant money to help provide food, shelter, or education to those in need. In these cases a 501(c)(3) organization is required to apply and maintain reporting requirements for the grant. If your FBC fits this description, we can show you how your FBC can have both a 508(c)(1)(a) and a 501(c)(3) and how these organizations interact.