Does A Church Need A Lawyer?

Does A Church Need A Lawyer

The short answer is yes – churches need lawyers in today’s world. In fact, it is not uncommon for churches to find themselves on the receiving end of a lawsuit. How well does your church handle the following issues that can result in litigation against churches?

Screen and Train Volunteers: Bad things happen, even in very good churches. It is absolutely necessary to make sure your volunteers, especially those working with minors, have undergone background checks and are properly trained in their duties and responsibilities. Are your volunteers competent in First Aid? Is there a procedure in place for dropping off and picking up children? Do you have volunteers that know how to handle food allergies? What is the protocol for dealing with a fire or other emergency?

Maintain Safe Facilities: Not maintaining church property in a safe condition is a top reason churches find themselves in a lawsuit. Are the facilities clean and free of tripping hazards? Are any sharp objects or dangerous chemicals within reach of children? Do doors get locked when rooms are not being used? Is their adequate lighting inside and outside the church? A lawsuit is all too likely to result when someone gets injured from an unsafe condition that the church failed to correct.

Prevent Misuse of Church Vehicles: Motor vehicle accidents happen every day, and church vehicles are not immune. Every church that owns any type of automobile should have a well-drafted policy explaining who can use the vehicles and for what purposes. Keys to all vehicles should be properly stored and not turned over to anyone who fails to meet insurance requirements. Church members should never be allowed to borrow church vehicles for personal transportation needs.

Have Clear Policies and Follow Them: Like any organization, churches should have policies in place governing how the church operates. Everything from personnel issues, to how members are accepted and dismissed, to how money is handled need to be explained in writing. While lawsuits by disgruntled church members are rare (as they should be), these types of claims will often be thrown out by a court if the church can show that it acted consistent with its policies.

Honor Copyright Laws: Copyright violations are extremely common in our society, but churches must be extra careful to follow the law. Copyright law is extremely complicated, and it is best to consult with an attorney before making use of anything that might be protected by federal law.

Reasons Your Church Needs A Lawyer

• Every new church planter should talk to a lawyer familiar with churches, and ask about forming a corporation or similar entity. The legal risks are too high and the solution is relatively easy.

• If you are updating a corporate charter, constitution, bylaws, or similar governing document, talk to an attorney.

• If you haven’t updated your main governing documents in awhile, the church should touch base with an attorney. Hopefully, you have a relationship with a trusted legal advisor that you meet with every year. But if it’s been more than five years, please set aside an hour or two for a review.
• If you are updating your policy manual, it’s wise to have them reviewed by an attorney. If you don’t yet have a policy manual, you should’ve talked to a lawyer a long time ago.

• If the church is granting housing allowance to ministers, an experienced lawyer will help your decisions be supportable and defensible.

• If you’re making a major change in compensation or benefits to key staff, a quick review by a lawyer may save headaches down the road.

• If you are purchasing real estate, the church should use an attorney to make sure the deal doesn’t result in surprises (environmental contamination, zoning issues, etc.)

• If your church is going to terminate the employment of anyone, it is a good time to talk to an attorney. Non-ministerial employees are often subject to the same laws and regulations affecting other businesses. And while the Constitution gives churches broad leeway over “ministerial” employees, those decisions also have legal and political implications.

• A new or unusual fundraising method should be run by a lawyer who understands the charitable solicitation laws in the relevant areas. An improperly designed used-car donation program, eBay ministry, or commission-based solicitor can risk the church’s tax exemption.

• Any significant investment agreement should be reviewed by an attorney. Is the church issuing bonds? Engaging in creative financing? Offering interest? Expecting to receive a return on an investment? Developing real estate? Engage legal counsel.

• If the church is contacted by the IRS or the State or local equivalents, you should talk to an attorney, and have them respond.

• If your church receives communication about a zoning issue, it will be helpful to talk to an attorney before you make any response.

• If the church is contacted by an attorney representing someone else, you should respond through an attorney.

• If your church is engaged in church discipline, or removing members, talk to an attorney about your process. If you are contacted by an attorney representing a member, please have a church attorney respond.

• If your church becomes aware of allegations of sexual misconduct by any employee, contractor, volunteer or associate, contact an attorney immediately.

• If the sexual misconduct includes any person under 18 or over 65, contact an attorney immediately. In many states, ministers and other authorities are required to take very specific steps in a short timeframe. An attorney can make sure it is implemented properly.

• If any staff, contractor, or volunteer is alleged to have taken unfair advantage of an elderly, infirm, or disabled person, talk to an attorney immediately. Some states have implemented “elder abuse” laws similar to child abuse laws, with similar reporting requirements.

• If there is a potential conflict of interest transaction, it is helpful to involve an attorney before it is proposed and approved. Does it benefit staff, insiders, or key members in an unusual way? An attorney can make sure the discussion and record support the decision of the church.

• Does your church still have Trustees? It’s past time to talk to an attorney.

When Does A Church Need An Attorney?

When someone is starting or joining leadership in a religious institution, legal considerations are often towards the bottom of the priority list. However, religious institutions of all faiths need to be aware of areas where they may need advice from a licensed attorney in order to best serve their membership and carry out their faith. Here are some of the most common areas where a church or other religious organization should consult an attorney.

• Governing Documents: The majority of religious organizations operate under the direction of one or more governing documents. It is absolutely vital that these documents be kept up to date and reviewed on a regular basis. An attorney will be able to provide valuable advice and suggestions about what to include in these documents to give the maximum protection to the organization.

• Real Estate and Land Use: If your religious institution needs to move locations or expand its current location, an attorney will often be necessary. In this case, an attorney can help with reviewing your real estate transaction documents, determining whether your land use is permitted in the proposed location, or securing a variance or special use permit from the municipality if necessary.

• Employment: When hiring and firing lay employees, religious institutions must consider state and federal employment law. Discussing particular employment situations with an attorney before acting can save an organization thousands of dollars and an immeasurable amount of negative public perception. Further, an attorney can help prevent difficult situations in the first place by providing your organization with a clear and comprehensive employee handbook.

• Litigation: This is the obvious scenario where an attorney is needed. If a religious institution is presented with a lawsuit, it should immediately seek out an attorney with experience representing religious institutions, as the unique culture and issues in these types of lawsuits often call for a specialist. An attorney specializing in representing religious institutions will be able to better understand issues that are important to the organization, and will be familiar with the special challenges and opportunities presented.

• Denominational Relations: In today’s changing culture, many of the traditional denominations in Utah are changing also. It is inevitable that some congregations will feel called away from their past denominational affiliations for one or more reasons. When separation is being considered, it is vital to consult an attorney who is familiar with the process of leaving a denomination. Various legal issues will need to be considered before undertaking a separation and an understanding and knowledgeable counselor will ease the transition for all involved.

• Organizational Discipline: Many faiths have unique practices for disciplining individual members when necessary. However, there can be potential for some inter-organizational discipline practices to create legal issues. Having an attorney review organizational policy and provide advice on a particular issue can prevent unintended legal consequences.

• Advice on Current Legal Issues: As the culture changes rapidly, new legal issues arise frequently. Religious organizations must be prepared to operate in the light of these new realities. In these cases, an attorney will be an invaluable resource as a counselor who understands both the law and the client, and will be able to shed light on an otherwise confusing situation.

Church Governance And Property Disputes

Property and governance issues are often at the forefront in a church dispute:
• Governance issues: These often occur when there are struggles for control within a congregation or a church body. In nonhierarchical church bodies, disputes often arise between different factions who rival for control of the church.

• Control of church property: Disputes over property are usually a key issue when a church body splits. When a local church congregation breaks off from a larger church structure that is hierarchical in nature, disputes often arise over which body has rights in the church property.

All of these situations must be handled with the utmost care and sensitivity. Governance issues may result in religious employment litigation. When a church splits from a denomination, it is more than a matter of conflicting belief systems or leadership squabbles. Ownership of church buildings must be settled between a denomination and a congregation that is leaving that denomination. Possession and management of endowment funds may also be in question. It is often in the best interests of both sides to resolve the property or governance question without resorting to costly litigation. However, a desire to settle church building ownership or other questions of congregational control may not be enough to avoid a major lawsuit. It is critical to find a well-qualified attorney with experience handling church disputes, both to contain legal fees and to move forward with confidence toward a satisfactory resolution. Every church needs governing documents that define the organization’s scope and determine how it is run. Whether the church is organized as a religious nonprofit corporation or as a nonprofit association, a charter, bylaws, and other guiding documents are necessary for a wide variety of reasons, from basic operations to establishing proper tax treatment, managing assets, and controlling liability. As a church grows and evolves, it’s normal to need to make changes to governing documents.

There are some general steps that apply to each case:

• Take stock of existing documents: Many organizations, including churches, make the mistake of losing sight of their governing documents and discover conflicts only after they’ve become a real problem. Treating documents as living, breathing things is a helpful way to ensure that issues can be addressed. Doing so as a director is also an important part of satisfying one’s fiduciary obligations to the church. When changes do need to be made, it’s a good idea to review the entire document for any other improvements that could be made at the same time.

• Understand technical requirements: A particular governing document, like an incorporated church’s bylaws, typically will have a prescribed process for making amendments. In addition to these rules, changes to a particular document may be subject to state law or the rules of a church’s parent organization, if applicable.

• Reach a consensus: Following the church’s governing rules, the board or other leadership group should discuss why changes need to be made and proposals for new language. An attorney’s help is often necessary to ensure that proposed changes won’t create other problems.

• Document approvals: Regardless of how a church is organized it’s important that the leadership group’s approval of changes to its governing documents be memorialized in writing, either with meeting minutes or, if permitted, by a written consent. Certain types of documents, like corporate charters, may need to be submitted to the state before they will take effect.

• Notify applicable parties: If the church has relationships with outside organizations that rely on its governing documents, they will need to be provided with the updated versions. Banks are a common example of organizations that routinely refer to client governing documents to verify that formalities are satisfied.

Church Lawyer Consultation

When you need a lawyer for your church in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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501C3 Attorney

501 C 3 Attorney

501c3 rules are the Internal Revenue Service (IRS) guidelines set forth to regulate the activities of certain nonprofit organizations. 501c3 tax status is awarded to charitable organizations and provides them exemption from federal taxes. There are a wide variety of federal nonprofit tax codes, spanning from (1) to (28). 501c3 is one of the most popular yet restrictive tax codes. Some common examples of organizations that fall into this group include trusts and public foundations, but the most popular type of institution is nonprofit corporations. This type of nonprofit tax code stands apart from its counterparts because of the donation exemptions. Individuals or companies that donate to 501c3 organizations are able to deduct the contribution on their taxes. The majority of state governments also allow tax deductions for donations, making gifts to nonprofit entities under this category appealing to many donors. 501c3 institutions can also benefit from state tax reductions such as sales and property fees. Other outlets, like the post office, also provide discounts for certain types of groups. Organizations with 501c3 statuses span a wide variety of industries and service types. One of the main distinguishers of a public charity, at least according to the IRS, is that it isn’t a private foundation. They’re many other things that they look for to approve companies for tax-exemption, and they place a heavy focus on revenue sources.

The bulk of public nonprofit’s revenue must be provided by public donations or government entities, and one-third of the public donors must be composed of a broad range of backgrounds and classes. The IRS does allow that funds be obtained from individuals as well as companies, and it can also come from other types of charities. Individual donors can write off donations up to amounts that equal half of their yearly income while corporations can only deduct up to 10 percent of their income. There are many similarities between public and private nonprofit organizations, but there are specific differences that the IRS looks for when determining status. While most private organizations are run by families, the rules for a 501c3 charity demand that the majority of the company’s board members are not related.
Private organizations aren’t known for their continuously active programs, which is another stipulation for public entities. While they may not technically be active, many private foundations fund the activities of public groups through the use of grants. However, their donor base is usually much smaller than their counterparts because they don’t face the same variety of restrictions. Donors also don’t receive the same deduction opportunities as the IRS limits the claims to 30 percent of their income. It’s not impossible for private foundations to earn 501c3 status, especially if they’re practices result in a hybrid organization, but they’re the smallest type of institution among (3) tax codes. If they do in fact qualify, their donors are able to reap the same tax deduction benefits.

Restrictions on Activities
501c3 organizations face extensive restrictions that are much tougher than other 501c tax code categories. Some of these rules include:
• Individual members or leaders can’t benefit financially from the programs and activities of the organization;
• The assets of a dissolved company much transfer to another 501c3 organization and not to any one person;
• Lobbying should be limited and only use a small percentage of the budget.
The IRS also prevents organizations from making official ties to political campaigns including candidate endorsements.
Obtaining 501(c)(3) Status
In order to obtain 501c3 status, the company or organization needs to complete and file Form 1023. Small entities or those with limited income can use the 1023-EZ Form if they meet the minimal requirements. The IRS requires companies with early earnings of $10,000 or more to pay an $875 filing fee. Organizations with lower revenues are only charged $400 for the application process, but certain entities, like religious institutions, can avoid the entire process as they aren’t required to apply. It’s easy for a nonprofit organization to maintain its tax exempt status and can be just as easy to lose it. Each year, the IRS revokes the tax-exempt status of more than 100 501(c)(3) organizations. Organizations recognized as exempt from federal income tax under this section of the Internal Revenue Code include private foundations as well as churches, educational institutions, hospitals, and many other types of public charities.
But these organizations can maintain their tax-exempt status if they heed the rules in six areas:
• Private benefit
• Lobbying
• Political campaign activity
• Unrelated business income (UBI)
• Annual reporting obligation
• Operation in accord with stated exempt purpose(s)
When to File For 501(c)(3) Status

To get the most out of your tax-exempt status, you’ll want to file your Form 1023 within 27 months of the date you file your nonprofit articles of incorporation. If you file within this time period, your nonprofit’s tax exemption takes effect on the date you filed your articles of incorporation (and all donations received from the point of incorporation onward will be tax deductible). If you file later than this and can’t show “reasonable cause” for your delay (that is, convince the IRS that your tardiness was understandable and excusable), your group’s tax-exempt status will begin as of the postmark date on its IRS Form 1023 application.
Form 1023-EZ: The Streamlined Application
Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This is a shorter, simpler application form that you complete online. Form 1023-EZ may only be filed by nonprofits with less than $50,000 in annual receipts and $250,000 in total assets. If you’re in the ballpark, complete the Form 1023-EZ Eligibility Worksheet contained in the Form 1023-EZ Instructions to determine if your nonprofit meets all the requirements for using the shorter streamlined form. If you are eligible to use it, this version of the form is much easier to complete and will take you much less time. The filing fee is also much smaller.
Identification of Applicant
This section tells the IRS about your organization. It asks for basic information like the name of your nonprofit corporation, contact information, and when you filed your articles of incorporation. Your nonprofit must have a federal employer identification number (EIN) prior to applying for 501(c)(3) tax exemption, even if it doesn’t have employees. This can be done quickly and easily. Even if your organization held an EIN prior to incorporation, you must obtain a new one for the nonprofit corporate entity.
Required Provisions in Your Organizing Document
There are certain clauses that you must have in your articles of incorporation in order to get your 501(c)(3) exemption, including:
• a clause stating that your corporation was formed for a recognized 501(c)(3) tax-exempt purpose (charitable, religious, scientific, literary, and/or educational), and
• a clause stating that that any assets of the nonprofit that remain after the entity dissolves will be distributed to another 501(c)(3) tax-exempt nonprofit or to a federal, state, or local government for a public purpose.
Narrative Description of Your Activities
Here you provide a detailed, narrative description of all of your organization’s activities — past, present, and future — in their order of importance (that is, in order of the amount of time and resources devoted to each activity). For each activity, explain in detail:
• the activity itself, how it furthers an exempt purpose of your organization, and the percentage of time your group will devote to it
• when it was begun (or, if it hasn’t yet begun, when it will begin)
• where and by whom it will be conducted, and
• how it will be funded (the financial information or projections you provide later in your application should be consistent with the funding methods or mechanisms you mention here).
Compensation and Financial Arrangements
The purpose of this section is to prevent people from creating and operating a nonprofit for the sole benefit of its founders, insiders, or major contributors. You’ll need to give information about all proposed compensation to, and financial arrangements with:
• initial directors
• initial officers (such as the president, chief executive officer, vice president, secretary, treasurer, chief financial officer, or any other officer in your organization)

• trustees
• the five top-paid employees who will earn more than $50,000 per year, and
• the five top-paid independent contractors who will earn more than $50,000 per year.
In computing the amount of compensation paid, include employer contributions made to employee benefit plans, 401(k)s, IRAs, expected bonus payments, and the like. You must also answer questions relating to possible conflicts of interest, which is an important part of the application.
Financial Data
All groups wishing to obtain 501(c)(3) exempt status must provide a statement of revenues and expenses and a balance sheet. An organization that has been in existence for five years or more must provide financial data for its most recent five years. Other groups must provide financial data for each year they have been in existence and good faith estimates for future years for a total of three or four years, depending on how long the organization has been in existence. These revised financial data requirements relate to IRS rules that automatically classify all new 501(c)(3) groups as public charities as long as they can show in their Form 1023 that they reasonably expect to receive qualifying public support. If your nonprofit is a public charity, you will want to include all the information necessary to avoid misclassification as a private foundation.
Public Charity or Private Foundation
This section relates to your nonprofit’s classification as a public charity or private foundation. Public charities, which include churches, schools, hospitals, and a number of other groups, derive most of their support from the public or receive most of their revenue from activities related to tax-exempt purposes. Most groups want to be classified as a public charity because private foundations are subject to strict operating rules and regulations. Under IRS regulations all new 501(c)(3) groups are automatically classified as public charities for the first five years as long as they demonstrate in their Form 1023 that they reasonably expect to receive qualifying public support. This way new groups applying for 501(c)(3) tax-exempt status need not seek an advance IRS ruling on their public charity status. For the first five years, the group will maintain its public charity status regardless of how much public support it actually receives. After the initial five-year period, the IRS will start to monitor whether the group receives the public support necessary to qualify as a public charity.
Fee Information
You must pay a fee when you submit your Form 1023 application. Check the IRS website for the current user fee.
Additional Schedules
Certain types of nonprofits must attach an additional schedule to their Form 1023 application. Most of these schedules concern statutory public charities–nonprofits like churches and hospitals that are automatically classified as a public charity no matter how much public support they receive. Each schedule asks for additional information geared to the type of nonprofit. For example, Schedule A for churches asks a series of questions designed to show whether the organization really is a church for tax purposes, such as whether it has a creed or form of worship. These schedules include:
• Schedule A: filed by churches
• Schedule B: filed by schools, colleges, and universities
• Schedule C: filed by hospitals and medical research organizations
• Schedule D: filed by supporting organizations
• Schedule E: filed by nonprofits over 27 months old
• Schedule F: filed by homes for the elderly or handicapped, or low income housing
• Schedule G: filed by successors to other nonprofits.
After You File
After reviewing your application, the IRS will do one of three things:
• grant your federal tax exemption
• request further information, or
• issue a proposed adverse determination (a denial of tax exemption that becomes effective 30 days from the date of issuance).
If you receive a proposed denial of tax-exempt status and you wish to appeal, see a lawyer immediately.
501c3 Requirements
The IRS requires that nonprofit organizations must meet specific requirements before earning 501c3 status. Some of the basic essentials include:
• Avoid any purpose that praises or calls for discrimination;
• Must have obtained an official status as an association, corporation, or trust;
• Provide a reason for their desire to seek tax exemption;
• Three-years of existence before applying;
• Earnings and funds raised by the outlet can’t benefit a sole member;
• Profits must be used for charitable activities;
• Political involvement should be avoided;
• Sole purpose is to meet public needs.

501 C 3 Lawyer

When you need legal help with a non-profit charitable organization in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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