Chapter 25 - § 25.6 • PLANNING FOR RELIGIOUS ACCOMMODATIONS
| Jurisdiction | Colorado |
In certain contexts and often for good reasons, religious organizations may not choose to emphasize the distinctly religious character of their activities; but doing so without careful planning may put at risk certain accommodations upon which a religious organization relies to preserve its distinctive religious character and mission. This section discusses the definitions of key terms used in many religious exemptions. The section also provides several examples of religious restrictions which, if agreed to, may undermine an organization's ability to claim certain exemptions. Finally, the section presents general guidelines to help religious organizations strengthen their claims for religious exemptions.
§ 25.6.1—Religious Organizations and Activities
As discussed above, there is no single definition of a religious organization or of a religious activity that applies across all religious exemptions. The general definition in I.R.C. § 501(c)(3) provides a good starting point, defining a religious organization as one that is organized and operated primarily for religious purposes. Similarly, a religious activity is an activity that furthers a religious purpose. In some contexts, these terms have been construed broadly, such as for the religious property tax exemption described in § 25.2.2. In other contexts, such as in the World Vision case discussed in § 25.4.1, these terms are defined more narrowly. As discussed in these sections, courts have consistently held that they cannot engage in intrusive inquiries into whether activities are "secular" or "religious," but in applying various multi-factor tests they have not consistently followed this restriction.
§ 25.6.2—Churches and Religious Orders
As provided in I.R.C. § 170(b)(1)(A)(i) and other I.R.C. sections, a church organization includes both a "church" and an "association of churches." Although neither the I.R.C. nor the Treasury Regulations define either of these terms, both the courts and the IRS apply an "associational test" to define a "church" (and to distinguish a church from other religious organizations). The I.R.C. defines the term "church" for FICA purposes in § 3121(w)(3), but the definition is circular. I.R.C. § 3121(w)(3) provides that, "For purposes of this subsection, the term 'church' means a church, a convention or association of churches, or an elementary or secondary school which is controlled, operated, or principally supported by a church or by a convention or association of churches." In Foundation of Human Understanding v. United States, the Federal Circuit Court of Appeals held that a church is "an organization that includes a body of believers who assemble regularly for communal worship." Foundation of Human Understanding v. United States, 614 F.3d 1383, 1387 (Fed. Cir. 2010). Put differently, "in order to be considered a church under [the Internal Revenue Code], a religious organization must create, as part of its religious activities, the opportunity for members to develop a fellowship by worshipping together." Id. at 1389.
A similar analysis applies to the definition of a "convention or association of churches" as that phrase is used in I.R.C. § 170(b)(1)(A)(i). In Revenue Ruling 74-224, the IRS defined an association of churches under this section as "a cooperative undertaking by churches." Further, the IRS expressly stated that an association of...
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