Legal Memorandum: "Integrated Auxiliary" of a Church in ND

Issue: What is necessary to qualify as an ‘integrated auxiliary’ of a church in North Dakota?

Area of Law: Tax Law
Keywords: Integrated auxiliary; Tax-exempt supporting organizations; Church
Jurisdiction: Federal, North Dakota
Cited Cases: None
Cited Statutes: 29 U.S.C. § 6033(a)(3)(A)(2007) ; 509 (a)§§ 501(c)(3) and 509(a) (1), (2), or (3); 26 C.F.R. §1.6033-2(h)(1), § 1.6033-2(h)(4)
Date: 11/01/2008

The Pension Protection Act removed from § 6033 certain 990 filing discretionary exceptions for tax-exempt supporting organizations.  See 2006 Pension Protection Act, Pub. L. No. 109-208, 120 Stat. 1090 (codified as amended in scattered sections of 26 U.S.C.).  However, mandatory filing exceptions were retained for “(i) churches, their integrated auxiliaries, and conventions or associations of churches, (ii) any organization (other than a private foundation, as defined in section 509 (a)) described in subparagraph (C), the gross receipts of which in each taxable year are normally not more than $5,000, or (iii) the exclusively religious activities of any religious order.”  29 U.S.C. § 6033(a)(3)(A)(2007) (emphasis added).

To qualify as an “integrated auxiliary” of a church, an organization must be “(i) Described both in sections 501(c)(3) and 509(a) (1), (2), or (3); (ii) Affiliated with a church or a convention or association of churches; and (iii) Internally supported.” 26 C.F.R. §1.6033-2(h)(1) (2008).  “An organization is internally supported . . . unless it both (i) Offers admissions, goods, services or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for an insubstantial portion of the cost); and (ii) Normally receives more than 50 percent of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or […]