GROUP RULING TAX EXEMPTION

The General Council on Finance and Administration (GCFA) has the responsibility to maintain the United Methodist Group Tax Exemption Ruling, on behalf of the denomination as provided in ¶ 807.7 of the 2000 Book of Discipline.The following topics are to assist all interested persons in understanding the Group Ruling:

1. What Does The Group Ruling Do?

2. What United Methodist Organizations Are Covered Under The Group Ruling?

3. How Does An Organization Not Already Included Apply For Inclusion Within The Group Ruling?

4. To Whom Should Questions And Requests On The Group Ruling Be Directed?

HOW TO REQUEST INCLUSION

You may request inclusion within the United Methodist Group Ruling by either mailing a written request to the General Council on Finance and Administration at 1200 Davis Street, Evanston, Illinois, 60201-4193, or sending a fax to the attention of the Legal Department at 847-425-6568. You may also make a request by phone at 847-425-6534, or send an e-mail to Eunice Magnus at emagnus@gcfa.org.

Requests for inclusion should not be referred directly to the Internal Revenue Service, which has designated GCFA as the administrator of the Group Ruling.

Scroll down to see a detailed memorandum on the Group Ruling.

INTERNET MEMO

To:Interested Persons

From:GCFA Legal Department

Re:United Methodist Church Group Federal Income Tax Exemption

As a service to United Methodist organizations, the General Council on Finance and Administration administers The United Methodist Church Group Federal Income Tax Exemption Ruling, which is contained in the ruling letter (“Group Ruling Letter”) issued by the Internal Revenue Service to the Council on October 16, 1974. GCFA applied for the Group Ruling under the authority provided by The Book of Discipline.A copy of the IRS 1974 letter is available by contacting GCFA.

What Does The Group Ruling Do?

The Group Ruling recognizes certain United Methodist organizations as exempt from payment of federal income tax under §501(c)(3) of the Internal Revenue Code.Organizations covered by the Group Ruling are not liable for taxes imposed under the Federal Unemployment Tax Act (FUTA). Covered organizations are not required to file Internal Revenue Service Form 990. However, if such organizations have received unrelated business income during the year, they must file Internal Revenue Service Form 990T. (Exempt Organization Business Income Return)

Beginning January 1, 1984, all employees of non-profit organizations are covered by social security.(Therefore, the language in the 1974 Group Ruling Letter exempting churches from social security is out of date and should not be followed.)This change is mandatory and there are no exceptions.

A copy of the Group Ruling Letter may be used as initial proof of the tax-exempt status of covered organizations.Persons or corporations making gifts to United Methodist churches and other covered organizations under the Group Ruling may request evidence that the recipient of the gift is a tax-exempt organization.A copy of the Group Ruling Letter may be furnished to such persons and a letter certifying inclusion from our office will be furnished upon request in such cases.Requests for such letters of certification should be sent to the attention of the GCFA Legal Department.The Group Ruling Letter also may be used in obtaining bulk mailing permits from the U.S. Postal Service.

What United Methodist Organizations Are Covered By The Group Ruling?

Organizations that are covered include local United Methodist churches and local United Methodist church agencies, commissions, committees, and officially affiliated organizations; annual conferences and divisions and departments; annual conference agencies, commissions, committees, their divisions and departments, and other related organizations; the Judicial Council and the General Conference. Covered organizations need take no further action to acquire exemption from federal income tax. Copies of the Group Ruling Letter may be furnished as evidence of the covered organization’s status.(Despite the 1974 issuance date, this remains in force and effect.)

Certain documents were filed by GCFA in its original application for the Group Ruling back in the early 1970s. These documents are updated annually and contain the names of the organizations that are automatically included within the Group Ruling. The principal listing documents are:

1.The most recent edition of The United Methodist Directory;

2.A computer printout, based on the information most nearly current as of the filing date, which lists the names and addresses of all charges and churches within the denomination and located in the United States;

3.A roster of organizations not included in the above categories that have been accepted upon application to GCFA for inclusion within the Group Ruling.

The following types of institutions and organizations are excluded from coverage within the Group Ruling:

1. Hospitals, nursing homes, other health-care facilities and children’s homes;

2.Universities, colleges and other educational institutions;

3.Non-denominational organizations headquartered in local churches, such as day-care centers, extended care facilities, and senior citizen organizations, where such organizations are not an integral part of the local church in which they are located;

4. Certain recreational facilities and summer camps.

5.Ecumenical groups, such as a community food pantry operated by local churches of different religious denominations.

How Does An Organization Not Already Included Apply For Inclusion Within The Group Ruling ?

Please forward any requests for inclusion within the Group Ruling to the General Council on Finance and Administration, 1200 Davis Street, Evanston, Illinois, 60201-4193, to the attention of the Legal Department.You may also fax requests to the Legal Department at 847-425-6568.Such questions should not be referred directly to the Internal Revenue Service, which has designated GCFA as the administrator of the Group Ruling.Each inquiry will be considered on its individual facts and circumstances. If it is clear that the organization in question qualifies to be tax-exempt as a religious organization under §501(c)(3) of the Internal Revenue Code, GCFA will then make the determination whether or not the organization also qualifies for inclusion within the Group Ruling.

Any affiliated United Methodist organization seeking to be added to the roster for inclusion within the Group Exemption Ruling (that is, a United Methodist organization that is not automatically covered) should submit to GCFA the following documents in support of its request.

1.A statement giving written authorization to GCFA to add the organization to the roster on file with the IRS;

2. A statement that the organization is not, in its opinion, a private foundation as defined in §509(a) of the Code;

3.A copy of the Articles of Incorporation of the organization, if any;

4. A copy of the bylaws of the organization, if any;

5. If there are no articles or bylaws, then similar “structure” documents, such as a mission statement, charter, standing rules, and/or explanation of structure;

6. A statement setting forth the source and nature of the funding of the organization;

7. The Employer Identification Number (EIN) of the organization.

GCFA carefully examines all these documents with a view to determine whether the organization qualifies for inclusion within the Group Exemption Ruling.

IMPORTANT: Organizations must have their own EIN. If your church or United Methodist organization does not have an EIN, you must obtain one from the Internal Revenue Service by filing Internal Revenue Service Form SS-4 with their Internal Revenue Service District Office. The EIN functions as a taxpayer identification number for organizations just as a social security number functions in a similar manner for individuals.This number is to be used when churches and other organizations pay employee withholding tax and social security taxes.Inclusion in the Group Ruling is not the same as, and does not take the place of, having an EIN. Every church organization must have its own EIN!

Organizations seeking to be added to the roster should be aware that the annual filing is made September 30 of each year, which is 90 days prior to the close of GCFA’s fiscal year, in accordance with the Internal Revenue Service’s requirements under the Group Ruling.All such requests for additions to the roster should be made in enough time for documents to be submitted and reviewed prior to the annual filing.

Organizations not qualifying for inclusion under the Group Ruling may, nevertheless, qualify for exemption on their own, via an individual tax ruling exemption. In such cases, the ruling is sought directly from the Internal Revenue
Service.

To Whom Should Questions And Requests On The Group Ruling Be Directed?

GCFA, as part of its connectional responsibilities, is proud to be able to protect the legal interests of the denomination by maintaining the Group Ruling Exemption.

Additional questions and requests for information should be directed to the General Council on Finance and Administration, 1200 Davis Street, Evanston, Illinois 60201-4193, to the attention of the Legal Department. You may call us at 847-425-6534 or fax us at 847-425-6568.Please do not refer questions concerning the denominational Group Federal Income Tax Exemption Ruling to any office of the Internal Revenue Service, which has been charged with administration of the Ruling by the Internal Revenue Service.

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