In February 2013 The Church amended the papers of incorporation in the state of Nevada for its corporation sole. The International Community of Christ has two corporations, a church corporation that receives donations and operates Church functions, and a corporation sole that holds the property of the Church. The amended papers restate the purpose and simplify the incorporation document for the corporation sole. Churches must comply with state laws for corporations as well as federal IRS regulations for tax exempt status.
Like several other churches incorporated in Nevada, the International Community of Christ has a corporation sole to hold title to its property. Bishop Gene Savoy Jr. explains: The corporation sole is a holding corporation; that is, it holds property, specifically for a religious institution. In this case, the religious institution is The Church. Under IRS regulations, a corporation sole is a 501(c)(2) nonprofit entity while the church corporation is a 501(c)(3) entity. The Church corporation allows individuals and organizations to make charitable contributions to The Church and receive a tax deduction whereas the corporation sole, while not paying taxes on its income, cannot give tax deductions to contributors.
“The corporation sole is unique in that it literally is a corporation composed of one individual—in this case, the head of the Church. Many churches are organized this way. In Nevada, for instance, the Catholic, Episcopalian, and Mormon bishops are organized in this way.”
After 2011 no new corporations sole were allowed to incorporate in Nevada unless they were extensions of an already existing religion. This is important to note because the law regarding corporations sole was changed to avoid abuses perpetrated recently by individuals who set up such corporations as personal tax shelters. (See the Nevada Revised Statutes, NRS 84.0065.)
“The Nevada revised statute states the requirements of the corporation. The name can either be an individual’s name, the title of the individual, or both. The powers of the corporation are also spelled out. Because the corporation is perpetual, the phrase ‘and his/her successors’ must always be included in the name.”
The history of The Church’s corporation sole began in 1971, when The Church was incorporated as “Douglas Eugene Savoy, Trustee in Trust and Overseer of the International Community of Cosolargy for Advanced Studies in Religious Arts, Sciences and Technologies, and his successor, a corporation sole.” At that time it was the only corporation of the Church.
The articles of incorporation were amended several times: in 1973, 1974, and 1977. In 1977 after an IRS audit, the church corporation was formed and the corporation sole was changed from a 501(c)(3) to a 501(c)(2). The name of the corporation sole was changed to “Douglas Eugene Savoy, Trustee in Trust and Overseer of the International Community of Christ for Advancement in the Religious Arts, Sciences and Technologies of Cosolargy, and his successor, a corporation sole.”
Bishop Gene Savoy Jr. explains how, over the years, the name of the corporation has caused The Church problems. “Because corporations sole are rare, not very many people understand what a corporation sole is or how it functions, including people in governmental positions. Therefore, The Church quite literally has inadvertently been penalized in certain circumstances, such as our tax case with the county in the 1980s.
“Every time The Church has needed a loan from the bank, the corporation sole guarantees the loan. Bankers have more often than not been confused with the name, thinking that the corporation was a ‘trust’ because the word ‘trustee in trust’ appeared in the corporation’s name. In some cases, even members of the Church believed that the corporation was personal, which it is not.”
Because the name of the corporation sole was long, county records of property shortened it to “Douglas Eugene Savoy,” which created the impression that the property was held personally rather than by The Church. There was a provision in the documents which allowed the use of “International Community of Christ” for the corporation sole, so the name on the properties was changed in this way to reduce confusion; but the nature of the name continued to create confusion.
“In 2012, the corporation sole was reviewed by the IRS,” Bishop Savoy notes. “While all was found to be well within the corporation, the IRS requested that we clean up our documents—meaning that we restate our articles of incorporation into one document so that we don’t have all of the various ‘amendments.’ Over the years many amendments had been filed, and none of these amendments had been filed as replacements for the original articles. This left more that twenty pages to be examined to understand the nature of the corporation.”
In February 2013, Bishop Savoy called a meeting of the Sacred Oversee to update Oversee members on developments relating to the Church’s corporation sole and to review a revised version of the corporation sole articles of incorporation. At the meeting, Bishop Savoy explained that one year ago the Internal Revenue Service informed The Church that its corporation sole was no longer listed in the tax rolls as tax exempt and that the IRS would agree to return the Church’s corporation sole to tax exempt status retroactively if The Church revised the statement of purpose. Through the many amendments the original broad purpose written when this was the only corporation for the Church was still included in the documents. To qualify as a 501(c)(2) the corporation must have one sole purpose: the holding and managing of property.
Bishop Savoy produced copies of a rewriting of the incorporation papers for review by the Oversee members with amended title. The complicated twenty-some pages of documents had been simplified to two clear and concise pages. All members agreed to the new statement of articles as revised and the new title proposed for the corporation sole: The Head Overseer (Bishop) of the International Community of Christ, Church of the Second Advent, and his successors, a corporation sole.
“The changing of the name to a shorter one made the IRS very happy,” Bishop Savoy says. “So, it seems that all is well.” The new corporate documents were filed with the Nevada secretary of state on February 22, 2013; and on February 25, The Church received notice that the newly filed documents were accepted.
It should be noted that the amended articles of incorporation, which state the name, purpose, succession, and powers of the corporation sole, continue to state the relationship with the church corporation and its purpose to be for “the advancement of the religious arts, sciences and technologies of Cosolargy, and the establishment of the new apostolic ministry of the Second Advent.”
submitted by Rev. Canon Rebecca Willis
Department of Canon Law
