The former pastor of our church turned the church over to the present pastor about five years ago. With all of the financial debts, mortgage etc. involved, it has taken us almost five years to recover from paying debts incurred by the former pastor. The church now has a new name and is ready to file new articles of incorporation to start afresh and hopefully for 501(c)(3) status. Is the new church classified as a successor to the old?
It is admirable that you have paid off all of the debt incurred by the prior pastor. Many groups that wanted to start over might have let the old organization go defunct and might have attempted to avoid the old debt by starting a new organization and starting new operations at the time.
It isn’t clear why you want to file new articles of incorporation to start afresh. You can amend your articles to provide for your new name and any other governance changes without establishing a new entity. If you establish a new entity, someone will have to dissolve the old one and transfer the assets and programs to the new one. For purposes of a new Form 1023 application for recognition of exemption, you would definitely be a “successor” organization. The instructions say you are considered a successor if you have taken over substantially all of the assets and activities of another, have been converted or merged with another, or have the same officers and directors as the other. Sounds like you would meet at least two of those criteria. You would also likely be subject to successor liability for any outstanding obligations of the old organization under state law, so a new entity does not provide much protection or any clear benefit.
As a church, of course, you don’t have to file for recognition of 501(c)(3) exemption, although you may if you want the specific letter that the IRS will provide. If the old organization had a letter, you can get a new one for a name change without filing a full Form 1023. If you are going to start a new entity, you will need a full application as a successor if you want to get the letter of recognition.
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