According the Wall Street Journal, a "digital" or "virtual" church was denied church status on the grounds that it's congregation did not, well, congregate. Because there is no physical meeting space and in essence, no way to document congregants meeting for worship, the church-applicant failed the "association" test which essentially says that one of the core elements of church is people meeting face-to-face to do their religious thing.
As one nonprofit lawyer points out, there is a possible so-what to nonprofits from this ruling.
"....if the IRS doesn’t clarify its classifications, non-profits conducting board meetings electronically could run afoul of the agency. If my clients’ boards of directors can meet that way, is it much different than allowing a church congregation to congregate that way and hold a worship service?” he asked. “The IRS is going to have to address that sooner or later.”
I have to admit that I believe that nonprofit boards that meet in-person tend to pay better attention to their decisions in addition to having the opportunity to forge relationships which also contribute to better decision-making. At the same time, in-person meetings are not a guarantee that all in the room are fully participating.