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Why The IRS Prosecutes Some Pastors and Not Others, Part 2
Should I be personally concerned? As you read yesterday's article, you may have had some alarming thoughts cross your mind. I have had conversations with many church treasurers and CFO's that describe the way money is handled, and at times I cringe. The IRS focused on Pastor's Jinwright and Clarke for prosecution. They could have just…
Read Full Article | CommentsWhy The IRS Prosecutes Some Pastors and Not Others
Pastor, Church and IRS In the last year, I have written about two pastors that have been prosecuted by the IRS. One pastor, Gregory Louis Clarke, was sentenced to 21 months in prison for assuming that the love offerings he received from his church were gifts to him. The other, pastor Anthony L. Jinwright, was convicted of fraud and tax evasion…
Read Full Article | CommentsHow a Church Debit Card Can Cause Trouble
The convenience of debit cards "It's convenient and much easier than writing a check," were the words one pastor said as he swiped his card at a Christian bookstore. He was buying research material for a sermon series he was doing on marriage and family. He purchased several books and one set of DVD teachings from a popular Christian speaker. …
Read Full Article | CommentsCan a Pastor be Guilty of Fraud for Selling His Own Sermons to a Publisher?
A conflict may exist between you and your church Many pastors are not aware that because of the United States Copyright Act, when a minister preaches a sermon, the sermon belongs to the church. There are two reasons why, as listed below. The United States Copyright Act vests ownership of a sermon with the church because it was created and…
Read Full Article | CommentsPastor's Actions Lands Wife in Jail
A period of discomfort A Charlotte, North Carolina Pastor was convicted of fraud and tax evasion charges because he failed to report reimbursements, seed offerings and his housing allowance as taxable income from 2002 to 2007. In 2001, it was brought to the church's attention that several items were out of compliance and in need of correction. …
Read Full Article | CommentsExcellence in Ministry . . . What is It?
I get the privilege of working with hundreds of churches and ministries every year. With that privilege comes the responsibility of looking into their books, records, policies, and procedures to analyze the good, the bad and the ugly. In my own estimation, the majority of churches fall into the bad and ugly when it comes to their IRS…
Read Full Article | CommentsCalled by God to Start a Church in Port St. Lucie, Florida . . . Now What?
How does one start? When Pastor Alvin heard from the Lord to start a church, he responded with a strong yes, but he wondered how it would be possible if both he and his wife had full time jobs. Where would the time come in order to launch the church? Where would they start? An even bigger question was, "How would they start?" After…
Read Full Article | CommentsEstablishing a Scholarship Fund for Graduating Seniors
Investing in the Lives of Young Adults In what significant way could your church impact the life of a young man or woman who is graduating from high school-a way that would help solidify the future he or she aspires to have? In 2002, our church in Florida began a scholarship program in order to do that very thing-to help some of the graduating seniors…
Read Full Article | CommentsWhen Your Vision Is Greater Than The Finances!
How Big Are Your Dreams? Sometimes, the vision of a pastor's heart is greater than what the church's finances can provide. A big vision is wonderful, yet when you add a lack of finances to the mix it can lead to a discouraged heart. If you ever become discouraged in this way, I challenge you to assess the condition of your heart! Scripture…
Read Full Article | CommentsThe Federal Government Wants to Give Your Church Money
A Law that may actually help your church It seems that all I have been writing about lately is bad news! For a change, there is some good news for churches and ministries! On March 18th, 2010 a law was passed that may make it the best time ever for the church to hire the pastor or another employee. The Hiring Incentives to Restore…
Read Full Article | CommentsA New IRS Law That Makes It Tougher on Churches
Every Church in America is required to issue and file 1099-Misc forms. The new changes to the way 1099 forms are issued will cause churches and ministries to come under intense and burdensome regulations. The 2010 Health Care Act under subsection 9006(b)(1) amended old rules and it now mandates all churches, ministries, non-profit organizations and…
Read Full Article | CommentsWhat Soccer Taught Me About the Business Side of Church
Getting your church in order may feel like learning something new. After all, you were called to be a minister not a bookkeeper. That may be true but part of being a minister is being an open letter (books). Your life (which consists of your church's books) needs to be beyond reproach. How can you preach a message of godliness…
Read Full Article | CommentsA Tale of Two Pastors, Part Two--Church Members and the IRS
Pastor Jones Church and Tom It was a beautiful spring day in mid April. The Easter Sunday service the day before marked the first time that Pastor Jones church had 175 people in attendance. On Monday, he walked into his office to see a note from Tom requesting a meeting with him. Pastor Jones was glad to see Tom's note. He and…
Read Full Article | CommentsNo Minutes? Then No Meeting!
Does Your Ministry Keep Minutes? I recently had a conversation with an administrator who had just joined the staff of his church. He mentioned that in the three months he had been there, he had found no trace of any board meeting records for the last decade. He asked what could happen if he could not find any minutes. My reply was…
Read Full Article | CommentsProtect Your Church or Ministry's Assets!
Every Year Thousands of Churches Lose Assets Unnecessarily! Starting a ministry is one thing, but managing a ministry is a completely different matter! It is my experience that many ministries have a much more difficult time managing their ministries than they do starting them. Don't you know that the call to preach is also the call to stewardship…
Read Full Article | CommentsWhat Tax Forms Does My Ministry Have to Prepare in January?
January is often times busier than December! January is the time of year that many leaders make an effort to keep a resolution of better managing their ministries. Though it be a noble resolution, January may be the most challenging month of the year to keep such goals. It is the month that the ministry must prepare and file tax and informational…
Read Full Article | CommentsBecome Ordained Before the Year Ends!
Do not let the Christmas season distract you from time sensitive tax issues! This time of year, pastors and leaders get caught up in the wonderful Christmas season and enjoy weeks of celebrations, plays and time with family. I personally love Christmas and make every effort to create precious memories with my wife and children. I love to…
Read Full Article | CommentsHow to Go on Salary at the Church or Ministry!
Why Receive a Salary? In my 18 years of ministry experience, I have come to the conclusion that churches and ministries that have pastors and leaders on full time salary are much more effective in their outreach than pastors who are working full time jobs in other places. The dilemma we run into when our pastors are working outside jobs is that…
Read Full Article | CommentsCommon Mistakes Made By Ministers that May Take their Churches Down!, Part 3!
A Three-Part Series on Common Mistakes Made by Ministers! Welcome to part three of our series titled "Common Mistakes Made By Ministers." Congress has tightened its grip on the legislation that governs the way nonprofits, including churches and ministries, handle their finances. This gives us good reason to understand the new rules and regulations…
Read Full Article | CommentsCommon Mistakes Made By Ministers, Part 2!
A Three-Part Series on Common Mistakes Made by Ministers! Last week I wrote on two common mistakes made by ministers. Most ministers fail to set up the housing allowance and self employment tax exemption correctly and in a timely manner. They believe that because they are not drawing a salary at the church, they do not need the allowance…
Read Full Article | CommentsCommon Mistakes Made By Ministers, Part 1!
I am not on salary at my church, should I still set up a housing allowance and opt out of self employment tax? This is the time of year when ministers begin to think about going on salary at the church. They wonder about setting up a housing allowance and opting out of self employment tax. When it comes to tax compliance, the most common mistake I…
Read Full Article | CommentsIRS Requires 30% Withholding on Love offerings to Foreign Guest Speakers!
Churches Must Withhold 30% on Love Offerings Paid to Foreign Guest Speakers! Most churches support missions and often times have foreign nationals speak at their church. Whether it be a missions conference or a special service, the love offering, or honorarium paid to the foreign guest speaker, is subject to a Non-Resident Alien withholding of…
Read Full Article | CommentsSpecial Tax Requirements for California Churches and Ministries!
The state of California has been increasing its tax compliance efforts in an attempt to raise tax revenues. Because of these increased efforts by the state, we urge churches in California to become educated about the specific tax rules and registrations that are unique to California. Below is a quick list. Franchise Tax: Every church or…
Read Full Article | CommentsIRS Loses Against Church!
Church In Minnesota Avoids an Audit ... At Least For Now! In February of 2009, the IRS suffered a setback in its ability to audit churches. That setback came as a result of two federal court rulings which prohibited the IRS from auditing a church in Minneapolis, Minnesota. In 2007, the IRS began an inquiry into the church's records. …
Read Full Article | Comments5 Things to Consider Before the Year Ends!
1. The $250.00 Dollar Rule for Tax Deductions Did you know that there are special rules issued in IRC 170 that specifically delegate how your church or ministry should treat donations that exceed $250.00 in value? One of the greatest blessings to your church are members who tithe and give offerings faithfully. Your church depends…
Read Full Article | CommentsCan Our Church Own a Business?
I recently received an email from one of our readers asking if their church could own a business. Someone wanted to donate a business to the church, but the reader didn't know if the church was even allowed to own and operate a business that would bring the church income. In short, the answer is yes. The church is allowed to own a business…
Read Full Article | CommentsWhy I Started a New Non Profit Organization (CDC)
Outreach! Last week's article, "The Biggest Part of Receiving a Blessing is Being Ready When it Comes!," received quite a response from our readers. Many of you wanted to know why we incorporated our outreach as a separate, nonprofit corporation. Simply put, our old ideas were not working. My wife and I had big dreams for our outreach ministry. We…
Read Full Article | CommentsLegislation that Makes it Mandatory for You Purchase Health Insurance
Yesterday, the House of Representatives agreed on a 1,000 page plan that completely overrides health care as we know it. The new Bill will force every American to buy health insurance. If insurance is not purchased, Americans will have to pay fines worth 2.5% of their income. Additionally, employers will be forced to provide health…
Read Full Article | CommentsGet Ready for an IRS Audit!
What are the chances of an IRS audit against my ministry? Good question! Historically, chances have been low...maybe too low. It is a well documented fact that more than 85% of churches have compliance issues. Issues that need resolution. Now that the post-denominational era has been well established, and the majority of church…
Read Full Article | CommentsThe Church Benevolence Program and the Law!
The Need for Benevolence! In the late 1990's I was pastor over a small church in South Florida. We were located in a small agricultural town; population 5,000. Most members of the church were of Mexican descent and many of them came from broken homes and had poor educations. Despite the adversity, our church did well. We had grown from 25 members…
Read Full Article | CommentsCompensation for past years!
Last week we briefly covered the issue of compensating pastors for previous, un-paid years of service, and that it is perfectly legal to do so. This stems from a court case involving a church who paid a pastor and his [missionary] son in lump sums for the years of work they performed for the church without pay. The church decided to sell its building…
Read Full Article | CommentsOur church has made a few mistakes. What can we do about them?
What to do about past mistakes! Many churches that we serve have made mistakes in the the past and are wondering what they can do to correct them. These errors range from years worth of unreported love offerings, to missing W-9's and 1099-Misc forms, to lost board meeting minutes. Some mistakes, like misplaced W-9's, can easiliy be fixed, while…
Read Full Article | CommentsChurch Loses Property Over Bake Sales!
Beth-El, an African-American church in the Chicago neighborhood of Englewood, purchased some property on 63rd Street in 1976. The church rehabilitated the property and established itself there. During the years that the church quietly enjoyed its existence on the property, the community improved and the church continued to grow. However, the county…
Read Full Article | CommentsAlabama Pastor Goes to Prison for Love Offerings!
A pastor in Alabama, Gregory Louis Clarke, was sentenced to 21 months in prison for assuming that the love offerings he received from his church were gifts to him. Over a period of several years he received many love offerings from the church for purposes such as car allowances, appreciation gifts and other offerings that he did not consider as normal…
Read Full Article | CommentsCan a Church Get in Trouble for Not Properly Handling Designated Offerings?
Often times, churches and ministries receive designated offerings for building campaigns, outreach programs or benevolence. You may be surprised to know that a large number of churches have trouble properly handling designated offerings. The main reason for this problem is that not many know what the proper procedure is for handling designated…
Read Full Article | CommentsWhat is Taxable Income for a Minister? Part 2
Yesterday you received part 1 of a series of emails titled "What is Taxable Income for a Minister?" Today we will discuss the benefits of income from book or sermon sales or the performance of weddings.Many ministers perform weddings, sell their sermons, books and other teachings in the church book store or as they travel and speak in other…
Read Full Article | CommentsWhat is Taxable Income for a Minister?
Many churches pay certain allowances as a benefit to their minister, such as a car allowance, light bills, water bills and much more. Under the law, most of these allowances are illegal and can result in fines and back taxes for the minister.When a church pays the minister allowances it does so thinking that it is allowed to pay for these items…
Read Full Article | CommentsCan Pastors Deduct Tithes as Business Expenses?
Pastors all across America work hard and are underpaid. Statistics show that the average pastor is severely underpaid; more than in any other profession. Many pastors have chosen not to opt out of having to pay social security taxes. Social security tax (otherwise known as self employment tax) is 15.3% of the pastor's income. This means that a pastor…
Read Full Article | CommentsThe IRS May Say That You Are On Salary At the Church, Even If You Believe You Are Not.
Because of the nature of our tax system, while most churches are focusing on outreach and other ministry functions of the church, many pastors and church treasurers fail to think about on taxes. Unfortunately, they miss the mark and often times under report the pastor's income.This happens because there are many pastors that are not on salary…
Read Full Article | CommentsEmbezzlement While Counting Tithes and Offerings!
Counting the church tithes and offerings is where most embezzlement of church occurs. Establishing a procedure of checks and balances is the only way to prevent it from happening. Regrettably, most pastors, though they think about it, never take the necessary measures to implement a procedure prevents this crime from happening. A church in Raleigh,…
Read Full Article | CommentsAll Ministers on Salary at Church Must Get a W-2 by January 31st
Should the Pastor Get a W-2 or 1099-Misc? Some churches give their pastors and other ministers a 1099-Misc each year for their taxes. This is not correct. A pastor must be given a W-2. Under the latest treasury regulations, a pastor is described as an employee for federal income tax purposes but as self employed for social security tax purposes. …
Read Full Article | CommentsCreating a W-2 is not an option!
Under the law, a church must issue a W-2 form to the pastor and any other employee of the church. A 1099-Misc is not the legal way to do it. Most churches do not issue a W-2 and instead give a 1099-misc to the pastor. This is not correct and greatly increases the chances of an audit of the pastor's tax return and also increases the chances of the church…
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