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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 | CommentsYou Have What it Takes to Make It
Three signs of good, healthy loneliness Chances are, if you have pastored a church for at least one year or more, you have struggled with feelings of loneliness and inadequacy. If so, then you are doing things right, because leadership requires walking alone for seasons at a time. It may be that after last Sunday's service you felt like…
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 | CommentsWhy Many Pastors Quit The Ministry on July 5th
For many pastors the Monday after July 4th is a very depressing day. That is the day when countless pastors feel the most abandoned by God and by the congregation. Though the reasoning is not clear, it seems that we pastors, from the day we say "Yes" to God's call, associate His blessing on our life with the size of the crowd and the…
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 | 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 Four--Served With Papers.
This story is a continuation of part three...three months later Pastor Jones* had always done his best to be a good steward of the ministry entrusted to him, and though his efforts were imperfect, they were wholehearted and had resulted in ministry growth. The church was now at 325 members, and to Pastor Jones' relief, he had not heard anything more…
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 | CommentsA Tale of Two Pastors, Part One--Minister's Taxes
Please join me as I take a few moments to share with you the tale of two men who pastored churches in different states. Though they lived almost 1,000 miles apart, they had very similar circumstances. If it was not for the one thing that distinguished their ministries, one would think they were one and the same person. Pastor Smith Let…
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 | CommentsPastors Do Not Own Their Own Sermons!
Most Pastors Are Unaware That They Do Not Own Their Sermons! Many pastors have their sermons recorded on Sundays. They are normally saved in church archives and later used to create sermon series that the pastor sells when he travels. However, they are not aware that it is very likely that the pastor does not own these sermons, nor does…
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 | CommentsEcclesiastical Authority of the Pastor!
Protecting Your Ministry is of Absolute Importance! A few days ago I had a conversation with a pastor who was ousted from his own church by the church membership because they did not like the way he was running the church. After 19 years of ministry experience, I have come to learn that when church government empowers the members to vote in and…
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 | 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 | CommentsThe Biggest Part of Receiving a Blessing is Being Ready When it Comes!
An Outreach to Our City In 1999, my wife and I were traveling home to South Florida from a trip to Tampa. During our three hour ride home we were brainstorming outreach ideas that would help increase our church's presence in the community. We were determined to do something much bigger than ourselves. We wanted to do something that…
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 | 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 | CommentsProtect the Pastor's Spouse!
What if something happens to the pastor? Not long ago, I had a conversation with a pastor on salary at a church. He explained how he had recently begun thinking about his wife who has been serving faithfully at the church with him for over 20 years, but without any salary. What began as a passing thought grew into a real concern: if something ever…
Read Full Article | CommentsA Lesson on the Housing Allowance! Part 2
Setting up the Housing Allowance After reading part 1 of this series you may feel a little lost. Although Congress made changes to the Housing Allowance which made it more complicated, it was forced to make these decisions because of a court case that was taking place in the Ninth Circuit Federal Court of Appeals in California. This case was an appeal…
Read Full Article | CommentsHow to Decrease the Chance of a Personal Lawsuit Against the Pastor and Board!
We are living in a time and era when lawsuits against churches have increased over 2,000 percent since 1992. Litigating attorneys have found it convenient to sue churches because most churches operate under a great deal of trust. We all know that the times have changed, and it is prudent to make changes in our church operating procedures…
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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