Church Business Administration Training Day 2

Legal and Tax Matters

Now before most of you tune this section out....don't!!! It wasn't a 'snoozer'!! It was enlightening, eye-opening, and affirming. As sick as it may sound, IT WAS A FUN DAY! Today's emphasis was tax matters pertaining to the church. It is CRUCIAL that our churches are compliant. It jeopardizes the Body as a whole when churches struggle with compliance when it comes to tax matters. Our speaker today was Rick Veit, Esq. He was awesome and his heart for doing ministry correctly was very evident. He comes from a family of pastors and knows the importance of handling the tax issues we face with integrity. He completely admits that most accounting firms are unfamiliar with compliance for churches and pastors. He lead us toward Richard Hammar's published works--Church & Clergy Tax Guide as well as his monthly periodical, Church Law & Tax Report. We discussed all the federal reporting requirements. Who can be considered a 'minister' in order to claim a housing allowance? Do they meet the majority of these requirements: Ordained/licensed, performs religious worship, administers the sacraments, manages responsibilities in the church, considered to be a religious leader. We discussed self-employed vs. employee. One interesting fact is that you are less likely for audit if you are an 'employee' rather than an outside contractor (self-employed). We defined income. Love gifts are income...Christmas gifts are income....retirement gifts are a 'fuzzy' area! Forgiven debts are income. Non-accountable reimbursements of business expenses are income. There needs to be an accountable plan established for the reimbursement of business expenses. We discussed at length the Housing and Parsonage allowances. The IDEAL clergy tax reporting arrangement would be: considered an employee, withholding of income tax as well as self-employment tax, accountable reimbursement plan for business expenses, housing allowance properly designated by a church board, and adequate retirement contributions. Rick would be an excellent resource to our churches. He would gladly come and teach to any seminary the proper management of church tax and legal requirements.