the church and i.r.s. presented by rev. dr. robert l. peoples winston salem greenville district...

The Church And The Church And I.R.SI.R.S..

Presented by Rev. Dr. Robert L. Peoples

WINSTON SALEM GREENVILLE DISTRICTCLEVELAND STATE UNIVERSITYSHELBYVILLE NORTH CAROLINA

CHRISTIAN METHODIST EPISCOPAL CHURCH, INCPRESIDING ELDER DR. JAMES RUSSELL

BISHOP THOMAS HOYT JR.

IntroductionIntroduction

In view of the In view of the unique unique relationship between relationship between the United States Government and the the United States Government and the religious community, Congress has religious community, Congress has provided special tax rules to certain provided special tax rules to certain religious groupsreligious groups

DefinitionsDefinitions

The words “church” and “minister” are not used by all The words “church” and “minister” are not used by all faiths. To make this presentation understandable, faiths. To make this presentation understandable, the terms “Church” and “minister” are used.the terms “Church” and “minister” are used.

The rules contained in this publication come from the The rules contained in this publication come from the Internal Revenue Code, the Income Tax Internal Revenue Code, the Income Tax Regulations, court decisions, and the IRS Regulations, court decisions, and the IRS interpretation of the Code, regulations, and court interpretation of the Code, regulations, and court decisions.decisions.

Section 501 (c) (3) Section 501 (c) (3) This section of the Internal Revenue Code This section of the Internal Revenue Code

describes charitable organizations, describes charitable organizations, including churches and other religious including churches and other religious organizations that qualify for exemption organizations that qualify for exemption from federal income tax and are eligible from federal income tax and are eligible to receive tax-deductible contributions.to receive tax-deductible contributions.

Section 501 (c) (3) Section 501 (c) (3)

Section 501 (c) (3) provides that an Section 501 (c) (3) provides that an organization must be organized and organization must be organized and operated exclusively for religious or other operated exclusively for religious or other charitable purposes.charitable purposes.

Section 501 (c) (3) Organization: This term Section 501 (c) (3) Organization: This term refers to any organization, including a refers to any organization, including a church or other religious organization, that is church or other religious organization, that is tax exempt because it meets the tax exempt because it meets the requirements of 501(c ) (3).requirements of 501(c ) (3).

MinisterMinister

A minister is an individual who is duly A minister is an individual who is duly ordained, commissioned, or licensed by a ordained, commissioned, or licensed by a religious body constituting a church or religious body constituting a church or church denomination. church denomination.

A minister is considered to be a religious A minister is considered to be a religious leader by his or her church or denomination.leader by his or her church or denomination.

MinisterMinister

A minister has the authority to conduct A minister has the authority to conduct religious worship, perform sacerdotal, religious worship, perform sacerdotal, functions, and administer ordinances or functions, and administer ordinances or sacraments according to the prescribed sacraments according to the prescribed tenets and practices of that church or tenets and practices of that church or denomination. denomination.

Generally, Generally, an individual who is a minister of an individual who is a minister of music or educationmusic or education is not considered to be a is not considered to be a minister for federal tax purposes.minister for federal tax purposes.

Integrated Auxiliary Of A Integrated Auxiliary Of A

ChurchChurch

Refers to a class of organizations that are related to a Refers to a class of organizations that are related to a church or convention or association of churches but church or convention or association of churches but are not such organizations themselves. are not such organizations themselves.

The IRS will treat as an integrated auxiliary of a The IRS will treat as an integrated auxiliary of a church any organization that meets two tests: 1) church any organization that meets two tests: 1) affiliation with a church or convention or association affiliation with a church or convention or association of churches, and 2) financial support primarily from of churches, and 2) financial support primarily from internal church sources as opposed to public or internal church sources as opposed to public or governmental sources.governmental sources.

ChurchChurch

The term "church" is not specifically defined in the The term "church" is not specifically defined in the Internal Revenue Code.Internal Revenue Code.

However, because special tax rules apply to churches, However, because special tax rules apply to churches, it is important to distinguish churches from other it is important to distinguish churches from other religious organizations.religious organizations.

Certain characteristics are generally attributed to Certain characteristics are generally attributed to churches. These attributes have been developed churches. These attributes have been developed by IRS and by court decision. They include:by IRS and by court decision. They include:

ChurchChurch

a)a)A distinct legal existenceA distinct legal existence

b)b)A recognized creed and form of worshipA recognized creed and form of worship

c)c) A definite and distinct ecclesiastical A definite and distinct ecclesiastical governmentgovernment

d)d)A formal code of doctrine and disciplineA formal code of doctrine and discipline

e)e)A distinct religious historyA distinct religious history

f)f) A membership not associated with any other A membership not associated with any other church or denominationchurch or denomination

ChurchChurch

gg)) An organization of ordained ministersAn organization of ordained ministers

h)h) Ordained ministers selected after completing Ordained ministers selected after completing prescribed courses of studyprescribed courses of study

I)I) A literature of its ownA literature of its own

j)j) Established places of worshipEstablished places of worship

k)k) Regular congregationsRegular congregations

1)1) Regular religious servicesRegular religious services

m)m) "Sunday schools" for the religious instruction "Sunday schools" for the religious instruction of the youngof the young

n)n) Schools for the preparation of its ministersSchools for the preparation of its ministers

Recognition By The IRS Recognition By The IRS That The Church Is Tax-That The Church Is Tax-Exempt Exempt

Does a church have to contact the Internal Does a church have to contact the Internal Revenue Service in order to be exempt from Revenue Service in order to be exempt from income taxes? income taxes? NoNo

Is there any reason why a church would Is there any reason why a church would contact the IRS for formal recognition of the contact the IRS for formal recognition of the church as tax-exempt? church as tax-exempt? YesYes


What if the church has a parent that is tax-exempt? A What if the church has a parent that is tax-exempt? A church or other organization may wish to contact the church or other organization may wish to contact the parent to see if the parent has a “group exemption parent to see if the parent has a “group exemption letter.” letter.”

Does a religious organization other than a church have Does a religious organization other than a church have to apply for recognition that it is tax-exempt? to apply for recognition that it is tax-exempt? YesYes


What notice does The service provide when it has found What notice does The service provide when it has found an organization to be tax-exempt? Organizations that an organization to be tax-exempt? Organizations that file Form 1023 and satisfy all requirements of section file Form 1023 and satisfy all requirements of section 501(c)(3) will be notified in writing of their status, any 501(c)(3) will be notified in writing of their status, any requirement to file an annual information return (see requirement to file an annual information return (see below), and of eligibility to receive deductible. below), and of eligibility to receive deductible. contributions. contributions.


Generally, a letter from the IRS is the only evidence Generally, a letter from the IRS is the only evidence provided to the organization as to the organizations provided to the organization as to the organizations exempt status. exempt status.

Is there A cost To An organization that applies For Is there A cost To An organization that applies For exemption? exemption? Yes.Yes. The IRS is required to collect a fee The IRS is required to collect a fee from any organization seeking a determination of its from any organization seeking a determination of its tax-exempt status under the Internal Revenue Code.tax-exempt status under the Internal Revenue Code.

Restrictions That Apply If A Restrictions That Apply If A Church Is Church Is To Remain Tax-Exempt Under To Remain Tax-Exempt Under

Section 501 (c) (3) Section 501 (c) (3) All organizations that are exempt under Section 501 (c)All organizations that are exempt under Section 501 (c)

(3), including churches, must be engaged in activities (3), including churches, must be engaged in activities that further exclusively public purposes, rather than that further exclusively public purposes, rather than private interests. private interests.

The organization must not be operated for the benefit of The organization must not be operated for the benefit of designated individuals or the persons who created designated individuals or the persons who created them. them.


Section 501 (c) (3) Section 501 (c) (3) What is prohibited inurement?What is prohibited inurement?

What is prohibited private benefit? What is prohibited private benefit?

What are the restrictions on legislative activity What are the restrictions on legislative activity that may be engaged in by churches?that may be engaged in by churches?


Section 501 (c) (3) Section 501 (c) (3) What constitutes “attempting to influence What constitutes “attempting to influence

legislation”?legislation”?

What constitutes “legislation”?What constitutes “legislation”?

May a church use other than the May a church use other than the “substantial part” test?“substantial part” test?


Section 501 (c) (3) Section 501 (c) (3) What are the consequences that result from What are the consequences that result from

excessive legislative activity? An organization excessive legislative activity? An organization that continues to lobby on an excessive basis that continues to lobby on an excessive basis may lose its tax exemption under section 501 may lose its tax exemption under section 501 c (3). c (3).


Section 501 (c) (3) Section 501 (c) (3) If an organization loses its status as a tax-If an organization loses its status as a tax-

exempt charitable organization because it exempt charitable organization because it engages in excessive legislative activity, it engages in excessive legislative activity, it may not thereafter qualify for exemption as a may not thereafter qualify for exemption as a social welfare organization under section social welfare organization under section 501(c)(4).501(c)(4).


Section 501 (c) (3) Section 501 (c) (3) What are the Restrictions on Political Activity that may be engaged What are the Restrictions on Political Activity that may be engaged

in by Churches?in by Churches?

All section 501(c)(3) organizations, including churches, their All section 501(c)(3) organizations, including churches, their integrated auxiliaries, conventions or associations of churches, integrated auxiliaries, conventions or associations of churches, are prohibitedare prohibited from participating in, or intervening in (including from participating in, or intervening in (including the publication or distribution of statements), any political the publication or distribution of statements), any political campaign on behalf of (or in opposition to) any candidate for campaign on behalf of (or in opposition to) any candidate for public office. public office. Violation of this prohibition results in denial or Violation of this prohibition results in denial or revocation of exempt status and the imposition of certain excise revocation of exempt status and the imposition of certain excise taxestaxes..


Section 501 (c) (3) Section 501 (c) (3) What constitutes prohibited political activity?What constitutes prohibited political activity?

Whether a particular activity, action, or expenditure Whether a particular activity, action, or expenditure constitutes the conduct of prohibited political activity constitutes the conduct of prohibited political activity depends on all the facts and circumstances. For depends on all the facts and circumstances. For example, certain voter education activities (including example, certain voter education activities (including the presentation of public forums and the publication the presentation of public forums and the publication of voter. education guides) conducted in a non-of voter. education guides) conducted in a non-partisan manner may not constitute prohibited partisan manner may not constitute prohibited political activity, while other so-called voter education political activity, while other so-called voter education activities may. activities may.



Contributions to political campaign funds, public Contributions to political campaign funds, public statements of position (verbal and written) in statements of position (verbal and written) in favor of or in opposition to candidates for favor of or in opposition to candidates for office, or provision of a forum for expression office, or provision of a forum for expression of candidates' views on a partisan basis, of candidates' views on a partisan basis, however, would clearly violate the prohibition however, would clearly violate the prohibition against political activity.against political activity.



Ministers and others who commonly speak or Ministers and others who commonly speak or write on behalf of religious organizations write on behalf of religious organizations should clearly indicate, at the time they do should clearly indicate, at the time they do so, that public comments made by them in so, that public comments made by them in connection with political campaigns are connection with political campaigns are strictly personal and are not intended to strictly personal and are not intended to represent their organization. represent their organization.



Partisan comments by the employees or other Partisan comments by the employees or other representatives of an organization regarding representatives of an organization regarding political candidates must be avoided in political candidates must be avoided in official organization publications and at official organization publications and at official church functions.official church functions.

Excise TaxExcise Tax An initial tax is imposed on the organization at the rate An initial tax is imposed on the organization at the rate

of 10% of the political expenditures. Also, a tax at of 10% of the political expenditures. Also, a tax at the rate of 2.5% of the expenditures is imposed the rate of 2.5% of the expenditures is imposed against the organization's managers (jointly and against the organization's managers (jointly and severally) who, without reasonable cause, agreed severally) who, without reasonable cause, agreed to the expenditures knowing they were political to the expenditures knowing they were political expenditures. expenditures.

The tax on management may not exceed $5,000.The tax on management may not exceed $5,000.

Excise TaxExcise Tax In any case in which an initial tax is imposed against In any case in which an initial tax is imposed against

an organization, and the expenditures are not an organization, and the expenditures are not corrected within the period allowed by law, an corrected within the period allowed by law, an additional tax equal to 100% of the expenditures is additional tax equal to 100% of the expenditures is imposed against the organization.imposed against the organization.

In that case, an additional tax is also imposed against In that case, an additional tax is also imposed against the organization's managers jointly and severally) the organization's managers jointly and severally) who refused to agree to make the correction. who refused to agree to make the correction.

CorrectionCorrection Correction of a political expenditure requires the recovery of the Correction of a political expenditure requires the recovery of the

expenditure, to the extent possible, and establishment of expenditure, to the extent possible, and establishment of safeguards to prevent future political expenditures.safeguards to prevent future political expenditures.

Possible InjunctionPossible Injunction:: Where a section 501(c)(3) organization has Where a section 501(c)(3) organization has flagrantly participated in a political campaign, the IRS may go to flagrantly participated in a political campaign, the IRS may go to court for an injunction to prevent further abuse and to ensure court for an injunction to prevent further abuse and to ensure that the organization's funds are preserved for charitable that the organization's funds are preserved for charitable purposes.purposes.

In that case, an additional tax is also imposed against the In that case, an additional tax is also imposed against the organization's managers jointly and severally) who refused to organization's managers jointly and severally) who refused to agree to make the correction. agree to make the correction.

Is A Church Subject To Tax On Any Is A Church Subject To Tax On Any Income From An Activity Unrelated Income From An Activity Unrelated To Its Exempt Purposes That To Its Exempt Purposes That Constitutes A Trade Or Business?Constitutes A Trade Or Business?

Yes. Churches, like other tax-exempt organizations, Yes. Churches, like other tax-exempt organizations,

may engage in income producing activities unrelated may engage in income producing activities unrelated to their tax-exempt purposes. However, the net to their tax-exempt purposes. However, the net income from such activities may be subject to income from such activities may be subject to unrelated business income tax.unrelated business income tax.

Is A Church Subject To Tax On Any Is A Church Subject To Tax On Any Income From An Activity Unrelated Income From An Activity Unrelated To Its Exempt Purposes That To Its Exempt Purposes That Constitutes A Trade Or BusinessConstitutes A Trade Or Business

When is Income Subject To the Unrelated Business Income Tax?When is Income Subject To the Unrelated Business Income Tax?

What Are Some Exceptions to the Taxation of Unrelated Trade or Business IncomeWhat Are Some Exceptions to the Taxation of Unrelated Trade or Business Income

Examples of Unrelated Trades or BusinessesExamples of Unrelated Trades or Businesses

Special Rules Regarding Special Rules Regarding

AuditsAudits Special restrictions placed on the internal revenue Special restrictions placed on the internal revenue

service when it examines A churchservice when it examines A church

What organizations are covered under these special What organizations are covered under these special rules?rules?

Do the restrictions apply to all IRS inquiries to a church?Do the restrictions apply to all IRS inquiries to a church?

Must a Church maintain books and records?Must a Church maintain books and records?

Special Rules Applicable To Special Rules Applicable To

Compensation Of ClergyCompensation Of Clergy What rules apply to a Parsonage or Rental Allowance?What rules apply to a Parsonage or Rental Allowance?

Are there limitations on the amount that is deductible by a Are there limitations on the amount that is deductible by a minister as to expenses allocable to tax free income? Yesminister as to expenses allocable to tax free income? Yes

Does the Parsonage allowance apply to home ownership? Does the Parsonage allowance apply to home ownership? YesYes

How do you get further information? See Publications 517 and How do you get further information? See Publications 517 and 525525

Special Rules Applicable To Special Rules Applicable To

Compensation Of ClergyCompensation Of Clergy

What is the treatment of reimbursement payments to What is the treatment of reimbursement payments to ministers and other church employees?ministers and other church employees?

What is an accountable plan?What is an accountable plan?

How are automobile expense reimbursements treated?How are automobile expense reimbursements treated?

Church Responsibilities For Church Responsibilities For

Employment TaxesEmployment Taxes

Are churches liable for employment taxes?Are churches liable for employment taxes?

When are churches and other religious organizations When are churches and other religious organizations not liable for Social Security and Medicare taxes?not liable for Social Security and Medicare taxes?

How do you determine whether a worker is an How do you determine whether a worker is an employee?employee?

Church Responsibilities For Church Responsibilities For

Employment TaxesEmployment Taxes

What is the treatment of compensation paid to What is the treatment of compensation paid to ministers for purposes of employment tax ministers for purposes of employment tax and income tax withholding?and income tax withholding?

For additional information: See Publications For additional information: See Publications 334, 939, and 517.334, 939, and 517.

FundRaising RulesFundRaising Rules

Are there special rule relating to fundraising and Are there special rule relating to fundraising and charitable contributions? charitable contributions? YesYes

What are the new substantiation rules?What are the new substantiation rules?

What are “Quid Pro Quo contributions” and what new What are “Quid Pro Quo contributions” and what new rules apply to such transactions?rules apply to such transactions?

Filing RequirementsFiling Requirements

Does a church have to file an annual income Does a church have to file an annual income tax return with the IRS? tax return with the IRS? NoNo

Does a religious organization other than a Does a religious organization other than a church have to file an annual income tax church have to file an annual income tax return with the IRS?return with the IRS?

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Key PointKey PointThe new regulation does not relieve churches of the duty of noting; on The new regulation does not relieve churches of the duty of noting; on receipt that no goods or services were provided to donors who make on receipt that no goods or services were provided to donors who make on or more individual contribution of at least $250.or more individual contribution of at least $250.

If a charity provides a donor with no goods or services in connection with If a charity provides a donor with no goods or services in connection with a contribution of $250 or more, the charity’s receipt must still say so. The a contribution of $250 or more, the charity’s receipt must still say so. The new regulations simply permits charities to use this same rule when they new regulations simply permits charities to use this same rule when they provide such donors with goods or services of insubstantial.provide such donors with goods or services of insubstantial.

A charity provides only intangible religious benefits. What if a religious A charity provides only intangible religious benefits. What if a religious charity only provides intangible religious benefits in connection with a charity only provides intangible religious benefits in connection with a charitable contribution? Must the receipt say so? According to Mr. charitable contribution? Must the receipt say so? According to Mr. Rutstine, the answer is yes. Once again, the sole purpose of the new Rutstine, the answer is yes. Once again, the sole purpose of the new regulation was to permit charities that provide goods or services of regulation was to permit charities that provide goods or services of insubstantial value in connection with a contribution of $250 or more, to insubstantial value in connection with a contribution of $250 or more, to say on the receipt issued to the donor that no goods or services were say on the receipt issued to the donor that no goods or services were provided. The regulation had no effect on the requirement that is a church provided. The regulation had no effect on the requirement that is a church provides “intangible religious benefits” in connection with a contribution of provides “intangible religious benefits” in connection with a contribution of $250 or more its receipt must say so.$250 or more its receipt must say so.

FUNDS ACCOUNTABILITYFUNDS ACCOUNTABILITYThe procedure for validating or authenticating all funds received on behalf of the church that will The procedure for validating or authenticating all funds received on behalf of the church that will meet Internal Revenue Services regulations are as follows: (This information is for those who meet Internal Revenue Services regulations are as follows: (This information is for those who handle the church finances- re: Stewards of Finance Committee count the money)handle the church finances- re: Stewards of Finance Committee count the money)

1. Have a sign in roster which includes the names of those who are to count the 1. Have a sign in roster which includes the names of those who are to count the Funds and a place for them to initial.Funds and a place for them to initial.2. Have these persons use red pens to circle or note the date and the amount of 2. Have these persons use red pens to circle or note the date and the amount of The donation on each envelope before opening.The donation on each envelope before opening.3. Upon opening the envelope, write in red ink whether it is cash or check and if 3. Upon opening the envelope, write in red ink whether it is cash or check and if It is a check verifies the check number.It is a check verifies the check number.4. If there is an error on the envelope notate the correct amount that is in the in 4. If there is an error on the envelope notate the correct amount that is in the in Red and initial a second time or have a second person to initial.Red and initial a second time or have a second person to initial.5. Provide by mail a receipt of all contributions that are $250.00 or greater.5. Provide by mail a receipt of all contributions that are $250.00 or greater.6. Be sure that treasurer receipt the stewards or finance committee for the 6. Be sure that treasurer receipt the stewards or finance committee for the Money.Money.((The treasurer should not count the funds but simply deposit and let the receipt from the bank The treasurer should not count the funds but simply deposit and let the receipt from the bank determine if there are any errors. This will keep the check and balance system in line and when determine if there are any errors. This will keep the check and balance system in line and when the treasurer and recording steward meet to reconcile the bank statement as per the discipline, the treasurer and recording steward meet to reconcile the bank statement as per the discipline, it will create a stronger check and balance.)it will create a stronger check and balance.)7. Be sure to bind all envelopes. Make envelopes for any persons who put in 7. Be sure to bind all envelopes. Make envelopes for any persons who put in Checks without envelopes. Signify the envelope with a red initial. For all looseChecks without envelopes. Signify the envelope with a red initial. For all loose Monies make one envelope and call it Mr. or Ms. Miscellaneous use the sameMonies make one envelope and call it Mr. or Ms. Miscellaneous use the same Name for every time you count fund and there are loose donation, which Name for every time you count fund and there are loose donation, which Cannot be attributed to any one person.Cannot be attributed to any one person.8. At the close of the fiscal year, distribute year-end receipts to church members 8. At the close of the fiscal year, distribute year-end receipts to church members (And other donors) so they may validate their contributions.(And other donors) so they may validate their contributions.

Contribution FormsContribution FormsEach member should receive a contribution form. It is believed that the best form Each member should receive a contribution form. It is believed that the best form is a small card that has the basic information preprinted on it and can be typed or is a small card that has the basic information preprinted on it and can be typed or hand written for each taxpayer. It requires three signatures: the Recording hand written for each taxpayer. It requires three signatures: the Recording Steward (Financial secretary), treasurer and pastor. The pastor must sign as the Steward (Financial secretary), treasurer and pastor. The pastor must sign as the Chief Executive Officer of the local church.Chief Executive Officer of the local church.

Forms should be in the members’ hands by January 20Forms should be in the members’ hands by January 20thth of each year, since this is of each year, since this is the beginning of the tax-filing year. The ledger or computer printout should show the beginning of the tax-filing year. The ledger or computer printout should show their contributions as received; however the form will sum-up the amounts by their contributions as received; however the form will sum-up the amounts by category. (A copy of these forms will be shown at the end of this book.)category. (A copy of these forms will be shown at the end of this book.)

Is a church subject to tax on any income form an activity that is unrelated to its Is a church subject to tax on any income form an activity that is unrelated to its exempt purposes and that constitutes a trade or business?exempt purposes and that constitutes a trade or business?

Yes, churches, like other tax-exempt organizations, may engage in income Yes, churches, like other tax-exempt organizations, may engage in income producing activities unrelated to their tax-exempt purposes. However, the net producing activities unrelated to their tax-exempt purposes. However, the net income from such activities may be subject to unrelated business income tax. If a income from such activities may be subject to unrelated business income tax. If a church or other exempt organization has gross receipts of $1,000 or more from the church or other exempt organization has gross receipts of $1,000 or more from the conduct of any unrelated trade or business, it is required to file Form 990-T, conduct of any unrelated trade or business, it is required to file Form 990-T, Exempt Organization Business Income Tax Return. The Form 99-T is due on the Exempt Organization Business Income Tax Return. The Form 99-T is due on the 1515thth of the fifth month following the end of the church’s tax year. of the fifth month following the end of the church’s tax year.

““Quid pro quo”Quid pro quo”

““A quid pro quo contribution is a payment made A quid pro quo contribution is a payment made to a charity by a donor as a contribution to a charity by a donor as a contribution and/or for goods or services provided to the and/or for goods or services provided to the donor by the charity.” donor by the charity.”

41

StatementsStatements “ “Quid pro quo” donations must be accompanied by a Quid pro quo” donations must be accompanied by a

disclosure statement. disclosure statement. “A quid pro quo contribution is a “A quid pro quo contribution is a payment made to a charity by a donor as a contribution payment made to a charity by a donor as a contribution and/or for goods or services provided to the donor by the and/or for goods or services provided to the donor by the charity.” charity.” The charitable organization must provide a The charitable organization must provide a written disclosure statement to donors of a quid pro quo written disclosure statement to donors of a quid pro quo contribution in excess of $75. For example, if a donor contribution in excess of $75. For example, if a donor gives a charity $100 and receives a ticket to go on a bus gives a charity $100 and receives a ticket to go on a bus trip which is valued at $40, the donor has made a quid pro trip which is valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable quo contribution. In this example, the charitable contribution portion of the payment is $60. Even though contribution portion of the payment is $60. Even though the part of the payment available for deduction does not the part of the payment available for deduction does not exceed $75, a disclosure statement must be filed because exceed $75, a disclosure statement must be filed because the donor's payment (quid pro quo contribution) exceeds the donor's payment (quid pro quo contribution) exceeds $75 The required written disclosure statement must:$75 The required written disclosure statement must:

1. Inform the donor that the amount of the contribution that is deductible for

Federal income tax purposes are limited to the excess of any money (and the

value of any property other than money) contributed by the donor over the

value of goods or services provided by the charity, and

2. Provide the donor with a good faith estimate of the value of the goods or

services that the donor received.

Statements

The church as all other charities must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. This means that if the tickets you are selling furnished the disclosures so that the tickets provide the necessary disclosure information or statement in connection with a particular solicitation, it is not necessary for the organization to provide another statement when the associated contribution is actually received.

Statements Continued

Filing RequirementsFiling RequirementsNo statement required when:No statement required when: 1. The goods or services given to a donor meet the standards 1. The goods or services given to a donor meet the standards

for insubstantial value set out in Rev. Proc. 90-12, 1990-1 for insubstantial value set out in Rev. Proc. 90-12, 1990-1 C.B. 471, and Rev. Proc. 92-49, 1992-1 C.B.987 (as updated);C.B. 471, and Rev. Proc. 92-49, 1992-1 C.B.987 (as updated);

2. There is no donation element involved in a particular 2. There is no donation element involved in a particular transaction with a charity when one purchases an item from transaction with a charity when one purchases an item from the church (for example, there is generally no donation the church (for example, there is generally no donation element involved when a member purchases a tape after element involved when a member purchases a tape after Sunday morning worship); orSunday morning worship); or

3. There is only an intangible religious benefit provided to the 3. There is only an intangible religious benefit provided to the donor. The intangible religious benefit must be provided to the donor. The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a purposes, and must be of a type that generally is not sold in a commercial transaction. Outside the Donation Context.commercial transaction. Outside the Donation Context.

Filing Requirements Filing Requirements

A penalty is imposed on a charity (including churches) that A penalty is imposed on a charity (including churches) that does not make the required disclosure in connection with a does not make the required disclosure in connection with a quid pro quo contribution of more than $75. The penalty is $10 quid pro quo contribution of more than $75. The penalty is $10 per contribution, not to exceed $5,000 per fund-raising event per contribution, not to exceed $5,000 per fund-raising event or mailing. The charity can avoid the penalty if it can show that or mailing. The charity can avoid the penalty if it can show that the failure was due to reasonable cause. Under a new record the failure was due to reasonable cause. Under a new record keeping rule effective for all cash, check, electronic funds keeping rule effective for all cash, check, electronic funds transfers, credit card charges, or other monetary contributions transfers, credit card charges, or other monetary contributions of any amount made in taxable years beginning after August of any amount made in taxable years beginning after August 17, 2006, the donor must obtain and keep a bank record or a 17, 2006, the donor must obtain and keep a bank record or a written communication as a record of the contribution. Written written communication as a record of the contribution. Written records prepared by the donor (such as check registers or records prepared by the donor (such as check registers or personal notations) are no longer sufficient to support personal notations) are no longer sufficient to support charitable contributions. charitable contributions.

Bank records for this record-keeping requirement include Bank records for this record-keeping requirement include bank or credit union statements, canceled checks, or credit bank or credit union statements, canceled checks, or credit card statements. They must show the date paid or posted, the card statements. They must show the date paid or posted, the name of the charity, and the amount of the payment. name of the charity, and the amount of the payment. Taxpayers who claim charitable contributions made by payroll Taxpayers who claim charitable contributions made by payroll deduction can satisfy the record keeping requirement if the deduction can satisfy the record keeping requirement if the donor has :(1) a pay stub, W-2, or other document furnished donor has :(1) a pay stub, W-2, or other document furnished by the employer that states the amount withheld for payment by the employer that states the amount withheld for payment to charity, or (2) a pledge card or other document prepared by to charity, or (2) a pledge card or other document prepared by or at the direction of the charity that shows the name of a or at the direction of the charity that shows the name of a giver. An organization described in section 170(c) of the giver. An organization described in section 170(c) of the Principal Combined Fund Organization for purposes of the Principal Combined Fund Organization for purposes of the Combined Federal Campaign, will be treated as a donating Combined Federal Campaign, will be treated as a donating organization for purposes of the new record keeping organization for purposes of the new record keeping provision.provision.

Filing Requirements Filing Requirements

Filing RequirementsFiling Requirements The procedure for validating or authenticating all funds received on The procedure for validating or authenticating all funds received on

behalf of the church that will meet Internal Revenue Services behalf of the church that will meet Internal Revenue Services regulations are as follows: (This information is for those who handle the regulations are as follows: (This information is for those who handle the church finances- re: Stewards or Finance Committee count the church finances- re: Stewards or Finance Committee count the money)money)

1. Have a sign in roster which includes the names of those who are to 1. Have a sign in roster which includes the names of those who are to count the funds and a place for them to initial.count the funds and a place for them to initial.

2. Have these persons use red pens to circle or note the date and the 2. Have these persons use red pens to circle or note the date and the amount of the donation on each envelope before opening.amount of the donation on each envelope before opening.

3. Upon opening the envelope, write in red ink whether it is cash or 3. Upon opening the envelope, write in red ink whether it is cash or check and if it is a check verifies the check number.check and if it is a check verifies the check number.

4. If there is an error on the envelope notate the correct amount that is 4. If there is an error on the envelope notate the correct amount that is in the in red and initial a second time or have a second person to initial.in the in red and initial a second time or have a second person to initial.

5. Provide by mail a receipt of all contributions that are $250.00 or 5. Provide by mail a receipt of all contributions that are $250.00 or greater.greater.

Filing Requirements Filing Requirements ContinuedContinued

6. Be sure that treasurer receipt the stewards or finance committee for 6. Be sure that treasurer receipt the stewards or finance committee for the the

money. (money. (The treasurer should not count the funds but simply deposit The treasurer should not count the funds but simply deposit and let the receiptand let the receipt from the bank determine if there are any errors. This from the bank determine if there are any errors. This will keep the check andwill keep the check and balance system in line and when the treasurer balance system in line and when the treasurer and recording steward meet toand recording steward meet to reconcile the bank statement as per the reconcile the bank statement as per the Discipline, it will create a stronger checkDiscipline, it will create a stronger check and balance.)and balance.)

7. Be sure to bind all envelopes. Make envelopes for any persons who 7. Be sure to bind all envelopes. Make envelopes for any persons who put in checks without envelopes. Signify the envelope with a red initial. put in checks without envelopes. Signify the envelope with a red initial. For all loose monies make one envelope and call it Mr. or Ms. For all loose monies make one envelope and call it Mr. or Ms. Miscellaneous use the same name for every time you count fund and Miscellaneous use the same name for every time you count fund and there are loose donation, which cannot be attributed to any one person.there are loose donation, which cannot be attributed to any one person.

8. At the close of the fiscal year, distribute year-end receipts to church 8. At the close of the fiscal year, distribute year-end receipts to church members (and other donors) so they may validate their contributions. members (and other donors) so they may validate their contributions.

FREEMAN CHAPEL C. M. E. CHURCH

REV. DR. ROBERT PEOPLES PASTORDR. MARTHA GRANGER

PRESIDING ELDER THE RTE. REV. E. LYNN BROWN PRESIDNG PRELATE

ACKNOWLEDGMENT FOR CONTRIBUTIONS OF $250.00 OR MORE

CONTRIBUTOR:

_______________________

ADDRESS:

________________________

_________________________ TOTAL AMOUNT OF CONTRIBUTION (S):Cash_________

Check________

Check # _______DATE OF CONTRIBUTION (S)DESCRIPTION OF ANY PROPERTY CONTRIBUTED:__________________________________________________________________________________________________________________________________________________________________________

WERE GOODS AND SERVICES GIVEN IN EXCHANGE OF THE CONTRIBUTION (S) LISTED ABOVE?YES _____ NO______

IF SO, GIVE AN ESTIMATE OF THE VALUE OF THE GOODS AND SERVICES.* If the benefit received was an intangible religious benefit that is generally not sold in a commercial transaction outside the donative context, please state, but there is no need to describe or estimate the Value of the benefit._____________________

________________________________________________

___________________________

_____________________

___________________________

DATE ISSUED. ______________________OFFICER: _____________________

137 VIRGINAI STREET HOPKINSVILLE, KY 42240 TELEPHONE (270) 885-2186

ELIZABETH CHURCH OF CHRIST WRITTEN IN HEAVENELIZABETH CHURCH OF CHRIST WRITTEN IN HEAVEN

POST OFFICE BOX 274POST OFFICE BOX 274

CHATTAHOOCHEE, FL 32324CHATTAHOOCHEE, FL 32324

INCOME TAX STATEMENT _______________________________INCOME TAX STATEMENT _______________________________

NAME ________________________________________________NAME ________________________________________________

DUES/TITHES __________________________________________DUES/TITHES __________________________________________

BENEVOLENT _________________________________________BENEVOLENT _________________________________________

SUNDAY SCHOOL ______________________________________SUNDAY SCHOOL ______________________________________

SPECIAL OFFERING ____________________________________SPECIAL OFFERING ____________________________________

TOTAL _______________________________________________TOTAL _______________________________________________

PASTOR ______________________________________________PASTOR ______________________________________________

RECORDING SECRETARY________________________________ RECORDING SECRETARY________________________________

TREASURER ___________________________________________TREASURER ___________________________________________

There were no goods or services exchanged for the contributionThere were no goods or services exchanged for the contribution

Filing RequirementsFiling Requirements

What other reporting requirements must be met by a What other reporting requirements must be met by a church?church?Employee Identification NumberEmployee Identification NumberInformation Return Filing RequirementsInformation Return Filing RequirementsForms 1099-MISCForms 1099-MISCForm 1099-INTForm 1099-INTForm W-2GForm W-2GForm 8282Form 8282

Helpful Internal Revenue Helpful Internal Revenue

PublicationsPublications

Publication 334, Tax Guide for Small BusinessPublication 334, Tax Guide for Small BusinessPublication 517, Social Security for Members of the Clergy Publication 517, Social Security for Members of the Clergy

and Religious Workersand Religious WorkersPublication 525, Taxable and Nontaxable IncomePublication 525, Taxable and Nontaxable IncomePublication 557, Tax-Exempt Status for Your OrganizationPublication 557, Tax-Exempt Status for Your OrganizationPublication 561, Determining The Value of Donated PropertyPublication 561, Determining The Value of Donated Property


PublicationsPublications

Publication 571, Tax-Sheltered Annuity Programs for Employees Publication 571, Tax-Sheltered Annuity Programs for Employees of Public Schools and Certain Tax Exempt Organizationsof Public Schools and Certain Tax Exempt Organizations

Publication 586, Charitable ContributionsPublication 586, Charitable ContributionsPublication 598, Tax on Unrelated Business Income for Exempt Publication 598, Tax on Unrelated Business Income for Exempt

OrganizationsOrganizationsPublication 937, Business Reporting (Employment Taxes, Publication 937, Business Reporting (Employment Taxes,

Information Returns)Information Returns)


PublicationsPublications Publication 1391, Deductibility of Payments Publication 1391, Deductibility of Payments

Made to Charities Conducting Fund-Raising Made to Charities Conducting Fund-Raising EventsEvents

Publication 1771, Substantiation and Publication 1771, Substantiation and Disclosure RequirementsDisclosure Requirements

Employer’s Tax Guide CircularEmployer’s Tax Guide Circular

The Church And The Church And I.R.SI.R.S..

Produced by:Produced by:

Dr. Robert L. PeoplesDr. Robert L. Peoples

the church and i.r.s. presented by rev. dr. robert l. peoples winston salem greenville district...

Documents