Pastors Beware – Your Blessing, May be your Demise
He called me on the phone ecstatic at the huge “blessing” his Church had just provided. To honor their Pastor, the Church had bought him a new car and sent his wife and him on an all-expense paid cruise. Unfortunately, the next year, he received that dreaded letter from the IRS notifying him of an audit that had been scheduled for his previous year’s income tax return.
The audit was not favorable. The items and gifts he thought were blessings became a curse as he was made to pay additional taxes, penalties and interest on those gifts. Later the IRS began looking into the bookkeeping practices of the Church and noticed several violations. All of these actions were the result of what the man of God had construed as the Church loving and blessing him
Does God Want His Ministers Blessed?
God desires for Pastors and those in the ministry to be blessed abundantly. The Apostle Paul described God’s intention in this manner: “Let the elders that rule well be counted worthy of double honor, especially they who labor in the word and doctrine” (1 Tim 5:17).
If God wants us blessed, why should we have to succumb to IRS abuse for those blessings? Unfortunately, many Pastors forget another command God gave us: “. . . And He said to them, Render therefore to Caesar the things that are Caesar’s, and to God the things that are God’s” (Matt 22:21 – NKJV).
We may be blessed as long as we do it legally.
The Fine Line Between Blessing and Private Inurement
Churches enjoy something many businesses do not – tax exempt status. As bad as our Government needs money, they will not allow this benefit without some strings attached.
The IRS states if a Church is to remain tax exempt it must continually meet at least two requirements.
- No person or persons may own the Church or take property from it.
- The Church must operate exclusively for its tax-exempt purpose and may not engage in the benefit of a private individual.
The above statements basically mean that the Church may not loan its property to benefit the Pastor or Church Member, nor must it provide unreported income that does not meet IRS standards.
Since total Church payroll should not exceed 32.6% of total Church income, what many Pastors call “blessings” are really Private Inurement and may result in some stiff penalties for them and their Church.
How We Can Help
Chitwood & Chitwood is the ultimate Church and Clergy Compliance firm in the World. For more than 78 years, we have served thousands of Churches, bringing and keeping them in IRS compliance.
At our Church Management and Tax Conferences we teach this area of Private Inurement and how to avoid its traps and downfalls. Every Pastor and Church Board should attend one of these conferences in the city nearest them. To register, visit www.cmtc.org or call 800-344-0076. YOU WILL BE GLAD YOU DID!
We do not need another Pastor or Church in trouble with the IRS. We need our Churches open and our Pastors preaching the Gospel and rescuing sinners from the hands of the adversary. DO NOT THINK THE IRS WILL NOT CATCH YOU – THEY WILL! Get compliant today.
For us, this is “A Ministry – Not A Job!”