The Person Managing Your Church Books, May Know Just Enough to Get You In Trouble


The afternoon session of the Church Management Tax Conference in Florida was about to begin when a Pastor frantically tried to register. My associate took him into the hallway to discover the sense of urgency to register for a conference that was almost finished. As my associate delved deeper into the matter, it was discovered that this Pastor was on the radar of the Internal Revenue Service and would soon be indicted and his ministry closed.


The Problem


I have constantly said: “Cheap advice is expensive. You get what you pay for, but what you get is not what you want.”


This Pastor hired a local CPA who had been referred to him by an acquaintance. Unfortunately, neither the acquaintance nor the CPA knew anything about Church Tax Law. The CPA had convinced the Pastor to incorporate via an S Corporation rather than non-profit.


During the five years since his incorporation and the formation of his Church, his ministry had been trouble free. All of that changed in one afternoon. His largest tithe payer was audited by the IRS for calendar year 2012, and her tax deduction claims for her donations were denied.


It Gets Worse


In defense of his tithe payer, the Pastor called the IRS and an uninformed agent told him to file a 1023 application to obtain his 501(c)(3) and letter of determination (This would have been a disaster because his ministry was registered as an S Corp). This troubled Pastor enlisted the aid of the friend who recommended the original CPA, for assistance in preparing the 1023.


You cannot obtain a 501(c)(3) and Letter of Determination if you are not incorporated as a Church or non-profit in your state. Out of panic the Pastor was on the verge of creating further problems for him and his Church membership.


He listened to a CPA who did not know Church Tax Law. He listened to a friend who is not a CPA, but apparently trying to do the job of one. And, he listened to an uninformed IRS agent who provided wrong information.


His desperate attempts were admirable because he was attempting to help his members. He did not want to see his most faithful tithe payer be audited again. Although his actions were admirable, sometimes our attempt to help only helps hasten our demise.


The bad advice given to this man of God, plus his desperation to protect a Church member, almost led to his downfall.


Never allow anyone who does not know Church law to do Church books!


The Rest of the Story


This Pastor came to the Seminar late, in hopes of gaining some insightful information to help his situation. However, when he heard the truth it overwhelmed him. My associate spent an hour attempting to help the Pastor, even to the point of allowing him to retain us at conference prices. But, the Pastor left the building to seek the advice of his non-CPA friend – the very one whom had caused his problems.


The saddest thing about this any ministry is coming to grips with the knowledge that you cannot help everyone! Some are bent on doing things the way they always have – even when those ways are wrong/illegal!


Let Us Help!


Chitwood & Chitwood has helped Pastors and Churches get and remain IRS compliant for more than 78 years. Our expertise is the source of our unmatched and unblemished track record.


Many Pastors feel they cannot afford outsourcing of the financial records to Chitwood & Chitwood. However, you cannot afford to not do it. Remember, it is much cheaper to get and remain compliant, than it is to attempt to go into battle with the IRS.


If you allow us the privilege, we will get your financial house in order so that God can begin to bless it. God cannot bless a mess!


Do Not Delay. Contact us at 800-344-0076 or visit us at for a seminar nearest you. Let us show you how simple it will be to get your Church in-line with pertinent laws and regulations and watch what God will do.


For us this is “A Ministry – Not A Job.