Churches need to properly prepare and document payments and housing allowance to pastors and ministers. It's the law!!

Article 1 Volume 4                                                      July 4, 2014

           Republished by demand November 17, 2015

Church Law

In the past 20 years I have met with and consulted several pastors and church leaders on matters pertaining to church law and finance. The discussions and consultations were generally about doing things the right and legal way.

Surprisingly, many of the persons I talked with had very little knowledge that so many laws existed pertaining to churches.  Many of them believed that churches were exempt from virtually all the laws and could do whatever they wanted to do in handling church affairs.

In some cases, I was informed that churches had auditors and qualified accountants and bookkeepers to do their books.  

In the cases mentioned above, the auditors and reviewers accountability for the dollars were exceptional. Every dollar was accounted for on the books. But compliance with church laws was generally absent because the highly paid auditors and reviewers had little or no knowledge of church laws.  

Thus, the church could be found in violation of critical laws pertaining to housing allowance and accountability for disbursements to contractors, pastors, church members and many other sources.

I recommend that every church, check to determine if their treasurer and financial secretary are familiar with IRS regulations.  

The number one item in my mind right now is the accountability for pastors and ministers income and housing allowance.

The housing allowance has to be approved in advance and properly recorded in the church's minutes before it can take effect.

For example, if you have paid your pastor a housing allowance so far this year and did not document the churches approval in the minutes of the church meeting or some other government approved method before starting the allowance, the housing allowance is illegal and the pastor will have to pay taxes on that income.  That is the law!!

So, for 2014, if you have not already started a legal housing allowance for your pastor, the earliest you can start is August 2014, providing you have a church meeting and grant approval.

Please don't go back and start doctoring the minutes.  Because if you do, that can cause legal issues. 

I have a lot to say on this topic.  Too much for this blog. But on July 19th I will be presenting a seminar at the Northern Virginia Baptist Center, in Gainesville, Virginia pertaining to church tax and management of pastor's and minister's financial matters.  It will be a 4 hour workshop and lecture.

We will provide insight on the following topics:

      1. How to prepare and allocate housing allowance benefits that may save your pastors thousands of dollars annually.

     2.  How to prepare a compensation package for your current or new pastor.

     3.  Why it may not be legal to pay a pastor a stipend or just housing allowance without proper documentation.

     4.  How to prepare tax returns for pastors using rules established by IRS. 

     5.  Determining if your pastor is an employee or contractor. If contractor, benefits may be very limited and illegal.

     6.  Cash payment to guest ministers is illegal. We will show you how to do it the right way.

    7.  Do you give a 1099 to people you hire to do certain jobs for the church?  You should. If you don't the church could be fined by IRS. 

    8.  Should your church be incorporated?  Think twice before you do it.

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I will be discussing the 8 topics above.

The seating is limited.  So, for more information please call Sandy Blackwell,

 between the hours of 10 a.m. and 8 p.m., Monday through Saturday.

telephone:  703-670-3419

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11/17/2015
Please return to this blog site for more information about church tax and management. I am planning to have another workshop soon. Telephone: 571-201-6066

Copyright 2014.Grady E. Bryant Sr.