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No Form 1099 to Benevolence Recipients, Says IRS

Recipients of gifts from a benevolence fund do not need to fill out the form.

Many church treasurers have wondered if they need to issue a Form 1099 to persons who receive distributions of $600 or more from the church benevolence fund. The IRS addressed this question in a recent ruling, and concluded that no Form 1099 is required under these circumstances. The ruling addressed a charity that provided financial assistance to "distressed individuals" affected by a natural disaster for such items as medical and transportation expenses and temporary housing that were not compensated by insurance or otherwise. The IRS concluded that this financial assistance was not taxable compensation for which a Form 1099 would be required, but rather was a "gift" to the recipients. It observed, "In general, a payment made by a charity to an individual that responds to the individual's needs, and does not proceed from any moral or legal duty, is motivated by detached and disinterested generosity" and therefore is a tax-free gift. IRS Revenue Ruling 2003-12.

This article first appeared in Church Treasurer Alert, February 2003.

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