Questions & Answers
Who Owns the Accounting Records?
Q: Who owns a church's accounting records? Our treasurer frequently brings some of the church's financial records home to work on them. He claims that the records are his property, and not the church's, when they are in his home. Is that correct?
How Do We Minimize Taxes on a Retirement Gift?
Question: Our pastor will soon be retiring after serving our church for 30 years. We would like to make a sizable gift to him. How can we minimize his taxes?
How Long Should Our Church Keep Offering Envelopes?
Question: How long should our church keep offering envelopes?
Answer: Many churches use offering envelopes. They have a number of advantages, including the following:
Can We Reward Employees for Years of Service?
Question. Our church is considering an employee service awards program for rewarding employees who have worked a specified number of years for our church.
Can We Pay Board Members an Honorarium?
Question. Our church is considering the payment of an annual honorarium of $1,000 to each member of our church board as an expression of appreciation for their service. Are there any legal or tax issues that are implicated by such an arrangement?
How Do We Confront Suspected Embezzlement?
Question: We've had the same church bookkeeper for ten years. Now, I suspect she's been embezzling church funds. When I confronted her, she adamantly denied any wrongdoing.
Can a Youth Pastor Receive a Housing Allowance?
Q: We have a non-credentialed youth pastor who lives in our parsonage. Do we need to report the fair rental value of the parsonage as taxable income to him? If so, is it taxable for both income taxes and Social Security?
Are All Churches Vulnerable to "Office Supply Scams"?
Question. I recently learned of a church in our community that was a victim of an "office supply scam." What exactly does this mean? Are all churches vulnerable to this risk?
How Do We Report Gifts Provided to Volunteers?
Q. Our church provides gifts to several employees and volunteers each year at Christmas. Staff members receive either a check or a gift certificate to a local grocery or department store. Key volunteers receive either a turkey, fruit basket, or gift
When Does A Board Resignation Become Effective?
Q: Occasionally, a member of our church will resign due to health problems or relocation. At what point is a resignation effective? And, is there any legal significance to the timing of a board member's resignation?
How Do We Handle a Write-In Candidate?
Q: Our church bylaws state: "All nominees for the office of deacon shall be chosen from the membership of the church and must be nominated by a nominating committee of seven members appointed by the pastor and church board.
Can We Invite a Political Candidate to Speak?
Q: Our church wants to invite a political candidate to speak during a worship service. The candidate is also a noted community leader. Will this invitation jeopardize the church's tax-exempt status?
Can Full-Time Employees Receive Overtime for Volunteering?
Question: Our church operates a preschool that employs six persons. We often have church employees volunteer to work in the preschool. They work 40 hours for the church, and then want to volunteer several hours during the same week working in the pre
Can Our Retiring Pastor Become a “Pastor Emeritus”?
Q: Our senior pastor will be retiring soon, and our church board would like to name him "pastor emeritus." It is our understanding that concerns have been raised about high profile pastors manipulating a church
Can We Hire Someone Receiving Worker’s Comp?
Question. We have a volunteer who gives a lot of time, maybe 20-30 hours a week. We do not pay him. He is on workers compensation from an ankle injury.
Should Our Church Give the Pastor a No-Interest Loan?
Q: Our church board has approved a $10,000 no-interest loan to one of our pastors to assist him with the down payment on a new home. We have two questions about this transaction. Since the loan is for $10,000,
Do Contribution Receipts Need the Church’s Identification Number?
Q: A member of our church is being audited by the IRS. The IRS auditor is telling her that the church's contribution receipts are not acceptable because they do not list the church's employer identification number. Would you be aware of any such requ
Can Pastors Inspect Members’ Giving Records?
Question: Can a senior pastor and members of the church board inspect the contribution records of each member?
How Much Severance Should We Pay?
Q: We are considering the dismissal of an employee, and would like to enter into a severance agreement with her. Do you have any guidelines on how much severance pay should be considered?
Employee or self-employed?
Q. Our church has two full-time pastors and three full-time lay employees. It also has two part-time custodians. Should these workers be treated as employees or self-employed by our church treasurer?
What Churches Should Know about Skateboarding
Q: We are having a lot of teenagers skateboarding in our church parking lot after school. Few if any of them attend our church. What liability do we have if one of the kids is injured? Also, what if we install skateboard ramps as a means of reaching
Do We Report Tuition Expenses as Taxable Income?
Q: Our senior pastor is pursuing an advanced degree through a seminary located in another state. Our church board would like to pay his tuition expense, since we believe that our church will directly benefit from this additional education.
Should Our Church be Incorporated?
A church was established in 1930. It has never been incorporated. A child is sexually molested by a church member during a church activity.
Selecting an Attorney or CPA
A church dismisses an employee for violating the church's employment standards. The dismissed employee sues the church for wrongful discharge and discrimination.
Can Church Members Suspend Our Bylaws?
A question came up during our church's annual business meeting regarding the suspension of bylaws. Our church bylaws state that board members serve a maximum of six years in office. Our church is in the midst of a construction project, and one of our
Can We Offer Our Pastor a No-Interest Loan?
Q: Our church board has approved a $10,000 no-interest loan to one of our pastors to assist him with the down payment on a new home.
Housing for Non-Credentialed Pastors?
Q: We have a non-credentialed youth pastor who lives in our parsonage. Do we need to report the fair rental value of the parsonage as taxable income to him?
Can We Ask about Past Abuse?
Question: When screening volunteers who will work with children of all ages, do you recommend that volunteers be asked if they have ever been abused? If so, how would you word this delicate question?
Can I Keep a Secret?
Q: What is the difference between "privileged" communications and "confidential" communications?
Should Signatures on Permission Slips Get Notarized?
Q: I am a children's pastor and I have a question about whether parents' signatures on permission slips should be notarized. A member of my church said to me, "Do you know how much a notarized signature is worth in court?
Can a Court Prevent Someone from Attending Church?
A Louisiana court ruled that a restraining order prohibiting a husband from going within 100 yards of his wife's residence did not violate the husband's constitutional right to attend his church that was located within 100 yards of his wife's residen
Sleeping Arrangements for Missions
Q: Our church is sending a group of high school students on a 10-day missions trip. What sleeping arrangements would result in the least risk?
Churches and Tax Exemption
Q: I am confused about our church's tax-exempt status. Are we required to apply to the IRS for recognition of exemption, or are we automatically exempt because we are a church?
Pastors and Board Meetings
Q: Can a church board meet without informing the senior pastor and transact business on behalf of the church that is not an emergency?
Withholding Payroll Taxes
Q: One of our church employees has informed us that he considers himself to be exempt from federal taxes, and has asked that we discontinue withholding taxes from his pay. Should we honor his request, or should we continue withholding taxes? Can we b
Computer Privacy
Q: When a church staff member is suspected of viewing online pornography, do other staff or board members have the right to access that person's computer and investigate, or would the church risk being liable for invasion of privacy?
Are we violating copyright laws?
Question: Our church's music director had created a "chorus booklet" containing about 100 of our congregation's favorite songs. She made 200 copies of the booklet, and placed them in the hymnal racks next to our church hymnals. She made the booklets
Office Supply Scams
Question. I recently learned of a church in our community that was a victim of an "office supply scam." What exactly does this mean? Are all churches vulnerable to this risk?
