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Webinar: Navigating Church Management Software (ChMS) with guest Jonathan Smith

Church Law & Tax brought in church IT professional Jonathan Smith to share key insights for church leaders on choosing the right church management software package.

The Editors
Bio

For church leaders, managing finances, taxes, and administrative work is not a sprint, it’s a marathon. To get it right, you need to have the right tools.

It’s why selecting the right church management software (ChMS) is so important. But where do you begin? Which is the best choice? It’s enough to overwhelm even the most technically savvy church leader.

We’re here to help. Church IT pro and Church Law & Tax contributor Jonathan Smith agreed to spend about an hour with us navigating the key questions around ChMS every church leader should be asking.

This on-demand webinar for Church Law & Tax members will leave you feeling empowered to make the right decisions.

When you become a Church Law & Tax member, you’ll receive more than just on-demand webinar access—you get exclusive access to the 2026 Tax Prep Guide for Churches and Clergy. This resource is trusted by thousands of pastors, treasurers, and church administrators nationwide.

Here’s what membership unlocks for you:

📚 The entire Church Law & Tax legal library

🤖 AI-powered search (coming soon!) for fast, reliable answers

📊 2026 Digital Tax Prep Guide included with your membership when it’s released.

This is the kind of support that keeps your ministry compliant, confident, and focused on what matters most: your people.

Don’t wait until the next tax deadline is around the corner. Prepare now—and lead with confidence.

In service,

The Church Law & Tax Team

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The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.
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Is Your Housing Allowance Process Up to Speed?

This housing allowance checklist for pastors and church leaders will ensure your church stays on track when taking advantage of this important tax exclusion.

The Editors
Bio

Setting a housing allowance is one of the most valuable tax benefits available to ministers, but it is also one of the most misunderstood.

Done properly, a housing allowance empowers pastors to exclude certain housing-related expenses from their taxable income—which reduces their overall tax burden.

But if handled improperly, a housing allowance can expose churches and pastors to unnecessary financial and legal risk.

The IRS requires churches to designate a housing allowance in advance and to document it clearly.

Why Wait? Join Church Law & Tax Today and Start Leading Your Ministry With Greater Confidence!

It cannot be applied retroactively, and it must be based on a reasonable estimate of the pastor’s actual housing costs.

While the church plays a critical role in approving and recording the allowance, the responsibility for tracking expenses and staying within IRS limits ultimately rests with the pastor.

Since compliance is so important, church leaders should approach the housing allowance process with care. Each year, boards should review and approve designations, communicate them in writing, and ensure the treasurer knows how to report them correctly.

It’s why we’ve created this downloadable checklist for churches and pastors looking to set and manage a housing allowance.

Download our free Housing Allowance Checklist:
The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.
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Series: Financial Transparency for Churches

3 financial warning signs your church shouldn’t ignore.

Tim Samuel, CPA and Church Chief Financial Officer
Bio

This free article is offered as an introduction to our three-part series for members on financial transparency for churches by Church Law & Tax Contributing Editor Tim Samuel.

Churches run on trust. 

We trust our pastors to lead. We trust our volunteers to serve. And we trust the people handling the money to do it well. 

However, trust alone is not enough. 

Churches also need intentional, basic systems that protect that trust. 

These systems are called internal controls, and they help make sure the church’s finances are managed with integrity.

Lead your church with confidence. Join Church Law & Tax today!

Most financial problems in churches don’t start with bad people. They start with unclear roles, missing steps, or assumptions that someone else is probably checking. Over time, those gaps create risk. 

That’s why recognizing the signs of financial problems is so critical.

So, what are  ‘internal controls’?

Internal controls are the habits and guardrails that help a church handle its money wisely. They answer questions like:
  • Who counts the offering?
  • Who signs the checks?
  • Who reconciles the bank account?
  • Who reviews the reports?

When those tasks are clearly divided and regularly reviewed, they create a financial culture of accountability. 

When they’re all handled by one person, or when no one is really paying attention, problems can hide. Even churches that have never had a theft or a scandal can still be at risk for confusion, misreporting, or avoidable loss.

Let’s look at three red flags. You don’t need formal training to spot them, but you do need eyes to see—and the courage to keep looking.

Red Flag Number 1: One person does all the money jobs.

In some churches, one person does everything that has to do with money. 

They count the offering, take the money to the bank, and enter the numbers in the computer. They also write the checks and look at the bank account. They make the monthly reports and give updates to the board.

At first, this might seem like a good idea. Maybe the person is very trustworthy and has been doing it for years. 

Maybe they’re the only one who knows how the system works or the church only has money to hire one person to do the tasks. 

However, when one person does all the work, it becomes a big problem because no one else is watching what they do.

Even kind and honest people can make mistakes. They might forget to record something and they could enter a number wrong. They might miss something important because they are tired or busy. When no one checks their work, those mistakes can go on for a long time.

Sometimes, the problem is more serious. Someone might feel pressure at home, like a job loss or bills they can’t pay. If they’re the only one handling the money, they might take some, thinking they’ll return it later. Since no one else is looking, they don’t return the money, and no one knows the money is missing until it’s too late.

But even if nothing bad happens, it’s unfair to lay the church’s financial pressures on just one person. If something does go wrong, they’ll be the one blamed. 

A better system shares the work, and at least one other person should be helping and checking the records.

Church Law & Tax offers real examples of how to do this in Strengthening Internal Controls for Churches: Key Steps and Risks

Red Flag Number 2: The numbers don’t make sense, and no one can explain why.

When budget reports are unclear, late, or don’t match what people expect, that’s a red flag. 

It doesn’t always mean someone is doing something wrong. But it does mean the system is weak.

If questions like “Why did this expense change?” or “How much have we actually spent this year?” lead to confusion or silence, that’s a sign the reports aren’t helping. 

Good reports bring clarity and bad ones create confusion.

Another sign that something may be wrong is a church reporting a budget surplus year after year while seeing its cash balance shrink. On paper, it appears that the church is doing well. The income is greater than the expenses, so the budget shows a positive result. However, the actual amount of money in the bank keeps going down.

This decline is not because the church is investing in property, paying off loans, or building up other long-term assets. Instead, the cash is quietly disappearing, and no one seems to notice. 

This happens when reports are built to match the budget instead of showing the real movement of money. 

In some cases, it may mean that unpaid bills are piling up, or that designated funds are being used without being properly tracked.

The problem is harder to spot when financial terms like “in the black” are used without explanation. That phrase sounds positive, even when it is misleading. 

A healthy church financial system does not just look at whether the budget is balanced. It also asks, Is our cash growing or shrinking? and Do our reports match our real financial position?

Dig deeper: Communicating Key Financial Information to Church Boards, Committees

Red Flag Number 3: People resist outside review, even when it would help.

Sometimes, churches don’t want anyone from the outside to look at their finances. They might say, “We’ve got it covered,” or “We don’t need help.” It can be a sign of hesitation, fear, pride, or a culture that doesn’t welcome questions.

Healthy churches are not afraid to be checked. They understand that a second set of eyes brings protection, not punishment. Outside reviews help build trust. They can also spot things that were missed. 

A full audit by a professional can be expensive, but even small reviews by board members or trusted volunteers can be helpful.

Still, you get what you pay for. 

Quick or casual reviews may not catch everything. For example, if the church uses paper records and no one compares them to the actual bank account, someone could fake the numbers. They could print a report that looks real, but hides the truth. If no one checks the bank’s website directly, they might never know.

Even honest systems need outside review. Not to catch bad people, but to protect good ones and keep the process clean. 

Have you spotted one or more of these red flags?

Asking the right questions is a good start, but in many churches, it is not going to be enough

If you’re not on the finance team, the answer you get might be vague, overly confident, or not fully true. 

Or, the culture may not welcome real questions or they may not even know what they are saying. Therefore, before asking questions seek clarity, context, and cover.
  • Clarity means knowing what a healthy system actually looks like. That way, you’re not guessing. You’re comparing. 
  • Context means understanding your role. You may not have the authority to dig deep, but you can raise concerns through the right channels. That might be a board member you trust or a leader who can ask harder questions on your behalf.
  • Cover means bringing it up in a way that won’t isolate you. You might say, I was reading this article from Church Law & Tax about internal controls. It made me wonder if we’ve ever done a review like that. When you reference an outside source, it takes pressure off you and shifts the focus to shared learning.

You may not be able to fix the system but you can tell the truth about what you see. 

Do it with wisdom, not fear. Sometimes a church has money problems, and no one notices for a long time. It might not look like anything is wrong. The budget might say the church is doing fine. The reports might show the numbers are in the black. But behind the scenes, something could still be off.

This does not mean someone is doing something bad. It might just mean the system is too quiet. No one is asking questions. No one is checking the work. People are trusting each other, but they are not checking the process.

You do not have to fix everything right away. But you can start by paying attention. 

Look for what feels off. Notice what is missing. You are not being difficult. You are being careful.

That is part of what it means to care for a church.
Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.
Image: getty/yauhen akulich

Part 3 of 3: When Church Financial Reports Don’t Tell the Truth

When financial reports show a surplus but the bank balance says otherwise, something’s off. Here’s how churches can build honest, readable reports that lead to trust.

Tim Samuel, CPA and Church Chief Financial Officer
Bio

Part 1 of 3: Why Every Church Needs Financial Oversight—Even When Trust Is High
Part 2 of 3: When One Person Handles the Money: How Churches Can Prevent Financial Risk

Church financial reports should provide clarity, not confusion. 

Yet in many churches, the numbers shown in monthly reports do not reflect financial reality. 

The budget may show a surplus, but cash feels tight. 

The giving reports may look stable, yet expenses are outpacing income. 

Leadership teams may feel unsettled, while the board quietly wonders if anyone understands what is going on. 

These moments are not just technical issues. They are signals that something deeper needs attention.

Most churches rely heavily on trust. That trust is spiritual, relational, and often well-placed. 

However, when financial systems are built only on trust and not supported by structure, that trust becomes vulnerable. 

Financial confusion does not usually begin with fraud. 

It starts with a missing system, a lack of financial training, or assumptions that go untested. 

These situations are not malicious, but they are risky. They lead to decisions based on a picture that is incomplete or misleading.

Every church needs a reporting system that helps leaders understand what the numbers mean, what questions to ask, and how to act on what they see.

Start with the truth

The first step toward financial clarity is facing what is actually happening today. 

That means pulling the last three to six months of financial reports and comparing them directly to the church’s actual bank balances. 

If the reports show a surplus but cash is shrinking, then the system is hiding something important. 

Strengthen your church’s financial integrity with Learn more about internal controls and ways to segregate duties through, “Safeguarding Your Church’s Finances,” an online training program from Church Law & Tax. Learn practical strategies for internal controls and effective ways to segregate duties.

Many churches unintentionally mix restricted and unrestricted funds, leading to an inaccurate cash picture. Others rely on budget-versus-actual reports without looking at cash flow, which can hide the reality of overspending or under-giving.

Stabilizing the system begins by checking whether restricted funds are being tracked separately, whether reconciliations are happening monthly, and whether someone besides the bookkeeper is reviewing them. If any of these steps are missing, then the financial foundation is not as solid as it appears.

Create a consistent reporting process

Once the current picture is clear, the next step is to design a process that provides reliable, readable, and consistent financial reports.

Most board members are not accountants. They should not be expected to decode vague spreadsheets or overly complex financial statements. 

Reports should include a short narrative that summarizes key insights in clear language. 

A simple paragraph can explain trends in giving, changes in expenses, and any red flags that require attention.

A monthly report will include giving totals, expense breakdowns, and any anomalies. Along with the numbers, a simple paragraph like this can help key leaders immediately understand what happened last month:

“Total giving came in at $82,500 around $4,000 below our monthly average. Expense tracked as expected, except for a $20,000 HVAC repair. No urgent concerns, but cash reserves dipped slightly, and we’ll keep an eye on trends if giving stays flat next month.”

This type of explanation brings context to the numbers without requiring leaders to dig through spreadsheets.

The goal is not more data. The goal is shared understanding.

Make financial clarity a leadership culture

Once the reports are standardized, the focus shifts to building financial literacy across the leadership team. 

This is not about turning pastors into CPAs. 

It is about helping key leaders understand what the numbers mean and how their roles affect the church’s financial health. 

They understand by engaging with real-time data, asking better questions in planning meetings, and seeing how their decisions shape the church’s financial story.

When ministry leaders can read their budgets, understand their impact on cash flow, and spot areas of concern early, the entire system becomes stronger.

For example, during an outreach planning meeting, a team might dream about expanding a food distribution program. They may want to feed more families, open additional pickup sites, or move to weekly deliveries. Adding financial insight to the conversation doesn’t slow the vision. It makes the vision stronger. Understanding the cost of refrigeration, electricity, delivery vans, and staffing allows teams to scale with confidence, not guesswork.

Financial clarity turns great ideas into sustainable ministry.

Oversight should also be shared. No one person should control all the reporting, approvals, and reconciliation. Roles should be distributed, and team members should be rotated over time to avoid bottlenecks or blind spots.

Build long-term financial integrity

Once the church has stabilized its financial systems, created consistent reports, and trained its leadership, the final step is to make sure the structure lasts. 

Good systems are not one-time fixes. They must be maintained, reviewed, and adjusted as the church grows and changes. 

This means scheduling an annual financial review, even if it is not a full audit. It means documenting financial procedures so they are not trapped in one person’s memory. It also means rotating volunteers and committee members every two to three years so that oversight is always fresh and active.

Transparency should be part of the church’s public witness. Share with the congregation that the church reviews its finances regularly, uses checks and balances, and follows a reporting process that aligns with best practices. Donors do not expect perfection. They expect care, clarity, and stewardship.

Order creates trust

A church that commits to clarity, consistency, and oversight is not becoming more corporate. It is becoming more faithful. When reports are honest, easy to read, and reviewed regularly, the church can act with confidence. Staff and volunteers can lead without stress. Donors can give with joy.

Financial integrity is not built by having more spreadsheets. It is built by creating systems that help the right people see the right numbers at the right time. When that happens, the church is free to focus on what matters most: the mission.

If the numbers do not make sense, it is not a reason to panic. It is a reason to begin. One clear report, one better question, and one honest conversation can lead your church toward financial health that lasts.
Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.
Posted:
Image: getty/yauhen akulich

Part 2 of 3: When One Person Handles the Money—How Churches Can Prevent Financial Risk

Even the most loyal and capable person should never carry the full weight of your church’s finances. Here’s how to share responsibility—and reduce risk.

Tim Samuel, CPA and Church Chief Financial Officer
Bio

Part 1 of 3: Why Every Church Needs Financial Oversight—Even When Trust Is High
Part 3 of 3: When Church Financial Reports Don’t Tell the Truth

In many congregations, one trusted individual handles nearly every aspect of the church’s finances. 

This person receives the offerings, makes the bank deposits, writes the checks, enters the transactions, reconciles the bank statements, and prepares the financial reports. 

They are often seen as irreplaceable, deeply loyal, and fully trusted by everyone around them. 

While this level of trust may seem like a blessing, it often creates one of the most overlooked sources of financial risk in the church.

How churches create risk

This scenario is usually not created through poor intentions but through relational trust, a desire for efficiency, and limited staffing. 

When someone shows interest, dependability, and capability, it feels natural to delegate more to them. 

Over time, the systems and routines of the church grow around this individual. Eventually, their knowledge becomes institutional memory, their presence becomes essential, and their departure feels unthinkable. 

Here is what shocked us most about people who perpetrate fraud in churches, based on a nationwide survey.

Without realizing it, many churches have placed both the authority and the responsibility for financial oversight in the hands of a single individual, creating  an  environment where oversight is least likely to occur.

The ‘Fraud Triangle’

The “fraud triangle” is a well-established concept that outlines the conditions where financial misconduct becomes more likely. 

The three components of the triangle are:
  • Opportunity
  • Pressure
  • Rationalization 

The opportunity for financial misconduct exists when no one else is watching.

If a person is collecting offerings, entering those amounts into the ledger, making deposits, and reconciling accounts without oversight, the opportunity for misstatement or misuse is present by default.

Pressure can come from personal life. 

It may be medical debt, family emergencies, relational breakdowns, or even the feeling of being overworked and underappreciated. Most of these pressures remain hidden from leadership, especially in small churches where personal and professional lines are blurred.

Rationalization is the mental justification that allows someone to violate their integrity. It may sound like “I’ll pay it back soon,” or “I’ve given too much of my time already,” or “The church owes me for all I’ve done.” 

Rationalization doesn’t begin with malice. It grows in silence and convenience when accountability is weak.

This is why churches must build systems that reduce both opportunity and isolation before these issues have the chance to grow.

A better way: Shared financial responsibility

Churches do not need to wait for growth or a crisis to change how they handle money. They can use a simple structure to create transparency, reduce pressure on individuals, and build a foundation of trust that does not depend on a single person. This approach also improves public perceptions, protecting the reputation of a team member who might otherwise face unwarranted accusations if all responsibilities fall to them. 

This structure follows a practical four-part framework: Stabilize, Systemize, Scale, and Sustain.

Stabilize

Begin by assessing your current process. List every financial task  being performed, then identify which individual is responsible for each. Pay special attention to roles involving authorization of payments, physical handling of cash or checks, recording of transactions in accounting software, and reconciliation of bank statements. 

If any one person performs more than one of these core tasks, the system is not stable. That person is carrying too much responsibility, and the church is exposed to risk, even if that risk is not yet visible.

Strengthen your church’s financial integrity with Learn more about internal controls and ways to segregate duties through, “Safeguarding Your Church’s Finances,” an online training program from Church Law & Tax. Learn practical strategies for internal controls and effective ways to segregate duties.

To deepen this review, use simple tools like AI or guided templates. Write a prompt like this:: “List the four key financial functions in a church and how they should be divided to prevent internal risk.”

Systemize

Once you have clarity on the current structure, redesign the workflow so that no single person handles more than one core task in the same transaction cycle. 

The four essential financial functions to separate are: 
  • Authorization (deciding to approve a transaction) 
  • Custody (handling the money) 
  • Recordkeeping (entering the data) 
  • Reconciliation (matching reports to bank activity)

Assign two unrelated people to count offerings together. Require a second signature on checks above a certain amount. 

Have someone outside the bookkeeping process handle monthly bank reconciliations. Use your accounting software’s user role features to ensure that not all functions are accessible to the same person.

Scale

Now that the system is in place, bring more people into the process. 

Financial sustainability does not depend on having more money. It depends on having more people trained, trusted, and engaged. Avoid creating a bottleneck where one person becomes the only person who knows how things work.  Teach leaders and board members how to read financial reports. The goal is to make financial health a shared responsibility, not a private task.

For training and communication, AI can be useful. Try prompts such as: “Write a training plan for new church finance volunteers that explains how to read a balance sheet and spot red flags.”

Sustain

A strong system should last beyond the season or staff. Record your procedures in a finance manual and update it every year. Store templates and forms in a central location. 

Train successors before people step away. Share openly with the congregation that you have strong financial systems in place. Transparency builds confidence.

Create time-off rhythms for anyone involved in financial roles. No one should feel like the church cannot function without them. Structure creates peace. It reduces stress and protects people from burnout and isolation.

If needed, ask AI to help writea one-page financial controls policy for your church that clearly explains roles and responsibilities.

Final Word: Protect the Mission by Sharing the Load

One person should never carry the entire weight of the church’s finances. Even when that person is capable and trustworthy, the system becomes fragile, the risk becomes silent, and the mission becomes vulnerable. By taking small steps to build structure, your church is not just protecting money. It is protecting people, building trust, and creating systems that can grow and last.
Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.
Image: getty/yauhen akulich

Part 1 of 3: Why Every Church Needs Financial Oversight—Even When Trust Is High

Churches often avoid financial reviews out of loyalty, fear, or limited budgets. But real stewardship begins with clarity, accountability, and shared responsibility.

Tim Samuel, CPA and Church Chief Financial Officer
Bio

Part 2 of 3: When One Person Handles the Money: How Churches Can Prevent Financial Risk
Part 3 of 3: When Church Financial Reports Don’t Tell the Truth

While trust is essential to the life of a church, it becomes a risk when it operates without oversight. 

Resistance to review often comes not from misconduct but from comfort. It stems from long-term loyalty, limited resources, or fear of what a review might reveal. 

Many church leaders say they trust their teams, or that their treasurer has served for years, or that their budget is too small to afford a CPA. 

These statements, while sincere, reflect a misunderstanding of the role and value of financial review. 

Longevity does not guarantee accuracy. Simplicity does not eliminate the need for oversight. 

Trust cannot take the place of verification.

Most churches rely on volunteers to manage their finances. Some of these individuals bring deep experience while others are simply willing and faithful. They want to help and see their service as a way to save the church money. 

But without training in nonprofit accounting or internal controls, they may be unaware of best practices. 

They might not know how to manage designated funds, reconcile accounts, or prepare reports in compliance with IRS and donor requirements. Even the most dedicated volunteer can make repeated errors if no one else is looking. 

Often, leaders hesitate to challenge the system out of fear of creating conflict. They do not want to offend volunteers or suggest distrust. 

In reality, avoiding review leaves volunteers unprotected, boards uninformed, and systems vulnerable.

Step 1: Start with the truth

The first step toward better oversight is clarity. 

Churches must identify who is responsible for approving expenses, handling deposits, entering financial data, and reconciling bank statements. 

If one person is responsible for multiple steps within the same transaction, the system carries structural risk. 

Of course, having one person responsible for multiple steps within the same transaction is not necessarily a sign of mismanagement, but it can indicate that responsibilities should be more appropriately shared. 

Mapping out the workflow and recognizing points of concentration is the foundation for improvement.

Churches can benefit from asking structured questions to identify these risks:

“What are the core financial roles that should never be combined?” or “How can our church identify risks in our financial workflows?” 

These questions help leaders begin the process of improving stewardship by seeing the truth of their system.

Step 2: Normalize the review process

Financial reviews do not always require a full audit. 

Depending on a church’s size and budget, oversight can take different forms. 

An internal review by a committee of individuals who are not involved in daily bookkeeping can offer meaningful checks. Though not fully independent, this approach introduces visibility and accountability. 

Meanwhile, an  external review of limited scope targets specific areas like bank reconciliations or payroll, and is less expensive than a full audit. 

Churches may also pursue agreed-upon procedures where a certified public accountant (CPA) performs selected tasks requested by leadership. 

This option provides clarity without incurring unnecessary cost. 

In the end, full audits provide the highest level of assurance and are often used when external reporting or complex operations are involved.

No matter which of the above options your church decides to take, one thing is sure: delay is not an option. Waiting until a financial crisis strikes is a mistake.

Churches should make use of these options based on available resources. 

The goal is not perfection but progress toward stronger financial governance. 

To guide these choices, leaders should seek resources that can help answer questions such as, “What types of financial reviews are available to churches, and how do we select the right one?” or “Explain the difference between a limited review and a full audit for a church board meeting.”

Step 3: Bring others into the process 

Technology is a valuable ally in this effort. Accounting systems that assign user roles and track activity logs help ensure accountability. 

When churches use technology to define access and monitor financial tasks, they add both structure and transparency. UseAI to create a sample onboarding checklist for church finance volunteers, or to create a rotation schedule for offering counters, check signers, and reconciliations. These tools guide leadership toward scalable systems that invite shared responsibility and reinforce trust.

Step 4: Make financial oversight the norm, not the exception

Routine oversight reinforces stewardship as an ongoing discipline rather than a reactive measure. 

Churches that build financial reviews into their annual calendar promote transparency and consistency. 

This predictability removes the assumption that a review signals distrust or failure.

Instead, it shows that oversight is part of how the church protects its mission and honors its people. Developing a written review policy, storing procedures in a shared location, and ensuring smooth transitions all contribute to sustainability. 

Training incoming leaders, revisiting standards each year, and making financial review part of board orientation keeps the system active and understood.

It is equally important to communicate these practices with the congregation. Doing so promotes confidence and demonstrates a commitment to honor each gift, which builds credibility.t.”

Conclusion: Accountability is stewardship

Financial review is not just about numbers. It is a discipline of trust, a protection for volunteers, and a safeguard for the mission. 

Churches that resist review may do so with good intentions, but they leave themselves open to risk. 

Oversight builds strength. It prevents problems from going unnoticed. 

It invites multiple voices into the process and ensures generosity is honored. It also safeguards the decision-making process by bringing clarity and accountability.

When review becomes part of the culture, it serves everyone: leaders have more peace, volunteers enjoy more security, and givers feel more confident.

Again, financial review  is not about fixing what is broken. It is about keeping what matters strong. 

Churches that choose accountability demonstrate that the gospel is not only preached. It is practiced in every part of ministry, including how the offering is received, recorded, and reported.
Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.
Posted:
Image: getty/Douglas Rissing

Seven Ways the One Big Beautiful Bill Act Impacts Churches and Ministries

Unpacking seven critical provisions within the One Big Beautiful Bill Act with real-world implications for churches, from charitable donations to increased demands on food and health ministries.

Tim Samuel, CPA and Church Chief Financial Officer
Bio

Last Reviewed: October 10, 2025

Summary

One Big Beautiful Bill Act (“OBBBA”) introduces several provisions affecting church financial operations, charitable giving, and community outreach. 

Key provisions include:
  • Permanent expansion of the above-the-line charitable deduction for non-itemizers; 
  • the creation of “Trump Accounts” for children with potential church involvement; and, 
  • policy shifts that may increase demand on church-based food and health ministries. 

Here, we’ll highlight and analyze seven relevant sections for churches and church leaders. 

Above-the-Line Charitable Deduction for Non-Itemizers

This provision applies to taxable years beginning after Dec. 31, 2025, and permanently reinstates and expands the above-the-line deduction for donors who claim the standard deduction.

Individuals who claim the standard deduction also may deduct up to $1,000, and joint filers may deduct up to $2,000.

What this means for churches:
  • To help individual donors deduct contributions of $250 or more, churches should issue contemporaneous written acknowledgments. These acknowledgements should include the church’s name, the date, the amount, and a statement indicating no goods or services, other than intangible religious benefits, were provided in exchange.
  • Year-end giving statements and stewardship messaging should be updated to reflect this benefit.
  • Expect an increase in receipt requests, especially in late January and early April, even for modest donations.
  • Only cash contributions to organizations described in section 170(b)(1)(A) (which includes churches) qualify. Contributions to donor-advised funds or supporting organizations do not qualify for this above-the-line deduction.

Establishment of “Trump Accounts” for Children

This section creates a new tax-favored savings vehicle for minors. 

Accounts may receive up to $5,000 annually from families, employers, or charitable contributors. 

A federal pilot program will fund $1,000 for each newborn from 2025 through 2028.

What this means for churches:
  • These accounts are likely modeled on 529 and Coverdell Education Savings Accounts, with post-tax contributions and tax-free earnings if used for qualified purposes.
  • Churches may consider offering financial literacy education to families on account setup and use.
  • Any contributions made by churches to pastors or employees must avoid private benefit or inurement, as defined by section 501(c)(3) of the Internal Revenue Code (IRC). Consistent, neutral criteria must guide participation.

Important: Consult a lawyer before facilitating or funding these accounts.

0.5 Percent Floor for Itemized Charitable Deductions

This provision creates a floor for deductibility. 

Itemizing taxpayers can only deduct charitable contributions that exceed 0.5 percent of their adjusted gross income.

What this means for churches:
  • For a donor with $100,000 in adjusted gross income, only contributions above $500 are deductible in the current year. Amounts below this floor may be carried forward under section 170(d).
  • To maximize deductions, some may “bunch” several years of giving into one year to exceed the threshold, then take the standard deduction in other years. Donor-advised funds can support this strategy by allowing a lump-sum gift in one year while spreading distributions to churches over time. 
  • Churches should explain this change in donor education efforts and ensure annual giving statements clearly summarize totals.
  • Some donors may reduce small recurring gifts that no longer offer tax benefits.

Support for Nonprofit Development in Native Villages

This section provides federal support for nonprofit activities in remote Native villages. Support may include grants and technical assistance.

What this means for churches:
  • Churches serving Native communities should assess their eligibility based on location, mission alignment, and partnerships with tribal authorities.
  • All federal funding must follow Uniform Guidance (2 CFR Part 200), including cost principles, documentation standards, and nondiscrimination rules.
  • Activities must remain within the church’s exempt purpose. Take care  to avoid unrelated business income or private benefit.
  • Engagement strategies should reflect cultural sensitivity and affirm tribal sovereignty.

Medicaid Eligibility Redeterminations

Effective Dec. 31, 2026, this provision will require Medicaid recipients to reverify their eligibility every six months, rather than annually, potentially resulting in temporary or permanent loss of coverage for individuals.

What this means for churches:
  • Churches offering benevolence assistance or health clinics may see increased demand.
  • Ministries providing direct services must ensure HIPAA compliance, privacy protections, and adherence to state-level licensing or reporting obligations.
  • New referral pathways or partnerships with healthcare providers may be necessary to serve uninsured individuals.
  • Volunteer capacity and intake processes should be reevaluated for scalability and compliance.

Rural Health Transformation Program

This section authorizes federal funding to states to improve healthcare access in rural areas, likely through grants, technical assistance, and local partnerships. States may apply until the end of 2025, with the program scheduled to roll out starting in 2026.

What this means for churches:
  • Churches in rural communities may be eligible to apply for funding to support clinics, health education, mental health services, or preventive care.
  • Successful participation will require administrative capacity to manage grants, financial reporting, and ensure regulatory compliance.
  • Churches should begin identifying local health providers or nonprofits for joint applications or service coordination.
  • This funding may also allow rural ministries to expand their reach and impact.

SNAP Work Requirements Expanded

This section tightens work requirements for able-bodied adults without dependents (ABAWDs) who receive Supplemental Nutrition Assistance Program (SNAP) benefits, increasing the age requirement for such individuals from 54 to 64. The provision also lowers the age of a “dependent child” from 18 to 14.

The changes mean fewer individuals likely will qualify for food assistance.

What this means for churches:
  • Expect increased reliance on church- and faith-based food pantries, grocery programs, and community meals.
  • Churches receiving public food support must maintain eligibility documentation and comply with state and federal reporting requirements.
  • For churches that operate pantries, programs, and meals, their intake training should address respecting the dignity and privacy of individuals seeking help, as well as how to explain the complex new eligibility criteria to those individuals.
  • Budget planning should reflect increased grocery purchases and staffing or volunteer needs.

Want more? Our In-Depth Summary of OBBBA is Available With An Advantage Membership!

Exciting days ahead for Church Law & Tax members:

OBBBA also brings notable changes to IRS Form 1099 reporting requirements, easing the compliance burden for many churches.

Previously, churches were required to file these forms for payments of $600 or more to non-corporate service providers in a calendar year.

Under the new law, this threshold rises to $2,000, indexed for inflation.

This means fewer small payments will trigger the need for information reporting, streamlining administrative processes for many organizations.

Note: OBBBA does not alter the core rules regarding who must file, what types of payments are reportable, or the deadlines for filing and furnishing Forms 1099.

Penalties for noncompliance remain the same.

Churches should update their procedures to reflect these new thresholds and ensure continued compliance. It will be effective for payments made after December 31, 2025.

The relevant statutory references in the Act are Section 70433 (for the general $2,000 threshold).
Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.
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Update: Key Tax Law Changes in the OBBBA Affecting Families, Churches, and Workers

“One Big Beautiful Bill Act” (OBBBA) overhauls multiple areas of tax law. This executive summary for pastors and church leaders highlights key provisions set to take effect.

Matthew Branaugh, Attorney and Editor
Bio
Richard R. Hammar, Attorney, CPA
Bio

Last Reviewed: October 8, 2025

Editor’s Note: The original version of this article was updated on July 17, 2025 to incorporate new section numbers and content and to exclude section numbers and content that do not appear in the final, enrolled version of H.R. 1.

On July 3, 2025, Congress passed the “One Big Beautiful Bill Act” (“OBBBA”), H.R. 1, which President Trump signed into law the next day. 

Church Law & Tax’s tax resources, such as the comprehensive Church & Clergy Tax Guide, will be updated with more in-depth analysis and explanations. But for now, we offer this executive summary of several provisions within OBBBA likely to most affect churches and clergy.

Five Key Provisions
  • OBBBA increases the filing threshold for Forms 1099 and 1099-NEC from $600 to $2,000. This provision is effective beginning with payments made in 2026. The threshold is also subject to inflation adjustments beginning in 2027. This will reduce the number of individuals who will need to receive a 1099 from a church. 
  • OBBBA makes permanent the modified federal income tax bracket schedule and lower tax rates created by prior law and adds an additional year of inflation adjustment to all brackets except for the top bracket (37 percent).
  • OBBBA makes permanent the nearly doubled standard deduction created by prior law and further increases the standard deduction by including an extra year of inflation adjustment. 
  • OBBBA makes permanent a deduction for non-itemizing taxpayers up to $1,000 for single filers ($2,000 for married filing jointly) for charitable cash contributions beginning January 1, 2026. The charitable contribution must be made to a qualified charity and cannot be made to donor-advised funds or supporting organizations.
  • OBBBA establishes a floor equal to 1 percent of taxable income for the deductibility of corporate charitable contributions. In the case of a corporation with charitable contributions exceeding the 10-percent limit, the provision allows taxpayers to add the amount disallowed under the 1-percent floor to the amount carried over to the subsequent year.

Further reading for pastors and church leaders:

Key Sections of OBBBA Title VII, Chapter 1—Providing Permanent Tax Relief for Middle-Class Families and Workers

Key Sections of OBBBA Title VII, Chapter 2—Delivering on Presidential Priorities to Provide New Middle-Class Tax Relief

Key Sections of OBBBA Title VII, Chapter 4—Investing in American Families, Communities, and Small Businesses—Make America Win Again

Key Sections of OBBBA Title VII, Chapter 5—Ending Green New Deal Spending, Promoting America-First Energy, And Other Reforms

Key Section of OBBBA Title VII, Chapter 6—Enhancing Deduction And Income Tax Credit Guardrails, and other Reforms

Jump over to CPA and Church CFO Tim Samuel’s “7 Ways the One Big Beautiful Bill Act Impacts Churches and Ministries”

Title VII, Chapter 1—Providing Permanent Tax Relief for Middle-Class Families and Workers

Most tax provisions take effect on January 1, 2026.

Section 70101. Extension and Enhancement of Reduced Rates. This section makes permanent the modified federal income tax bracket schedule and lower tax rates created by the “Tax Cuts and Jobs Act (2017)” (TCJA). These were set to expire at the end of 2025. 

This provision also adds an additional year of inflation adjustment to all brackets except for the top bracket (37 percent).

Key Point. The taxable income of many ministers will be substantially cut because of OBBBA. As a result, ministers may want to review their estimated tax payments and make adjustments based on the significantly reduced tax liability.

Section 70102. Extension and enhancement of increased standard deduction. Under prior law, the increased standard deduction was      set to expire after December 31, 2025. The increased deduction enjoyed for the past several years is made permanent by OBBBA and further increases by including an extra year of inflation adjustment. The standard deduction for single filers is $15,750; for head of household it is $23,625; and for married filing jointly it is $31,500.

Section 70103. Termination of deduction for personal exemptions and enhanced deduction for seniors. Under prior law, the deduction for personal exemptions was set to return after December 31, 2025. The deduction for personal exemptions is permanently eliminated. However, a temporary deduction for tax years 2025 through 2028 for seniors (age 65 or older) of $6,000 per eligible filer, regardless of whether they are itemizers or non-itemizers is now available. The deduction is available to taxpayers with a modified adjusted gross income that does not exceed $75,000 for single filers ($150,000 for married filing jointly). This deduction expires after 2028 unless extended by Congress.

Section 70104. Extension and increased Child Tax Credit and other dependent credit. After December 31, 2025, the Child Tax Credit was set to decrease to $1,000 per qualifying child under age 17, and fewer American families would qualify for the credit as the income phase-out levels returned to much lower thresholds. Similarly, the nonrefundable Other Dependent Credit—$500 for older children or adults who are unable to care for themselves—was also set to expire.

OBBBA provides a child tax credit of $2,200 per child for 2025 and adjusts it annually for inflation starting in 2026. Phaseout thresholds for 2025 and 2026 are $200,000 for single filers and $400,000 for married filing jointly. A taxpayer (or spouse, if married filing jointly) must provide a Social Security number, along with the child’s Social Security number.

The nonrefundable Other Dependent Credit is also made permanent, although it will not adjust annually for inflation.

Section 70106. Extension of increased estate and gift tax exemption amounts and permanent enhancement. Under prior law, the increased estate and lifetime gift tax exemption amount was set to expire after December 31, 2025 ($13.99 million for single filers and $27.98 million for married filing jointly in 2025). The estate and lifetime gift tax exemption are both extended and increased. The exemption amount increases to $15 million for single filers and $30 million for married filing jointly in 2026 and indexes the exemption amount for inflation going forward. The highest estate and gift tax rate remains 40 percent.

Section 70107. Extension of increased alternative minimum tax exemption and phase-out thresholds. This section of OBBBA permanently extends the increased individual alternative minimum tax exemption amounts and exemption phase-out thresholds.

Section 70108. Extension of limitation on deduction for qualified residence interest. Under prior law, the deduction for qualified residence interest, also known as the home mortgage interest deduction, was set to increase from the first $750,000 in home mortgage acquisition debt to $1 million after December 31, 2025. This section of OBBBA permanently lowers the deduction for qualified residence interest to the first $750,000 in home mortgage acquisition debt.

Section 70109. Extension of limitation on casualty loss deduction. Under prior law, the itemized deduction for uncompensated personal casualty losses resulting from a fire, storm, shipwreck, other casualty, or theft was set to return after December 31, 2025. This section of OBBBA permanently allows for the itemized deduction for only personal casualty losses resulting from federally declared disasters.

Section 70110. Termination of miscellaneous itemized deductions. Under prior law, individuals could deduct certain miscellaneous itemized deductions in taxable years beginning after December 31, 2025, including unreimbursed employee business expenses, legal fees, and investment expenses, to the extent they exceeded 2 percent of the taxpayer’s adjusted gross income. Miscellaneous itemized deductions (other than educator expenses) are now permanently eliminated.

Section 70113. Extension of limitation on exclusion and deduction for moving expenses. Under prior law, both the exclusion for qualified moving expenses reimbursement and the deduction for moving expenses were set to return for taxable years beginning after December 31, 2025. Both the exclusion for qualified moving expenses reimbursement and the deduction for moving expenses, except for active-duty members of the U.S. Armed Forces and certain members of the U.S. intelligence community, are now permanently eliminated.

Section 70120. Limitation on individual deductions for certain state and local taxes. Under prior law, the itemized deduction for state and local taxes was capped at $10,000 ($5,000 for a married taxpayer filing a separate return). The “SALT cap” was set to expire for taxable years beginning after December 31, 2025. This section increases the SALT cap to $40,000 starting in 2025 for most taxpayers; and increasing by 1% per year through 2029. The cap remains $10,000 for taxpayers with modified adjusted gross incomes over $500,000.

Title VII, Chapter 2 – Delivering on Presidential Priorities to Provide New Middle-Class Tax Relief

Section 70202. No taxes on tips or overtime pay. OBBBA created two deductions related to wages earned by taxpayers: the deduction for tips received and the deduction for qualified overtime.

Both provisions require an employer to provide information to the taxpayer and the government to facilitate these deductions.

  • Tips. For 2025 through 2028, a deduction for qualified tips received by taxpayers during a given taxable year is limited to $25,000. Not only must employers report qualifying amounts, but the deduction for tips requires employers to report the employee’s qualifying occupation code (as defined by Treasury). The deduction begins to phase out when the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return). A work-eligible Social Security number is required to claim the deduction.
  • Overtime. For 2025 through 2028, a deduction for overtime premium pay received by taxpayers during a given taxable year limited to $12,500 ($25,000 in the case of a joint return). Qualified overtime compensation means overtime compensation paid to an individual required under Section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed. The deduction begins to phase out when the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return). A work-eligible Social Security number is required to claim the deduction.

Mandatory Employer Reporting: As of August 7, 2025, the IRS announced it will not change Form W-2 for 2025. Further guidance is expected as to how the reporting requirements will be met for 2025, so employers should be aware further updates may be issued in January of 2026, prior to the start of the 2026 tax-filing season. Informal guidance from the IRS suggests reporting the amount in Box 14 of Form W-2.

For 2026, the IRS has issued a draft Form W-2 that contains Box 14b to report the qualifying occupation code for the tip deduction and added two codes to Box 12: Code TP for qualified tips; and Code TT for qualified overtime compensation.

Section 70203. No tax on car loan interest. A deduction is available for tax years 2025 through 2028 of up to $10,000 for qualified passenger vehicle loan interest paid during a given taxable year. The deduction phases out starting when the taxpayer’s modified adjusted gross income exceeds $100,000 ($200,000 in the case of a joint return). To be eligible, the passenger vehicle must have at least two wheels, be made primarily for use on public streets, roads, and highways, and have its final assembly occur in the United States.

Section 70204. Trump accounts. OBBBA introduces “Trump Accounts,” a new kind of tax-favored savings account for minors beginning on January 1, 2026. The accounts will be administered by a bank or similar financial institution and the overall program will be seen by the US Department of Treasury.

Accounts may be established for any child under the age of 18 and designated as a Trump Account. To be eligible, the child must be a U.S. citizen with a Social Security number and at least one parent must provide his or her Social Security number.

These accounts are eligible to receive contributions from a variety of sources, including parents, relatives, employers,  nonprofit organizations, and government entities facilitated by the Treasury Department.

Title VII, Chapter 4—Investing in American Families, Communities, and Small Businesses

Section 70413. Additional elementary, secondary, and home school expenses treated as qualified higher education expenses for purposes of 529 accounts. Under prior law, “529 savings plans” are tax-advantaged accounts designed to fund education expenses, with federal law allowing tax-free withdrawals for the following qualified expenses: tuition (including up to $10,000 annually for K-12 education), fees, books, supplies, equipment required for enrollment, room and board (for students enrolled at least half-time), computers, software, internet access, special needs services, and costs for registered apprenticeship programs.

Tax-exempt distributions from “529 savings plans” may now be used for additional educational expenses in connection with enrollment or attendance at an elementary, secondary, or home school, including:
  1. curriculum and curricular materials,
  2. books or other instructional materials,
  3. online educational materials,
  4. tutoring or educational classes outside the home,
  5. testing fees,
  6. fees for dual enrollment in an institution of higher education, and educational therapies for students with disabilities.

The OBBBA also increased the limit for expenses associated with K-12 education from $10,000 to $20,000 annually.

Section 70414. Certain postsecondary credentialing expenses treated as qualified higher education expenses for purposes of 529 accounts. Under OBBBA, tax-exempt distributions from 529 savings plans may now be used for additional qualified higher education expenses, including “qualified postsecondary credentialing expenses” in connection with “recognized postsecondary credential programs” and “recognized postsecondary credentials.”                                                                                         

Section 70416. Expanding application of tax on excess compensation within tax-exempt organizations. Under prior law, section 4960 of the tax code imposes an excise tax on excess compensation paid to certain highly compensated employees by tax-exempt organizations. The excise tax rate is equal to the corporate tax rate multiplied by the sum of (1) any remuneration in excess of $1 million paid to a covered employee for a taxable year, and (2) any excess parachute payment paid to a covered employee. 

Previous law limited the number of persons considered for the excise tax. OBBBA expands application of the law by defining a covered employee to include any employee of an applicable tax-exempt organization that receives remuneration in excess of $1 million during any tax year after 2016, effective for tax years beginning after December 31, 2025.

Section 70424. Reinstatement of partial deduction for charitable contributions of individuals who do not elect to itemize. Under prior law, only taxpayers who itemize deductions could deduct their charitable contributions. A permanent deduction for non-itemizing taxpayers up to $1,000 for single filers ($2,000 for married filing jointly) for charitable cash contributions is available starting in 2026. The charitable contribution must be made to a qualified charity and cannot be made to donor-advised funds or supporting organizations.

Section 70426. 1-percent floor on deduction of charitable contributions made by corporations. Under prior law, corporate taxpayers were generally allowed a deduction for charitable contributions up to a limitation equal to 10 percent of taxable income. 

This section of OBBBA establishes a floor equal to 1 percent of taxable income for the deductibility of corporate charitable contributions. 

In the case of a corporation with charitable contributions exceeding the 10-percent limit, the provision allows taxpayers to add the amount disallowed under the 1-percent floor to the amount carried over to the subsequent year.

Section 70432. Repeal of the revision of rules for third-party network transactions. Under the American Rescue Plan Act (ARPA) of 2021, third-party settlement organizations, such as payment card companies, payment apps, and online marketplaces, would be required to issue Form 1099-K to participating payees receiving gross payments exceeding $600 for goods or services, regardless of the number of transactions. 

The law was strongly protested by filers, and implementation delays led to a higher threshold of $5,000 or more, regardless of the number of transactions, in a year. 

This OBBBA provision increases the threshold to $20,000, and more than 200 transactions, effective with the date ARPA became law.

Section 70433. Increase in threshold for requiring information reporting with respect to certain payees. This increases the filing threshold for Forms 1099 and 1099-NEC from $600 to $2,000. This provision is effective beginning with payments made in 2026. The threshold is also subject to inflation adjustments beginning in 2027. This will reduce the number of individuals who will need to receive a 1099 from a church.

Title VII, Chapter 5—Ending Green New Deal Spending, Promoting America-First Energy, and Other Reforms

Section 70502. Termination of clean vehicle credit. Under prior law, taxpayers could claim a tax credit of up to $7,500 for clean new vehicles placed in service in a given taxable year. The credit was limited to incomes of $150,000 for single filers, $225,000 for head of household filers, and $300,000 for joint filers. It was also limited to varying Manufacturer’s Suggested Retail Prices (MSRPs) for different vehicle types. The credit was set to expire December 31, 2032.

This section of OBBBA accelerates the expiration to vehicles acquired after September 30, 2025. 

Section 70505. Termination of energy efficient home improvement credit. This section of OBBBA accelerates the expiration of the tax credit for household energy efficient improvements to December 31, 2025. The value of the credit was 30 percent of qualified energy efficient improvements, residential energy property, or home energy audits not exceeding $1,200 annually ($2,000 if for heat pumps and biomass stoves). 

Section 70506. Termination of residential clean energy credit. This section of OBBBA accelerates the expiration of a credit with respect to any expenditures made for solar electric, solar water heating, fuel cell, small wind energy, geothermal heat pumps, and battery storage in residences to December 31, 2025.

Section 70508. Termination of new energy efficient home credit. This section of OBBBA accelerates the expiration of an energy efficient credit for new homes to June 30, 2026. 

Title VII, Chapter 6—Enhancing Deduction and Income Tax Credit Guardrails, and Other Reforms

Section 70607. Task force on the termination of Direct File. Under prior law, the IRS could prepare and file tax returns online, for free, to qualifying taxpayers in participating states (the “Direct File” program). In addition, the IRS offered      a Free File program where several tax preparation and filing software industry companies provided their online tax preparation and filing for free.

OBBBA earmarks $15 million for a task force to determine program costs, explore public-private partnerships, and replace any direct e-file programs run by the IRS.

OBBBA (H.R. 1) full text:
OBBBA_EnrolledDownload
Matthew Branaugh is an attorney and editor for Church Law & Tax.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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Update: Churches Gain Political Speech Leeway—But Uncertainty Remains

A recent IRS settlement signals greater freedom for churches to speak on political candidates—yet murky boundaries and tax-code risks still require caution.

Matthew Branaugh, Attorney and Editor
Bio

Last Reviewed: September 23, 2025

Editor’s Note: On September 22, 2025, the federal judge presiding over National Religious Broadcasters et al. v. Danny Werfel et al. scheduled a November 7, 2025, hearing for oral arguments on two motions related to the case, delaying its final outcome.

The first motion aims to finalize the agreed-upon settlement from July of 2025 between the Internal Revenue Service (IRS) and the plaintiffs, which garnered widespread publicity because it contains an IRS statement indicating greater leeway for churches to support or oppose political candidates.

The second motion, filed by Americans United for Separation of Church and State, seeks to intervene in the case. The group opposes the IRS settlement statement.

Pastors and church leaders should note this development, since both the scope and the implications of the settlement statement explained in this article remain up in the air—and likely will remain so for a while.

Church Law & Tax will continue to monitor the case and provide updates as they become available.

In a statement included with a proposed lawsuit settlement, the Internal Revenue Service (IRS) says churches enjoy more latitude when it comes to endorsing or opposing political candidates.

It’s a surprising development after decades of debate and uncertainty regarding what is and isn’t allowed for tax-exempt organizations under a controversial Internal Revenue Code provision best known as the “Johnson Amendment.”

But uncertainties remain about just how much latitude.

Churches sue the IRS 

Two Texas churches and the National Religious Broadcasters sued the agency in August of 2024 regarding the constitutionality of the Johnson Amendment. Previously, President Trump called for its repeal through a 2018 executive order. 

Don’t Let Legal Ambiguity Put Your Church at Risk

The IRS may have softened its stance, but the legal landscape remains unclear—and your church’s tax-exempt status could still hang in the balance. As a Church Law & Tax member, you get exclusive access to expert analysis, real-time legal updates, and practical guidance trusted by pastors, church administrators, and attorneys nationwide.

Become a member today and stay legally confident, not legally exposed.

The amendment, adopted in 1954, says tax-exempt organizations—as defined for federal law under section 501(c)(3) of the tax code—may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” The amendment also limits the amount of political lobbying conducted by those organizations.

Churches meeting certain criteria are automatically considered tax-exempt under 501(c)(3), and for years, the IRS has contended they fall under the Johnson Amendment’s prohibitions. But religious freedom advocates say the amendment violates the free exercise rights of churches protected by the First Amendment.

The IRS shifts its position

In agreeing to settle the lawsuit this week, the IRS includes this pronouncement granting churches more latitude with political candidates:

When a house of worship in good faith speaks to its congregation, through its customary channels of communication on matters of faith in connection with religious services, concerning electoral politics viewed through the lens of religious faith, it neither “participate[s]” nor “intervene[s]” in a “political campaign,” within the ordinary meaning of those words. 

To “participate” in a political campaign is “to take part” in the political campaign, and to “intervene” in a political campaign is “to interfere with the outcome or course” of the political campaign. . . . 

Bona fide communications internal to a house of worship, between the house of worship and its congregation, in connection with religious services, do neither of those things, any more than does a family discussion concerning candidates. Thus, communications from a house of worship to its congregation in connection with religious services through its usual channels of communication on matters of faith do not run afoul of the Johnson Amendment as properly interpreted.

Six observations for pastors and church leaders

Persuasive, but not precedential. 

The IRS’s position through the settlement would be binding precedent only in the jurisdiction where the lawsuit was filed: the US District Court for the Eastern District of Texas, Tyler Division. Its outcome applies only to the plaintiffs who brought the lawsuit. 

However, the IRS position still would be considered persuasive nationwide, and a church facing future IRS action that’s inconsistent with that position could use it effectively as an “admission against interest” against the agency, says attorney Frank Sommerville, a longtime senior editorial advisor for Church Law & Tax. 

The Internal Revenue Code (IRC) remains unchanged—for now. 

As a federal agency, the IRS can change its regulations through a process involving proposed new language, notice, and a period for public comment. Congress also can enact laws revising the tax code. Until one or the other acts, however, the tax code will remain unchanged. This means churches and church leaders must remain mindful of the proposed settlement’s persuasive value.  

Uncertain scope. 

The proposed settlement statement emphasizes “(b)ona fide communications internal to a house of worship,” and notes “communications from a house of worship to its congregation in connection with religious services through its usual channels of communication on matters of faith do not run afoul of the Johnson Amendment.”

Communications made during worship services, as well as through printed bulletins and signs and posters within the church’s building, would appear safe under the IRS’s settlement statement. 

Meanwhile, widespread pamphleteering, signs on church lawns, or roadside billboard advertising using the church’s name and logo would not be safe. 

Less certain? Streamed worship services, and articles, audio, and video sent through websites and social media. Sommerville says an important principle is that political speech is only a small part of the communications. Were the settlement to become finalized, he suggests:
  • Streaming a church’s worship services in which a discussion of a candidate arises would be allowable;
  • Less certain would be a church website featuring a prominent political endorsement, or a prominent article on a church’s website endorsing or opposing a candidate;
  • Social media posts to an open account endorsing a candidate would remain troublesome, while posting to a closed social media account probably would be safe; and,
  • An email endorsing a candidate from a pastor probably would be still prohibited.

CPA Mike Batts, also a longtime senior editorial advisor for Church Law & Tax, notes that the involvement of the National Religious Broadcasters as a plaintiff in the lawsuit appears to help “accommodate the dissemination or broadcast of a church’s religious message to ‘its congregation’ via media (such as television, radio, and internet broadcasts).”

The bottom line: the ambiguity probably sets the stage for future litigation, should the settlement receive court approval.

IRS publications and advisory materials also remain unchanged. 

The IRS’s Publication 1828, Tax Guide for Churches and Religious Organizations still states the IRS’s previous interpretation of the Johnson Amendment. It remains to be seen whether the agency would update the guide or other related materials. Regardless, churches should note that such materials always carry an IRS disclaimer stating they are for informational purposes only and are not considered authoritative.

The IRS is watching–but how closely? 

The settlement statement also contends the IRS position regarding churches actually operates consistently with lax IRS enforcement actions against politically active churches. Attorney and Church Law & Tax senior editor Richard Hammar has noted that few churches have lost their tax-exempt status due to political activities policed by the agency. 

However, Batts says he has “firsthand knowledge that the IRS has definitively engaged with churches” recently regarding political activities.  

Each church must discern how it is called to act. 

Churches that feel called to engage in political matters, including opposing or endorsing political candidates, face the same question now as they did before: To what extent do they wish to pursue such activities, vis-a-vis the possible threat to their tax-exempt statuses? 

With a court approval of the settlement, the threat of losing tax-exempt status may lessen. But the extent of activities permissible in the eyes of the IRS will remain uncertain, leaving churches to decide how far to go with politically related activities.

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Matthew Branaugh is an attorney and editor for Church Law & Tax.
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Supreme Court Restricts Nationwide Injunctions by Federal Judges

The Court’s ruling limits the authority of individual federal district judges and helps preserve key religious tax benefits like the housing allowance.

Richard R. Hammar, Attorney, CPA
Bio

An important question has remained unresolved in the US judicial system for decades: Does a federal district judge have the authority to issue a “universal injunction” binding in all 50 states? 

In 2025, the United States Supreme Court said no. 

The ruling addresses three separate legal challenges to executive orders made by President Trump. 

This means that a federal district judge does not have the constitutional authority to issue nationwide injunctions. Instead, a federal judge can only issue an injunction affecting the parties involved with litigation before the court.

Historical basis

The Court, in a 6-3 majority, based its decision on history. 

It noted that “the first universal injunction was not issued until 1963 . . . and they remained rare until the turn of the 21st century when their use gradually accelerated. . . . One study identified approximately 127 universal injunctions issued during the 40-year period between 1963 and 2023.” 

Further, the Court noted that “universal injunctions postdated the founding [of the country] by more than a century.” 

The Court majority concluded that such history supports a narrow—rather than an expansive—application of universal injunctions.

What this means for churches

The relevance of this case to churches and clergy is illustrated by a case several years ago that threatened the viability of the ministerial housing allowance.

In 2013, a federal district court judge in Wisconsin struck down
the ministerial housing allowance as an unconstitutional preference for religion. 

The ruling was in response to a lawsuit brought by the Freedom from Religion Foundation (FFRF). The lawsuit challenged the constitutionality of the housing allowance and the parsonage

exclusion (Freedom From Religion Foundation, Inc. v. Lew, 983 F. Supp. 2d 1031 (W.D. Wis. 2013)). 

The court issued a universal injunction banning application of the housing allowance by clergy in all 50 states, but it postponed its ruling pending an appeal to the US Court of Appeals for the Seventh Circuit. 

The appeals court ultimately reversed the federal district court’s ruling, and the ministerial housing allowance remains legal and constitutional today. 

Through the Supreme Court’s ruling, ministers now have additional peace of mind. They need not be concerned that the housing allowance exclusion may be lost at any time due to a future injunction by a lone federal district court judge.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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Can One Federal Judge Issue a Nationwide Injunction?

Church leaders need to know: Can one federal judge issue a ruling that binds all 50 states? The answer matters—especially when clergy housing allowances are at stake.

Richard R. Hammar, Attorney, CPA
Bio

Does a federal judge have the authority to issue a nationwide injunction that is binding in all 50 states? There is no simple answer to this question. 

Federal judges are not mentioned in the Constitution, and examples of national injunctions being issued by a federal judge are rare. 

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The issue is again in the national spotlight as  the Trump administration pushes to block what it believes to be judicial overreach by federal judges who are resisting the president’s agenda by issuing national injunctions.


Not just a political question

The question of a nationwide injunction is not restricted to the political realm.

A federal district court raised it in a 2013 case (Freedom From Religion Foundation, Inc. v. Lew, 983 F. Supp. 2d 1031 (W.D. Wis. 2013)) challenging the constitutionality of the clergy housing allowance. 

A federal district judge in Wisconsin issued a nationwide injunction barring the Internal Revenue Service (IRS) from recognizing the clergy housing allowance. 

A federal appeals court eventually reversed this case, but the larger issue remains unresolved.  

Some members of Congress want to pass a law to address it. Senate Judiciary Committee chairman Chuck Grassley (R- Iowa), for example, has introduced the Judicial Relief Clarification Act that would limit the ability of federal courts to issue national injunctions.

WATCH: Speaking of the clergy housing allowance, Church Law & Tax Attorney & Editor Matt Branaugh offers 5 key insights about this valuable benefit for pastors.

What should church leaders do?

For now, ministers should recognize that any one of about 700 federal district judges has the authority to issue a national injunction binding in all 50 states. This remains true unless changed by Congress or a decision by a federal appeals court or the United States Supreme Court.

This theoretically means someone could bring a future legal challenge regarding the constitutionality of the clergy housing allowance. This, in turn, could lead to a federal judge again issuing a national injunction rendering it  unconstitutional and unenforceable. 

Note: This is an unlikely result given the compelling and unanimous decision by the three-judge federal appeals court in 2019 affirming the constitutionality of the housing allowance.

FAQ

1. Can a federal judge issue a nationwide injunction?

Yes—any one of roughly 700 federal district judges has the authority to issue a nationwide injunction that binds all 50 states. However, such broad injunctions are relatively rare and legally contested.

2. Has a nationwide injunction ever affected churches?

Yes. In 2013, a federal district judge in Wisconsin ruled the clergy housing allowance was unconstitutional and issued a nationwide injunction. The ruling was later reversed on appeal, and the housing allowance remains constitutional.

3. Could Congress or the courts change this authority?

Possibly. Some members of Congress have proposed legislation to limit federal judges’ ability to issue nationwide injunctions. The issue remains unresolved at the federal level.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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Image: gettyimages/Fat Camera

Why Your VBS Needs the Two-Adult Rule for Child Protection

Vacation Bible School creates exciting ministry moments—but also unique risks. Learn why the two-adult rule is vital to your child protection strategy.

Matthew Branaugh, Attorney and Editor
Bio

Vacation Bible School (VBS) is an early summer tradition for many churches across the country.

As you recruit staff and volunteers to support your church’s VBS, it’s important to keep a holistic abuse-prevention plan in view, even when pursuing last-minute help. 

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That starts with staff and volunteer training that covers all of the needed screening, selection, and supervision efforts, such as Church Law & Tax’s Reducing the Risk available for Advantage Members. 

One supervision angle that matters greatly and can easily get overlooked at VBS merits specific attention: the two-adult rule.

What Is The Two-Adult Rule?

The core idea behind the two-adult rule is that no child should ever be alone with an unrelated adult during church activities, including VBS. 

Church leadership should establish the rule and make it applicable to all church property and church functions, notes Richard Hammar, attorney and senior editor of Church Law & Tax. 

For churches that use underage teenage volunteers for ministry, including VBS, the rule also applies. Leaders must make certain at least one adult is present with a teenager while working with kids (thus maintaining the presence of at least two people—and once children are no longer present, the adult and teenager must then join other adults to maintain the two-adult rule with the teenager).

Tip: The presence of multiple children is an asset. “Some churches follow public school models, allowing one adult with multiple children in a classroom during regular hours,” Hammar says. “This is generally seen as legally acceptable.” 

When Can Violations Arise?

Here are common ways the two-adult rule gets compromised during VBS:
  • Scenario: A VBS mostly functions outdoors and includes multiple activity stations. Groups of kids, segmented by age, rotate through activities. Shortly after one group arrives at the craft station, one child suddenly needs to use a restroom in the building. 

Solution: The craft station leader monitors the group’s remaining kids, while the group’s two adult leaders walk with the child to the restroom. Alternatively, the leaders can ask if other kids need to use the restroom and one adult leader can accompany multiple kids to the restrooms. (Note: The adults should not go with the child into the restroom. For guidance on how to assist young children with bathroom needs, consult with your local school district’s policies to see how such situations get handled.)

  • Scenario: At the end of the day’s activities, one child’s parent is running late to pick him up. Staff and volunteers are packing up to leave and all the other kids are gone. 

Solution: The two adult leaders for the child’s group should remain present with the child until he gets picked up. If one or both adults need to leave, then they should communicate with the children’s ministry director to ensure at least two other trained adults remain with the child until the parent arrives. 

  • Scenario: A child’s parent cannot pick her up, due to the parent’s unexpected work conflict. 

Solution: This scenario presents an especially high risk. Ideally, your church has already established policies for transportation that include: 

  • (1) Written consent from parents or guardians,
  • (2) Review of insurance coverage with the church’s insurance carrier,
  • (3) Screening drivers for suitability. 

Beyond this, two trained adults and other children should be present in a vehicle to provide the child a ride, assuming the child will be dropped off to a parent or approved guardian. 

The bottom line: One adult providing one child a ride should be prohibited, including scenarios where one adult drives multiple children to their destinations, thus eventually leaving one child alone with the adult. Safe Kids Thrive, an organization serving Massachusetts, offers additional helpful tips regarding transportation.

Why The Two-Adult Rule Exists

Some might believe the two-adult rule is excessive–even unrealistic–given the challenges of finding enough volunteer help for children’s ministries and VBS.

But countless cases of abuse involving church leaders and minors could have been prevented by the two-adult rule. That includes the rape of a 13-year-old by a church volunteer who was supposed to drive her to a church activity, and the rape of a 14-year-old by a youth pastor who conducted events as the only adult present.

That’s why adopting and following a two-adult rule should be central to every church’s child-abuse prevention efforts. As your church readies itself for VBS and other ministry activities, take time now to ensure you have the rule–and everyone knows how to comply with it.
Matthew Branaugh is an attorney and editor for Church Law & Tax.
Video

RLUIPA Case Study: Christian Fellowship Centers

A case study which illustrates RLUIPA in action involving a property zoning in the tiny berg of Canton, New York.

Matthew Branaugh, Attorney and Editor
Bio

Church Law & Tax members can watch the full Religious Land Use & the Church: Virtual Roundtable series, which includes an insightful discussion with leading attorneys, a companion PDF guide, and another video case study featuring a church that faced government challenges to a property it planned to purchase.

Matthew Branaugh is an attorney and editor for Church Law & Tax.
Video

Religious Land Use & The Church: A Virtual Roundtable — Segment 5

RLUIPA provides critical protections when churches encounter opposition over land use. In this insightful video series, legal experts and pastors walk through real examples of how congregations defended their rights—and what steps your ministry can take today to be prepared.

Featuring attorneys Midgett Parker, John Mauck, Noel Sterrett, Eric Treene, and Matthew Branaugh

The Religious Land Use and Institutionalized Persons Act (RLUIPA) was passed unanimously in 2000 by the US Congress and signed into law by President Bill Clinton. However, many church leaders remain unaware of how this law can help them avoid—or at least navigate—challenges posed by governments, agencies, and associations regarding the purchase or use of property for worship and other religious purposes.

Not yet a member? View the series introduction and one case study for free.

This five-segment virtual roundtable features attorneys Midgett Parker, John Mauck, Noel Sterrett, and Eric Treene. It explores why every church should understand the ins and outs of this valuable law. It is particularly key when confronting obstacles from local government or zoning officials or neighborhood associations.

In addition, Matthew Branaugh, an attorney and editor for Church Law & Tax, shares two video case studies regarding how RLUIPA helped two pastors successfully overcome obstacles presented by their local officials.

To get the most out of the roundtable, we suggest you download this PDF. It will help guide you through the video series and offer helpful notes and highlights for future reference.

Segment 5: How RLUIPA May Help Your Church in the Future

Return to:

Video

Religious Land Use & The Church: A Virtual Roundtable — Segment 4

Zoning disputes and government restrictions can threaten your church’s ability to grow. In this five-part roundtable, legal experts and ministry leaders explain how RLUIPA works—and how it has helped churches overcome land use challenges and preserve their rights.

Featuring attorneys Midgett Parker, John Mauck, Noel Sterrett, Eric Treene, and Matthew Branaugh

The Religious Land Use and Institutionalized Persons Act (RLUIPA) was passed unanimously in 2000 by the US Congress and signed into law by President Bill Clinton. However, many church leaders remain unaware of how this law can help them avoid—or at least navigate—challenges posed by governments, agencies, and associations regarding the purchase or use of property for worship and other religious purposes.

Not yet a member? View the series introduction and one case study for free.

This five-segment virtual roundtable features attorneys Midgett Parker, John Mauck, Noel Sterrett, and Eric Treene. It explores why every church should understand the ins and outs of this valuable law. It is particularly key when confronting obstacles from local government or zoning officials or neighborhood associations.

In addition, Matthew Branaugh, an attorney and editor for Church Law & Tax, shares two video case studies regarding how RLUIPA helped two pastors successfully overcome obstacles presented by their local officials.

To get the most out of the roundtable, we suggest you download this PDF. It will help guide you through the video series and offer helpful notes and highlights for future reference.

Segment 4: RLUIPA Resources

Return to:
Video

Religious Land Use & The Church: A Virtual Roundtable — Segment 3

Churches often face resistance when buying or using property. This expert-led video roundtable unpacks how RLUIPA helps protect your church’s rights—and why leaders should understand the law before issues arise.

Featuring attorneys Midgett Parker, John Mauck, Noel Sterrett, Eric Treene, and Matthew Branaugh

The Religious Land Use and Institutionalized Persons Act (RLUIPA) was passed unanimously in 2000 by the US Congress and signed into law by President Bill Clinton. However, many church leaders remain unaware of how this law can help them avoid—or at least navigate—challenges posed by governments, agencies, and associations regarding the purchase or use of property for worship and other religious purposes.

Not yet a member? View the series introduction and one case study for free.

This five-segment virtual roundtable features attorneys Midgett Parker, John Mauck, Noel Sterrett, and Eric Treene. It explores why every church should understand the ins and outs of this valuable law. It is particularly key when confronting obstacles from local government or zoning officials or neighborhood associations.

In addition, Matthew Branaugh, an attorney and editor for Church Law & Tax, shares two video case studies regarding how RLUIPA helped two pastors successfully overcome obstacles presented by their local officials.

To get the most out of the roundtable, we suggest you download this PDF. It will help guide you through the video series and offer helpful notes and highlights for future reference.

Segment 3: Key Provisions of RLUIPA

Return to:
Video

Religious Land Use & The Church: A Virtual Roundtable — Segment 2

This five-part video roundtable explains how the Religious Land Use and Institutionalized Persons Act (RLUIPA) protects your church’s property rights. Legal experts and real-world case studies reveal how this underused federal law can help you respond to zoning conflicts and government pushback.

Featuring attorneys Midgett Parker, John Mauck, Noel Sterrett, Eric Treene, and Matthew Branaugh

The Religious Land Use and Institutionalized Persons Act (RLUIPA) was passed unanimously in 2000 by the US Congress and signed into law by President Bill Clinton. However, many church leaders remain unaware of how this law can help them avoid—or at least navigate—challenges posed by governments, agencies, and associations regarding the purchase or use of property for worship and other religious purposes.

Not yet a member? View the series introduction and one case study for free.

This five-segment virtual roundtable features attorneys Midgett Parker, John Mauck, Noel Sterrett, and Eric Treene. It explores why every church should understand the ins and outs of this valuable law. It is particularly key when confronting obstacles from local government or zoning officials or neighborhood associations.

In addition, Matthew Branaugh, an attorney and editor for Church Law & Tax, shares two video case studies regarding how RLUIPA helped two pastors successfully overcome obstacles presented by their local officials.

To get the most out of the roundtable, we suggest you download this PDF. It will help guide you through the video series and offer helpful notes and highlights for future reference.

Segment 2: The history of RLUIPA

Return to:

Image: gettyimages/saifulasmee chede

Why Institutional References Matter When Screening Church Volunteers

Richard Hammar urges churches to shift from personal to institutional references when screening youth workers.

Matthew Branaugh, Attorney and Editor
Bio

Attorney Richard Hammar was among the first to caution Protestant churches about the need to protect kids and use screening and selection processes for the people who work with children and youth in their care. 

When he crafted the Reducing the Risk abuse-prevention awareness training program in the early 1990s, Hammar recommended a five-step checklist. Three of those steps–a written application, interview, and reference checks–occurred before a person even set foot in a Sunday school classroom or youth-group gathering. 

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Over time, Hammar has expanded the checklist to 14 steps. The checklist is based on new research, new best practices, and input from law enforcement and courts.

One example: requiring applicants to provide reference checks from institutions, rather than personal acquaintances.

FBI insights

For years, personal references seemed adequate. Churches, already scrambling to find eligible volunteers and staff, could ask applicants for the names of two people and quickly contact them to confirm the applicants’ suitability to work with children and youth. 

Then Hammar came across research from the Federal Bureau of Investigation (FBI). 

As he explained in an issue of Church Law & Tax Report, “(u)sually, church leaders are not familiar with personal references, and so they are of limited value. Further, the FBI profile on pedophiles states that the only adult friends of pedophiles tend to be other pedophiles. This further diminishes the value of personal references.”

From that point forward, Hammar recommended institutional references, not personal ones.

What is an institutional reference?

So, what is an “institutional reference”? An institutional reference is one provided by someone at an institution where the applicant has previously worked with children or youth. 

It might be another church’s children’s ministry or a youth sports program. It might be a school. 

“(O)btaining a positive reference from one or more other institutions that have actually observed the applicant interact with minors is the gold standard in screening prospective youth and children’s workers,” Hammar notes. 

Your church should ask “whether the institution is aware of any information indicating that the applicant poses a risk of harm to minors,” he adds. 

In some instances, an applicant may not have previous experience volunteering or working with a youth-serving organization. When that happens, Hammar recommends limiting the applicant’s personal references to “members of the church, or to members of other churches that are well known to church leadership.”

Be thorough

When contacting an institutional reference, the date and time of the conversation should be logged. So should the name of the person contacted, the questions asked, and a summary of the responses. Careful written notes should be made and retained permanently with the applicant’s file.

If possible, include a second person on the call who can sign the notes as a witness.

Thoroughness doesn’t stop there, however. Hammar’s full 14-step list includes, among other things, interviewing the applicant and running a criminal background check with a service that reviews local, state, and federal databases. 

Though Hammar’s process may appear excessive, the well-being of children hangs in the balance. Abuse does not only affect the victim, but their family. There’s also the effects on a church congregation along with the existential threat of a civil lawsuit.

A church that has not taken steps is particularly susceptible to civil lawsuits that come with significant financial risks. Damages may exceed a church’s insurance coverage, assuming the policy even covers abuse claims. Many general liability policies do not.

After the Penn State University football program scandal in the early 2010s, the #MeToo and #ChurchToo movements in 2017, and the widespread effort of many states to temporarily or permanently pause the statutes of limitation to bring civil claims, the risk is too great for church leaders to take the threat of abuse too lightly. 

“The public (your potential “jury pool”) is increasingly intolerant of the inadequate response by churches and other youth-serving charities to incidents of child sexual abuse,” Hammar says. “Church leaders need to review current policies and be prepared to take additional steps to protect minors.”
Matthew Branaugh is an attorney and editor for Church Law & Tax.
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Mandatory Child Abuse Reporting Laws: What Church Leaders Must Know

Every state has child abuse reporting laws—and many apply to clergy. Learn what your church needs to know, how to comply, and why immediate action is critical.

Matthew Branaugh, Attorney and Editor
Bio

Every state has a mandatory child-abuse reporting law on the books. 

But many pastors and church leaders are unaware of these statutes, let alone their need to comply with them. 

Since April is National Child Abuse Prevention Month, now is a smart time for church leaders to familiarize themselves with these laws, how they work, and what to do if the unthinkable–a suspected case of child abuse–ever arises. 

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Abuse allegations consistently rank first among the reasons churches go to court each year, so the gravity of the situation alone merits the highest of priorities. 

What is a mandatory abuse-reporting law? 

Mandatory abuse-reporting laws first emerged in the early 1960s, mainly in response to growing research regarding the immense harm suffered by children through ongoing physical, emotional, or sexual abuse, and neglect. 

Researchers increasingly found that persons in positions of trust often had opportunities to intervene on a child’s behalf, but didn’t, leading state lawmakers to begin passing legislation compelling them to do so. 

The ultimate goal: increase action and reduce abuse.

In the decades since these laws first surfaced, every state has adopted one, and most states have modified them multiple times to expand the list of named professionals required to report. 

Over time, most–though not all–state laws have explicitly named clergy and other common church roles, such as teachers and directors.  

The penalties for failing to comply are notable. Most laws recognize criminal liability for the person who fails to report, with penalties ranging from misdemeanors and small fines to jail time and hefty fines. 

At least eight states also recognize civil liability, which means a victim can personally sue the person who failed to meet their reporting obligation.

What church leaders should know

Church Law & Tax regularly updates its 50-state survey of abuse-reporting laws, and recently did so again. 

Upgrade to Advantage Membership to access our 50-state survey of abuse-reporting laws.

The report offers specific guidance on whether laws include clergy and other church-related positions, plus other requirements a state’s law imposes, including:
  • The state’s definition of abuse;
  • The process for reporting suspected abuse;
  • The deadline for reporting (usually within 24 hours to 48 hours);
  • The state’s position on how a clergy member should handle information potentially received through a conversation protected by the clergy-penitent privilege; 
  • The phone and website contact points for reporting; and,
  • The criminal and/or civil liability faced for failing to report.

When the #MeToo movement erupted on social media in 2017, numerous states enacted broad-sweeping changes to their reporting laws. That activity has subsided during the past two years, with the most notable changes coming in the phone numbers or website links that mandatory reporters must use to report. 

When in doubt, report

Pastors and church leaders often become aware of abuse either because they learn a child has been harmed by a person within the church or by someone outside the church. 

Regardless of who has perpetrated the suspected abuse and where it occurred, pastors and leaders must respond. 

Regrettably, though, many hesitate. 

Sometimes it’s because they believe a situation can be handled within the church. Other times it’s because they aren’t sure whether they need to verify the credibility of a case.

Neither are good reasons. 

The laws simply state “reasonably suspected cases of abuse,” and that standard–though seemingly ambiguous–is not difficult to meet. The laws do not require further inquiry on the part of the mandatory reporter, or for the mandatory reporter to present specific evidence. 

Furthermore, states offer immunity to an individual who makes a good-faith report that is later deemed to be inaccurate, underscoring just how much the state wants persons in positions of trust to act.

As attorney Richard Hammar, the co-founder of Church Law & Tax, has recommended for years, “When in doubt, report.” A child’s well-being hangs in the balance.
Matthew Branaugh is an attorney and editor for Church Law & Tax.
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Image: Getty/marekuliasz

3 Tax Preparation Software Cautions Every Minister Should Know

Tax preparation software may seem like a quick fix for ministers during tax season, but it often overlooks key clergy-specific rules. Learn the top three issues to watch for—and when to seek help from a tax professional.

Matthew Branaugh, Attorney and Editor
Bio

Every tax season, ministers who struggle to get their federal and state returns done–or worse, get started too late or don’t start them at all–may get a little bit anxious. 

When that happens, it’s natural to look for help. 

And, in the tax industry, preparation software is a common solution. 

Did you know an Advantage Membership unlocks unlimited access to our extensive content library?

Whether TurboTax, TaxAct, or H&R Block, these programs are relatively inexpensive compared to hiring a qualified tax preparer. They also tend to take only a few hours to complete from start to finish. 

But ministers need to note three cautions before using one of these programs. 

Three cautions

Ministers have unique rules and benefits that make their tax reporting different from most people. Three of them aren’t addressed well by tax preparation software.

Michele Wales, Sophie Chevalier, and Jessica Hebb from national CPA firm Batts, Morrison, Wales & Lee outlined them for Church Law & Tax, and ministers should note where to work cautiously if they use a software program:
  • The “dual tax status” of ministers: Ministers are treated as employees for income tax purposes, but they are treated as self-employed for purposes of Social Security and Medicare.
  • Housing and parsonage allowances: Qualified ministers are eligible to have a portion of their incomes designated, tax-free, to cover eligible housing or parsonage costs. But tax prep software isn’t tailored to account for such allowances. 
  • Business expenses. Many tax software options do not automatically calculate the nondeductible portion of business expenses allocable to the tax-free portion of a minister’s income. This means a manual adjustment must be made.

What to do?

That’s not to say tax prep software is off-limits to ministers. The options can be used if proper caution is applied to these three topics. 

But as Wales, Chevalier, and Hebb note, it is still wise to have a qualified tax preparer review the returns. Do this before filing them. 

Ministers have options with finding that qualified person who can help. Along with CPAs, enrolled agents may be a viable–and possibly less expensive–path. 

Our Church & Clergy Tax Guide addresses tax status of ministers, the housing and parsonage allowances, and business expenses. 

Similarly, the companion 2025 Clergy Tax Prep Guide–a downloadable resource–walks ministers step-by-step through their federal Form 1040s.

Matthew Branaugh is an attorney and editor for Church Law & Tax.
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