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What We Know: Tax Payments and Filings for Churches and Individuals

How the coronavirus is affecting the current tax season—and beyond.

The Editors

The US Department of Treasury, the Internal Revenue Service (IRS), and state agencies continue to issue new instructions and guidance regarding tax-related matters for the country in response to the COVID-19 (coronavirus) outbreak. Church Law & Tax continues to update this page as relevant new advisories and information become available.

Income tax-filing

The Treasury Department has pushed back the deadline for Americans to file their income tax returns in response to the COVID-19 (coronavirus) outbreak.

All taxpayers and businesses now have through July 15, 2020, to file their returns—and the IRS will waive all interest and penalties. As a result, the extension now applies to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.

Separately, in Notice 2020-23, the IRS expanded this relief to include quarterly estimated tax payments (Form 1040-ES) that would have been due before July 15, 2020, including the first two estimated tax payments due on April 15 and June 15 of 2020. This means that any individual who has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.

Estimated Quarterly Tax Payments for 2020

Quarter	Original Due Date	Revised Due Date
Jan-Mar	April 15, 2020	July 15, 2020
Apr-Jun	June 15, 2020	July 15, 2020
July-Sept	Sept. 15, 2020	Sept. 15, 2020
Oct-Dec	Jan. 15, 2021	Jan. 15, 2021

Individual taxpayers who need additional time to file beyond the July 15 deadline can request an extension to October 15, 2020, by filing Form 4868 through their tax professional, tax software, or using the Free File link on irs.gov. An extension to file is not an extension to pay any taxes owed. Taxpayers requesting additional time to file should estimate their tax liability and pay any taxes owed by the July 15, 2020, deadline to avoid additional interest and penalties.

Key point. This provision is especially relevant to pastors who typically use the estimated tax procedure to prepay their federal taxes since they are exempt by law from income tax withholding.

Treasury Secretary Steven Mnuchin still encourages taxpayers to file income taxes as soon as possible, especially those who are expecting refunds, the Wall Street Journalreported.

The IRS also encourages people who have failed to file returns from previous years to do so now. The agency says “[m]ore than 1 million households that haven’t filed tax returns during the last three years are actually owed refunds; they still have time to claim these refunds.” For taxpayers with a tax liability, the IRS says they “should consider taking the opportunity to [enter] into an Installment Agreement or an Offer in Compromise.”

At the state level, the American Institute of Certified Public Accountants has assembled this chart tracking state income tax-filing deadlines. California has already pushed its filing and payment deadline to June 15, and the state waived interest, late-filing, and late-payment penalties. Connecticut and Maryland have extended their deadlines for business returns (June 15 for Connecticut and June 1 for Maryland). Oregon and Washington have issued guidance offering certain provisions and accommodations as well.

Church reporting requirements

Separately, in Notice 2020-23, the IRS said its deadline extensions also apply to tax-exempt organizations required to file an annual Form 990, Form 990-N, and/or Form 990-T; Form 4720; or other commonly required reports used under certain circumstances. Section 6033 of the Internal Revenue Code exempts churches from filing annual Form 990s or Form 990-Ns, however, if a church generates $1,000 or more annually in unrelated business income from a church-run business or the renting of its space to outside groups, it is required to file a Form 990-T.

Installment Agreements

The IRS says individuals with outstanding tax liabilities are still able to enter into new Installment Agreements (a monthly payment arrangement set in advance with the IRS). For existing Installment Agreements, the agency says payments that would have been due between April 1 and July 15, 2020, are now suspended. Taxpayers who cannot comply with the terms of an Installment Payment Agreement (including a Direct Deposit Installment Agreement) may also suspend payments during this timeframe if they wish, the IRS says.

The IRS will not default on Installment Agreements through July 15, 2020. However, interest will continue to accrue on unpaid balances.

Offers in Compromise

The IRS says taxpayers with a pending Offer in Compromise application will now have until July 15, 2020, to provide any requested additional information. The agency also will accept new applications for Offers in Compromise.

Regarding existing Offers in Compromise:

Taxpayers may suspend all payments until July 15, 2020. However, interest will continue to accrue on unpaid balances.
The IRS will not default on an existing Offer in Compromise for a taxpayer that is delinquent on a 2018 return. But the agency says the taxpayer should file the delinquent 2018 return, along with their 2019 return, on or before July 15, 2020.

Audits

The IRS will not start new field, office and correspondence examinations until July 15, 2020, unless such an examination is “deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.”

Stay updated

Continue to follow ChurchLawAndTax.com and its free e-newsletters and social media for updates on this page as well as its coronavirus coverage. In the meantime, track ongoing tax-related deadlines through Church Law & Tax’s tax calendar.

Also get updates directly from the IRS and the Treasury Department.

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Downloadable Checklist: Is our Church Keeping It Confidential?

This nine question checklist can help your church maintain financial and personal confidentiality.

The Editors

Last Reviewed: February 4, 2025

Confidentiality is always a high priority among church staff and members. Use this checklist to guage how your church is doing at securing confidential information.

Download a PDF version of this checklist.

Creating a Culture of Confidentiality

Verbal sharing is sometimes overlooked in discussions about church-office confidentiality. On the phone or in person, office employees field questions about personal appointments or express concerns about church members.

Put it in writing.

One church administrator at a large Baptist church on the West Coast said that all office workers must sign a statement of confidentiality before being hired. Employees that breach this rule are dismissed. Several churches include a confidentiality clause in their employee handbooks.

Clear the area.

Information can be leaked unintentionally. If a secretary gets a phone call from a distraught person, the secretary may have to ask questions before directing the call. The secretary should make sure others are not present who might hear this confidential conversation. If potential eavesdroppers are nearby, the caller should be put on hold until the area can be cleared.

Put a lid on the log.

Many offices log in phone calls or keep copies of messages. This information could be harmful if shared with others. It might be wise to limit access to the church office, particularly after office hours.

Stress confidentiality.

People who work in the church office should be regularly reminded of their role in maintaining confidentiality. What each person should ask prior to divulging information is, “Does this person have a qualified need to know it?” If not, the information should be kept quiet.

To learn more about confidentiality, check out attorney Richard R. Hammar’s commentary on the topic in Pastor, Church & Law: Your ultimate reference guide to understanding the legal issues and responsibilities of the church in America. Full access to this guide is available to with a Church Law & Tax membership.

The 10 Commandments of Church Management

The 10 commandments of church management cover everything from intellectual property to unrelated business income.

Frank and Elaine Sommerville

The 10 Commandments of church management offer a basic framework for ensuring your church does not veer too far off the path of sound financial, tax and governance matters.

I. Thou shalt not allow the church’s intellectual property to be used for personal purposes.

Rule: Under the work for hire doctrine, any property developed within the scope of the job duties of an employee is the property of the employer.

Practice Tip: An intellectual property policy should be carefully crafted and adopted. It should address all areas of concern, such as curriculum, sermons, and music.

II. Thou shalt not have a substantial amount of revenue derived from unrelated business income.

Rule: An organization may have some unrelated business income, but too much can endanger the exempt status of the church.

Unrelated business income is generated from activities that are r egularly carried on; not substantially related to exempt purposes, and trade or business.

Practice Tip: The rules are complicated and there is an exception to every exception. Each activity must be separately analyzed. The commercial manner in which an activity is conducted can create unrelated business income even if the activity seems to be related.

III. Thou shalt carefully design outreach programs to provide for the benefit of a charitable class.

Rule: The church’s programs cannot create unacceptable private benefit to individuals and organizations. Therefore, all programs have to be able to pass a test that any benefit to an individual is permissible private benefit and will not endanger the exempt purposes of the church. Such programs include the benevolence program and scholarship programs.

Practice Tip: The church should construct policies and guidelines to be followed for these programs that comply with the applicable rules.

IV. Thou shalt not allow any transactions with another party to be conducted at more than or less than fair market value.

Rule: Any transaction may benefit the church, but the transaction may not provide a greater benefit to the other party (with the exception of another nonprofit organization). Transactions with disqualified persons may be subject to intermediate sanctions of 25 percent to 200 percent under IRC Section 4958.

Practice Tip: Fair market value should always be established for a transaction. Where a control party is involved, this should be determined and documented in writing. For example, competitive bids should be obtained for transactions involving outside services, purchases, or sales.

V. Thou shalt not endorse any candidate for any public office, nor dedicate a substantial amount of your assets to legislative activities.

Rule: No support or opposition may be given to a political candidate and only limited support can be dedicated to legislative activities.

VI. Thou shalt fully document every aspect of a control party’s (disqualified person’s) compensation package within the requirements of IRC Section 4958.

Rule: A disqualified person is someone who carries influence in the church, either currently or within the past five years. Examples include the senior pastor and other senior leaders (whether credentialed ministers or not); board members; committee members who oversee key areas of the church; and, family members of any of those individuals.

The compensation paid to a disqualified person must meet the following criteria:

• It must be decided by the independent persons.

• It must be based on outside, comparable data.

• It must be documented in writing along with the basis for the amount of compensation determined.

Practice Tip: Each year, analyze every benefit provided to a disqualified person and re-document these in writing prior to the start of the next year. This includes cash compensation, noncash compensation, and fringe benefits. (To go deeper on compensation-setting, and the topic of disqualified persons, see Chapter 2 of CPA Elaine Sommerville’s Church Compensation, Second Edition.)

VII. Thou shalt document all expenditures as to the exempt purpose of the expenditure and maintain documentation as required by law for those special expenses involving meals, entertainment, and travel.

Rule: Every expenditure of a church must be documented as to the exempt purpose of the expense. For meals, entertainment, and travel, the “who, what, when, where, and why” must be documented.

Practice Tip: The following should be adopted and maintained by the church:

• An accountable plan for all business expenses.

• A credit card acceptance policy that requires employees to submit receipts for all charges.

• A formal policy should be adopted to require immediate repayment of any expense that is determined to be a personal expense.

VIII. Thou shalt conduct all designated fundraising programs with the greatest of care and caution and don’t mess up the contribution receipts.

Rule: Designated contributions must be used as designated unless the restriction is released by the donor or by the appropriate state office or court.

Practice Tips:

• Attempt to build in a provision that allows excess funds to be redirected to another ministry of the church or to the general fund.

• Make sure everyone is familiar with the rules regarding events that include a contribution where benefits may be exchanged.

IX. Thou shalt adhere to all payroll/labor rules—even the ones you don’t like.

Rule: Churches are subject to many of the same payroll tax rules as other organizations, with the complication of special rules for ministers. Additionally, the majority of labor law rules apply to churches and religious ministries.

Practice Tip: Pay special attention to the following areas:

• Classification of ministers.

• Classification of employees vs. independent contractors.

• Deposit rules for payroll taxes and filing requirements for Forms 941, 944, W-2, and 1099-Misc.

• Taxation of fringe benefits.

• Designation of housing allowance.

X. Thou shalt endeavor to determine good governance procedures and adhere to them consistently.

Rule: Good governance equals good organization. Follow the basics:

• Knowledge of what the organization’s exempt purposes are.

• Good governing documents.

• Well-documented actions of the governing body(ies).

• Good policies.

• Good people.

• Keep the corporate status up to date and in good standing.

Practice Tip: Review governing documents, policies, and procedures and make sure that they are actually being followed.

Adapted from “The Ten Commandments of Religious Organizations,” by Frank and Elaine Sommerville. Used with permission.

Additional resource:

Church Compensation – Second Edition with 2023 Updates: From Strategic Plan to Compliance.

Annual Nondiscriminatory Policy Reporting Deadline Looms for Church-Run Schools

Filing Form 5578 is one of the most commonly ignored federal requirements of church-run schools and preschools.

Richard R. Hammar, Attorney, CPA

Bio

Last Reviewed: April 16, 2025

Filing the certificate of racial nondiscrimination (IRS Form 5578) is one of the most commonly ignored federal reporting requirements of private schools and preschools, including ones operated, supervised, or controlled by churches and other religious organizations.

But it is due every year.

I want to start my Church Law & Tax membership today. How do I sign up?

What is a private school?

A private school is defined as an educational organization that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly conducted. The term includes primary, secondary, preparatory, or high schools, as well as colleges and universities, whether operated as a separate legal entity or an activity of a church.

Key point. The term school also includes preschools, and this is what makes the reporting requirement relevant for many churches. As many as 25 percent of all churches operate a preschool program.

Private schools must meet certain requirements

The IRS requires that a private school have:

a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that is has a racially nondiscriminatory policy toward students.
a statement of its racially nondiscriminatory policy toward students in all its brochures and catalogs dealing with student admissions, programs, and scholarships.

The IRS also requires that a school make its racially nondiscriminatory policy known to all segments of the general community served by the school either online, in the local newspaper, or via broadcast media (see below).

What is an acceptable public notice?

The IRS has offered this template:

Notice Of Nondiscriminatory Policy As To Students

The (name) school admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

Exceptions to the public notice requirement

The publicity requirement is not required if one or more exceptions apply. These include the following:

During the preceding three years, the enrollment consists of students at least 75 percent of whom are members of the sponsoring church or religious denomination, and the school publicizes its nondiscriminatory policy in religious periodicals distributed in the community.
The school draws its students from local communities and follows a racially nondiscriminatory policy toward students and demonstrates that it follows a racially nondiscriminatory policy by showing that it currently enrolls students of racial minority groups in meaningful numbers.
The school can demonstrate that all scholarships or other comparable benefits are offered on a racially nondiscriminatory basis.

Online notice options

Private schools can post their racially nondiscriminatory policy online, per IRS Revenue Procedure 2019022 (2019).

To do that, a school must display a notice of its racially nondiscriminatory policy on its primary publicly accessible Internet homepage at all times during its taxable year (excluding temporary outages due to website maintenance or technical problems) in a manner reasonably expected to be noticed by visitors to the homepage.

Per the IRS, a publicly accessible Internet homepage is one that does not require a visitor to input information, such as an email address or a username and password, to access the homepage.

Factors to be considered in determining whether a notice is reasonably expected to be noticed by visitors to the homepage include the size, color, and graphic treatment of the notice in relation to other parts of the homepage, whether the notice is unavoidable, whether other parts of the homepage distract attention from the notice, and whether the notice is visible without a visitor having to do anything other than simple scrolling on the homepage.

A link on the homepage to another page where the notice appears, or a notice that appears in a carousel or only by selecting a dropdown or by hover (mouseover) is not acceptable. If a school does not have its own website, but it has webpages contained in a website, the school must display a notice of its racially nondiscriminatory policy on its primary landing page within the website.

Other notice options

A school may publish its racially nondiscriminatory policy at least once a year in a newspaper of general circulation, or via broadcast media.

Filing the certificate of racial nondiscrimination

The certificate of racial nondiscrimination is due by the fifteenth day of the fifth month following the end of the organization’s fiscal year.

However, for organizations that operate on a calendar-year basis, the Form 5578 deadline is May 15. Schools must also maintain supporting records documenting compliance with the policy in order to retain their tax-exempt status.

Form 5578 is easy to complete. A church official simply identifies the church and the school and certifies that the school has “satisfied the applicable requirements of sections 4.01 through 4.05 of Revenue Procedure 75-50.”

Key point. Independent religious schools that are not affiliated with a church or denomination and that file Form 990 do not file Form 5578. Instead, they make their annual certification of racial nondiscrimination directly on Form 990 (Schedule E).

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Are Employee Discounts on Church Retreats and Events Taxable?

Churches offering employee discounts on retreats and events must determine whether these benefits are taxable. IRS Publication 15-B allows certain exclusions, but restrictions apply, especially for highly compensated employees. Get expert insights on compliance and best practices.

David Fletcher, Founder of XPastor.org

Bio

Q: We want to offer all staff who work 32 hours a week or more discounts to church retreats and functions. Does the “employee discounts” exclusion outlined in IRS Publication 15-B apply or must discounts be treated as taxable income to the employees? The publication says: “This exclusion applies to a price reduction you give your employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services.”

I would also like to point out that Publication 15-B says, “You can generally exclude the value of an employee discount you provide an employee from the employee’s wages, up to” certain limits—including “a discount on services, 20% of the price you charge nonemployee customers for the service.”

There are some caveats to this discount, and this one may apply to your executive leadership: “You can’t exclude from the wages of a highly compensated employee any part of the value of a discount that isn’t available on the same terms to” other employees.

If you are giving a discount of 20 percent or less to any employee, it is nontaxable. If the discount is more than 20 percent, then the term “substantial services,” as you quoted above, will need clarification from a tax expert.

For some additional insights, I reached out to nonprofit CPA Mike Batts, a nationally noted expert, an editorial advisor of Church Law & Tax, and author of Church Finance: The Church Leader’s Guide to Financial Operations. He concludes his remarks by dealing specifically with the terms “line of business” and “substantial services,” which relates specifically to whether an employee needs to work in the department conducting the discounted activity in order to be eligible for the discount.

Here, then, is what Mike had to say:

The nontaxable fringe benefit rule that your reader is referring to is the “qualified employee discount” exclusion found in Internal Revenue Code Section 132(a)(2). Under this rule, an employer can generally exclude from an employee’s wages the value of an employee discount of up to 20 percent of the price charged to nonemployee customers for the same service. An employee discount provided to “highly compensated” employees is nontaxable only if the discount program does not discriminate in favor of highly compensated employees. In other words, the discount given to highly compensated employees should not be more favorable than that given to other employees. For this purpose, the term “highly compensated employee” generally refers to individuals whose total compensation exceeds $125,000. This is the amount applicable to 2019 and it is indexed annually for inflation. Note that for this purpose, the compensation used in determining whether an individual is highly compensated is the compensation of the prior year. The definition of “compensation” varies depending on the circumstances, but it generally does not include a validly designated clergy housing allowance within allowable limits. As far as the “substantial services” question, unfortunately, neither the Internal Revenue Code nor the related Regulations provide a definition or “bright-line” test for what constitutes “substantial services.” However, the Regulations do indicate that an employee who performs substantial services that directly benefit more than one line of business of an employer is treated as performing substantial services in all such lines of business. In our experience, we believe it is likely that all of the ministry activities of a traditional church taken together would comprise a single line of business for purposes of this fringe benefit rule. In practicality, churches rarely consider their employees to work in separate lines of business as that concept would be applied to this issue.

Visit ChurchLawAndTaxStore.com and check out these resources for additional insights:

Church Compensation by Elaine Sommerville (chapters 8 and 9)
Church & Clergy Tax Guide by Richard Hammar (chapters 4 and 5)

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David Fletcher has more than 35 years of experience as a pastoral leader in churches. In 2003, he founded XPastor, a resource website for executive pastors, and XP-Seminar, an annual church leadership conference.

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Child Abuse Prevention and Reporting: Protecting Your Church in the #MeToo Era

Webinar Recording: Create a plan for your church to help prevent child abuse and sexual harassment.

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How Should Items Donated for a Silent Auction Be Treated for Tax Purposes?

Discover if silent auction items are tax-deductible and how churches can comply with IRS guidelines for noncash donations.

Kaylyn Varnum, CPA

Bio

Q: My church is planning a silent auction to raise money for a missions trip. What should we say to potential donors to help them understand any tax implications for their donations—whether it involves a donated item, a service, or, say, the use of a vacation cottage for a week?

Are Silent Auction Items Tax Deductible?

Items donated to a silent auction are treated as noncash contributions under federal tax law. Donors are responsible for determining the value of their noncash gifts and calculating the appropriate amount to deduct as a charitable contribution. However, it’s important to note that certain donations, such as services or the use of property (e.g., a vacation cottage), are not tax-deductible.

What Are the Rules for Noncash Contributions?

For items donated to a silent auction, donors who contribute noncash items valued at more than $500 must generally file IRS Form 8283 with their tax returns. Depending on the type of item and the claimed deduction amount, donors may also need a church official’s signature on the Form 8283 to confirm receipt of the donation.

If the church sells, exchanges, or disposes of a donated item within three years of the contribution date and previously signed a Form 8283, the church must file IRS Form 8282 within 125 days. A copy of Form 8282 should also be provided to the donor.

What Acknowledgment Should the Church Provide?

The church should issue a contribution acknowledgment that includes:

The date of the gift;
A description of the property donated (but not its value);
A statement indicating whether the donor received any goods or services in exchange for the gift.

If no goods or services were provided, the acknowledgment should clearly state that. If goods or services were provided, the acknowledgment must include their estimated value and a statement noting that the donor may only deduct the excess of their gift amount over the value of the goods or services received.

What About Donations of Services or Use of Property?

Donors should be aware that contributions of services (e.g., professional skills or labor) and gifts of the right to use property (e.g., a vacation home for a week) are not tax-deductible. While the church can acknowledge such gifts, the acknowledgment should state that these types of donations are generally not deductible, and donors should consult a tax advisor for guidance.

Special Rules for Vehicle Donations

For donations of vehicles such as cars, boats, or airplanes, special IRS rules apply. Donors should refer to IRS Publication 4303 for detailed guidance on vehicle contributions.

Additional Resources

For more information about charitable contributions and IRS requirements, refer to Chapter 8 of the Church & Clergy Tax Guide. This resource provides comprehensive details on acknowledgment requirements, filing forms, and other aspects of charitable giving.

Frequently Asked Questions

Are silent auction items tax-deductible?

Physical items donated to a silent auction are generally tax-deductible, but donors must determine their value. Services or the use of property are not deductible.

What forms are required for noncash donations?

Donors must file IRS Form 8283 for noncash contributions over $500. If the church sells the item within three years, it must file IRS Form 8282.

What should be included in a donation acknowledgment?

The acknowledgment must include the date of the gift, a description of the donated property, and whether goods or services were provided in exchange for the gift.

How should the church handle vehicle donations?

Vehicle donations are subject to special rules outlined in IRS Publication 4303. Donors must follow specific IRS guidelines for these contributions.

Kaylyn Varnum is a partner and the assistant national director for tax services at Batts Morrison Wales & Lee (BMWL), an Orlando-based national CPA firm serving churches and nonprofits. Varnum’s primary responsibilities involve serving and advising tax-exempt organizations.

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Planning Your Pastor’s Retirement

Webinar Recording: What you need to create and follow a successful retirement plan.

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Taking the Next Steps

Action steps your church can take to implement or strengthen your child-protection program.

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Spokesperson David Staal wraps up the training and offers action steps your church can take to implement or strengthen your child-protection program.

Responding to an Allegation

The story of how one church handled an allegation of child sexual abuse.

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What would your church do if it were faced with an allegation of child sexual abuse? This video depicts the story of how one church handled this situation. Experts add insights to this first-person story.

Supervising Scenarios: What Would You Do?

Interactive segment teaches principles of good supervision.

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This fast-paced, interactive segment teaches principles of good supervision. It helps children and youth volunteers think through common scenarios of supervision.

Legal Requirements: The Church’s Responsibility to Protect Kids (with Richard Hammar)

Richard Hammar explains legal requirements for protecting children in your ministry.

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Viewers receive more training by the most trusted name in church law—Richard Hammar. In this segment, he explains legal requirements for protecting children in your ministry, plus practical tips on how your ministry can meet the “reasonable standard of care.”

Screening & Selection: The Candidate (a short film)

Teaches leaders how to interview a candidate, conduct a background check, and check references.

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This segment creatively teaches leaders how to interview a candidate, conduct a background check, and check references. Participants will see and hear what the screening and selection process should look like.

Screening & Selection: Your First Line of Defense

Richard Hammar’s teaching session on the importance of proper screening and selection of staff and volunteers.

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Richard Hammar, noted church attorney and CPA, and one of the creators of Reducing the Risk, presents a powerful teaching session on the importance of proper screening and selection of staff and volunteers. This segment provides a five-step plan for reducing liability.

Sexual Abuse in Faith Communities—an Expert Roundtable

Five experts who deal with different aspects of sexual abuse in the church.

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This presentation features five experts who deal with different aspects of sexual abuse in the church, ranging from a psychologist who helped create his church’s child protection program to an insurance claims manager who understands the legal impact of sexual abuse allegations. By sitting in on this group’s discussion, viewers gain insight into the issues surrounding child sexual abuse in ministries today.

A Victim’s Story

The true story of a victim of clergy abuse.

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This segment presents the true story of a victim of clergy abuse. It should help sensitize leaders to the human cost of sexual abuse in ministry settings.

Child Protection as the Foundation of Your Ministry

Children’s ministry director David Staal introduces churches to the problem of child sexual abuse in the church.

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Children’s ministry director David Staal introduces churches to the problem of child sexual abuse in the church. This segment gets people invested in solving this safety issue by engaging them, heart and mind. It should be the first presentation that you view and show.

Image: Image: Chip Somodevilla/Getty Images

How to File Form 6056

Discover the steps large employers need to take to file Form 6056 under the ACA requirements.

Richard R. Hammar, Attorney, CPA

Bio

Question: Should a church or employer file the 6056 return, and what does the process involve?

Overview of Section 6056 Requirements

The Affordable Care Act added Section 6056 to the Internal Revenue Code, requiring “applicable large employers” (ALEs) to file annual information returns with the IRS and provide statements to their full-time employees about the health insurance coverage offered. This is essential for administering the employer shared responsibility provisions and determining employee eligibility for premium tax credits.

Who Qualifies as an Applicable Large Employer?

An employer with an average of at least 50 full-time employees (including full-time equivalents) on business days during the preceding calendar year.
Full-time employees generally work at least 30 hours per week.
Religious or nonprofit employers are not exempt from these requirements.

Key Points About Filing Form 6056

The following are important considerations for ALEs:

The first filing requirements began for coverage offered in 2015, with returns due in 2016.
Form 1094-C (transmittal form) and Form 1095-C (employee statement) are required to satisfy the reporting requirements.
Large employers with self-insured health plans use Form 1095-C to meet both Section 6055 and 6056 requirements.

Reporting Deadlines

IRS Filing: File Form 1094-C and 1095-C by February 28 (or March 31 if filing electronically) of the year following the coverage year.
Employee Statements: Furnish statements to employees by January 31 of the year following the coverage year.

Filing Process and Methods

There are three main methods for filing under Section 6056:

General Method

The general method involves filing Form 1094-C and providing Form 1095-C for each full-time employee. These forms report the health coverage offered and other required details.

Alternative Methods

Two alternative reporting methods aim to reduce administrative burdens for employers. Detailed explanations of these methods are available on the IRS website (IRS Questions and Answers on Reporting).

Electronic Filing

Employers filing fewer than 250 returns may file on paper; others must file electronically.
Electronic furnishing of employee statements is permitted with employee consent.

Penalties for Noncompliance

Failure to file Form 6056 or furnish employee statements on time may result in penalties under Sections 6721 and 6722. Common issues include:

Missing deadlines
Omitting required information
Providing incorrect information

Employers may qualify for penalty waivers or abatements for reasonable cause under Section 6724.

FAQs About Filing Form 6056

What is the purpose of Form 6056? Form 6056 reports health coverage offered by ALEs to help the IRS administer shared responsibility provisions and determine premium tax credit eligibility. Do religious or nonprofit employers need to file? Yes, religious and nonprofit employers that meet the ALE criteria are subject to the same filing requirements. Can employers hire third-party providers to assist? Yes, third-party administrators can file returns and furnish employee statements on behalf of employers. Are there penalties for filing late? Yes, late filing or incorrect information may result in penalties. However, reasonable cause waivers may apply.

Conclusion

Filing Form 6056 is a critical responsibility for applicable large employers to comply with ACA requirements. Understanding deadlines, filing methods, and potential penalties ensures accurate and timely compliance. Employers should consult IRS resources or qualified professionals to navigate these obligations effectively.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Image: AdobeStock/Yurii Kibalnik

Form 8822-B Requirements for Churches: Staying Compliant

Discover why churches must comply with Form 8822-B requirements, including timely updates to the IRS about responsible party changes.

Richard R. Hammar, Attorney, CPA

Bio

Last Reviewed: January 11, 2025

Any church that has employees, files employment tax returns, or maintains a bank or brokerage account must have an Employer Identification Number (EIN). This requirement applies to nearly every church in the United States.

In 2010, the IRS introduced a process to collect information about the “responsible parties” associated with EINs. This step aimed to ensure that all tax-related correspondence reached the appropriate individuals. The IRS requested the name and Social Security number of a responsible party through Form SS-4, which is used to obtain an EIN.

The Introduction of Form 8822-B

By 2013, the IRS became increasingly frustrated with its inability to contact responsible parties identified on Form SS-4. Many responsible parties had moved, resigned, or passed away. As a solution, the IRS established a new requirement for all EIN holders: the need to report changes in their responsible party using Form 8822-B. This change was first announced on November 18, 2013, in the IRS newsletter Employee Plans News:

Key IRS Announcement:

“Beginning January 1, 2014, any entity with an EIN, such as a plan sponsor, must report a change in the identity of their plan’s responsible party on Form 8822-B, Change of Address or Responsible Party – Business, within 60 days of the change.”

Clarifying Form 8822-B Requirements

Church leaders were initially confused about this requirement. While the IRS did not impose penalties for failing to meet the original March 1, 2014, compliance date, the agency strongly encourages timely reporting of any changes to responsible parties. Failure to submit Form 8822-B could result in missed correspondence, including:

Warnings about incomplete paperwork
Notices of taxes owed
Information about potential fines and penalties

To remain compliant, churches must notify the IRS of any changes to their responsible party within 60 days by filing Form 8822-B. This ensures that critical IRS communications are directed to the appropriate individual.

Why Compliance Matters

Filing Form 8822-B helps churches avoid miscommunications with the IRS that could lead to administrative complications or financial penalties. Keeping the IRS updated about responsible party changes ensures churches remain informed about their tax obligations and avoids unnecessary risks.

FAQs

What is Form 8822-B?
Form 8822-B is used to report changes in the responsible party or address for any entity with an EIN.
Who is considered a responsible party?
A responsible party is the individual who controls, manages, or directs the entity’s funds and assets.
What happens if Form 8822-B is not filed?
Failure to file may result in missed IRS communications, leading to fines or penalties for unresolved tax issues.
How soon must Form 8822-B be filed after a change?
It must be filed within 60 days of a change in the responsible party or address.

Church leaders should prioritize updating the IRS promptly to ensure compliance and maintain smooth operations.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Image: AdobeStock/furyon

Hosting a Music Group at Church: Legal and Clergy Tax Considerations

Don’t allow any performances until your sought guidance from a competent tax adviser.

The Editors

Bio

Last Reviewed: January 24, 2025

Q: I’m a pastor of a local church and have some questions about groups and individuals that come to the church to do musical performances. I’d like to know what our requirements are as a church regarding the legal and tax requirements.

Churches often host music groups or individual performers for special events, raising questions about legal and tax obligations. Below, we address key considerations for churches when organizing such events.

Can We Collect an Offering to Offset Expenses?

Yes, churches may collect offerings to offset expenses such as travel, meals, and other performance-related costs. However, it is important to document the purpose of the offering and ensure it complies with the church’s tax-exempt status.

What Are the Rules for Collecting Offerings?

You can collect offerings in various ways, such as passing a collection plate, accepting contributions at the door, or using online donation platforms. Ensure transparency regarding the purpose of the offering.

Can We Sell Tickets to the Performance?

Yes, churches may sell tickets to performances, but this may trigger unrelated business income tax (UBIT) if the event is not directly related to the church’s religious mission. Consult a tax professional for guidance on UBIT implications.

What Should We Call the Offering?

It is acceptable to call the offering a “love offering” or “suggested donation,” but the terminology should not mislead donors. Clearly communicate whether the offering is tax-deductible or used to support specific expenses.

Do We Need to Issue Receipts or Tax Forms to Performers?

If performers are compensated with part or all of the offering, you may need to issue IRS Form 1099-NEC if payments exceed $600 for the year. Verify the tax status of the performers and maintain proper documentation.

Should We Explain the Purpose of the Offering?

Yes, explaining the offering’s purpose ensures transparency and compliance. Clearly state whether the funds will offset costs or support a specific initiative, and document this for recordkeeping.

Key Questions to Address Before Hosting

Is the music group recognized as tax-exempt or a taxable entity?
Is the church providing only the venue, or is it a church-sponsored event?
Does the event align with the church’s religious mission?
Is there a written agreement detailing the terms of the event?

Important Legal and Tax Considerations

Churches must avoid practices that jeopardize their tax-exempt status. For example:

Avoid agreements to pass all collected offerings to performers without oversight.
Limit compensation to reasonable amounts and document expenses.
Ensure events comply with IRS guidelines for tax-exempt organizations.

For further guidance on love offerings and tax compliance, consult the Church & Clergy Tax Guide.

FAQ Section

1. Can the church keep a portion of the offering for expenses?

Yes, churches can allocate a portion of the offering to cover event-related costs, but this must be communicated to donors.

2. Are ticket sales always taxable?

Ticket sales may be subject to UBIT if the event is not directly related to the church’s mission. Seek professional advice to determine tax implications.

3. What if the performers are volunteers?

Volunteers who receive no compensation do not require tax reporting. However, reimbursed expenses may still need documentation.

Yes, but ensure promotional materials align with the church’s mission and clarify any ticketing or donation procedures.

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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Church reporting requirements

Installment Agreements

Offers in Compromise

Audits

Stay updated

Creating a Culture of Confidentiality

What is a private school?

Private schools must meet certain requirements

What is an acceptable public notice?

Exceptions to the public notice requirement

Online notice options

Other notice options

Filing the certificate of racial nondiscrimination

Are Silent Auction Items Tax Deductible?

What Are the Rules for Noncash Contributions?

What Acknowledgment Should the Church Provide?

What About Donations of Services or Use of Property?

Special Rules for Vehicle Donations

Additional Resources

Frequently Asked Questions

Are silent auction items tax-deductible?

What forms are required for noncash donations?

What should be included in a donation acknowledgment?

How should the church handle vehicle donations?

Overview of Section 6056 Requirements

Who Qualifies as an Applicable Large Employer?

Key Points About Filing Form 6056

Reporting Deadlines

Filing Process and Methods

General Method

Alternative Methods

Electronic Filing

Penalties for Noncompliance

FAQs About Filing Form 6056

Conclusion

The Introduction of Form 8822-B

Clarifying Form 8822-B Requirements

Why Compliance Matters

FAQs

Can We Collect an Offering to Offset Expenses?

What Are the Rules for Collecting Offerings?

Can We Sell Tickets to the Performance?

What Should We Call the Offering?

Do We Need to Issue Receipts or Tax Forms to Performers?

Should We Explain the Purpose of the Offering?

Key Questions to Address Before Hosting

Important Legal and Tax Considerations

FAQ Section

1. Can the church keep a portion of the offering for expenses?

2. Are ticket sales always taxable?

3. What if the performers are volunteers?

4. Can the church promote the event on social media?