IRS Releases Updated Withholding Calculator. “The Internal Revenue Service . . . released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December. The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks. ‘Following the major changes in the tax law, the IRS encourages employees to check their paychecks to help ensure they’re having the right amount of tax withheld for their personal situation,’ said Acting IRS Commissioner David Kautter. The Tax Cuts and Jobs Act made changes to the tax law, including increasing the standard deduction, removing personal exemptions, increasing the child tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets. If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer” (“Updated Withholding Calculator, Form W-4 Released; Calculator Helps Taxpayers Review Withholding Following New Tax Law,” IRS.gov).
Here are the top three most confusing tax issues for clergy—and what you need to know as you’re filing.
Court Rules Hospital Can Invoke Ministerial Exception Doctrine. “In Penn v. New York Methodist Hospital . . . the U.S. 2nd Circuit Court of Appeals in a 2-1 decision held that a hospital ‘only historically connected to the United Methodist Church but still providing religious services through its pastoral care department’ may invoke the ministerial exception doctrine. The court summarized its majority opinion: ‘Mr. Penn—a former duty chaplain at New York Methodist Hospital—brought a lawsuit alleging that New York Methodist Hospital and Peter Poulos discriminated against him on the basis of his race and religion, and retaliated against him after he filed charges with the U.S. Equal Employment Opportunity Commission and the New York City Commission on Human Rights. New York Methodist Hospital, because of its history and continuing purpose, through its Department of Pastoral Care, is a “religious group.” Mr. Penn’s role within the Department of Pastoral Care was to provide religious care to the hospital’s patients and religious care only. Therefore, the First Amendment’s Religion Clauses warrant the application of the ministerial exception doctrine and the dismissal of this lawsuit’” (“Hospital Can Assert Ministerial Exception Defense to Suit by Chaplain,” Religion Clause).
Learn more about the ministerial exception doctrine in the Employment Law section of our Legal Library.
Lobbyist for Roman Catholic Archdiocese Voices Opposition to Child Sexual Abuse Bill. “A Georgia legislative proposal to give adult survivors of childhood sexual abuse more time to sue pedophiles and organizations has encountered opposition from the Catholic Church. A lobbyist for the Roman Catholic Archdiocese of Atlanta proposes gutting a bill that would extend the statute of limitations for lawsuits and make it easier to sue entities that harbored pedophiles. The Archdiocese is led by a clergyman who was in charge of the U.S. Catholic church’s response in the early 2000s to the priest pedophilia scandal and who has publicly spoken out for justice for the victims. Archbishop Wilton D. Gregory issued a statement Friday [March 9] after The Atlanta Journal-Constitution sought comment about the church’s lobbying effort, saying the bill was ‘extraordinarily unfair’ to the church and would hinder its mission by allowing lawsuits for actions that occurred years ago. The legislation, dubbed the ‘Hidden Predator Act,’ extends the statute of limitations for victims from age 23 to 38, and creates other avenues for adults to sue long after that age. It passed 170-0 on the floor of the House of Representatives, despite what those close to the process say was quiet lobbying by the church, the Boy Scouts and other entities that would face increased exposure to liability” (“Lobbyist for Archdiocese tries to gut childhood sexual abuse bill,” MyAJC.com).
Invest in our newly revised Reducing the Risk training program to help ensure the children in your church are safe.
General Conference of Seventh-Day Adventists Not Required to Pay Back Income Taxes. “The General Conference of Seventh-day Adventists won’t have to pay millions of dollars in back income taxes after reaching a settlement agreement with the Department of Revenue and Taxation. The Seventh-day Adventists sued in January 2017 after Rev and Tax issued a notice stating SDA did not pay income taxes at its clinic from 1991 through 2013 and owed $12.6 million in back taxes, and $3.1 million in penalties for failure to pay. As an unincorporated nonprofit religious organization, the General Conference of Seventh-day Adventists is exempt from federal income tax by the Internal Revenue Service, it stated in court documents. SDA has argued it has a ‘blanket exemption,’ applicable to all its business activities. Rev and Tax had argued the gross income from the clinic and food center are unrelated to the organization's tax-exempt purpose and therefore are not exempt from paying income taxes. A bench trial in the case started Monday in federal court, and both sides on Tuesday told the court they had reached a settlement agreement, court documents state. Chief Judge John Coughenor on Friday approved the agreement” (“SDA, Rev and Tax settle case over church taxes,” Pacific Daily News).
Got questions about the unrelated business income tax? Check out this downloadable resource.
Kentucky Church’s Board Votes Out Controversial Senior Pastor. “A newly-elected board of elders for Southern Acres Christian Church has taken possession of the church and ousted senior pastor Cameron McDonald from his position. In a post on the church’s Facebook page Tuesday evening, the new board detailed the steps they have taken to acquire legal possession of the church. . . . McDonald is also being accused by church members James Keogh and Chad Martin of embezzlement, unlawful conversion of funds and unjust enrichment in a civil complaint. According to the lawsuit, Keogh gave $170,000 to the church in December 2016 and $100,000 of it was diverted to McDonald or his wife to help pay the mortgage on the couple’s $530,000 Jessamine County home they had purchased five months prior. Last year, McDonald also insisted the church add his wife to the payroll, giving them a combined income of more than $100,000, the lawsuit said. . . . Last month, the church’s members voted 173-0 in favor of a resolution to remove McDonald as pastor and elect a new board of elders. The church members had to vote at a nearby park because they weren’t given access to church property; the church was locked during service that Sunday. The resolution demanded that the McDonalds and Jones deliver the new board the keys to the church property and control of church bank accounts, property and assets, according to court records” (“Pastor ousted from troubled Lexington church after months of controversy,” Lexington Herald-Leader).
Find insights on what all church board members should know (ranging from training new members to church documents and records) in this downloadable resource.
Emily Lund is assistant editor for Church Law & Tax.
This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."
Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.