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IRS Issues New Business Expense Substantiation Rules

What churches and their employees should know.

Background. In March the IRS released amended regulations addressing the substantiation of business expenses under an employer's expense reimbursement arrangement. The amended regulations contain a number of provisions that will affect the way churches reimburse business expenses. It is important for church treasurers to be familiar with the new rules. This article will summarize the amended regulations, and illustrate them with several examples.

Receipts. For many years the income tax regulations required that taxpayers substantiate the amount of any business expense of $25 or more with a receipt. In 1995 the IRS announced that it was increasing this "receipt threshold" to $75. The amended regulations make official the action taken by the IRS in 1995.

Key point. The $75 receipt requirement applies both to the deductibility of a business expense, and to the substantiation of a business expense ...

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Posted:
  • July 1, 1997

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