Swaringer v. Commissioner, T.C. Summary Opinion 2001-37 (2001)
Background. A recent Tax Court decision addresses the correct reporting of minister compensation as well as the substantiation requirements for business expenses. There is much in this decision that will be instructive for church treasurers. This article will review the facts of the case, summarize the court's ruling, and then address the relevance of the case to church treasurers.
Facts. A pastor reported $28,000 as income from his church in 1995. The IRS audited the pastor's tax return and concluded that he understated his taxable income by $24,000 and overstated several business expense deductions. The pastor insisted that the $24,000 of unreported income came from voluntary "gifts" or offerings from members of the congregation, which were not taxable. The IRS rejected this argument, and the pastor appealed to the Tax Court.