Jump directly to the Content

IRS Addresses Church Compensation Practices

Part I - Intermediate Sanctions

IRS Private Letter Rulings 200435019, 200435020, 200435021, 200435022

Article summary. In a series of four rulings published in August of 2004 the IRS for the first time assessed "intermediate sanctions" against a pastor as a result of "excess benefits" paid to him (and members of his family) by his church. Intermediate sanctions are substantial excise taxes the IRS can impose on persons who receive "excess benefits" from a tax-exempt organization. The IRS concluded that a pastor's personal use of church assets (vehicles, cell phones, etc.) and nonaccountable reimbursements (not supported by adequate documentation of business purpose) that a church pays its pastor, are "automatic excess benefits" resulting in intermediate sanctions, regardless of the amount involved, unless they are reported as taxable income by the church on the pastor's W-2, ...

Join now to access this member-only content

Become a Member

Already a member? for full access.

Related Topics:
Posted:
  • November 1, 2004

Related ResourcesVisit Store

CARES Act and CAA Table
CARES Act and CAA Table
A Side-By-Side Look at COVID-19 Economic Relief
2022 Church & Clergy Tax Guide
2022 Church & Clergy Tax Guide
Support your ministry with the most authoritative and comprehensive, year-round tax resource.