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Pastor Sentenced to Prison for Tax Fraud

Learn to properly identify and report taxable income.

Key Point. Failure to report taxable fringe benefits as taxable income can expose a pastor or lay church employee to significant criminal penalties.

A federal appeals court ruled that a pastor was properly convicted and sentenced to prison for filing a fraudulent tax return as a result of his failure to report several items of taxable income. A pastor (Pastor Phil) served as both senior pastor of his church and superintendent of a school operated by the church. The IRS began investigating Pastor Phil after receiving an anonymous letter. As part of its investigation, the IRS traced payments made by the church and the school to various sources on Pastor Phil's behalf or for his benefit and determined that he failed to report a substantial amount of taxable income on his tax returns in violation of section 7206 of the tax code which imposes criminal penalties for willfully filing a fraudulent ...

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

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  • July 1, 2009

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