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Synagogue Not Liable for Thousands of Dollars in Penalties

Court ruled rabbi in question wasn't an employee of the synagogue.

Key point. The Tax Court uses a seven-part test in deciding if a minister is an employee or an independent contractor for payroll reporting purposes.

The United States Tax Court ruled that a rabbi was not an employee of a synagogue, and therefore the synagogue was not liable for tens of thousands of dollars in penalties for failing to withhold Social Security and income taxes. A religious organization was incorporated to operate a synagogue. It paid a rabbi annual amounts ranging from $30,000 to $100,000 from 2004 to 2007. None of these amounts were reported as employee compensation, and so no FICA taxes or income taxes were withheld. The IRS audited the rabbi, determined that he was an employee, and assessed penalties (under section 6651 of the tax code) of more than $100,000 against the synagogue for failing to withhold and pay $95,000 in FICA taxes and $162,145 in federal income taxes. ...

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Posted:
  • October 24, 2013

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