Supreme Court: Religious Law Allows Clergy to be in Execution Chambers

Law protecting prisoners’ religious rights allows clergy to be present in execution chambers, Court says.

A prisoner scheduled to be executed in Texas requested that he be allowed to have his pastor present to provide “spiritual comfort and guidance in his final moments.” The state of Texas denied the request because it bars chaplains of any religion to enter an execution chamber.

After the denial by Texas, the prisoner sought legal relief for his request only to be denied by a federal district court and a court of appeals. The United States Supreme Court subsequently took up the case.

The Court, in an 8-1 majority, reversed the lower court decisions. Citing the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), it said the restrictions imposed by Texas were not based on “a compelling governmental interest.”

This article will explore the Court’s analysis, and the general implications of the decision for chaplains and prison ministries.

Background

Pablo Castro worked the night shift at the Times Market convenience store in Corpus Christi, Texas. On July 19, 2004, Castro was outside closing up when John Ramirez and an accomplice approached him with a knife. Ramirez stabbed Castro 29 times, searched his pockets, and made off with $1.25. Castro died on the pavement, leaving behind 9 children and 14 grandchildren.

Ramirez fled to Mexico, where he evaded authorities for more than three years. In 2008, he was finally apprehended near the Mexican border. The state of Texas charged Ramirez with murdering Castro in the course of committing or attempting to commit robbery—a capital offense. Ramirez admitted to killing Castro but denied the robbery that made the murder a capital crime. A jury disagreed, found Ramirez guilty, and sentenced him to death.

Texas scheduled Ramirez’s execution for September 9, 2020. Ramirez asked to have his pastor accompany him into the execution chamber. Prison officials denied the request. They did so because, at the time, Texas’s execution protocol barred all spiritual advisors from entering the chamber.

A prior version of the protocol had allowed access for prison chaplains, but at the time, Texas employed only Christian and Muslim chaplains. In 2019, when a Buddhist inmate sought to have his spiritual advisor join him in the execution chamber, Texas declined to grant the accommodation. In response, Texas also amended its execution protocol to bar all chaplains from entering the execution chamber so as not to discriminate among religions.

Turning to RLUIPA

Ramirez filed a lawsuit in federal court. He did not challenge his conviction or death sentence. Instead, he asked that his longtime pastor be allowed to pray with him and lay hands on him while he was being executed. He claimed that RLUIPA, a federal law, requires this accommodation.

Ramirez sought a preliminary injunction ordering Texas to permit his religious exercise if the state went forward with his execution. A federal district court and court of appeals declined to grant such relief. The United States Supreme Court agreed to hear the case on appeal.

Ramirez’s complaint said that he was a Christian and had received religious guidance from Pastor Dana Moore since 2016. Ramirez is a member of Moore’s church in Corpus Christi.

Ramirez explained that he wanted his pastor “to be present at the time of his execution to pray with him and provide spiritual comfort and guidance in his final moments,” and that the pastor be permitted to “lay hands” on him and audibly “pray over” him while the execution was taking place. Ramirez’s grievance explains that “it is part of my faith to have my spiritual advisor lay hands on me anytime I am sick or dying.”

Texas denied this request on the ground that spiritual advisors are “not allowed to touch an inmate while inside the execution chamber.”

In reviewing the case, the Supreme Court described RLUIPA in this way:

No government shall impose a substantial burden on the religious exercise of a person residing in or confined to an institution—including state prisoners . . . unless the government demonstrates that imposition of the burden on that person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.

The Court concluded that any restriction on the ability of Ramirez’s pastor to enter the execution chamber, lay hands on him, and audibly pray for him during the execution procedure would impose a substantial burden on his religious exercise.

The Court further concluded that restrictions imposed by Texas on the presence of clergy during an execution were not based on a compelling governmental interest.

Rejecting Texas’s arguments

Texas argued it had two compelling governmental interests that justified its policy.

First, absolute silence was necessary in the execution chamber so they can monitor the inmate’s condition through a microphone suspended overhead. Prison officials claimed that audible prayer might impede their ability to hear subtle signs of trouble or might prove distracting during an emergency.

The Court agreed that “audible prayer could present a . . . serious risk of interference during the delicate process of lethal injection. . . . But [prison officials] fail to show that a categorical ban on all audible prayer is the least restrictive means of furthering their compelling interests,” as required by RLUIPA.

Second, Texas argued about concerns regarding possible disruptions. Prison officials claimed that if they allow spiritual advisors to pray aloud during executions, the opportunity “could be exploited to make a statement to the witnesses or officials, rather than the inmate. . . . [And] such statements might cause further trauma to the victim’s family or otherwise interfere with the execution.”

The Court agreed that the government has a compelling interest in preventing disruptions of any sort and maintaining solemnity and decorum in the execution chamber. But “there is no indication in the record that Pastor Moore would cause the sorts of disruptions that [prison officials] fear.”

Historical practices with executions

With its decision, the Court briefly summarized the history of audible prayer at the time of execution to affirm the central importance of this practice in the Christian tradition:

As for audible prayer, there is a rich history of clerical prayer at the time of a prisoner’s execution, dating back well before the founding of our Nation. For example, at Newgate Prison—one of London’s most notorious jails—an Anglican priest would stand and pray with the condemned in their final moments. By the early 1700s, that practice had evolved to permit prisoners to be “attended by a minister, or even a priest, of their own communion. Prayer at the time of execution was also commonplace in the American Colonies. . . . And during the Revolutionary War, General George Washington ordered that “prisoners under sentence of death” “be attended with such Chaplains as they choose”—including at the time of their execution. These chaplains often spoke and prayed with the condemned during their final moments. . . . (“Upon the arrival of the criminals at the place of execution, the attending chaplain . . . prayed and recommended them severally to God.”)

A tradition of such prayer continued throughout our Nation’s history. When, for example, the Federal Government executed four members of the conspiracy that led to the assassination of President Abraham Lincoln, the prisoners were accompanied by clergy of various denominations. These “spiritual advisers” ministered to the condemned, and three spoke public prayers shortly before the prisoners were hanged. And in the aftermath of World War II, the United States Army even permitted Nazi war criminals facing execution to be accompanied by a chaplain, who “spoke” prayers on the gallows in the moments before death.

The practice continues today. In 2020 and 2021, the Federal Bureau of Prisons allowed religious advisors to speak or pray audibly with inmates during at least six federal executions. What’s more, Texas itself appears to have long allowed prison chaplains to pray with inmates in the execution chamber, deciding to prohibit such prayer only in the last several years. (citations omitted)

What this means for churches

The ministries of chaplains carry great historical significance in the country and constitute significant and vibrant efforts still today in many parts of the country. This decision is especially relevant to chaplains carrying on that work now and going forward. Likewise, it is relevant to any church with a minister who serves as a prison chaplain, as well as churches with active prison ministries in which ministers visit prisoners, among other services.

Ramirez v. Collier, 142 S. Ct. 1264 (2021)

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

Key Tax Dates July 2022

File 8274 and 941 forms and meet monthly or semiweekly requirements.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

July 30, 2022: File employer exemption—Form 8274

Churches hiring their first nonminister employee between April 1 and June 29 may exempt themselves from the employer’s share of Social Security and Medicare taxes by filing Form 8274 by this date (nonminister employees are thereafter treated as self-employed for Social Security purposes).

The exemption is only available to churches that are opposed on the basis of religious principles to paying the employer’s share of Social Security and Medicare taxes.

July 31, 2022: File Form 941

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the second quarter of 2022 by this date. Enclose a check in the total amount of all withheld taxes (withheld income taxes, withheld Social Security and Medicare taxes paid by the employee, and the employer’s share of Social Security and Medicare taxes) if less than $2,500 on June 30, 2022.

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

Advantage Member Exclusive

Retirement Planning for Pastors and Staff

On-Demand Webinar: Setting successful strategies as your church’s workforce ages.

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Editor’s note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In America, the retirement boom has begun. Yet statistics from annuity.org and elsewhere indicate that most Americans are not financially ready for it.

Unfortunately, this trend rings true in churches as well. But this doesn’t have to be the case. With a little forward thinking, churches can set their pastors and staff up for success during the retirement years.

In this webinar featuring CPA Elaine Sommerville, you will learn what to do–or not do–as your workforces age. Watch now to gain an overview of plans that can assist pastors and staff members with setting aside retirement funds, as well as critical considerations they must make regarding housing, spouses, health insurance and Medicare, and life insurance.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

Key Tax Dates June 2022

Review housing allowance designations, make quarterly payments, and meet monthly or semiweekly requirements.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

June 15, 2022: Quarterly estimated tax payments for certain employees and churches

Filing for certain ministers and self-employed workers

Ministers (who have not elected voluntary withholding) and self-employed workers must file their second quarterly estimated federal tax payment for 2022 by this date. A similar rule applies in many states to payments of estimated state taxes.

Nonminister employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay FICA taxes) are treated as self-employed for Social Security, and accordingly are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they ask their employing church to withhold an additional amount of income taxes from each paycheck that will be sufficient to cover self-employment taxes (use a new Form W-4, Step 4(c), to make this request).

Payments for unrelated business income tax liability

A church must make quarterly estimated tax payments if it expects an unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure your estimated taxes. Quarterly estimated tax payments of one-fourth of the total tax liability are due by April 15, June 15, September 15, and December 15, 2022, for churches on a calendar year basis. Deposit quarterly tax payments electronically using the Electronic Federal Tax Payment System (EFTPS).

June 30, 2022: Review housing or parsonage allowance designations

Now is a good time to review the 2022 housing or parsonage allowances designated for all ministers on staff. If an allowance designated for 2022 is clearly below actual housing expenses, then the church board should consider declaring a larger portion of the minister’s remaining compensation as a housing or parsonage allowance.

A church is free to designate any portion of a minister’s compensation as a housing allowance, but remember that clergy who own their home cannot claim a housing allowance exclusion greater than the fair rental value of the home (furnished, including utilities). Therefore, the allowance ordinarily should not be significantly more than this amount.

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

Can Churches Assist with Medicare Premiums for Eligible Employees?

Churches must understand several rules and factors when it comes to medicare premiums for eligible employees.

Can churches assist with medicare premiums for eliglible employees?

It’s an important question as aging workers stay in the marketplace longer than in past years.

As a result, churches are facing—or will face—the question of how to handle health insurance coverage for employees reaching Medicare eligibility. Upon reaching Medicare eligibility, a person’s health coverage becomes a maze of options for both the employer and the employee.

Churches often desire to encourage an employee to leave a group health-care plan and enroll in Medicare to take advantage of cost savings. Many times, the employee also desires this path because it is less expensive than his or her portion of the cost of the church’s group health-care plan. When discussing Medicare as a health-care option, the topic of the church’s ability to assist with Medicare-related premiums invariably comes up.

While employers may not pay Medicare premiums directly for active employees, they may in some circumstances establish reimbursement plans for the related costs. However, employer assistance with these costs requires great caution and an understanding of multiple, little-known laws.

Navigation of this complex subject is dependent on several factors requiring skilled analysis and well-thought-out planning. The analysis is intricate and easy to misstep. The purpose of this article is to raise awareness of the rules involved and assist a church in knowing when to seek guidance from a benefits professional.

Rules to consider in the analysis

There are two primary sets of rules to consider when deciding whether to assist an employee with Medicare-related premiums and supplemental coverage.

The first is the Affordable Care Act (ACA). Created in 2010, most churches are now accustomed to navigating the ACA’s intricate rules relating to health-care coverage.

The second set of rules, which is not as familiar to church employers, is the Medicare Secondary Payer (MSP) rules.

The ACA and Medicare

Medicare is not a group health-care plan under the ACA, so Medicare reimbursements or payments are considered reimbursements of an individual health insurance plan. Therefore, if a church agrees to pay an employee for Medicare premiums, it is reimbursing an individual health insurance plan. If a church has more than one employee, then the provisions of the ACA kick in, and those provisions generally prohibit the reimbursement of individual health insurance premiums.

In the past few years, two avenues have been approved that allow employers to provide for individual health insurance coverage. These avenues are specific versions of health reimbursement arrangements (HRAs): the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or the Individual Coverage Health Reimbursement Arrangement (ICHRA).

Both HRAs have specific qualifications and operating rules. Reimbursing individual health insurance premiums outside of a qualifying HRA creates an employer-paid health plan subject to the ACA’s penalty of $100 per day ($36,500 per year) per employee.

Additional ACA rules apply to employers with 50 or more full-time equivalent employees because they must offer group health insurance to all full-time employees.

Medicare Secondary Payer rules

Outside of the ACA rules, any arrangement involving Medicare and employees must also comply with the MSP rules. No one should be surprised to learn that the government does not approve of employers transferring their insurance responsibilities to the government. MSP rules define when Medicare can be the primary payer versus when the federal government insists that Medicare operate as a secondary payer behind other employer-provided insurance plans covering active employees.

For an employer with 20 or fewer full- or part-time workers that offers group health insurance plans, MSP rules allow greater latitude in working with employees eligible for Medicare. Medicare rules require an employee to enroll in Medicare when eligible and Medicare serves as the primary payer of medical needs.

But the provisions clearly state that employers of 20 or more employees may not actively encourage or compensate employees for exiting their group health plan in favor of Medicare. The employer must offer the same health-care benefits to those 65-and-older employees that they do to employees under 65. A church’s group health plan must be the primary payer and Medicare the secondary payer. While an employee may choose to exit the group health-care plan in favor of a Medicare option, the employer may not compensate or reward the employee for this decision.

Note. An employer meets the 20-or-more-employee requirement when an employer has 20 or more full-time and/or part-time employees for each working day in each of 20 or more calendar weeks in the current or preceding year.

Potential solutions

So, what are a church’s options for employees who desire to enroll in Medicare?

Churches with fewer than 20 employees that offer group health insurance

A church with fewer than 20 full- or part-time employees (as defined above)—and that offers group health insurance not consisting solely of benefits excepted from the ACA rules—may take the following steps:

  • establish a group health insurance plan for employees not eligible for Medicare; and
  • create an integrated health reimbursement arrangement for those employees enrolled in Medicare Part A and Part B or D that reimburses the premiums the employee pays for Medicare Parts B and/or D only. (This is a specifically authorized method of integrating this type of HRA into an employer’s group health plan.)

Churches with fewer than 50 employees not offering group insurance

A church with no more than 49 full-time equivalent employees and not offering group health insurance may consider establishing an ICHRA or a QSEHRA (see above sidebar). Both types of HRAs may reimburse individual health insurance premiums and the employee’s benefits may be used to pay for Medicare Parts B, C and/or D. However, these plans may not be limited to simply covering Medicare premiums and must comply with nondiscrimination rules.

Churches with 20 or more employees offering group insurance

For employers that offer group coverage and meet the 20-employee rule above, compliance with MSP rules is more challenging. To comply, the health-care options offered to qualifying employees and their spouses (if applicable) may not differ based on whether or not employees are eligible for Medicare. Any HRA must comply with ACA rules. The interplay of these rules makes it difficult—if not impossible—to create a plan providing for the reimbursement of Medicare-related premiums for active employees.

Employer size is the determining factor

In summary, an employee may enroll in Medicare when he or she becomes eligible and may still participate in his or her employer’s group health plan—or choose to leave the employer’s plan.

However, the size of the employer determines which plan provides primary coverage for health expenses and which one provides secondary coverage, and it determines the options available (or not) for the employer to reimburse costs.

Assisting employees with Medicare-related premiums should only be undertaken when a church has actively sought the assistance of a benefits professional skilled in working with these specific rules. Churches and employees may also find assistance through a State Health Insurance Assistance Program (SHIP) that provides free health insurance counseling services. Locate a local SHIP by visiting shiphelp.org or by calling (toll-free) 1-800-633-4227.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

Downloadable Checklist: How Various Political Activities Might Affect Your Church’s Tax-Exempt Status

Which political activities may affect your church’s tax-exempt status, based on IRS guidance.

Last Reviewed: April 25, 2024

Election years frequently prompt a common question among church leaders and pastors: What types of political activities and speech are allowed under section 501(c)(3) of the tax code?

While political activities and speech by churches and pastors are protected by the US Constitution’s First Amendment, the Internal Revenue Code contains specific language that either prohibits or limits certain activities conducted by tax-exempt entities. Violations can lead to excise taxes, the revocation of federal tax exemption, or both. While few public examples exist of the enforcement of these rules over the years by the Internal Revenue Service (IRS), churches and church leaders still should understand the prohibitions and limitations, including any potential tax consequences any violations may trigger.

This chart provides a variety of examples of political activities churches might wish to do and briefly details the related IRS guidance, including the potential effects of those activities on a church’s tax-exempt status. The goal is to provide a quick reference for church leaders that helps them make informed decisions.

To go deeper on these issues, don’t miss “The Tax Implications of Churches and Political Involvement,” by attorney, CPA, and senior editor Richard R. Hammar, and “Churches, Politics, and Constitutional Protections,” by attorney Erik Stanley on ChurchLawAndTax.com’s Recommended Reading page.

ACTIVITY

IMPACT ON TAX- EXEMPT STATUS

BASIS

A church makes contributions to a candidate’s campaign fund

Prohibited

IRS Publication 1828

A church makes public statements of position (verbal and written) in favor of or in opposition to candidates for office through official church publications, at official church functions, or both

Prohibited

IRS Publication 1828

A church’s pastor delivers a sermon series addressing what the Bible says about abortion, criminal justice reform, sexual orientation and gender identity, and other topics with social and spiritual implications

Permitted

First Amendment of the US Constitution

A church provides a nonpartisan forum for all candidates to address the church

Permitted

IRS Publication 1828

A church invites all candidates for a political office to address the congregation and informs the congregation before each candidate’s speech that the views expressed are those of the candidate and not the church, and that the church does not endorse any candidate

Permitted

Revenue Ruling 74-574; IRS Publication 1828

A church invites only one candidate in a political campaign to address the congregation

Prohibited

Revenue Ruling 2007-41; IRS Publication 1828

A church provides an opportunity for a candidate to speak in a noncandidate capacity (for example, as a member of the church, public figure, or expert in a nonpolitical field) without providing equal access to all political candidates for the same office. The church ensures that the candidate speaks in a noncandidate capacity; no reference is made to the person’s candidacy; the church mentions the capacity in which the candidate is appearing (without mentioning the person’s political candidacy); and no campaign activity occurs.

Permitted

IRS Publication 1828

A church distributes a compilation of voting records of all members of US Congress on major legislative issues involving a wide range of subjects; the publication contains no editorial opinion, and its text, design elements, and structure do not imply approval or disapproval of any members or their voting records

Permitted

Revenue Ruling 78-248; IRS Publication 1828

A church distributes a voter guide containing questions answered by all candidates. The questions cover a wide range of topics, but the wording of the questions demonstrates bias on certain issues.

Prohibited

Revenue Ruling 78-248; IRS Publication 1828

A church endorses a candidate (by any variety of ways, including verbal or written statements, references to the candidate’s political party, references to the candidate’s distinctive platform or biography, and/or showing the candidate’s picture)

Prohibited

Int. Rev. News Release IR-96-23; IRS Publication 1828

Church employees carry on campaign activities for a candidate within the context of their church employment

Prohibited

FSA 1993-0921-1; IRS Publication 1828

A church fails to “disavow” the campaign activities of persons under “apparent authorization” from the church by repudiating those acts “in a timely manner equal to the original actions” and taking steps “to ensure that such unauthorized actions do not recur”

Prohibited

FSA 1993-0921-1

A church engages in fundraising on behalf of a candidate

Prohibited

Int. Rev. News Release IR-96-23; IRS Publication 1828

A church conducts a neutral voter registration drive

Permitted

11 C.F.R. § 111.4(c)(4); IRS Publication 1828

A church buys and places newspaper ads urging voters to vote for or against a candidate

Prohibited

Branch Ministries, Inc. v. Commissioner, 99-1 USTC ¶50,410 (D.D.C. 1999), aff’d, Branch Ministries v. Rossotti, 2000 USTC ¶50,459 (D.C. Cir. 2000)

A church website contains information either supporting or opposing candidates for public office

Prohibited

IRS Publication 1828

A church website contains links to candidate-related materials, and does not include any text, design elements, or structure indicating support of or opposition to any of the candidates

Permitted

Revenue Ruling 2007-41; IRS Publication 1828

A church website links to third-party websites containing materials supporting or opposing candidates

Prohibited

IRS Publication 1828

A minister who is known well in the community attends a press conference at a political candidate’s campaign headquarters and states that the candidate should be reelected. The minister does not say he is speaking on behalf of his church. His endorsement is reported on the front page of the local newspaper, and he is identified in the article as the minister of his church.

Permitted

Revenue Ruling 2007-41; IRS Publication 1828

A church maintains a website that includes biographies of its ministers, times of services, details of community outreach programs, and activities of members of its congregation. A member of the congregation is running for a seat on the town council. Shortly before the election, the church posts the following message on its website: “Lend your support to your fellow parishioner in Tuesday’s election for town council.”

Prohibited

Revenue Ruling 2007-41; IRS Publication 1828

A church urges its members to contact members of the state legislature and urge them to reject a proposed bill legalizing marijuana

Prohibited

IRS Publication 1828

A church provides its members with educational materials about the legalization of marijuana and hosts an educational meeting on the topic

Permitted

IRS Publication 1828

A church gives a pro-life advocacy group permission to place pamphlets on vehicles in the church’s parking lot during Sunday worship services. The pamphlets urge congregants to support a “pro-life” slate in the upcoming election.

Unclear based on IRS regulations and current law—but likely prohibited

A church owns space suitable for events and makes it available for rent to the public on a first come, first served basis. A candidate pays the standard fee to host a campaign dinner.

Permitted

IRS Publication 1828

A church sets up a booth at the state fair where citizens can register to vote. The booth only contains the church’s name, the date of the next statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made in any materials or in any statements given by volunteers.

Permitted

IRS Publication 1828

A church maintains a list containing contact information for its members and has never rented it to a third party. The church allows one candidate to rent the list to send campaign information, but declines similar requests from other candidates.

Prohibited

IRS Publication 1828

A church sets up a telephone bank to conduct a “get-out-the-vote” effort and contacts registered voters in its district. Church volunteers are instructed to ask the registered voters about their positions on certain moral issues, and if the voter’s positions align with a specific candidate running for office in the district, to then remind them about the upcoming election, the importance of voting, and the availability of church-sponsored transportation to the polls.

Prohibited

IRS Publication 1828

For a more detailed discussion about political activities and the church, visit ChurchLawAndTax.com’s Recommended Reading page, “Churches and Political Activities,” as well as chapter 12 of Richard R. Hammar’s annual Church & Clergy Tax Guide.

The Tax Implications of Churches and Political Involvement

The tax implications for churches that engage in political campaigns and legislative lobbying.

To maintain federal tax-exempt status under section 501(c)(3) of the Internal Revenue Code, churches must follow specific rules. Two key restrictions apply:

  • No political campaign activity—churches may not support or oppose any candidate for public office.
  • Limited lobbying—churches may not devote a substantial part of their activity to influencing legislation.

While enforcement has historically been limited, violations can carry significant tax consequences. Church leaders should understand these restrictions and evaluate how their activities may be affected.


Historical Context: A Tradition of Political Engagement

Political involvement by churches and clergy is nothing new. Common examples include:

  • Inviting candidates to speak at services
  • Distributing voter guides or candidate literature
  • Organizing voter registration drives
  • Recruiting volunteers for campaigns
  • Making statements for or against political candidates during worship

However, even well-intentioned actions can risk a church’s tax-exempt status.


What Section 501(c)(3) Requires

According to the law, a church is tax-exempt only if:

“No substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, and which does not participate in, or intervene in … any political campaign on behalf of any candidate for public office.”

This means:

  • No substantial lobbying (even if not related to elections)
  • No political campaign activity whatsoever, even if minimal

These activities aren’t illegal—but they can result in loss of tax-exempt status.


IRS Enforcement: Rare but Real

Although violations have occurred with little IRS response, there have been some notable actions:

  • 1990s: The IRS revoked a church’s exemption for engaging in a presidential campaign.
  • Jimmy Swaggart Ministries (1992): Agreed to cease political activity after IRS findings.
  • 2004 Ruling: A pastor’s comments opposing candidates were imputed to the church. The IRS imposed a tax but did not revoke status.

Limited enforcement is partly due to the Church Audit Procedures Act, which restricts when and how the IRS can investigate churches. A 2009 federal court ruling further limited IRS authority—though a later settlement in 2014 affirmed the IRS still had enforcement procedures in place.


Understanding Political Campaign Activity

What the Law Prohibits

Churches cannot:

  • Make statements (oral or written) supporting or opposing candidates
  • Distribute biased voter guides
  • Allow use of church property or events to promote candidates

This includes all levels of government: local, state, and national.

What the IRS Says (Publication 1828)

The IRS allows personal political activity by church leaders, but not during:

  • Official church functions
  • Church publications
  • Any event where the leader represents the church

To protect the church, leaders should clarify when they’re speaking personally—not on behalf of the church.


Candidates Speaking at Church

Speaking as a Candidate

Churches may invite candidates to speak—but must ensure:

  • Equal opportunity is given to all candidates
  • The church does not endorse or oppose the candidate
  • No fundraising occurs
  • The nonpartisan purpose of the visit is clear
  • The church maintains a neutral tone in all announcements

Speaking as a Noncandidate

Candidates may also speak in a noncandidate capacity (e.g., as a public figure or expert). In these cases:

  • The event must remain nonpartisan
  • No mention of candidacy or elections is permitted
  • The individual must be invited for reasons unrelated to the campaign

Hosting Forums or Debates

Public candidate forums are allowed—but only if they are neutral. The IRS evaluates:

  • Who prepares and asks the questions
  • Whether issues reflect public interest
  • Whether all candidates get equal opportunity
  • Whether the event avoids endorsements or disapproval
  • Moderator neutrality

Voter Education and Registration

Churches may conduct:

  • Voter registration drives
  • Distribute nonpartisan voter guides
  • Host educational events

But they must avoid:

  • Comparing candidate views to the church’s positions
  • Distributing guides with biased design, content, or placement
  • Omitting candidates or editorializing their views

Even third-party guides may count as political activity if biased and distributed by the church.


Campaign Literature on Church Property

If individuals distribute campaign materials on church premises—especially with leadership’s permission—the church risks appearing to endorse a candidate.

Key point: If church leaders allow this, the IRS may view it as indirect campaign participation.

Unsolicited pamphleteering (e.g., flyers on windshields without church knowledge) is not a violation—unless church leaders gave permission.


Business Activities and Campaigns

Churches must be cautious with:

  • Renting out space
  • Selling mailing lists
  • Accepting political advertising

IRS will consider:

  • Equal access for all candidates
  • Whether services are offered to the general public
  • Standard pricing practices
  • Whether the church routinely conducts the activity

Church Websites and Digital Content

The IRS treats websites like printed materials. Churches are responsible for:

  • Content favoring or opposing candidates
  • Links to outside political websites
  • Context in which links or statements are shared

Churches should regularly review links and online materials during election seasons.


Lobbying Restrictions

Churches may lose tax-exempt status if a substantial part of their activity is lobbying. This includes:

  • Urging the public to contact legislators
  • Supporting or opposing legislation
  • Advocating for ballot measures

What Isn’t Lobbying?

  • Educating the public on policy issues
  • Hosting educational meetings
  • Distributing materials in an educational, nonpartisan way

How Much Is Too Much?

There is no clear IRS rule defining “substantial.” Courts have offered guidance:

  • Less than 5% of a church’s time/resources may be considered insubstantial (Seasongood v. Commissioner, 1955)
  • 16% to 20% was deemed substantial in another case (Haswell v. U.S., 1974)

The IRS considers all facts, including:

  • Time spent by staff and volunteers
  • Resources and money used for lobbying

Consequences for Violations

Political Campaign Violations

Possible penalties include:

  • Loss of tax-exempt status
  • Loss of tax-deductible contributions
  • Excise taxes, such as:
    • 10% on the church’s political spending
    • 2.5% on responsible managers (up to $5,000)
    • Additional taxes (up to 100%) if not corrected
    • 50% on managers who refuse to correct (up to $10,000)

Correction involves recovering the funds and creating safeguards to prevent future violations.

Lobbying Violations

Excessive lobbying may lead to:

  • Loss of tax-exempt status
  • Federal and state taxes on all income
  • Potential excise taxes on political expenditures (though churches are often excluded)

What Losing Tax-Exempt Status Means

If a church loses its status:

  • Income becomes taxable
  • Donors lose their charitable deduction
  • The church may lose:
    • Property tax and sales tax exemptions
    • Exemption from unemployment tax
    • Eligibility for 403(b) retirement plans
    • Preferential mailing rates
    • Protection under the Church Audit Procedures Act
    • Exemption from religious discrimination claims in certain cases

These consequences are serious—and should be carefully considered when evaluating political involvement.

Matthew Branaugh, attorney and content editor for ChurchLawAndTax.com, contributed to this article.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Politics, Churches, and Constitutional Protections

The Johnson Amendment and other tax laws try to limit activities by churches that intersect with politics—but certain constitutional protections allow more engagement than some realize.

Every election year churches question what they can do or say about the upcoming election. And quite often the central question is how far is too far?

Many churches earnestly attempt to navigate this dilemma while others are simply silent.

As a pastor or church leader, do you know what your church may legally do during an election year? Or would you wonder if you really understood what the law says and how it applies to your church?

Unfortunately, articles and guides about the Internal Revenue Service (IRS) regulations on election-year activities by churches often overlook the US Constitution and its safeguards of the free exercise of religion, freedom of speech, and protection from government intrusion into the church.

Your church’s ability and freedom to address an election are broad, even under current tax law. This is especially true considering the constitutional guarantees churches enjoy.

Through exploring and explaining the Johnson Amendment (the law behind much of the confusion) leaders will learn more from this article about their constitutional protections.

This article will also point out key cautions wwith regard to candidates running for office.

Leaders also will learn more about how other tax laws allow churches to engage in some lobbying and advocacy efforts tied to legislative matters and ballot measures.

What is the Johnson Amendment?

The Johnson Amendment is a federal tax law restricting a tax-exempt organization’s interactions with candidates and elections. The Amendment gets its name from Senator Lyndon Johnson. He was the motivating factor in adding the provision to the tax code in 1954.

The history of the Amendment suggests that Johnson wanted to silence two powerful, secular nonprofit organizations. The organizations were opposing his reelection to the US Senate because they believed he was soft on communism.

The Amendment was part of a massive tax overhaul bill and was inserted into the bill by a voice vote.

There were no debates or committee hearings. There was no meaningful consideration of how the Amendment would impact the constitutional rights of churches.

President Eisenhower signed the tax bill, which included the Johnson Amendment, into law without comment in August 1954. Since that time, the Johnson Amendment has been part of federal tax law.

The Johnson Amendment is the last sentence of section 501(c)(3) of the Internal Revenue Code. It states that nonprofit organizations may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” Section 501(c)(3), of course, applies to churches.

How is the Johnson Amendment enforced?

The IRS enforces the Johnson Amendment along with the rest of the tax code. Its record of enforcement since 1954 has been spotty and uneven. For example, on its website, the IRS states that nonprofit organizations are “absolutely prohibited from directly or indirectly” violating the Johnson Amendment. Yet there is no explanation of what an “indirect” violation of the Johnson Amendment is or could be.

The Johnson Amendment itself prohibits a church from “participating in” a candidate’s campaign. However, the law contains no clear definition of what “participation” consists of.

Despite this vagueness, the IRS warns that a violation of the Johnson Amendment “may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”

The predictable result of the inherent vagueness and murkey enforcement rules is to chill the speech of America’s churches and pastors.

Pastors often admit they don’t know what is considered prohibited speech when it comes to candidates and elections.

So, most just say nothing. Only an intrepid few may decide to shoot in the dark and hope for the best.

This only magnifies the problem. Pastors are frequently intimidated because they do not know what the IRS thinks they can or cannot say.

This chill on speech is further exacerbated by the fact that churches cannot just sue the IRS to have the Johnson Amendment declared unconstitutional. The rules of federal court jurisdiction (when a lawsuit may be brought to court) prohibit lawsuits against the IRS until a provision of the tax code has been enforced against a taxpayer and a penalty has been levied and upheld during an internal IRS appeal process.

The IRS decides when to go to court

The result is that the IRS decides how, when, and with whom it will get into a lawsuit with. And the IRS has studiously avoided a lawsuit over the constitutionality of the Johnson Amendment.

The IRS prefers a status quo in which the law is never clarified. As a result, most churches simply self-censor.

No court has confronted the constitutionality of government regulation of a church’s political speech during a church service or event. Yet this is precisely what the Johnson Amendment claims authority to do.

Moreover, some organizations that advocate for radical enforcement of the “separation of church and state” take advantage the amendment’s vagueness.

One organization even conducted a nationwide advocacy campaign where it asked its supporters to turn in churches to the IRS.

Never mind that its view of the Johnson Amendment was so extreme the IRS wouldn’t act on the complaints.

Just the threat of a complaint or an actual complaint followed by a press release further chilled free speech.

Is the Johnson Amendment constitutional?

Numerous legal scholars have written law review articles arguing that the Johnson Amendment is unconstitutional. These arguments focus on the Establishment, the Free Exercise, and the Free Speech Clauses of the First Amendment to the US Constitution.

What follows is a summary of some of the legal arguments for how the Johnson Amendment appears to violate each clause.

The Establishment Clause

The Establishment Clause prohibits excessive entanglement of the government with religion. The IRS cannot enforce the Johnson Amendment without an IRS agent parsing the speech of a church or a pastor’s sermon or other speech to determine if it crossed the line into a Johnson Amendment violation.

The US Supreme Court has held—in more than one case—that a law that requires pervasive government surveillance and monitoring of religion results in excessive entanglement of the government with religion.

Put simply, the government cannot enforce the Johnson Amendment without intruding into the internal activities and speech of a church. Such enforcement of the Johnson Amendment would unconstitutionally entangle the government with religion.

The Free Speech Clause

The Free Speech Clause prohibits “content-based” restrictions on speech. This kind of restriction is one where the government must review the content of speech to determine if it violates the law.

In cases like this, courts hold the government to the highest constitutional standard in order to justify why it needs to review the content of speech.

The Johnson Amendment certainly requires the IRS to review the content of a church’s speech. In fact, there is no way to enforce the Johnson Amendment without reviewing the content of a church’s speech. This content review, coupled with the vagueness of the Johnson Amendment’s text, gives the government broad censorship power to prohibit speech.

Content-based restrictions on speech are highly disfavored. In fact, they are usually unconstitutional because these kinds of restrictions give the government far too much censorship power.

The Free Speech Clause also prohibits a speech restriction that creates an unconstitutional condition. Stated simply, the Johnson Amendment forces churches to give up their speech rights in order to retain their tax-exempt statuses. This is despite the fact that the Constitution (by virtue of the First Amendment’s Establishment Clause) requires the government to exempt a church from taxation.

Another way of looking at it

Would it be okay for the government to tell churches that they can retain their tax-exempt statuses only if they provide free housing for military troops (barred by the Third Amendment)? What about if they allow the police to search their buildings without warrants (barred by the Fourth Amendment)? Those kinds of restrictions would be instantly condemned—and rightly so—as unconstitutional. Yet the Johnson Amendment says churches can retain their tax-exempt statuses only if churches forfeit their First Amendment rights of speech. This is an unconstitutional trade-off.

The Free Speech Clause also prohibits vague restrictions on speech. The reason is that vague restrictions may result in self-censorship and a chill on speech. As we have already discussed, the Johnson Amendment is full of the type of vagueness to create such a chill.

The Free Exercise Clause

The Johnson Amendment also violates the Free Exercise Clause.

This is because it expressly discriminates against religious speech and penalizes such speech with civil or criminal penalties.

Why hasn’t the Johnson Amendment been declared unconstitutional?

Given the serious constitutional violations inherent in the Johnson Amendment, why has it not been declared unconstitutional? The answer lies in the IRS’s refusal to allow a direct constitutional challenge to the Johnson Amendment.

Again, most churches self-censor, thereby doing the IRS’s enforcement job for it. The few churches investigated for Johnson Amendment violations have generally settled with the IRS. They did so to avoid draconian tax penalties and consequences.

But outside of those few examples, the IRS has essentially avoided direct enforcement action against churches. Earlier in my career, I represented churches that wanted to create a civil rights “test case” challenge to the Johnson Amendment. Over the course of several years, I represented over 4,000 pastors who preached sermons seemingly violating the Johnson Amendment and sent them to the IRS.

This effort was intended to foster a serious constitutional challenge to the Johnson Amendment, something the Constitution gives citizens the right to do.

These churches were willing to endure the consequences for the right to challenge the constitutionality of the Johnson Amendment. Yet the IRS did not investigate or punish any of the churches. The IRS did not allow one court case. Even so, the law persists to this day despite the attempt to create a constitutional test case.

The IRS prefers the status quo of self-censorship by churches and a chill on speech. It can enforce the Johnson Amendment easily by making threatening statements that result in churches enforcing the law against themselves.

What should happen with the Johnson Amendment?

The status quo is a burden on the constitutional rights of America’s churches and pastors. In the absence of a court challenge to the Johnson Amendment, what should happen with the law?

Some have argued that getting rid of the Johnson Amendment would turn churches into pawns of the political parties. Yet the church does not need the government to protect it against itself. We should not allow an unconstitutional law to remain out of a misguided motivation to protect the theological purity of the church. That is not the government’s job anyway.

Others have argued that getting rid of the Johnson Amendment would allow churches to funnel “dark money” to political candidates, campaigns, and parties. Yet the Johnson Amendment applies to far more than just money.

Allowing an unconstitutional speech restriction that entangles the government with religion as a means of preventing political contributions by churches is overbroad. The simple answer is to prohibit political contributions by churches. Congress attempted to do just that when it introduced the Free Speech Fairness Act. The Act would have amended the Johnson Amendment to prohibit political contributions but remove the unconstitutional speech restrictions. The effort stalled, though, and has not moved forward to date.

The answer is not to jettison the Johnson Amendment entirely. Let’s instead remove provisions that prohibit the free speech and free exercise rights of America’s churches and pastors. Perhaps such an amendment will become politically viable in the future.

What about ballot initiatives and legislation?

In addition to the Johnson Amendment, section 501(c)(3) of the Tax Code also includes a limitation on legislative activities by tax-exempt organizations. This section was added to the tax code in 1934. It states that “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation.” This restriction applies to activities that support or oppose pieces of legislation, such as bills and ballot initiatives.

The lobbying restriction was sponsored by Sen. David Reed. Reed is a Republican from Pennsylvania who wanted to silence a nonprofit organization, the National Economy League. The League was in direct with Sen. Reed over the issue of benefits to veterans. The National Economy League was lobbying against a bill introduced by Sen. Reed who had made the issue, and his bill, the centerpiece of his reelection campaign to the US Senate.

Unlike the Johnson Amendment, the restriction on legislation is not an absolute prohibition, but just a limitation. The IRS does not define what an insubstantial amount of legislative activity is, but some guidance suggests that more than 5 percent to 15 percent of a church’s overall activities might be considered substantial.

Churches are allowed to directly support or oppose legislation, encourage congregations to vote for or against proposed laws, and speak into broader matters of public policy. None of these activities come close to the legislative limit included in section 501(c)(3).

What should churches do when it comes to an election?

Unless or until Congress amends the Johnson Amendment or a court declares it to be unconstitutional, it is still law. And the law regarding lobbying about legislation remains in place. When it comes to interacting with elections and candidates, churches should consider the following.

Recognize the significant and underappreciated constitutional protections churches have

Church leaders may be surprised by how much their churches may do in an election year. There are valuable resources that will help to cut through some of the vagueness and provide a roadmap as to what is permissible under current law. That’s true with respect to candidates for political office, as discussed above. That’s also true with respect to lobbying efforts related to legislative matters and ballot measures, as also discussed above.

Additionally, there are numerous activities that fall well within the bounds of current IRS guidance and tax law that churches also should contemplate. Such activities range from public forums inviting all candidates to speak, to compilations of voting records (absent editorial comment or approvals/disapprovals of those records), to neutral voter registration drives.

Even though the Johnson Amendment is unconstitutional, churches should appreciate the vast constitutional protections they currently enjoy without threat of losing their tax-exempt statuses. Doing so can help you avoid self-censorship and feel confident that there is a great deal your church may do should its leaders feel called to do so. Moreover, there are legal groups waiting and ready to provide pro-bono representation in the event a legal challenge ever arises.

Each church must decide for itself how to address politics and elections

For far too long, the Johnson Amendment and IRS guidance has made this kind of decision a legal decision, instead of a theological decision. The fact that this is true should be concerning.

Not every church will be called by its theology to speak about an election or candidates, but some will. Pastors and churches know their congregations best. Every church should have the choice to decide what to do for itself, not out of fear of violating the law, but out of its convictions informed by its theology.

Erik Stanley is an attorney at Provident Law, specializing in religious liberties, churches and nonprofits, commercial litigation, and business law, and the former senior counsel for Alliance Defending Freedom. He is an advisor at large for Church Law & Tax.

Key Tax Dates for May 2022

Along with monthly and semiweekly requirements, note quarterly filing and forms pertinent to your church or ministry.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

<img class=”alignleft size-thumbnail wp-image-52069″ src=”https://www.churchlawandtax.com/wp-content/uploads/sites/2/2023/04/128783.webp?w=150&h=150&crop=1″ alt=”” width=”150″ height=”150

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

May 10, 2022: Employer’s quarterly federal tax return—Form 941

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) may file their employer’s quarterly federal tax return (Form 941) by this date instead of April 30 if all taxes for the first calendar quarter have been deposited in full and on time.

May 16, 2022: File forms 990, 990-T, and 5578

Information return—Form 990

An annual information return (Form 990) for tax-exempt organizations is due by this date for tax year 2021. Form 990 summarizes revenue, expenses, and services rendered. Organizations exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code must report additional information on Schedule A.

Note. Churches, conventions and associations of churches, “integrated auxiliaries” of churches, and church-affiliated elementary and secondary schools are among the organizations that are exempt from this reporting requirement. Organizations not exempt from this reporting requirement must file the Form 990 if they normally have annual gross receipts of $50,000 or more.

Unrelated business income tax return—Form 990-T

An unrelated business income tax return (Form 990-T) must be filed by this date by churches and any other organization exempt from federal income tax that had gross income from an unrelated trade or business of $1,000 or more in 2021.

Certificate of racial nondiscrimination—Form 5578

Annual certification (for calendar year 2021) of racial nondiscrimination by a private school exempt from federal income tax (Form 5578) must be filed by this date by schools that operate on a calendar-year basis.

Fiscal year schools must file the form by the 15th day of the fifth month following the end of their fiscal year. This form must be filed by preschools, primary and secondary schools, and colleges, whether operated as a separate legal entity or by a church.

If an organization is required to file Form 990 (Return of Organization Exempt From Income Tax), or Form 990-EZ (Short Form Return of Organization Exempt From Income Tax), the certification must be made on Schedule E (Form 990 or 990-EZ), Schools, rather than on this form.

Advantage Member Exclusive

Lessons From Mars Hill: Who Pilots Your Church?

On-Demand Webinar: Why quiet governance changes run the risk of eroding congregational trust.

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Editor’s Note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In recent years, a growing number of churches have contemplated changing the governance structures contained in their bylaws. For practical reasons, these changes have often moved those structures from ones where voting rights for key decisions reside with members of the congregation to ones where that authority exclusively rests in the hands of a group of elders or the church’s board. To some church leaders, the changes make sense because they can reduce burdens and create efficiencies. But as Christianity Today’s podcast The Rise and Fall of Mars Hill powerfully demonstrates, significant problems can arise in a church when a move to consolidate decision-making power occurs with little or no warning to the church’s members.

In this exclusive webinar for Advantage Members, attorney Erika Cole dives deeply into this trend, examining the roles and purposes of governance, the reasons some churches consider changes, and why leadership must exercise great caution and transparency before ever proceeding with one.

You can download the presentation slides here.

More on this topic:

Find out more on this topic in Erika Coles article, The Dangers of a Quiet Governance Change.

Erika E. Cole, Esq., known as The Church Attorney®, is one of only a handful of attorneys in the nation who practices exclusively in the area of church law. She currently serves as a senior editorial advisor for Christianity Today’s ChurchLawAndTax.com.

The Dangers of a Quiet Governance Change

Subtly shifting who has authority to make key decisions in your church may make sense—but may also erode congregational trust.

In recent years, and without much fanfare, many churches have quietly shifted their governance structures, moving from structures where voting rights for key decisions reside with members of the congregation to structures where that authority exclusively rests in the hands of a group of elders or the church’s board.

To church leadership, the shift may make sense on paper, reducing burdens and creating efficiencies. But making such a shift also threatens to erode the trust of a congregation if it is done for the wrong reasons, or if it is done for good reasons, but mishandled. When such a significant change goes awry—as has been witnessed at a handful of high-profile churches—the consequences can be devastating.

Christianity Today’s podcast The Rise and Fall of Mars Hill powerfully demonstrates the trouble that can arise in a church when decision-making power gets consolidated.

Situations like this one offer an important caution: Church leaders are wise to review and understand their church’s governance model, and why it exists, before making plans to change it. And if they choose to pursue a change, leaders must carefully contemplate how to communicate with their congregations to demonstrate transparency and integrity throughout that process.

What is church governance?

The word “governance” comes from a Greek word meaning “to pilot” or “to steer.” In the context of church operations, governance connotes who has decision-making authority in significant matters such as buying or selling church property, adopting the annual budget, the approval of a merger or acquisition, and the hiring or firing of key leaders.

A church’s governance structure most commonly gets set at the time the church is founded. How it gets set depends on several factors, including denominational affiliations.

The role of bylaws

Many churches incorporate at their founding. Whether incorporated or not, nearly all adopt governing documents known as bylaws. These documents define the systems and processes for decision-making and leadership within the church.

Common Church Governance Models

Church bylaws typically reflect one of these models:

  • Board-led church: A governing board (e.g., elders, trustees, directors) acts on behalf of the congregation. The board makes operational decisions without congregational involvement, unless required by state law.
  • Congregation-led church: Members vote on major decisions, as outlined in the bylaws. This model encourages broad participation and transparency.
  • Denomination-led church: A hierarchical structure, governed by a Book of Discipline or similar document. Local churches operate under the oversight and guidelines of the denomination.

A Healthy Governance Ecosystem

A strong governance model often includes:

  1. Pastoral leadership
  2. A governing board (elders, trustees, directors)
  3. The congregation

All three components can coexist across different governance models.

Shifting Governance Trends

After more than 20 years representing churches, I’ve reviewed hundreds of bylaws. While the congregation-led model remains common, many churches are now shifting toward board- or elder-led models that consolidate decision-making.

This shift often occurs through bylaw revisions, reducing or eliminating the congregation’s decision-making role. When one part of the governance ecosystem is removed, problems frequently arise.

The Role of Church Members

Church members are often the lifeblood of a congregation. Removing their voice from decisions can cause confusion and distrust.

A Personal Example

I grew up in a rural church with fewer than 200 members. These members:

  • Maintained the building
  • Provided music and administration—unpaid
  • Shared meals and supported one another

Quarterly business meetings allowed members to vote on everything from budgets to special events. Membership came through baptism and fellowship. Members were deeply invested in church operations.

When a congregation-led church changes its structure suddenly, members can feel blindsided.

Why Churches Shift Away from Congregation-Led Models

Church leaders may choose to move away from congregation-led structures for reasons like:

  • Avoiding conflict: To reduce tension during contentious meetings.
  • Increasing efficiency: To streamline decisions without red tape.

However, fast decisions are not always wise. Requiring a majority or supermajority ensures careful deliberation and protects against impulsive decisions.

When Governance Changes Cause Conflict

I’ve observed a rise in litigation tied to governance changes, especially when:

  • Membership definitions are altered
  • Bylaws are revised without transparency

Courts are increasingly weighing in—especially when the dispute involves corporate governance rather than doctrine.

Key Legal Insight

Judges often side with long-term attendees and donors who are excluded from decision-making, especially if they were not informed of bylaw changes. Courts can rule on corporate matters that don’t require interpreting religious doctrine.

A Notable Cautionary Tale: Mars Hill Church

Mars Hill never used a congregation-led model, but its downfall underscores the risks of governance consolidation.

Founded in 1996, Mars Hill grew to 12,000 weekly attendees across 15 campuses. In 2014, internal conflicts and leadership issues led to its collapse.

One key decision: Founder Mark Driscoll revised the bylaws to concentrate power among a small group of elders—including himself. This governance shift limited accountability and fueled the church’s downfall. (See The Rise and Fall of Mars Hill, Episode 7.)

Six Key Considerations Before Changing Governance

Churches considering a move from congregation-led to board-led structures should address these:

  1. Assess current governance: Review bylaws, incorporation documents, and denominational rules.
  2. Check state laws: Some states require congregational votes regardless of internal governance.
  3. Evaluate current model: Consider the reasons your church chose a congregation-led model.
  4. Explore alternatives: Could your goals be met within the existing model?
  5. Plan the process: How will you involve the congregation, communicate changes, and handle dissent?
  6. Handle legal updates: Revise incorporation documents and bylaws to align with new governance.

Proceed with Transparency and Caution

A governance change made in secrecy can devastate a church. The Mars Hill story offers a strong caution: concentrated power with no accountability can create lasting damage.

Additional Resources

  • Podcast: Erika Cole interviews Rise and Fall of Mars Hill creator Mike Cosper on church governance
  • Bottom line: Don’t shrink decision-making to a few voices without careful review and counsel. Always consult experienced legal advisors before making major governance changes.
Erika E. Cole, Esq., known as The Church Attorney®, is one of only a handful of attorneys in the nation who practices exclusively in the area of church law. She currently serves as a senior editorial advisor for Christianity Today’s ChurchLawAndTax.com.

Church Formation Basics

Church formation basics gives leaders insights into how a church is formed, why it matters, and how it guides future decisions.

Last Reviewed: October 23, 2023

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Church formation basics is important because how a church is legally formed directly affects how it operates.

From articles of incorporation to bylaws to tax status, church leaders must understand how their church is formed and how that formation shapes the decisions they make, and the ways they make those decisions.

In this helpful, hands-on video, attorney Lisa Runquist, a longtime advisor for Church Law & Tax, delves deeper into the formation processes for churches and explains how the pieces that are essential to formation become instrumental to how those churches function, both internally and externally for years to come.

Download the slids to follow along and take notes as you watch.

Editor’s Note. This video is exclusive to Church Law & Tax members only. However, you can sign-up here to watch this video for free.

Lisa A. Runquist has more than 40 years of experience as a transactional lawyer, both with nonprofit organizations and business organizations.
Related Topics:

Key Tax Dates April 2022

Filing returns, key quarterly deadlines, exemptions, and more.

Monthly requirements

If your church reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly with a bank.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

April 18, 2022: Tax returns, amended returns, extension, exemption from Social Security, and quarterly payment

Individual tax returns

Federal income tax and self-employment tax returns by individuals for calendar year 2021 are due by this date.

Amended federal income tax returns

Last day for most taxpayers to file an amended federal income tax return (Form 1040X) for calendar year 2019 (unless you received an extension of time to file your 2019 return). See the instructions for Form 1040X on the IRS website.

Extension for file tax returns

Filing Form 4868 gives taxpayers until October 15 to file their 2021 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by April 15, 2022, to avoid interest and penalties.

Exemption from Social Security coverage

Last day to file an exemption from Social Security coverage (Form 4361) for most eligible clergy who began performing ministerial services in 2020 (deadline extended if applicant obtains an extension of time to file Form 1040).

Quarterly estimated tax payments for certain employees and churches

Ministers who have not elected voluntary withholding and self-employed workers must file their first quarterly estimated federal tax payment for 2022 by this date (a similar rule applies in many states to payments of estimated state taxes).

Nonminister employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay Social Security and Medicare taxes) are treated as self-employed for Social Security purposes, and are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they ask their employing church to withhold an additional amount of income taxes from each paycheck (use a new Form W-4 to make this request) that will be sufficient to cover self-employment taxes.

A church must make quarterly estimated tax payments if it expects an unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure your estimated taxes. Quarterly estimated tax payments of one-fourth of the total tax liability are due by April 15, June 15, September 15, and December 15, 2022, for churches on a calendar year basis. Deposit quarterly tax payments electronically using EFTPS.

April 29, 2022: Employer exemption

Churches hiring their first nonminister employee between January 1, 2022, and March 31, 2022, may exempt themselves from the employer’s share of Social Security and Medicare taxes by filing Form 8274 by this date (nonminister employees are thereafter treated as self-employed for Social Security purposes).

The exemption is only available to churches that are opposed on the basis of religious principles to paying the employer’s share of Social Security and Medicare taxes.

April 30, 2022: Employer’s quarterly federal tax returns

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the first calendar quarter of 2022 by this date.

Enclose a check in the total amount of all payroll taxes (withheld income taxes, the withheld employee’s share of Social Security taxes, and the employer’s share of Social Security taxes) if these taxes were less than $2,500 on March 31, 2022.

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

Key Tax Dates March 2022

Monthly and semiweekly requirements for depositing payroll taxes.

Monthly requirements

If your church reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly with a bank.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

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

Key Tax Dates February 2022

Forms 941, 1098-C, 1095-C, and 1094-C are due this month.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022, the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly. Monthly deposits are due by the 15th day of the following month.

Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022, the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

February 10, 2022: Employer’s quarterly federal tax return due

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) may file their employer’s quarterly federal tax return (Form 941) by this date instead of January 31 if all taxes for the fourth calendar quarter (of 2021) have been deposited in full and on time.

February 28, 2022: IRS forms due

Filing IRS 1098-C for reporting vehicle sale or donation

Churches file Copy A of Form 1098-C with the IRS by this date to report the sale or use of a donated vehicle. Generally, you must furnish Copies B and C of this form to the donor no later than 30 days after the date of sale if box 4a is checked, or 30 days after the date of the contribution if box 5a or 5b is checked. If box 7 is checked, do not file Copy A with the IRS and do not furnish Copy B to the donor. You may furnish Copy C to the donor. The donor is required to obtain Copy C or a similar acknowledgment by the earlier of the due date (including extensions) of the donor’s income tax return for the year of the contribution or the date that the return is filed. If filing electronically, this form is due by March 31, 2022.

Filing 1095-C and 1094-C for applicable large employers and ACA compliance

Applicable large employers, generally employers with 50 or more full-time employees (including full-time equivalent employees) in the previous year, must file a Form 1095-C for each employee who was a full-time employee of the employer for any month of the previous calendar year by this date. Generally, the employer is required to furnish a copy of Form 1095-C (or a substitute form) to the employee.

The employer also files a Form 1094-C transmittal form with the IRS (including copies of each Form 1095-C). The purpose of this form is to ensure that applicable large employers are complying with the shared responsibility provisions of the ACA. Forms 1094-C and 1095-C must be issued by March 31, 2022, if issued electronically.

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

IRS Bumps 2025 Business Use Mileage Rate to 70 Cents Per Mile

The IRS has once again increased the business use mileage rate. Moving, medical, and charitable rates remain unchanged.

Last Reviewed: January 6, 2025

The Internal Revenue Service (IRS) has released the 2025 optional standard mileage rates. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Effective January 1, 2025, the rates are:

  • 70 cents per mile driven for business use (up 3 cents from the 2024 rate).
  • 21 cents per mile driven for medical or moving purposes for certain members of the Armed Forces (no change from the 2024 rate).
  • 14 cents per mile driven in service of charitable organizations (it takes an act of Congress to change this rate).

Note: The rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.


Don’t wait! Start 2025 on a good footing with a Church Law & Tax Advantage Membership and gain access to cohorts, webinars, product discounts, and more, including full access to trusted content from our trusted team of legal, tax, finance, HR and technology advisors.


Limitations created under Tax Cuts and Jobs Act of 2017

Under the Tax Cuts and Jobs Act of 2017, taxpayers cannot:

  • claim a miscellaneous itemized deduction for unreimbursed employee travel expenses and,
  • cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. See Moving Expenses for Members of the Armed Forces for more details

Taxpayers can calculate the actual costs of using their vehicle rather than using the standard mileage rates. Taxpayers can usually only use the standard mileage rate in the first year a car is available for business use. In later years, taxpayers can choose either the standard mileage rate or actual expenses.

Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals). This applies if the standard mileage rate is chosen.

What does the business mileage rate increase mean for churches?

Increased amounts of reimbursement represent increased budget expenses, and that means adjusting budgets in ways that affect other ministry spending.

Conversely, eliminating or reducing reimbursements shifts the burden to pastors and employees using personal vehicles for church-related business.

Note: Unreimbursed employee business expenses are not deductible under the Tax Cuts and Jobs Act of 2017 (the “Act”). As a result, pastors and employees with unreimbursed mileage cannot seek tax relief on next year’s federal income tax returns. The act allows for a reinstatement of the deduction for unreimbursed employee business expenses after 2025.

You may also want read through this Q&A with CPA and Church Law & Tax Senior Editorial Advisor Michael Batts.

One final note:

Churches with an accountable reimbursement arrangement can reimburse eligible employees who use their vehicles for church-related business. Employees and pastors must properly track and document their business miles under these arrangements.

Unreimbursed employee business expenses are not deductible. Therefore, employees can no longer calculate a mileage deduction on their annual tax returns.

 

Key Tax Dates January 2022

Note deadlines for payroll taxes, fourth quarter estimated payment, and various forms.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022, the lookback period is July 1, 2020, through June 30, 2021), then withheld payroll taxes are deposited monthly. Monthly deposits are due by the 15th day of the following month.

Note, however, if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022, the lookback period is July 1, 2020, through June 30, 2021), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

January 1, 2022: Payroll Taxes

Social Security and Medicare taxes

Employees and employers each pay Social Security and Medicare taxes equal to 7.65 percent of an employee’s wages. The tax rate does not change in 2022.

The 7.65 percent tax rate is comprised of two components: 1) a Medicare hospital insurance tax of 1.45 percent, and 2) an “old age, survivor and disability” (Social Security) tax of 6.2 percent. There is no maximum amount of wages subject to the Medicare tax. The tax is imposed on all wages regardless of amount.

For 2022, the maximum wages subject to Social Security taxes (the 6.2 percent amount) is $147,000. Stated differently, employees who receive wages in excess of $147,000 in 2022 pay the full 7.65 percent tax rate for wages up to $147,000, and the Medicare tax rate of 1.45 percent on all earnings above $147,000. Employers pay an identical amount. The Medicare tax rate for certain high-income taxpayers increases by an additional 0.9 percent.

Self-employment taxes

The self-employment tax rate (15.3 percent) does not change in 2022. The 15.3 percent tax rate consists of two components: (1) a Medicare hospital insurance tax of 2.9 percent, and (2) an “old age, survivor and disability” (Social Security) tax of 12.4 percent. There is no maximum amount of self-employment earnings subject to the Medicare tax. The tax is imposed on all net earnings regardless of amount.

For 2022, the maximum earnings subject to the Social Security portion of self-employment taxes (the 12.4 percent amount) is $147,000. Stated differently, persons who receive compensation in excess of $147,000 in 2022 pay the combined 15.3 percent tax rate for net self-employment earnings up to $147,000, and only the Medicare tax rate of 2.9 percent on earnings above $147,000. The Medicare tax rate for certain high-income taxpayers increases by an additional 0.9 percent.

These rules directly impact ministers, who are considered self-employed for Social Security with respect to their ministerial services. Ministers should take these rules into account in computing their quarterly estimated tax payments.

Federal incomes taxes

Beginning on this date, churches having nonminister employees (or a minister who has elected voluntary withholding) should begin withholding federal income taxes from employee wages.

To know how much federal income tax to withhold from employees’ wages, employers should have a Form W-4 on file for each employee. Employees should file an updated Form W-4 for 2022, especially if they owed taxes or received a large refund when filing their previous tax return.

Employees should use the IRS Tax Withholding Estimator to determine accurate withholding.

January 15, 2022: Fourth quarter estimated taxes due

Ministers (who have not elected voluntary withholding) and self-employed workers must file their fourth quarterly estimated federal tax payment for 2021 by this date (a similar rule applies in many states to payments of estimated state taxes).

Employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay FICA taxes) are treated as self-employed for Social Security purposes, and accordingly are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they have entered into a voluntary withholding arrangement with their employing church or organization.

January 31, 2022: Tax forms due

File Form 941

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the fourth calendar quarter of 2021 by this date. Enclose a check in the total amount of all withheld taxes (withheld income taxes, withheld Social Security and Medicare taxes paid by the employee, and the employer’s share of Social Security and Medicare taxes) if less than $2,500 on December 31, 2021.

Copies of W-2s for employees

Churches must furnish Copies B, C, and 2 of Form W-2 (“wage and tax statement”) to each person who was an employee during 2021 by this date. This requirement applies to clergy who report their federal income taxes as employees rather than as self-employed, even though they are not subject to mandatory income tax (or FICA) withholding. Nonminister church employees must also receive a W-2.

Filing W-2s and W-3s with the Social Security Administration

Churches must send Copy A of Forms W-2, along with Form W-3, to the Social Security Administration by this date. If you file electronically, the due date is also January 31, 2022.

Copies of 1099-NEC for self-employed persons

Churches must issue Copy B of Form 1099-NEC (“nonemployee compensation”) to any self-employed person to whom the church paid nonemployee compensation of $600 or more in 2021 by this date.

This form (rather than a W-2) should be provided to clergy who report their federal income taxes as self-employed, since the Tax Court and the IRS have both ruled that a worker who receives a W-2 rather than a 1099-NEC is presumed to be an employee rather than self-employed.

Other persons to whom churches may be required to issue a Form 1099-NEC include evangelists, guest speakers, contractors, and part-time custodians.

Filing 1099-NEC and 1096 with the IRS

Churches must send Copy A of Forms 1099-NEC, along with Form 1096, to the IRS by this date.

Distributing 1099-INT

Churches must distribute a 2021 1099-INT form to any person paid $600 or more in interest during 2021 by this date (a $10 rule applies in some cases).

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

Key Tax Dates December 2021

Housing allowance designations, year-end transactions, 2021 donations, and more.

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2021, the lookback period is July 1, 2019, through June 30, 2020), then withheld payroll taxes are deposited monthly. Monthly deposits are due by the 15th day of the following month.

Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes. Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2021, the lookback period is July 1, 2019, through June 30, 2020), then the withheld payroll taxes are deposited semiweekly.

This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

December 15, 2021: Complete year-end transactions and make UBIT payments

Year-end transactions

Complete all year-end transactions to be sure that they are reportable on your income tax return.

Payment for unrelated business income tax liability

A church must make quarterly estimated tax payments if it expects an unrelated business income tax (UBIT) liability for the year to be $500 or more. Use IRS Form 990-W to figure your estimated taxes. For 2021, quarterly estimated tax payments of one-fourth of the total tax liability are due by April 15, June 15, September 15, and December 15, 2021, for churches on a calendar-year basis. Deposit quarterly tax payments using Electronic Federal Tax Payment System (EFTPS).

December 31, 2021: Housing and Parsonage allowance designations, donations for 2021, and more

Housing allowance

Churches must designate a portion of each minister’s compensation as a housing allowance by this date in order for ministers who own or rent their homes to receive the full benefit of a housing allowance exclusion for calendar year 2022.

The designation should be adopted during a regular or special meeting of the church board and should be contained in the written minutes of the meeting.

Parsonage allowance

Churches should designate a parsonage allowance for any minister who lives in a parsonage and who is expected to pay some of the expenses of maintaining the parsonage (e.g., utilities, furnishings, repairs, improvements, yard care).

Checks for 2021 donations

Donors must deliver checks on or by this date to claim a charitable contribution deduction for 2021. Checks that are placed in the church offering during the first worship service in 2022 will not qualify for a charitable contribution deduction in 2021, even if the check is predated to 2021 or was written in 2021. However, checks that are written, mailed, and postmarked in 2021 will be deductible in 2021 even though they are not received by a church until 2022.

Marital status

An employee’s marital status on this date determines his or her filing status for the year.

Reclassifying someone as an employee

If you have a minister or lay worker who is treated as self-employed for federal income tax reporting purposes, but who you would like to reclassify as an employee, the ideal time to make the change is on January 1, 2022.

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

On-Demand Webinar

Fraud in the Church: What We Learned from 700 Church Leaders

Discover the results of our 2021 church fraud survey and the best practices for reducing vulnerabilities.

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A new nationwide survey of more than 700 church leaders conducted by Church Law & Tax shows nearly one-third serve in congregations that have suffered from some form of financial misconduct. Churches of all sizes, ages, and locations are susceptible, according to the survey’s findings—and fraud prevention experts say the vulnerabilities that perpetrators commonly exploit are ones easily remedied. The survey also revealed surprising patterns regarding the types of people who are most prone to steal from their churches.

CPA Vonna Laue and attorney and Church Law & Tax content editor Matthew Branaugh co-led the research project. In this free, one-hour webinar, Laue and Branaugh sit down to discuss:

  • the purpose of the survey,
  • the results that stood out most,
  • and the best practices leaders can implement now to reduce their church’s vulnerabilities.

Download the slides below to follow along and take notes as you watch.

NEW! Safeguarding Your Church’s Finances:

Explore this multi-session video course for pastors, board members, staff, and volunteers on the basics of fraud prevention. LEARN MORE!

Can Churches Bar Service Animals?

Before your church considers barring service animals, it is good to understand the legal and ministerial dimensions.

Responding to a churchgoer who wants to bring a service or support animal to church may not be a new challenge.

A fresco in the ancient Roman city of Herculaneum is one of the world’s earliest references to service animals. The fresco shows a guide dog helping a blind man cross a busy street. Since this fresco dates back to the late first century A.D. in a city not far from Rome and its fledgling Christian church, it is not unreasonable to assume that the church encountered the occasional presence of a service animal.


Lead Your Church With Confidence—Become a Church Law & Tax Member Today.


The New Testament does not mention service animals. But there are several points that may be helpful to modern church leaders when considering whether to bar service animals.

Background: You cannot discriminate in places of public accommodation

Title III of the federal Americans with Disabilities Act (ADA) prohibits discrimination based on disability by places of public accommodation.

ADA Title III Technical Assistance Manual categorizes the 12 different types of public accommodations organizations.

Churches—and religious schools controlled by religious organizations—are not among them.

Actually, the ADA explicitly affirms this exemption by specifying that the public accommodations provisions “shall not apply to … religious organizations or entities controlled by religious organizations, including places of worship.”

As a result, most religious organizations are excluded from the prohibition of discrimination in places of public accommodation. The House Report detailing congressional committee discussions prior to the law’s passage notes that “places of worship and schools controlled by religious organizations are among those organizations and entities which fall within this exemption.”

The House Report also says “activities conducted by a religious organization or an entity controlled by a religious organization on its own property, which are open to nonmembers of that organization or entity are included in this exemption.”

More from the ADA Title III Technical Assistance Manual:

III-1.5000 Religious entities. Religious entities are exempt from the requirements of Title III of the ADA. A religious entity, however, would be subject to the employment obligations of Title I if it has enough employees to meet the requirements for coverage.

III-1.5100 Definition. A religious entity is a religious organization or an entity controlled by a religious organization, including a place of worship.

If an organization has a lay board, is it automatically ineligible for the religious exemption? No. The exemption is intended to have broad application. For example, a parochial school that teaches religious doctrine and is sponsored by a religious order could be exempt, even if it has a lay board.

III-1.5200 Scope of exemption. The exemption covers all of the activities of a religious entity, whether religious or secular.


ILLUSTRATION: A religious congregation operates a daycare center and a private elementary school for [the congregation’s] members and nonmembers alike. Even though the congregation is operating facilities that would otherwise be places of public accommodation, its operations are exempt from Title III requirements.

What if the congregation rents to a private day care center or elementary school? Is the tenant organization also exempt?

No. The private entity that rents the congregation’s facilities to operate a place of public accommodation is not exempt, unless it is also a religious entity. If it is not a religious entity, then its activities would be covered by Title III. The congregation, however, would remain exempt, even if its tenant is covered. That is, the obligations of a landlord for a place of public accommodation do not apply if the landlord is a religious entity.

If a nonreligious entity operates a community theater or other place of public accommodation in donated space on the congregation’s premises, is the nonreligious entity covered by Title III?

No. A nonreligious entity running a place of public accommodation in space donated by a religious entity is exempt from Title III’s requirements. The nonreligious tenant entity is subject to Title III only if a lease exists under which rent or other consideration is paid.

Note that while schools and daycare centers are both on the list of 12 categories subject to the ADA, they are exempt if “controlled by a religious organization.”

Example. A church operates a school and preschool as ministries of the church. Both the school and preschool are subject to the church’s control. The church’s governing board serves as the board for the school and preschool, and it exercises plenary control over all their activities, including personnel, finances, and curriculum. The school and preschool operate under the church’s corporate and tax-exempt status.

The school and preschool are “controlled by a religious organization,” and therefore are exempt from the ban on discrimination by places of public accommodation. Among other things, this means that the school and preschool are not required to allow service dogs.

Example. For many years, a church has operated a private school. Recently, church leaders decided to separately incorporate the school to insulate the church from the school’s liabilities. The school selects its own board and operates independently of church control. The school no longer is “controlled by a religious organization” and therefore is subject to the ADA’s public accommodations provisions.

Note. While religious organizations are not subject to the ADA’s public accommodation provisions, they may be subject to similar provisions under state or local law.

Applying the ADA requirements to service animals

The ADA requires covered entities that provide goods or services to the public to make “reasonable modifications” in their policies, practices, or procedures when necessary to accommodate people with disabilities. This requirement applies to service animals. As noted above, religious organizations are exempt from Title III of the ADA, and so they are not subject to any requirement under Title III of the ADA pertaining to service animals.

Key Point. Whether or not a church is required to allow service animals in church services or at church-sponsored activities, leaders should still have a basic understanding so they can make both informed and compassionate decisions.

What is a service animal?

The ADA defines a service animal as a dog trained to do work or tasks for a disabled person. The disabled person can train the dog. The task(s) performed by the dog must be directly related to the person’s disability.

The dog must be able to assist the person with a disability.

For example, a person with diabetes may have a dog trained to alert him when his blood sugar reaches high or low levels.

A depressed person may have a dog trained to remind them to take their medication.

Or, someone prone to seizures may have a dog trained to detect an oncoming seizure.

What about animals providing “emotional support?”

A fairly common misunderstanding is that a comfort pet is a service animal.

However, service animals are working animals, not pets.

Animals whose sole function is to provide comfort or emotional support do not qualify as service animals under the ADA.

The ADA does not view emotional support, therapy, comfort, or companion animals as service animals. However, some state and local governments do allow such animals in public places. Review local and state laws to find out.

How to determine if a dog is a service animal

In situations where it is not obvious that the dog is a service animal, church staff may ask only two specific questions:

  1. Is the dog serving someone with a disability?
  2. is the dog doing work or performing a task?

Caution. Churches are not allowed to request any documentation for the dog, require that the dog demonstrate its task, or inquire about the nature of the person’s disability.

The ADA does not require service animals to wear a vest, ID tag, or specific harness.

When can a church exclude service animals?

Someone asked the DOJ: “Are churches, temples, synagogues, mosques, and other places of worship required to allow individuals to bring their service animals into the facility?” Its response: “No. Religious institutions and organizations are specifically exempt from the ADA. However, there may be state laws that apply to religious organizations.”

Applying the Americans with Disabilities Act to a congregational setting

Animal’s Owner: Unpaid volunteer workers (i.e., some teachers, musicians, ushers), and/or church members.

Application: ADA Title I does not apply since there is no employment relationship.

ADA Title III states that the public accommodations provisions “shall not apply to . . . religious organizations or entities controlled by religious organizations, including places of worship.”

Be sure to check state and local disability laws.

Remember this: If admitting service animals would fundamentally alter the nature of a service or program, service animals may be prohibited under the federal ADA.

Further, if a service animal is out of control and the handler does not take effective action to control it, or if it is not housebroken, the church may request that the animal be removed from the premises.

The ADA requires that service animals be always under the control of the handler. In most instances, the handler will be the individual with a disability or a third party who accompanies the individual with a disability.

The service animal must be harnessed, leashed, or tethered while in public places unless these devices interfere with the service animal’s work or the person’s disability prevents use of these devices. In that case, the person must use voice, signal, or other effective means to maintain control of the animal.

For example, a person who uses a wheelchair may use a long, retractable leash to allow her service animal to pick up or retrieve items. She may not allow the dog to wander away from her and must maintain control of the dog, even if it is retrieving an item at a distance from her.

Under control also means that a service animal should not be allowed to bark repeatedly in a lecture hall, theater, library, or any other quiet place. However, if a dog barks just once, or barks because someone has provoked it, this would not mean that the dog is out of control.


To help guide your church’s decision-making regarding a service animal’s presence, consider the following examples.

Example. A church’s volunteer worship leader recently began bringing his pet dog to church as a support or comfort animal. Several members who find the presence of the dog a distraction complain to the pastor. Can the pastor ask the volunteer to discontinue bringing his dog?

Yes, for two reasons.

First, Title III of the ADA specifies that the public accommodations provisions “shall not apply to . . . religious organizations or entities controlled by religious organizations, including places of worship.”

Second, the volunteer’s dog is not a “service animal” protected by the ADA unless it has been trained to do work or perform tasks for an individual with a disability. The tasks performed by the dog must be directly related to the person’s disability.

Example. A church member begins bringing her large dog to church services. The dog sits up on the pew next to the owner. Several members find the presence of the dog a distraction and complain to the pastor. Can the pastor ask the member to discontinue bringing her dog?

Yes. See the analysis in the previous example.

Example. A church member begins bringing his miniature horse to church with him in order to provide comfort. The horse sits up on the pew next to the owner. Can the church ask the member to discontinue bringing his horse?

Yes. See the analysis in the previous example.

Also, see the “Miniature Horses” section in the ADA revised requirements for service animals.


Example. A church places a “no pets” sign at all of its entrances. Since religious organizations are not subject to the ADA’s public accommodation provisions, the sign is permissible. Note, however, that the church may be subject to similar provisions under state or local law.

Example. A church with 10 employees has an employee who suffers from anxiety. This employee has asked for permission to bring a service animal to work with her. This question implicates the ban on employment discrimination based on disability under Title I of the ADA. Employment discrimination under the ADA is addressed below.

Caution. It is important to remember that while religious organizations are not subject to the ADA’s public accommodation provisions, they may be subject to similar provisions under state or local law. More details below.


Churches may need to comply with state and local laws

While religious organizations are not subject to the ADA’s provisions regarding public accommodations, including service animals, they must still carefully evaluate whether they are subject to similar provisions mandated under state or local laws—and, if such laws exist, whether they provide any religious exemptions under them.

It is highly recommended church leaders consult with a local ADA attorney who understands local and state public state public accommodations laws, and religious organizations.

Can church employees bring service animals to work?

The ADA specifically permits religious organizations (including religious educational institutions) to “give preference in employment to individuals of a particular religion to perform work connected with the carrying on by organization of its activities.”

The ADA further provides that “a religious organization may require that all applicants and employees conform to the religious tenets of such organization.” 29 CFR 1630.16(a).

Note that Title I’s religious exemption is narrower than Title III’s blanket exemption of “religious organizations or entities controlled by religious organizations, including places of worship.”

Title I of the ADA prohibits private employers (among other entities) from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment. The ADA covers employers with 15 or more employees.

An individual with a disability is a person who:

  • Has a physical or mental impairment that substantially limits one or more major life activities;
  • Has a record of such an impairment; or
  • Is regarded as having such an impairment.

A qualified employee or applicant with a disability is an individual who, with or without reasonable accommodation, can perform the essential functions of the job in question. Reasonable accommodation may include, but is not limited to:

  • Making existing facilities used by employees readily accessible to and usable by persons with disabilities
  • Job restructuring, modifying work schedules, reassigning to a vacant position
  • Acquiring or modifying equipment or devices, adjusting or modifying examinations, training materials, or policies, and providing qualified readers or interpreters

If a reasonable accommodation of a known disability of a qualified applicant or employee does not impose an “undo hardship” on the employer’s business operation, the employer must do it.

Reasonable accommodations are adjustments or modifications provided by an employer to enable people with disabilities to enjoy equal employment opportunities.

Accommodations vary depending upon the needs of the individual applicant or employee. Not all people with disabilities (or even all people with the same disability) will require the same accommodation.

Service animals may be considered “reasonable accommodation”

The DOJ has stated that service animals may be a reasonable accommodation of some employee disabilities. (See this FAQ.)

Employers that agree to allow service animals can put limits in place to protect other employees and company property.

Applying Americans with Disabilities Act to paid church employees

Animal’s Owner: Paid employees

Application: The ADA’s employment discrimination provisions (Title I) only apply to employers that have 15 or more employees.

Covered employers must provide reasonable accommodations. Sometimes, these may include service animals that help an employee or job applicant do the essential functions of the job.

However, note: (1) The ADA permits religious organizations (including religious educational institutions) to “give preference in employment to individuals of a particular religion to perform work connected with the carrying on by organization of its activities,” and (2) the ADA provides that “a religious organization may require that all applicants and employees conform to the religious tenets of such organization.”

Be sure to check state and local disability laws.

Employers do not have to sacrifice quality or production standards to make an accommodation.

Employers do not have to provide personal use items, such as glasses or hearing aids.

An employer does not have to provide a reasonable accommodation unless an individual with a disability has asked for one. Sometimes, a medical condition may cause a performance or conduct problem. If that is the case, the employer may ask whether the the employee needs a reasonable accommodation.

Unlike Title III, there is no requirement in Title I (see below) that an employer grant the request of an employee for a service animal. Instead, such a request triggers an “interactive process.” This process involves discussing the employee’s needs and possible accommodations that will not impose an undue hardship on the employer.

Note. Where more than one accommodation would work, the employer may choose the one that is less costly or that is easier to provide.

Note. Employers must recognize that they now have an affirmative duty to make reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is a job applicant or employee, unless they can demonstrate that the accommodation would impose an undue hardship on the operation of their business.

Determining if Title I of the ADA applies

When does—and doesn’t—Title I of the ADA apply to a church and its employees? Consider these examples.

Example. A church with 10 employees has an employee with a disability. This employee has asked for permission to bring a service animal to work.

This question implicates the ban on employment discrimination based on disability under Title I of the ADA. However, Title I only applies to employers having 15 or more employees, and so it does not apply to the church in this example.

Most states, however, have enacted legislation banning discrimination in employment based on disability, and many of these laws apply to employers with fewer than 15 employees.

Example. A church with 20 employees has an employee with a disability. This employee has asked for permission to bring a service animal to work with her to manage her symptoms. This question implicates the ban on employment discrimination based on disability under Title I of the ADA.

Title I applies to employers having 15 or more employees, and so it applies to the church in this example. The employee’s request for accommodation triggers an “interactive process” in which the employee and church informally discuss what accommodations the church could adopt (including allowing the employee to bring a service animal to work) that would render her capable of performing the essential functions of her job without undue hardship to her employer.

Example. A church with 20 employees terminates its pastor, who became disabled in recent years.

The pastor sues, claiming that his termination constituted discrimination based on disability since the church refused to provide reasonable accommodations to enable him to perform the essential functions of his job. One of the specific accommodations the pastor requested was a Seeing Eye dog. The court declined to offer this accommodation based on the “ministerial exception.”

In Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012), the United States Supreme Court unanimously recognized the so-called “ministerial exception” barring civil court review of employment disputes between churches and ministers. The case involved a claim by a “called” teacher at a church-related school in Michigan that the school committed unlawful disability discrimination in terminating her employment. This case effectively bars claims of disability discrimination by ministers against their employing church.

Church leaders should seek legal counsel when responding to requests by employees, job applicants, church members, and visitors.

Sample Service Animal Policy tailored for Churches

Service & Support Animals Policy

{CHURCH NAME} is committed to providing a safe and secure environment for people participating in ministry
activities, including those using service animals. Please review our guidelines regarding both service and
emotional support animals. Although churches are not required to admit service animals to their worship
services, this voluntary policy generally follows federal and state guidelines.

Service Animals


The ADA defines a service animal as a dog that has been individually trained to do work or perform tasks for an
individual with a disability. The task(s) performed by the service animal must be directly related to the person’s
disability. We welcome people with service animals on ministry premises. Ministry leaders may ask individuals
with service animals a few questions, including:

Is the animal required because of a disability? If the answer is NO, see Emotional Support Animals below.

Emotional Support Animals


An emotional support animal (also known as a comfort animal) provides reassurance for someone. Dogs, cats, birds, hamsters, and many other species can serve as emotional support animals. However, they do not qualify as “service animals” under the ADA. Therefore, our organization has chosen NOT to allow emotional support animals on its premises. We apologize for any inconvenience this may cause to you or your family.

Animal Handler’s Responsibilities


Individuals who bring a service animal onto our premises are expected to:

  • Keep the animal harnessed, leashed, or tethered unless these devices interfere with an animal’s work or an
    owner’s disability prevents them from using them.
  • Control the animal through voice, signal, or other effective controls if the animal cannot be harnessed, leashed, or tethered.

Our Organization’s Rights


Our organization does not have to provide care, food, or a special location for the service animal to relieve
itself. We reserve the right to remove an assistance animal from the premises if it:

  • Is out of control, and the handler does not take effective action to control it.
  • Poses a direct threat to the health or safety of others.
  • Is not housebroken.

If a service dog must be removed from the premises, absent other circumstances, the owner may re-enter the
premises and attend church or ministry activities without the service dog. Handlers and Service Dogs seating will be on the outside seating of the Sanctuary.

Understand that the state of {INSERT NAME} may have enacted laws that supplement the federal Americans with Disabilities Act (ADA) when it comes to service animals—including laws that:

  • Set specific access rules for public and private facilities, including churches and religious organizations in certain contexts
  • Define service animals more narrowly or strictly than federal law,
  • Establish penalties for misrepresenting a pet as a service animal, and
  • Set specific access rules for public and private facilities, including churches and religious organizations in certain contexts.

Signed,

{CHURCH REPRESENTATIVE}

I have read and understand this policy. (The Service Dog’s handler may acknowledge the policy.)
Name: ____________________________________________________
Signature: _____________________________________Date: _______

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