No Form 1099 to Benevolence Recipients, Says IRS

Recipients of gifts from a benevolence fund do not need to fill out the form.

Richard R. Hammar, Attorney, CPA
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Church Finance Today

No Form 1099 to Benevolence Recipients, Says IRS

Recipients of gifts from a benevolence fund do not need to fill out the form.

Richard Hammar

Many church treasurers have wondered if they need to issue a Form 1099 to persons who receive distributions of $600 or more from the church benevolence fund. The IRS addressed this question in a recent ruling, and concluded that no Form 1099 is required under these circumstances. The ruling addressed a charity that provided financial assistance to “distressed individuals” affected by a natural disaster for such items as medical and transportation expenses and temporary housing that were not compensated by insurance or otherwise. The IRS concluded that this financial assistance was not taxable compensation for which a Form 1099 would be required, but rather was a “gift” to the recipients. It observed, “In general, a payment made by a charity to an individual that responds to the individual’s needs, and does not proceed from any moral or legal duty, is motivated by detached and disinterested generosity” and therefore is a tax-free gift. IRS Revenue Ruling 2003-12.

This article first appeared in Church Treasurer Alert, February 2003.

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

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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