Many foreign countries have no sophisticated system of receipting expenditures and many mission trip leaders fail to understand the documentation standards placed on a US exempt organization. The trip leader should understand the following:
- The dollars he or she cannot specifically account for will be his or her responsibility to return to the church at the end of the trip. There is no presumption of exempt purpose;
- Where possible, receipts must be obtained for expenditures;
- A detailed log of all the trip’s expenditures must be maintained, indicating dates, identities of those who received the money, amounts, and purposes of the expenses;
- If funds are given to individuals for benevolent purposes, the trip leader will have the recipient sign that they received the funds and will document the benevolent need that necessitated the support.
At this time, the IRS is very focused on exempt organizations’ activities in foreign countries. It is always best to remember that the IRS never presumes any expense is spent on exempt purposes until it is proven, and with expenses in foreign countries, the IRS tends to presume that the money was personally spent by the trip leader—or worse, with a terrorist.
Adapted from “Avoiding Tax Pitfalls of Short-Term Mission Trips.”
