Churches are not completely exempt from “rendering unto Caesar” what is due. If you are a pastor at church, you are not permitted to claim ignorance on these issues. It isn’t foggy. It isn’t unclear. The IRS has made known the laws and regulations for churches and will hold you to account whether you’ve taken the time to understand them or not.
First, when my organization, The Provisum Group, takes on a new church client, one of the first things we do is check to make sure that their IRS filings are current and complete. These IRS filings require yearly maintenance and contact with the federal government. Failure to do so can result in a forfeiture of your nonprofit status.
Second, we check expense reports and credit card statements because that’s what auditors do, and it is the number one area where abuse and neglect occur. The IRS becomes suspicious toward large purchases if receipts are not accompanying them. Only substantiated reimbursements are acceptable when a receipt proves the money was spent on materials pertaining to the exempted purpose of the organization.
Third, we check into one of the biggest areas of confusion and abuse: the purchase of meals. There must be a bona fide business reason or expectation of gain. If you are unsure about your church’s use of the meals practice is compliant with the federal government, please look into “de minimis meals” on the IRS website. It will help you know if you’re in risk for an audit.
More to come in part 2…