2016: Year of Compliance

2016 is quickly becoming the “Year of Compliance” for the Southwest Texas District. Over the years, the laws, specifically IRS tax laws, have changed, and we have discovered opportunities to close some potential risk and liabilities in our current church and ministry practices. This is not saying anyone is doing anything malicious, unethical, immoral or illegal. Just like going to the doctor for an annual health checkup, it’s good to do a health checkup of our churches and ministries to insure we are operating in accordance with the latest IRS code.

This past Saturday, January 30th, we held our first Compliance Conference at North Pointe Church in Copperas Cove for all of our ministers and churches in the northern part of our district. It was a big success. We had 25 attendees with 11 churches and 1 ministry represented. This Saturday, February 6th, we will hold our second Compliance Conference for all our ministers and churches in the southern part of our district. The conference is being hosted by Trinity Church, 2009 N Clinton St, Cuero, TX 77954. We will begin at 9AM, teach and discuss until around 11AM, and reserve the last hour for questions and answers.

You don’t want to miss this event. Even if you believe you are operating your church or ministry in accordance with the law, it never hurts to get a checkup. You might be surprised. See you Saturday in Cuero.

Your First Meeting of the Year is the Most Important

The IRS allows several tax benefits for ministers; however, they must be proposed and approved during your first board meeting of the year in order to take full advantage of them. They all fall under a Salary & Compensation Policy. Here are 3 very significant items that impact ministers tax liability:

  • Salary & Benefits
    • There must be either a contract or offer letter detailing exactly what the pastor/staff minister is to receive as salary & compensation
    • The pastor/staff minister must sign agreeing to the terms of the salary & benefits
    • This should be reviewed annually during the first meeting of each year
  • Housing Allowance Designation
    • The pastor/staff minister can deduct all expected expenses they will incur during the year from their gross salary; to include mortgage/rent, property tax, insurance, utility bills, maintenance, upgrades in furniture, appliances, fixtures, landscape etc.
    • If a parsonage is provided and/or utilities paid for by the church/ministry, then only additional expenses incurred can be designated.
  • Medical Reimbursement
    • ALL medical related expenses paid out by the pastor/staff minister are reimbursable. These are actual paid expenses for medical services provided.

There are more details on these items, so either refer to your accountant, attorney, the IRS publications or contact the district office for supporting information.