Church Financial Matters
Church
Reporting Requirements
"For there is a proper time
and procedure for every
matter …“
Ecclesiastes 8:6
Not A Complete List
For those who are viewing this
and are not in California,
disregard the California forms and
search out your particular state
forms
Willful or Intentional
Disregard
Sec. 6672 - 100% penalty
“Any person required to collect, truthfully account for, and
pay over any tax imposed by this title who willfully fails to
collect such tax, or truthfully account for and pay over such
tax, or willfully attempts in any manner to evade or defeat any
such tax or the payment thereof,shall in addition to other
penalties provided by law, be liable to a penalty equal to the
total amount of the tax evaded, or not collected, or not
collected for and paid over”
Baptist Temple Tax Dispute - Updated:07-24-2001
Church Building Confiscated To Pay Tax Debt
For 16 years the leaders of the Indianapolis Baptist Temple
refused to withhold federal taxes from their employees’
paycheck or to pay federal taxes as an employer. The protest
came to an end Feb 13, 2001 when federal marshals seized
the church building to pay taxes and fines totaling
$6 million.
The church was ordered to be sold at auction by U.S. District
Judge Sarah Evans Barker in a Sept. 28, 2000, ruling, in
which she gave the conservative evangelical congregation
until Nov. 14 to vacate. For urch was ordered to be sold at
auction by U.S. District Judge Sarah Evans Barker in a Sept.
28, 2000, ruling, in which she gave the conservative
evangelical congregation until Nov. 14 to vacate.
Code Section: 7201
Action: Willful attempt to evade or
defeat tax.
Penalty: A felony, with a criminal penalty of
up to $100,000 (up to $500,000 for a
corporation), and imprisonment of up to 5
years (or both).
Code Section: 7204
Action: Willful failure to provide a W-2 to
employees, or willfully including false information
in a W-2.
Penalty: A misdemeanor, with a criminal penalty of
up to $1,000, and imprisonment or up to 1 year
(or both).
Form W-2
Wage and Tax Statement
W-2C if you make a mistake on the W-2
Form W-3
Transmittal of Wage
And Tax Statement
W-3C if you make a mistake
on the W-3
Form W-2G
Certain Gaming Winnings
(Including Raffles)
For more information on reporting requirements for gaming
activities, see IRS Publication 3079,
Gaming Publication for Tax-Exempt Organizations
Form W-9
Request for Taxpayer Identification Number
Before you pay someone you need their Federal ID
Number or their Social Security Number
•
Form 941
Employer’s Quarterly Federal Tax Return
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Three types of taxes: Income taxes, Employee’s FICA,
Employer’s FICA (non-ministerial)
Taxes paid monthly if taxes are $50,000 or less in the
lookback period
Taxes paid bi-weekly if taxes are more than $50,000
File 941 Quarterly even if you have only ministerial staff
See IRS Publication 15 (www.irs.gov) - download a new
one (use a payroll service and you will not have to deal with this)
• Form 941X - To correct mistakes
Penalties For Paying Late
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2% - Deposits made 1 - 5 days late
5% - Deposits made 6 - 15 days late
10% - Deposits made 16 or more days late
10% - Deposits made at an unauthorized financial
institution, paid directly to the IRS, or paid with your
return.
• 15% - Amounts still unpaid more than 10 days after
the date of the first notice the IRS sent asking for the
tax due or the day on which you received notice and
demand for immediate payment, whichever is earlier.
• (See IRS Publication 15)
• (Use a payroll service and you will not have to deal with
this)
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Form 944
Employer’s Annual Federal Tax
Return
Small employers that have been notified by
the IRS to file Form 944 ($1,000 annual tax
liability or less - see form instructions) may use the
form; other employers required to file must
use Form 941.
Form 945
Annual Return of Withheld
Federal Income Tax
This form is used to report withheld federal
income tax from nonpayroll payments
Gambling winnings, backup withholding
(28%). Guest speakers or others when they
do not have the Federal ID number or Social
Security number
Form 945X - To correct mistakes
Form 990, 990-EZ, 990N
CHURCHES NOT REQUIRED TO FILE THESE
Return of Organization Exempt From
Income Tax
Form 990-N (electronic postcard),
Electronic Notice for Tax Exempt
Organizations Not Required to File Form
990 or 990-EZ
Form 990-T
Exempt Organization
Business Income Tax Return
For more information on unrelated
business income, see Unrelated Business
Income Tax (UBIT) IRS Pub 1828
Form is due when income is $1,000 or more
• Form 990-W
Quarterly Estimated Tax on Unrelated
Business Taxable Income (UBIT) for
Tax-Exempt Organization
I-9
Must be filled out by all employees and filed separately
from employee file
All employees (new employees and those
hired since Nov. 6, 1986) must fill out
section of Form I-9 and churches must fill
out section two
Do not file Form I-9 with U.S. Immigrations and
Customs Enforcement (ICE) or USCIS. Form I-9
must be kept by the employer either for three years
after the date of hire or for one year after
employment is terminated, whichever is later. The
form must be available for inspection by authorized
U.S. Government officials (e.g., Department of
Homeland Security, Department of Labor, Office of
Special Counsel).
1099 Misc
 Issued to self-employed for income tax or non
employees. Issued if paid more than $600
annually
 Not needed for a corporation or for anyone who
will receive a W-2 from another employer for work
done
 Name, address and SS number needed before
1099 can be issued. Get the info before payment
is made and have them fill out a W-9
 1099 is corrected by reissue of the 1099 with the
box at the top mark checked
 1096 is the Transmittal form for 1099 misc
Form 5578 Annual Certification of
Racial Nondiscrimination
• If a church has a school, the Annual
Certification of Racial Nondiscrimination
must be filled out (form 5578)
• Form is due 15th day of 5th month after close
of fiscal year
• This includes preschools through
universities
• Church must have written nondiscrimination
policy-known to community in newspaper
Contributions
• All cash donations less than $250 must be
substantiated by either bank record
(canceled check) or written communication
from the charity
• All donations over $250 must be
substantiated by written communication
from the charity with name of donor and
“the declaration” on statement
• Non Cash Property over $250 in value must
have description
No goods or services were received for contributions
except that which was spiritual in nature.
Contributions Form 8283
• Non Cash gifts in excess of $5,000 (except
securities) must be appraised by an
accredited appraiser and IRS Form 8283
must be used to document the gift.
• The church will sign the Form 8283 to
acknowledge the receipt of the items.
• Receipt must be given no later than date of
donation or tax return due date
Contributions Form 8282
• If Non Cash gifts in excess of $5,000 are
disposed of within 3 years of receipt,
(except securities) the church will need to
file Form 8282 and send a copy to the IRS
and give a copy to the donor within 125
days of disposition
Other Forms to Fill Out
Salary Reduction Form for 401k & 403b
Housing Allowance form (ministers)
New W-4
Where to Find Forms
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IRS – Mail or Local IRS office
IRS website – www.irs.gov
CA Franchise Tax Board – www.ftb.ca.gov
CA Board of Equalization – www.boe.ca.gov
California
Form DE-542 (CA)
Independent Contractors
• WHO MUST REPORT:
• Any business or government entity (defined as a
“Service-Recipient”) that is required to file a
Federal Form 1099-MISC for service performed by
an independent contractor (defined as a “ServiceProvider”) must report. You must report to the
Employment Development Department within
twenty (20) days of EITHER making payments of
$600 or more OR entering into a contract for $600
or more with an independent contractor in any
calendar year, whichever is earlier. This information
is used to assist state and county agencies in
locating parents who are delinquent in their child
support obligations.
DE-1NP (CA)– Employment Form
for Non-Profits
An employer is required by law to file a
registration form with the Employment
Development Department (EDD) within
fifteen (15) calendar days after paying over
$100 in wages for employment in a calendar
quarter, or whenever a change in ownership
occurs
DE-34 (CA)
REPORT OF NEW EMPLOYEE(S)
• WHO MUST BE REPORTED:
• State law requires all employers to report all newly
hired or rehired workers to EDD within 20 days of
their start-of-work date. State and county agencies
use this information to assist them in locating
parents who are delinquent in their child support
obligations.
• An individual is considered a new hire on the first
day in which he/she performs services for wages.
An individual is considered a rehire if the
employer/employee relationship has ended and the
returning individual is required to submit a W-4 form
to the employer.
DE-9 (CA) - Quarterly
Wage & Withholding Report
• Can be done online
• www edd.ca.gov
• State version of IRS 941
Calif. Form 3500A
Exemption Request – Exemption
from California Annual Minimum
Tax
CA Franchise Tax
Every church or ministry that incorporates
in the state of California has to pay a
minimum tax of $800.00 per year unless
the church or ministry files for an
exemption. The exemption is not
automatic!
Churches get these notices because they
never filed for the exemption. In order to
apply for the exemption, you need to file
Form FTB-3500 or FTB-3500A. If you have
recently incorporated (within the last 4
years), and have not filed for the
exemption, consider doing it immediately.
Out of State Guest Speakers
Withholding
 Did you know that the state of California
requires all churches and ministries to
withhold 7% of all honorariums over $600
paid to guest speakers that live outside
the state? (Prior to 2010 - $1,500)
 Report to the state on form 592-B the
amount of earnings and the amount of
withholdings.
 The penalty for not withholding is at least
10% of the entire honorarium. This is a
penalty against the church
Calif. Statement of Information
• Updates your church office address
• Updates your Principal Officers; Pastor
(CEO), Secretary, Chief Financial Officer
(Treasurer in small church)
• Must be done biennially
• No cost
• Penalty for not doing so: possible
Corporate Status Suspension
• See your status http: // kepler .sos.ca.gov
California
Certain Gaming Winnings
(Example Raffles)
For more information on reporting requirements for gaming
State of CA - http. // ag.ca.gov/charities/raffles.php
California Sales & Use Tax
USE TAX: Form BOE – 401-DS - BOE Pub. 79B
SALES TAX: Form BOE – 400 SPA
Due: January 31 , Following the end of tax year
www .boe.ca.gov
Know the difference between
Tax Evasion & Tax Avoidance
For further information
Rod Wiltrout - Church Finance Specialist
California So. Baptist Convention
rwiltrout@ csbc .com
David Rutledge EA, CEP, RFC
HarvestNET Ministries
info@ yourchurchmatters. com
www. yourchurchmatters. com