Church Property Tax & Business Expense Updates Carol Stream, IL January 15, 2008 - As the Internal Revenue Service announces tax law changes and updates for 2008, an expert in not-for-profit tax law, Richard Hammar, J.D., LL.M., CPA, has identified two little-known tax laws that churches may frequently be violating—often without knowing it. Church property in the United States is generally exempt from taxation, but churches may not be aware that some states require exemption to be renewed periodically. Failure to renew an exemption may result in the property becoming subject to taxation. If those taxes are not paid, the property may be sold to recoup the amount owed. A second area churches often miss: Church employee expenses that do not qualify as business expenses cannot be reimbursed. For example for cell phone and computer usage, documentation of business usage is required to be an allowable deduction and to not be included as income. If a church reimburses unaccountable expenses, they need to be reported as taxable income to the employee. Churches who fail to do this cause their employees to face serious consequences: back taxes being assessed, plus interest on the unreported income, and “intermediate sanctions” in the form of excise tax, if the benefits are provided to an officer or director. For more information, see the 2008 Church & Clergy Tax Guide, by Richard Hammar(YourChurchResources.com or call 1-800-222-1840). The 2008 Church & Clergy Tax Guide is published by Your Church, a division of Christianity Today International, a Christian communications ministry committed to engage, encourage, and equip the church worldwide (ChristianityToday.com). |
