October 17, 2014

Cautions for a Church Serving as a Missions Agency

Question:

Our church is thinking about acting as a missions agency by directly supporting some missionaries. Do you see any concerns with doing this?

Answer:

In the past, we have provided blog posts concerning how churches have chosen to serve as missions agencies. Recently, however, we have deepened our research and discussion concerning this complex topic. Our research and experience has provided some additional cautions about a church taking on the responsibilities of a missions agency. 

Regulations for missionaries continue to become more complex. Unless a church is willing and able to thoroughly research and act in accordance with these regulations, we strongly discourage churches from acting as missions agencies. We fear that either the church or the missionary will not have the expertise to comply with the law. 

Recently, the following topics have added to that complexity:
  • Affordable Care Act
  • Foreign Bank Account Reports (FBARS)
  • Payments to foreign nationals
  • Retirement plans
  • Employee vs. contractor classifications
  • Payments to foreign charities
  • Foreign Account Tax Compliance Act (FATCA)
  • Expense reimbursement plans
Before making a decision to act as a missions agency, we strongly suggest that a church consider contacting us or its own professional advisor. 

2 comments:

  1. Can I get some clarification on this... We have an India ministry that is set up under our tax id #. We collect support funds to be used for orphans, widows, training center, leperacy support, pastors and disaster relief. These funds are held in a separate bank account and dispersed to the missionary as needed by the ministry's bookkeeper. (The missionary's personal support is handled under a different mission agency.) We do not currently require an accounting of how these funds are being spent and I'm not sure how I need to report these funds W2 or 1099?

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  2. Great idea. These appear to be appropriate benevolent causes. The church should expect an accounting of how the funds are spent to assure itself that it is neither taxable income to the missionary nor dispersed for purposes that would be contradictory to compliance with Rev. Rul. 63-252. We have assisted client organizations to navigate these waters.

    If these disbursements are properly classified as benevolent, then there is no reportable income, meaning that there is no requirement to issue Form W-2 or Form 1099.

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