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Showing posts from February, 2019

Form 1099-MISC Failure to File Penalties Update For Churches and Christian Ministries

Question:

What are the consequences for a church or Christian ministry failing to file a required Form 1099-MISC?
Answer:
An organization that fails to file a Form 1099-MISC as required by the IRS and cannot show reasonable cause may be subject to severe financial penalties, as outlined in the IRS instructions (Section O. Penalties) for the form: $50 per information return if you correctly file within 30 days; maximum penalty $547,000 per year ($191,000 for small businesses)$100 per information return if you file correctly more than 30 days after the due date but by August 1; maximum penalty $1,641,000 per year ($547,000 for small businesses)$270 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,282,500 per year ($1,094,000 for small businesses)Based on these penalties, churches should be mindful of the filing requirements. 
The most common expenditures that churches make subject to Form 1099-MISC …

Pastor's Mid-year Resignation Effect on his Annual Housing Allowance

Question:
Every December, a church designates its pastor's next year's housing allowance. Its pastor resigned during the year to pursue other employment. How should his annual designated housing allowance be assigned to part-year compensation?
Answer:
To our knowledge, there is no specific guidance available in IRS regulations or rulings or in court case records to authoritatively clarify this reporting. It seems appropriate, however, that the annual housing allowance should simply be prorated over the time he was employed by the church. This situation does demonstrate the potential wisdom of documenting housing allowance as a monthly amount since mid-year turnover in the office of a pastor is not an uncommon event.
A pastor contemplating an earlier departure may wish to declare (or request) in advance that his housing allowance be increased immediately for the remainder of his service.
The minister's church or other qualified organization must designate the house allowance pur…