Church And Ministers – The Tax Advisor You Should Run Like Hell From

Kat Jennings

This was a story told to us by another Tax Advisor that we promised to protect their privacy if they shared their story with us and allowed us to share it with our audience. Therefore, we are publishing this under my name and encourage your comments at the end of this blog post.

There are wonderfully intelligent, honest and expert Tax Advisors to choose from on TaxConnections. However, on occasion we run across people who use unethical scare business tactics to gain your business. This is why we bring you this story.

Have a grace day!
Kat Jennings, CEO

Tax issues for churches and their ministers are often misunderstood, misapplied, and misguided. It is not so much that they are difficult but they are different from tax issues faced by the average taxpayer. Special rules apply to churches in regard to their tax obligations and their treatment of ministers. Ministers are uniquely considered employees for income tax purposes but self-employed for social security and Medicare. Many ministers, church treasurers, church financial secretaries, and even tax preparers do not fully understand how to handle these tax issues.

Fortunately, there are a number of aids available to help understand these tax issues. Publications, seminars, and the like are in abundance. However, in seeking outside help, one should be careful to ascertain that the resource is a valid, informed resource. Oftentimes in my tax preparation career, I have had ministers tell me that I did not prepare their taxes the same way that a previous preparer did them. In these cases, I would explain to the client why I did it differently, as the prior preparer did it incorrectly. Before engaging someone to prepare taxes for a minister, it is especially important for a minister to check the experience and background of the preparer specifically as it relates to ministers.

A number of organizations offer seminars relating to church and minister tax issues. Many of these are very good and will give you good, straightforward advice. Others are teaching the tax law incorrectly. Others are somewhere in between, but may use scare tactics to spur their attendees into often misguided action.

I recently encountered one of these seminars. Some of what the leader said was true, but much of his seminar was made up of half-truths and scare tactics to convince those in attendance that they needed to utilize the services of this organization, who would supposedly help avoid trouble with the IRS.

As we signed in for the conference, we filled out a sheet indicating the organization we represented, along with other information. As representatives of our church, we indicated the church name and other information. Seminar personnel proceeded to look up the name of the organization in IRS Publication 78. This is a listing providing names of organizations that have been recognized by the IRS as eligible to receive tax-deductible contributions. When the name of our church was not found in Publication 78, they stamped “ILLEGAL” on our registration form, indicating we were not eligible to receive tax-deductible contributions. Nothing could be further from the truth, as churches do not have to register with the IRS to obtain this status. It is automatic for a church to have this status.

It was also stated that the minister’s compensation should be set by an outside agency. This is to avoid excessive compensation and avoid the specter of private inurement. While this is something that may be done, it is not a requirement, or even advisable in many instances. It did not take us long to realize the seminar was designed to elicit additional services from those in attendance. Verbal statements were often made that went further than what was included in the written materials.

The bottom line on this organization is that most of what they say has a grain of truth, but is often overstated in order to invoke the fear of adverse consequences in regard to the IRS. Of course, the seminar provider benefits as it provides services to help set a minister’s compensation, does an operational review of the church, does a compliance exam, sets up the corporate structure and applies for tax exempt status. They also offer bookkeeping and tax services to the church and ministers.

In seeking help in the area of church and ministerial tax issues, you would be well-advised to avoid sensationalism and see out those who are quietly competent in this unique area of taxation. Some good resources are and Dan Busby’s Minister’s Tax and Financial Guide and Church and Nonprofit Tax and Financial Guide are very readable as is Church Finance by Batts and Hammar.

Kat Jennings, TaxConnections, CEO and Founder and Advisory Team provides three areas of services: 1) Internationally recognized, retained executive search services for multinational corporations, public accounting firms, and law firms; 2) Introductions of sellers to buyers of small and medium size accounting firms; and 3) Provide brand building and education services that support and prepare accounting firm owners to buy/sell an accounting practice. We focus on educating the journey to sell a practice and how to increase firm revenue prior to any sale. Our program ensures you start years prior to a sale by learning what is expected of you during the selling process, and introducing firm Partners to cross selling opportunities that are easy to implement and reduce your workload at the same time. We introduce you to value added connections to smartly grow revenue in your accounting practice.

Kat Jennings has been retained by organizations worldwide to locate tax professionals with highly specialized tax knowledge and expertise. She has a thorough understanding of the tax business community, with a proven record of stellar performances matching professionals with organizations. Bringing two parties together to work successfully is the art of understanding personalities, cultural fit, expectations by both parties, flexible or inflexible work environments, understanding what drives and motivates each party, and revolves around the personality and ethics of each executive team.

Kat is a widely recognized expert in high level, tax executive search, as well as connecting buyers and sellers of accounting firms. TaxConnections provides and educates small to medium size accounting firms owners and Partners how to prepare and sell their firms so they can build a succession plan for their retirement. With larger firms seeking to acquire smaller accounting practices, there is a real need to help firm owners prepare to be acquired. Most firm owners are unaware they are not ready to sell when they decide to retire. TaxConnections educates firm owners’ what they need to do years in advance of selling an accounting firm practice.
Senior tax executives expect the utmost privacy when being introduced to multinational organizations about a new tax opportunity under consideration. Having said that, companies searching for a new head of tax expecting tax executive candidates to submit their resume through a resume portal, will never see a full slate of outstanding tax executives available due to a candidates’ desire for greater privacy. This is why privacy focused Uber Tax Recruiters consistently outperform in-house recruiters on tax executive searches.

We offer our clients a Performance Retainer Agreement arrangement so their HR department can still recruit and compete with the tax candidates we present on Head of Tax searches. The client pays us a partial fee upfront, and if they find a candidate they deem better than we introduce to them, we forfeit the final fee. Most of the time, they love and prefer our private introductions to tax executive candidates better than what they source through their own resume portals.

When we represent selling/buying small to medium-sized firms, firm owners/partners also demand greater privacy when considering the sale of their practice. TaxConnections provides a safe place to discuss their business needs, elevate their practices’ online reputation, and increase revenue through new streams of business development by outsourcing work and partnering with other firms. Over three decades, we have worked tirelessly to build relationships between firm owners most organizations rarely have access to in the world of tax. There are numerous possibilities you may never have considered previously to bolster the value of your practice and service offerings.

As a globally recognized consultant to multinational organizations, accounting firms, and law firms searching for tax expertise, Kat has been retained by public accounting firms, law firms, and corporations worldwide including Apple Computer, AC Neilson, Accenture, Agilent Technologies, Allergan, Alza, American Express, American Media, Aon, Baker & McKenzie, Barclays Bank, Bechtel, Cargill, Carl Zieuss Vision, Century Aluminum, Chevron, Clorox, Citigroup, Commercials Metals, Constellation Energy, Countrywide, Del Monte, Deloitte Touche, DFS, DLA Piper, E&J Gallo Winery, Electronic Arts, Ernst &Young, Fox Entertainment, Fremont Investments, General Electric,General Motors, Herbalife, Hewlett Packard, Hyatt, Intel, Jones Lang LaSalle, Kimco Realty, KLA Tencor, Koch Industries, KPMG, Levi Strauss, Liberty Mutual, LKQ, Loews, Logitech, Lucas Film, Maersk, McKesson, Nalco, Newell Rubbermaid, Nissan, Oracle, Orbitax, Pacific Gas & Electric, PwC, QAD, SAIC, SanDisk, Sanmina, Sempra Energy, SONY, Synopsys, Ticketmaster, Trimble Navigation, Toyota, Univar, Wal-Mart, Wells Fargo, Vertex, Yahoo, Xilinx, and many more not listed here.
Contact Kat at 858,999.0053 Office/858.232.4415 Cell or to request a private consultation regarding the sale of your practice, adding top talent to your organization, or merging your practice with another firm owner with a book of business. The possibilities are endless; if you have a dream of a new vision for your professional life; we will scout opportunities throughout the market to make it happen.

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2 comments on “Church And Ministers – The Tax Advisor You Should Run Like Hell From

  • As tax preparers, our primary client type is ministers and missionaries. We, too have heard horror stories similar to those above. A knowledgeable preparer can save ministers significant headaches down the road!

  • This is a grEAt post! So true the fact that there are hucksters everywhere praying, literally, on people trying to do good for others. It is a crying shame that there are so many flimflam presentations and pudgy bald presenters espousing – mostly wrongfully so – the nuances of managing the business aspect and compliance requirements of churches. I personally have reported MANY ‘tax practitioners’ to the authorities who have the audacity to charge an attendance fee and then spew nonsense to the audience because of lack of knowledge and/or understanding of the US Tax Code. Stay diligent against hucksters!

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