Handling reimbursements properly is essential to keep them from becoming taxable income to the person receiving the reimbursement. For an accounting system to be considered accountable it must comply with the following rules:

Business connection. Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.
Adequate accounting. You must adequately account to your employer for these expenses within a reasonable period of time (not more than 60 days after an expense is incurred).
Returning excess reimbursements. You must return any excess reimbursement or allowance within a reasonable period of time (not more than 120 days after an excess reimbursement is paid). An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses you adequately accounted for to your employer.
Reimbursements not made out of salary reductions. The income tax regulations caution that in order for an employer’s reimbursement arrangement to be accountable, it must meet a reimbursement requirement in addition to the three requirements summarized above. The reimbursement requirement means that an employer’s reimbursement of an employee’s business expenses come out of the employer’s funds and not by reducing the employee’s salary.

(Church & Clergy Tax Guide 2008 by Richard Hammar, page 320)

There are several advantages to implementing an accountable reimbursement system:

Employees report their business expenses to the church rather than to the IRS.
Staff members who report their income taxes are employees (or who report as self-employed and who are reclassified as employees by the IRS is an audit) avoid the limitations on the deductibility of employee business expenses. These include (1) the elimination of any deduction if the employee cannot itemize deductions on Schedule A (two-thirds of all taxpayers cannot), and (2) the deductibility of business expenses on Schedule A as an itemized expense only to the extent these expenses exceed 2 percent of the employee’s adjusted gross income.
The Deason allocation rule is avoided. Under this rule, ministers must reduce their business expense deduction by the percentage of their total compensation that consists of a tax-exempt housing allowance.
The 50 percent limitation that applies to the deductibility of business meals and entertainment expenses is avoided. Unless these expenses are reimbursed by an employer under an accountable arrangement, only 50 percent of them are deductible by either employees or the self-employed. See IRS Publication 463.

(Church & Clergy Tax Guide 2008 by Richard Hammar, page 320)

WARNING: When making reimbursements make sure that no personal items were purchased using the church’s tax exempt number. When individuals use the church’s tax exempt number to make personal purchase they can place the church in a possible position of losing their tax exempt status.

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Annual Corporate Report

Churches need to annually check their state incorporation status. Many states require business entity reports to be submitted on a regular basis to maintain a incorporation “good standing” status. To check the church’s incorporation status check your Secretary of State website. Click for Secretary of State information contact information.

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Audits

Church board members have a long list of responsibilities. Among these is the responsibility for the money that flows through the church.

An annual audit of the church’s records is a must. External audits are performed by an independent auditor who has no impairing relationship to the church and, therefore, can review its data procedures with maximum objectivity. Internal audits generally are performed by church members or by persons closely associated with the church.

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Audits, External

The ideal is to have an annual audit performed by independent CPAs. However, only large churches generally can afford this extra expense. External audits of smaller churches often are done on a non-GAAP basis – the statements do not conform to the full accrual method with depreciation recognized. Non-GAAP audits of smaller churches often are acceptable to banks and other agencies that require audited financial statements. (GAAP stands for Generally Accepted Accounting Principles).

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Audits, Internal

Members of the church may form an audit committee to perform an internal audit to determine the validity of the financial statements. If the committee takes its task seriously, the result may be significant improvements in internal control and accounting procedures. Too often, the internal audit committee only conducts a cursory review, commends the treasurer for a job well done, and provides the church with a false sense of security.

For a list of recommended guidelines for an internal audit see Block B1 – Treasurer’s Guide.

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Bonding

Churches should bond all those in the church that have access to the money of the church. This can be cost effective by securing a blanket bond. Blanket bonds will usually cover embezzlement and other mishandling of funds whether committed by an individual or group. Some insurance companies provide a fidelity bond rider with their coverage. This type of bond will usually cover the same situations as a blanket bond.

If a financial problem is suspected in a church that is bonded, the church simply contacts the insurance company and their investigators handle the case. This reduces the church’s risk of a lawsuit resulting from false accusations.

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Cash Disbursements

Churches must establish a line of authority for the approval of expenditures. There are items that are set and do not need to be approved each week or month. These items would include: pastor’s salary, pastor’s benefit items, and utility bills. There may be other budgeted items that would not need approval for payment such as money set to be sent to missions. All other items would need to be approved before expenditures are made. The person(s) responsible for authorizing expenditures should be someone other than the treasurer and pastor. They could be the chairperson of the corporation or finance committee.

For items that must be approved, a requisition form or purchase order should be filed first. This form should include:

1. the date

2. purchase order number if using this method

3. the account number of the budget category

4. where the purchase will be made

5. the quantity of items needed

6. the item catalog number (if available)

7. a description of the item(s) being purchased

8. the unit price

9. the amount of purchase

10. the signature of the person(s) with authority to authorize

11. the date the items were received

12. the date they were paid for

13. the check number

14. the amount paid

Any receipts should be attached to the requisition form. All invoices should be checked for accuracy before payment is made.

Churches should always use pre-numbered checks. All checks should contain two signatures. The pastor should not be one who has authority to sign checks. No blank checks should ever be signed. For embezzlement protection, the one who fills in the check should not be one with authority to sign the check. This creates difficulty for small churches but it is a safety measure that should be considered. Some churches have created signature stamps and have a secretary or other personnel stamp the checks with the two stamps. This breaks down the wall of protection from embezzlement. It is better to have the persons actually sign the checks or stamp them themselves.

Once a payment is made, that receipt should be marked as being paid including the date of payment, the amount paid, and the check number of the check used to make the payment. If an error occurs when writing a check, the check should be voided and retained for records. No check should ever be made out to cash. This does not give the church proper information to know what the money was used for. After all payments are made, blank checks should be stored in a safe or secured area.

All payments should be recorded in the ledger. Many churches use various computer accounting programs to manage their books. This is just fine, however, a hand written copy is still a good idea. The hand written copy offers a check for the computer program. It is always wise to have a checks and balance system that will find errors.

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Cash Receipts

As money comes into the church, it needs to be handled with great care. Thomas McLeod, in his The Work of the Church Treasurer, recommends the following:

1. By passing of collection plates among the congregation during regular worship services.

2. From the offering given by the Sunday church school classes and other groups meeting for Bible study.

3. At weekly church suppers, banquets, and other occasions when members pay for their meals.

4. Mail receipts that come to the church for both regular and designated purposes.

5. Occasional sale of books and literature to members.

6. Special fund-raising efforts through sale of bonds, member solicitation for building programs, etc.

The church should establish procedures for the handling of money as it comes into the church. Examples of these procedures would include:

Counting of money: The money should be counted as soon as is reasonably possible. This should take place is a secured area, usually a room away from the flow of people. This should always be done by at least two non-related people. The amounts of cash and checks should be recorded to compare with the deposit slip. It is at this point that amounts in the giving envelopes are compared to the amounts listed on the envelopes. If the amounts do not match, a line should be drawn through the amount on the envelope, the correct amount written and circled on the envelope. All checks should be immediately endorsed with a “for deposit only” stamp or signature.

· Create deposit report: The deposit report works in conjunction with the deposit slip. The deposit slip contains the amount of cash, the numbers of the checks and their amounts, and the total amount to be deposited. This accompanies the money to the bank. The deposit report is for the church financial records. It contains the amount of loose money and the amount of checks or envelope money. The essential part of this report is that the money is broken down into how it is to be distributed between general funds and designated funds.

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Charitable Contributions

Churches operating income is generally generated through monetary gifts given by its members. The majority of these contributions will qualify as taxable deductions for the giver. Church leaders and treasurers must be aware of the legal requirements for the handling and reporting of charitable contributions.

Publication 526 defines a charitable contribution as a “donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value.” Churches are qualified organizations.

The details of handling charitable contributions are extensive, therefore, see Block B1 – Treasurer’s Guide or IRS Publication 526.

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Checks

It is best to have two signatures on every check written by the church. These signatures should never be rubber stamps. The pastor should not be one of the signatures. Two members from the same household should not be the signatures. In small churches it may be difficult to have two signatures on checks but if at all possible, a two signature system should be implemented.

NOTE: Blank checks should never be signed ahead of time because one of the signees is going to gone on vacation. Make sure there are at least three different people that are able to sign checks to cover vacations or illness.

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Church Records

Churches should maintain permanent copies of the following records:

correct, complete books/records of all finances
accurate minutes of all governing board meetings and church business meetings
a current of voting members
bylaws and articles of incorporation

For more details see Block B3 – The Church and the IRS.

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Contributions, Charitable

See Charitable Contributions

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Contributions, Designated Gifts

See Designated Gifts

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Contributions, Year-End

See Year-End Contributions

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Designated Gifts

There are two types of designated giving that individuals may try to contribute to the church. One is in the name of an individual and the other is to a specific ministry or fund.

Designated gifts to individual

IRS Publication 526 lists the following regarding contributions to individuals.

The other type of designating giving is to specific ministries or projects of the church. While these gifts may be deductible, many feel that they retain control of how the money is used. Richard Hammar writes in his book, 2005 Church & Clergy Tax Guide on page 338:

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Disbursements

See Cash Disbursements

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Employee Withholding

Churches are required to withhold taxes from all employees except pastors. Pastors may opt to have federal and state taxes withheld. The treasurer should obtain a written statement and Form W-4 from the pastor(s) if he/she desires to have taxes withheld from their income. To file the withheld taxes the treasurer must file a Form 941. Usually this can be done at the same bank where the church has its banking account. Check with your bank to make sure they provide this service.

To access copies of forms and instructions for completing Form 941, go to www.irs.gov and click of Forms and Publications. By clicking on Forms you will be taken to a screen where you can scroll down and find the form and instructions you need.

You must file Form 941 quarterly. The schedule of payments would be April 30, July 31, October 31, and January 31. Please note that the IRS will not accept credit card payments for making deposits of withheld taxes.

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Employee Status

The IRS defines a minister as:

“Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. “

(IRS Publication 517)

For clarification, sacerdotal functions include communion, baptism, foot washing, baby dedication. Another indication of a person being considered a minister is that they receive earnings for performing ministerial duties.

Financial reports are essential to any organization. Financial reports keep the organization abreast of its financial health.

David Pollock, in his Business Management in the Local Church, recommends the following when preparing such documents for the church, the treasurer or financial secretary should consider:

1. They should be easily understood so that any member of the church who takes the time to study them will understand what they are saying. (This is the one characteristic that is the most frequently absent.)

2. They should be concise so that the person studying them will not get lost in detail.

3. They should be all-inclusive and should embrace all activities of the church, such as church schools, summer camp, and so on. If there are two or three funds, the statement should clearly show the relationship between the funds without a lot of confusing detail.

4. They should have a focal point for comparison. In most instances, this will be a comparison with the budget or figures from the corresponding period last year.

5. They should be prepared on a timely basis. The longer the delay after the end of the period, the longer the time before corrective action can be taken.

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Forms, 1023

To apply for federal tax exempt status an IRS Form 1023 must be completed. Form 1023 is detailed and complicated. When completing the Form 1023 one can use the instruction document and IRS Publication 557 for assistance. All forms and publications can be downloaded at www.irs.gov.

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Forms, W-2

Form W-2 is the federal document upon which the wages and withholdings of all employees, including pastors, must be reported. These forms can be purchased at any office supply store. All employees must receive their Forms W-2 no later than January 31^st.

When completing a Form W-2 for a pastor, keep in mind that boxes 3, 4, 5, and 6 are left blank.

For detailed help in completing Form W-2 see Block B1 – Treasurer’s Guide.

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Forms, W-3

Form W-3 is to be filed along with copies of Copy A of all Forms W-2 by February 28^th. However, if you file electronically, the due date is March 31^st. All documents are sent to:

Social Security Administration

Data Operations Center

Wilkes-Barre, PA 18769-0001

For detailed information for completing Form W-3 see Block B1 – Treasurer’s Guide.

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Forms, W-4

The end of the year is a good time to ask employees to review their Form W-4 to see if they wish to revise their withholdings. If they wish to make a revision, new forms can be obtained at www.irs.gov. It is recommended that new forms be completed each year.

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Forms, W-9

The church should have a Form W-9 for each individual that receives a Form 1099-MISC. If the church needs to complete or update a Form W-9 for an individual, copies can be obtained at www.irs.gov.

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Form 1099-MISC

The church may need to send out Form 1099-MISC to contracted individuals, such as lawn care or snow removal. To determine if a Form 1099-MISC needs to be distributed, follow this simple test. The church must distribute a Form 1099-MISC if all five of the following conditions are met:

The church is “engaged in a trade or business” (includes nonprofit activities).

The church pays the person compensation of $600 or more during the calendar year.

The person is self-employed, rather than an employee.

The payment is in the course of the church’s “trade or business.”

No exceptions exists.

The church meets 4 of the points so the only point they will have to satisfy is if they paid an individual $600 or more during the year.

Like the Form W-2, Form 1099-MISC must be distributed to the individual by January 31^st and to the IRS by February 28^th.

For detailed information for completing Form 1099-MISC see Block B1 – Treasurer’s Guide.

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Form I-9

Every employee of the church, including the pastor, must have a Form I-9 on file in the church office. If the church does not have these for their employees, they need to complete them as soon as possible. A Form I-9 verifies the person is eligible to work in the United States. Forms can be downloaded at www.i9check.com/I9download.htm.

If the church does have these forms on their employees, the forms need to be reviewed to make sure verification documents have not expired, such as a driver’s license. If a document has expired, a new document must be obtained and Section 3 – Updating and Reverification of the Form I-9 must be completed.

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Gifts to Individuals

IRS Publication 526 states the following regarding gifts to individuals

You cannot deduct contributions to specific individuals, including the following.

· Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members.

· Contributions to individuals who are needy or worthy. This includes contributions to a qualified organization if you indicate that your contribution is for a specific person. But you can deduct a contribution that you give to a qualified organization that in turn helps needy or worthy individuals if you do not indicate that your contribution is for a specific person.

· Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses.

· Expenses you paid for another person who provided services to a qualified organization.

· Payments to a hospital that are for a specific patient’s care or for services for a specific patient. You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization.

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Group Exempt Ruling

Many religious organizations, which have multiple churches associated with them, operate under an IRS 501(c)(3) group exemption letter. The religious organization is the central organization. The churches are the subordinate organizations. In IRS Publication 557 each is defined as:

A central organization is an organization that has one or more subordinates under its general supervision or control.

A subordinate organization is a chapter, local, post, or unit of a central organization. A central organization may be a subordinate itself, such as a state organization that has subordinate units and is itself affiliated with a national (central) organization.

To remain an active subordinate, churches usually must register annually for the central organization’s yearbook.

The central organization must submit the following annually:

· Information about all changes in the purposes, character, or method of operation of the subordinates included in the group exemption letter.

· A separate list (that includes the names, mailing addresses, actual addresses if different, and EINs of the affected subordinates) for each of the three following categories.

· Subordinates that have changed their names or addresses during the year.

· Subordinates no longer to be included in the group exemption letter because they no longer exist or have disaffiliated or withdrawn their authorization to the central organization.

· Subordinates to be added to the group exemption letter because they are newly organized or affiliated or because they have recently authorized the central organization to include them.

An annotated directory of subordinates will not be accepted for this purpose. If there were none of the above changes, the central organization must submit a statement to that effect.
The information required to be submitted by a central organization on behalf of subordinates to be included in the group exemption letter is required for subordinates to be added to the letter.

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Housing Allowance

One of the greatest benefits a minister receives from the IRS is the housing allowance benefit.

Who is entitled to a housing allowance?

Ministers, who meet the test of qualifying services, are allowed to set aside a portion of the dollars they earn in ministry service for a housing allowance. These tests are:

Ordained, licensed, or commissioned,
Considered a spiritual leader,
Performs sacerdotal functions,
Conducts religious worship, and
Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization’s activities.

(IRS Publication 517)

In the past so long as a person qualified until the first test, being ordained, licensed or commissioned, it was enough to qualify for a housing allowance. The IRS is beginning to re-address the issue of housing allowance and reviewing whether church business administrators, children’s pastors, youth pastors, etc. truly qualify for the housing allowance. If you serve the church in one of these capacities, you will want to keep a watchful eye out for any rulings the IRS may produce in the future.

How much of the pastor’s salary can be set aside as housing allowance?

The IRS has established the limits of the housing allowance in the Article 4.10 “Interest/Dividends/Other Types of Income: Ministers’ Compensation & Housing Allowance.” The IRS states that:

“the exclusion cannot be more than the smaller of the following:

· The amount actually used to provide a home,

· The amount officially designated (in advance of payment) as a rental or housing allowance,

· The fair market rental value of the home, including furnishings, utilities, garage, etc., or

· An amount which represents reasonable pay for your services as a minister.”

It is recommended that all pastors acquire the fair market rental value of the home completely furnished including utilities. If the pastor sets their housing allowance under this value, it should pass audit standards okay. The thing to remember is that a housing allowance cannot exceed the amount of ministry dollars earned.

Who sets the housing allowance?

The local congregation must designate (with input from the pastor) the amount of housing allowance in a resolution at a duly called meeting of the church governing board or church business meeting. The housing allowance needs to be set prior to January 1 but can be adjusted during the year in a new resolution at a duly called meeting of the church governing board or church business meeting. It is best to set an open-ended housing allowance so that the amount carries from year-to-year.

It is essential to understand that if a housing allowance is adjusted during the year, the amount is effective from that point forward and cannot be used retroactively. In other words, if the pastor realizes he/she is going to have to replace the air-conditioning system and their current housing allowance will not cover it, they should make the change to their housing allowance prior to the replacement of the air-conditioning system.

Richard R. Hammar’s Church & Clergy Tax Guide 2008, gives the following example of a housing allowance resolution:

The following resolution was duly adopted by the board of directors of First Church at a regularly scheduled meeting held on December 15, 2007, a quorum being present:

Whereas, ministers who own their home do not pay federal income taxes on the amount of their compensation that their employing church designates in advance as a housing allowance, to the extent that the allowance represents compensation for ministerial services, is used to pay housing expenses, and does not exceed the fair rental value of the home (furnished, plus utilities); and

Whereas, Pastor John Smith is compensated by First Church exclusively for services as a minister of the gospel; and Whereas, First Church does not provide Pastor John Smith with a parsonage; therefore, it is hereby

Resolved, that the total compensation paid to Pastor John Smith for calendar year 2008 shall be $50,000, of which $15,000 is hereby designated to be a housing allowance; and it is further

Resolved, that the designation of $15,000 as a housing allowance shall apply to calendar year 2008 and all future years unless otherwise provided.

Is housing allowance taxable income?

No, a pastor’s housing allowance should not be included in Box 1 of the pastor’s Form W-2. It can appear in Box 14 of the pastor’s Form W-2 but it is optional. Pastors are required to pay SECA tax on the housing allowance.

What items can be included in calculating a housing allowance?

The following items can be included: (Church & Clergy Tax Guide 2008 – Richard R. Hammar)

down payment on a home;
payments (including prepayments) on a mortgage loan to purchase or improve your home (including both interest and principal);
real estate taxes;
property insurance;
utilities (electricity, gas, water, trash pickup, local telephone charges, Internet access fees);
furnishings and appliances (purchase and repair);
structural repairs and remodeling;
yard maintenance and improvements;
maintenance items (household cleaners, light bulbs, pest control, etc.); and
homeowners’ association dues.

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Individuals, Gifts to

See Gifts to Individuals

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Inspection of Records

Most church members believe that they have the right to inspect church records at anytime. This is not generally a true assumption. In order for this to be true, the church’s bylaws or the state’s nonprofit corporation law must grant permission for church members to inspect the church’s records.

For more information see Block B3 – The Church and the IRS.

IRS Publication 517 defines a minister as:

Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination.

If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes.

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New Hiring Reporting

When churches hire new employees, including pastors, they are required to file a “New Hire” report to the state agency designed to receive such reports. The church can contact the Secretary of State, State Attorney, or State Department of Revenue to acquire the contact information for filing “New Hire” reports in their state.

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Pastor, Employee or Self-employed

See Employee Status

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Petty Cash

Many churches have petty cash funds that cover minor purchases such as stamps, etc. Petty cash funds are created by cashing a check made out to petty cash and placing the proceeds in a locked box. A custodian should be appointed that monitors the petty cash funds. This person would be responsible for distributing petty cash vouchers, which must be completed before funds are released. Once a transaction is completed a receipt should be attached to the voucher and any difference in amount should be adjusted. It is the custodian’s duty to reconcile the petty cash fund and submit requests for replacement money to the treasurer. The custodian will be held personally responsible for any discrepancies in the petty cash fund.

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Politics

Politics is always a hot potato no matter what the setting might be, this holds true for the church and its ministries and staff persons. The local congregation must be very careful about taking an active role in local and national politics. There are areas in regards to politics that the church is prohibited to participate. These include:

1. Contributions to political campaign funds.

2. Public statements of position (verbal and written) in favor of or in opposition to candidates for office—in official church publications and at official church sponsored functions.

3. Provision of a forum for expression of candidates’ views on a partisan basis.

4. A church distributes a voters guide containing questions demonstrating a bias on certain issues.

5. The endorsement of candidates.

6. Campaign activities by employees within the context of their employment.

7. A church fails to “disavow” the campaign activities of persons under “apparent authorization” from the church, by repudiating those acts “in a timely manner equal to the original actions” and taking steps “to ensure that such unauthorized actions do not recur.”

8. Engaging in fund raising on behalf of a candidate.

9. Newspaper ads urging voters for or against a candidate.

If a church participates in any of these prohibited activities, they jeopardize their federal 501 (c)(3) tax-exempt status. There could also be additional penalties in the form of a tax percentage accessed on monies spent by the congregation and/or its officers and leaders for participating in a political campaign.

The church is not completely forbidden to participate in politics. There are areas in which they are permitted to participate. These areas include:

1. Public comments made by ministers and other church employees in connection with political campaigns, not made at church facilities or in church publications and accompanied by statements that the comments are strictly personal and are not intended to represent the church.

2. A church invites all candidates for a political office to address the congregation, and informs the congregation before each candidate’s speech that the views expressed are those of the candidate and not the church and that the church does not endorse any candidate.

3. A church distributes a compilation of voting records of all members of Congress on major legislative issues involving a wide range of subjects; the publication contains no editorial opinion and its contents and structure do not imply approval or disapproval of any members or their voting records. Churches should exercise extreme caution before deciding whether or not to distribute campaign materials prepared by other organizations.

4. Neutral voter registration drives.

For additional information see Block B2 – The Church and the Law.

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Posters

A church is an employer just like a small business. However, sometimes they may just have one employee, the pastor. As with any small business, churches may be required to post a variety of federal and state posters regarding minimum wage, equal employment opportunity, etc. To determine which posters a certain church must display, the church must determine if it is subject to the Fair Labor Standards Act and commerce requirements.

The Fair Labor Standards Act was passed in 1938 in order to regulate child labor, establish a minimum wage, establish a 40 hour work week, and establish a time and a half wage for overtime worked. Under this Act, an employee is defined as:

any individual employed by an employer including anyone who is “suffered or permitted to work.” To be an employee, an individual generally works with the expectation of some kind of compensation.

(The Church Guide to Employment Law, p. 69)

The Act defines a business or enterprise as:

the related activities performed…by any person or persons for a common business purpose. (CGEL, p. 67)

Churches usually do not fall into this category unless they operate a preschool, school, or daycare.

For the Fair Labor Standards Act to apply to a church, the church must prove that it is involved in commerce or in the production of goods for commerce. The Act defines an enterprise to be involved in commerce if it:

1. has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person, and is an enterprise whose annual gross volume of sales made or business done is not less than $500,000; or

2. is engaged in the operation of a…preschool, elementary or secondary school, or an institution or higher education (regardless or whether or not such…institution or school is public or private or operated for profit or not for profit). (CGEL, p. 68)

Churches that operate a preschool, school, or daycare would be subject to the Fair Labor Standards Act. Churches are subject to nondiscrimination laws except discrimination based on religion. Under Title VII of the Civil Rights Act of 1964. Title VII:

specifically permits churches and religious organizations to discriminate on the basis of religion, and they do not have to rely on the bona fide occupational qualification to do so. (CGEL, pp. 43-44)

Churches may meet a variety of commerce requirements if they are involved in:

· operation of a private school

· sale of products (such as literature or tapes) to persons or churches in other states

· purchase of products from out-of-state vendors

· persons from other states attend your church

· operation of a “web page” on the internet

· operation of a commercial or unrelated trade or business

· employees travel out-of-state

· employees make out-of-state telephone calls

· mail is sent out-of-state

· television or radio broadcasts

Based on which acts and commerce requirements a church falls subject to will determine which of the following federal posters a church is required by law to post.

1. Minimum wage

If you are subject to the federal Fair Labor Standards Act’s minimum wage and overtime pay requirements, then you are required by law to “post and keep posted a notice explaining the Act…in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy.”

If you operate a preschool or daycare or if you are engaged in commerce then you are subject to the federal minimum wage and overtime pay requirements.

Can obtain a free copy from the U.S. Department of Labor, Employment Standards Administration, Wage & Hour Division, Washington, D.C. 20210. Free download at www.dol.gov then to search A-Z index.

2. Equal Employment Opportunity

Every employer covered by federal nondiscrimination laws is required to post on its premises the poster “Equal Employment Opportunity Is the Law.”

Federal nondiscrimination laws include Title VII of the Civil Rights Act of 1964 (which bans discrimination in employment on the basis of race, color, national origin, gender, or religion); the Age Discrimination in Employment Act (which bans discrimination in employment on the basis of the age or an employee or job applicant who is 40 years of age or older); and the Americans with Disabilities Act (which bans discrimination in employment on the basis of the disability). Churches that are engaged in interstate commerce, and that have at least 15 employees (20 in the case of the age discrimination law) are subject to these laws, and as a result must display a poster.

You can obtain a free copy by contacting the Equal Employment Opportunity Commission, Communications and Legislative Affairs, 1801 L Street NW – Room 9405, Washington, D.C. 20507. Or call 1-800-669-3362. Free download at www.dol.gov then to search A-Z index.

3. Occupational and Safety and Health Act (OSHA)

In 1970, Congress enacted the OSHA “to assure so far as possible every working man and woman in the nation safe and healthful working conditions.” The Act achieves its aim primarily through imposing various duties upon employers. The Act defines “employer” as any person or organization “engaged in a business affecting commerce who has employees.”

Since religious organizations are not exempted by the Act, they are subject to it so long as they meet the commerce requirement.

Employers covered by OSHA are required to display a poster prepared by the US Department of Labor summarizing the major provisions of the Act, and telling employees how to file a complaint. The poster must be displayed in a conspicuous place where employees and job applicants can see it. Federal law requires that any reproductions or facsimiles shall be at least 8 ½ by 14 inches with 10 point type.

You can obtain free copy by contacting the U.S. Department of Labor, Occupational Safety and Health Administration, 200 Constitution Avenue, N.W., Washington, DC 20210. Or call your local OSHA office. Free download at www.osha.gov.

4. Employee Polygraph Protection Act

The federal Employee Polygraph Protection Act makes it unlawful for an employer engaged in interstate commerce (regardless of the number of employees) to require or even suggest that an employee or job applicant take a polygraph examination.

Since religious organizations are not exempted by the Act, they are subject to it so long as they meet the commerce requirement.

Free copy can be obtained from the nearest office of the U.S. Department of Labor, Wage and Hour Division. Or, you can write the U.S. Department of Labor, Employment Standards Administration, Wage & Hour Division, Washington, D.C. 20210. Free download at www.dol.gov then to search A-Z index.

5. Family and Medical Leave Act

Generally, all private employers employing 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or proceeding year as well as public employers and private elementary and secondary schools are required to display this poster in a conspicuous place. The poster summarizes the major provisions of the FMLA and tells employees how to file a complaint.

Free copy can be obtained from the U.S. Dept. of Labor, Employment Standards Administration, Wage & Hour Division, 429 N. Pennsylvania Street, Room 403, Indianapolis, IN 46204-1873 or call 1-317-226-6801. Free download at www.dol.gov then to search A-Z index.

6. Notice to Workers with Disabilities/Special Minimum Wage

Every employer of workers with disabilities under special minimum wage certificates authorized by the Fair Labor Standards Act, the Mc-Namara-O’Hara Service Contract Act, and/or the Walsh-Healey Public Contracts Act shall display a poster explaining the conditions under which special minimum wages may be paid. The poster shall be displayed in a conspicuous place on the premises where employees and the parents or guardians of workers with disabilities can see it.

7. USERRA

After the events of September 11, 2001 and the US going to war with Afghanistan and Iraq, the US government developed the USERRA to protect reservists that were called to active duty. The act is defined as:

The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects service members' reemployment rights when returning from a period of service in the uniformed services, including those called up from the reserves or National Guard, and prohibits employer discrimination based on military service or obligation. The U.S. Department of Labor’s (DOL) Veterans’ Employment and Training Service (VETS) administers USERRA.

(US Department of Labor website. www.dol.gov)

Free posters can be downloaded at http://www.dol.gov/compliance/laws/comp-userra.htm#overview.

Churches may be required to post various state posters. Below is a list of the state requirements for all 50 states and Puerto Rico. Many of these posters are available for free downloads either through the Secretary of States office or the state department of labor. Many of these posters are based on the number of employees. Each church is advised to contact their Secretary of State office or state department of labor to fine out which they must display.

Alabama

Unemployment Compensation

Notice to Employees to Report Injury

Child Labor Laws

Workers’ Compensation

Alaska

Summary of Alaska Wage & Hour Act

Safety & Health (OSHA) w/Hazardous Substances

Sexual Harassment – Human Rights Law

Emergency Information

Unemployment Insurance

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agents.

Arizona

Safety & Health Protection (OSHA)

Exposure to Bodily Fluids

Discrimination in Employment (English/Spanish)

Constructive Discharge Notice

Unemployment Insurance (English/Spanish)

*Workers’ Compensation

*The agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

Arkansas

Employer & Employee – Wage & Hour Laws

Workers’ Compensation

Unemployment Insurance

California

Safety & Health Protection (CAL OSHA)

Harassment or Discrimination

Pay Day Notice

Time Off for Voting

Workers’ Compensation

Family Care & Medical Leave Act

Pregnancy Disability Leave Notice A

Access to Medical Records

California Minimum Wage

Unemployment & Disability Insurance

Emergency Information

Whistleblowers Protection Act

Industrial Welfare Commission Wage Orders

Colorado

Notice of Injury

Colorado Minimum Wage

Unemployment Insurance (English/Spanish)

Civil Rights Commission/Discrimination

Workers’ Compensation (English/Spanish)

Notice of Pay Days

Connecticut

Discrimination in Employment

Workers’ Compensation

Safety & Health Protection (OSHA)

Connecticut Minimum Wage

Sexual Harassment

Unemployment Insurance

Delaware

Payment of Wages

Minimum Wage

Employee Breaks

Unemployment Compensation

Discrimination

Workers’ Compensation

Child Labor

District of Columbia

Minimum Wage

Unemployment Compensation

Workers’ Compensation

Family & Medical Leave Act

D.C. Parental Leave Act

Non-discrimination

Minor Labor Law

Florida

Discrimination (English/Spanish)

Child Labor Law

Workers’ Compensation & Anti-Fraud

Unemployment Compensation (English/Spanish)

*Equal Opportunity Is The Law

*Required by all employers who receive funding under the “Workforce Innovation Act of 1998” (WIA)

Georgia

Unemployment Insurance

Workers’ Compensation

Equal Pay for Equal Work Act

Vacation

Worker Compensation Accident Report

Hawaii

Workers’ Compensation

Safety & Health Protection (OSHA)

Unemployment Insurance

Minimum Wage

Idaho

Sexual Harassment

Discrimination (English/Spanish)

Minimum Wage Law

Unemployment Insurance Benefits (English/Spanish)

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

Illinois

Illinois Department of Labor Notice to Employers And Employees

Workers’ Compensation

Unemployment Insurance Benefits

Victims’ Economic Security and Safety Act

Equal Pay Notice

Indiana

Indiana Minimum Wage

Safety & Health (IOSHA)

Workforce Development Act

Workers’ Compensation (English/Spanish)

Equal Opportunity

Teen Work Hours

Iowa

Safety & Health Protection (OSHA)(English/Spanish)

Unemployment Insurance

Equal Employment Opportunity (English/Spanish)

Iowa Minimum Wage (English/Spanish)

Kansas

Equal Opportunity

Workers’ Compensation (English/Spanish)

Unemployment Insurance

Child Labor (Required Only if Employing Children Under 18)

Kentucky

Equal Housing Opportunity

Kentucky Wage & Hours Laws

Wage Discrimination Because of Sex

Unemployment Insurance Benefits

Equal Opportunity is The Law

Safety & Health Protection (OSHA)

Workers’ Compensation

Louisiana

Genetic Discrimination

Dept. of Motor Vehicles

Unemployment Insurance Benefits

Prohibition of Sickle Cell Discrimination (English/Spanish)

Minor Labor Law

Workers’ Compensation

Equal Opportunity for All

Military Leave

Workers’ Compensation Fraud

Maine

Occupational Safety and Health Regulations

Workers’ Compensation (English/Spanish/French)

Child Labor Laws

Whistle Blowers Protection Act

Unemployment Compensation

Maine VDT Law

Sexual Discrimination

Minimum Wage

Regulation of Employment

Maryland

Workers’ Compensation

Safety & Health Protection (OSHA)

Unemployment Insurance

Wage and Hour Fact Sheet

Discrimination

Health Insurance Coverage

Equal Pay for Equal Work

Employment of Minors Fact Sheet

Lie Detector Tests

Wage Payment & Collection

Massachusetts

Fair Employment Law

Workers’ Compensation

Minimum Fair Wage Law

Unemployment Insurance

Sexual Harassment

Parental Leave

Michigan

Safety & Health Protection (OSHA)

Discrimination (English/Spanish)

Child Labor Laws

Right to Know Law

General Rules

Unemployment Benefits

Minimum Wage

Whistleblowers

Overtime Compensation Rules

Minnesota

Safety & Health Protection (OSHA)

Minimum Wage

Discrimination

Unemployment Benefits

Workers’ Compensation

Mississippi

Equal Opportunity

Unemployment Insurance

Workers’ Compensation

Missouri

Discrimination in Public Accommodations

Workers’ Compensation

Discrimination in Employment

Unemployment Benefits

Montana

Discrimination

Minimum Wage

Safety & Health Protection (OSHA)

*Unemployment Insurance

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

Nebraska

Contractors and Subcontractors

Minimum Wage

Emergency Phone Numbers

Discrimination

Safety & Health Protection (OSHA)

Nevada

Abstract Wage and Hour Laws

Safety & Health Protection (OSHA)

Discrimination In Housing and Public Accommodations

Emergency Phone Numbers

Occupational Disease

Unemployment Benefits

Lie Detector

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

New Hampshire

The Workers’ Right to Know

Discrimination

Protective Legislation Law

Whistleblowers

Minimum Wage

Unemployment Compensation

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

New Jersey

Child Labor Law Abstract

Payment of Wages

Discrimination in Employment

Statutory Minimum Rate

Discrimination in Place of Public Accommodations

Unemployment Compensation

Family Leave Act

Schedule of Hours of Minors Under 18

Conscientious Employee Act

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

New Mexico

Notice of Accident Forms (English/Spanish)

Job Health & Safety Protection (OSHA)

Workers’ Compensation (English/Spanish)

Discrimination (English/Spanish)

Minimum Wage

New York

Discrimination (English/Spanish)

Employment of Minors

Unemployment Insurance

Minimum Wage (English/Spanish)

*Workers’ Compensation

*Disability Benefits

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

North Carolina

Safety & Health Protection (OSHA)

Unemployment Insurance

Minimum Wage

Workers’ Compensation

North Dakota

Workers’ Compensation

Minimum Wage

Unemployment Compensation Benefits

Ohio

Discrimination – Equal Employment Opportunity

Minor Labor Law

Minimum Wage

Unemployment Compensation

Employer’s Identification Notice

*Workers’ Compensation

**Self-insured (Workers’ Compensation)

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

**Employers that are Self-insured must call the Better Workers’

Compensation 1-800-644-6292 to obtain a poster.

Oklahoma

Minimum Wage

Workers’ Compensation

Discrimination

Child Labor Law

Oregon

Family Leave Act (English/Spanish)

Minimum Wage (English/Spanish)

*Unemployment Benefits

Notice to Agriculture Employees (English/Spanish)

Safety and Health Protection (OSHA) (English/Spanish)

*Workers’ Compensation

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

Pennsylvania

Employment Provisions

Fair Housing Practice

Public Accommodation Provisions

Equal Pay Law

Minimum Wage

Child Labor Law

Workers’ Compensation

Unemployment Compensation

Puerto Rico

Federal Posters are all that’s required

Rhode Island

Hazardous To Your Health

Minimum Wage

Workers’ Compensation

Parent & Family Medical Leave Act

Equal Opportunity

Unemployment Insurance and Temporary Disability Insurance

South Carolina

Employment Discrimination

Safety & Health Protection (OSHA)

Unemployment Insurance

Workers’ Compensation

Payment of Wages, Child Labor Law

South Dakota

South Dakota requires a posting regarding workplace safety. Additional posters listed are recommended.

Facts About Unemployment Insurance Benefits

Workplace Safety – Required

Questions About Worker’s Compensation

Sexual Harassment

Tennessee

Safety & Health Protection (OSHA) (English/Spanish)

Unemployment Insurance

Child Labor Law

Workers’ Compensation

Texas

Texas has two different required posters. Which poster you need depends on whether or not you have workers compensation insurance.

For employers that have workers’ compensation insurance:

Workers’ Compensation Notice (English/Spanish)

Texas Pay Day Law

*Child Labor

*Equal Employment

For employers that do not have workers’ compensation insurance:

Notice to employees that employer does not have Workers’ Compensation Insurance (English/Spanish)

Texas Pay Day Law

*Equal Employment

*Equal Opportunity Complaints

*Recommended

Utah

Safety & Health Protection (OSHA)

Workers’ Compensation

Unemployment Insurance

Vermont

Workers’ Compensation

Parental, Family, and Short Term Family Leave

Sexual Harassment

Safety & Health Protection (OSHA)

Employers Reinstatement Liability

Minimum Wage

Child Labor Law (Children over Sixteen and under Eighteen years of age.)

Wage orders for: hotel, restaurant, mercantile(retail)

*Unemployment Insurance

Minors work schedule

*The state agency responsible for this poster has chosen to control its distribution. Official versions of this poster are available only from the agency or its authorized agent.

Virginia

Safety & Health Protection

Workers’ Compensation

Unemployment Insurance Benefits

Discrimination

Washington

Washington has two different required posters. Which poster you need depends on whether or not you have workers’ compensation insurance or are self insured.

For employers that have workers’ compensation insurance:

Discrimination in Employment (English/Spanish)

Family Leave Provisions

Minimum Wage (English/Spanish)

Rights As an Agricultural Worker (English/Spanish)

Rights as Non-Agriculture Worker

Workers’ Compensation Insurance

Unemployment Insurance (English/Spanish)

Safety & Health Protection (OSHA)

For employers that are self insured

Discrimination in Employment (English/Spanish)

Family Leave Provisions

Minimum Wage (English/Spanish)

Rights As an Agricultural Worker (English/Spanish)

Rights as Non-Agriculture Worker

Notice that employer is self insured

Unemployment Insurance (English/Spanish)

Safety & Health Protection (OSHA)

West Virginia

Wage Payment & Collection Act

Unemployment Benefits

Workers’ Compensation

Minimum Wage

Discrimination

Wisconsin

Business Closing/Mass Layoff Law

Fair Employment Law

Minimum Wage

Unemployment Benefits

Family & Medical Leave Act

Retaliation Protection for Health Care Workers

Hours and Times Minors May Work

Honesty Testing Devices

Cessation of Health Care Benefits

Wyoming

Minimum Wage

Safety & Health Protection (OSHA)

Unemployment Insurance

Discrimination

Workers’ Compensation

See Cash Receipts

Form 945 - 4 years after filing return

(annual return of withheld federal income tax)

Form W-9 - 4 years from filing deadline of the contractor’s tax return

(request for taxpayer identification number)

Form 8283 – 4 years from the filing deadline of donor’s tax return

(noncash charitable contribution)

Offering envelopes – 4 years from filing deadline of the donor’s tax return

(some churches issue donors a periodic summary of contributions that includes a statement advising donors to question any discrepancies quickly since all documentation (including offering envelopes) the church relied on in preparing the summary will be disposed of within a specified period of time (e.g., six months) Such a statement relieves the church of the responsibility of warehousing offering envelopes and other supporting documentation for long periods of time.)

Contribution statements – 4 years from the filing deadline of the donor’s tax return.

Written acknowledgements of charitable contributions – 4 years from the filing deadline of the donor’s tax return.

Written acknowledgements for short-term missions trips participants - 4 years from the filing deadline of the donor’s tax return.

Accountable reimbursement policy – permanently

Accountable reimbursement policy receipts – 4 years from the filing deadline of the employee’s tax return.

Exception:

· The regulations require employers to maintain receipts and other records used by employees to substantiate their reimbursed business expenses

· The IRS has indicated that it may relax this requirement, but it has not done so

· If an employer does not maintain these records, its employees will have to substantiate expenses if audited

All records associated with nonaccountable expenses reimbursements – 4 years from filing deadline of the employee’s tax return.

Housing allowance – 4 years from the filing deadline of the pastor’s tax return.

Cafeteria Plan – permanently.

Estimated housing expense form – 4 years from the filing deadline of the pastor’s tax return.

Safety net housing allowance – permanently.

(continuing resolution designating a specified percent of the salary of any staff pastor as a housing allowance if no allowance has otherwise been declared)

Job descriptions of staff pastors – 4 years from the filing deadline of the pastor’s tax return.

Form 8274 – permanently.

(certification by churches requesting exemption from FICA taxes)

Property tax exemption applications and certificates – consult local law offices.

Sales tax exemption applications and certificates – consult local law offices.

Tax-sheltered annuity salary reduction agreements – 4 years from filing deadline of the employee’s tax return.

Form 990-T – 4 years from the filing deadline of the tax return.

(exempt organization’s unrelated business income tax return)

Retirement gifts – 4 years from the filing deadline of the employee’s tax return.

Special occasion gifts – 4 years from filing deadline of the employee’s tax return.

Health plans – permanently.

Documents defining compensation – 4 years from the filing deadline of the employee’s tax return.

Correspondence received from the IRS or state and local tax agencies – permanently.

Articles of Incorporation – permanently.

Bylaws – permanently.

Certificate of Incorporation – permanently.

Certificate of Good Standing – permanently.

Minutes of membership meetings – permanently.

(summaries of actions taken at regular and special membership meetings)

Minutes of board meetings – permanently.

(summaries of actions taken at regular and special board meetings)

Annual Corporate Reports – permanently.

(an annual report that in many states must be filed annually with the Secretary of State by any corporation incorporated under the general nonprofit corporation law)

Form W-2 – 4 years after filing the return.

(wage and tax statement)

Form W-4 – 4 years after filing the return.

(withholding allowance certificate)

Form 941 – 4 years after filing the return.

(employer’s quarterly tax return)

Form 1023 – permanently.

(application for recognition of exemption)

Form 1099-MISC – 4 years after filing the return.

(miscellaneous income)

Form 5578 – 4 years after filing the return.

(annual certification of racial nondiscrimination)

(used by private schools if church-affiliated to certify compliance with federal nondiscrimination requirements (due by the 15^th day of the 5^th month following the close of each fiscal year))

See Church Records

See Inspection of Records

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Reporting Requirements

Churches are required to file a variety of reports or forms annually to the federal and/or state government. These include:

Annual Corporate Report better known as a Business Entity Report
New Hire Reports
Property tax reports to county assessors to maintain tax exemption
Unrelated Business Income return on Form 990-T
Employment taxes on Form 941

For details of each report or form see Block B3 – The Church and the IRS.

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SECA Tax

SECA stands for Self-Employment Contributions Act. It is the social security and medicare tax for all those individuals who are self-employed. For social security purposes a minister is considered self-employed. Under this status ministers are required to submit quarterly payments to the IRS covering 15.3% of their adjusted gross minus any credits or deductions. See the end of this block for the IRS worksheet used to calculate what the estimated taxes should be for the minister. At the end of the year, ministers will use Schedule SE of the Form 1040 to determine the actual SE employment tax for the year.

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Secretary of State

Below is the contact information for the Secretary of State offices:

Alabama

Secretary of State

PO Box 5616

Montgomery, AL 36103-5616

(334)242-5324

www.sos.state.al.us

Alaska

Corporation Section

PO Box 110808

Juneau, AK 99811-0808

(907)465-2530

http://www.state.ak.us

Arizona

Arizona Corporation Commission

Corporations Division

1300 West Washington

Phoenix, AZ 85007-2929

(602)542-3135

www.azsos.gov

Arkansas

Arkansas Secretary of State

Business and Commercial Services

1401 West Capitol Avenue, Ste. 250

Victory Building

Little Rock, AR 72201

(888)233-0325

http://sos.state.ar.us

California

Business Programs Division

1500 11^th Street

Sacramento, CA 95814

ATTN: Document Filing Support Unit

(916)657-5448

www.sos.ca.gov

Colorado

Colorado Secretary of State

Business Division

1700 Broadway, Suite 200

Denver, CO 80290-5169

(303)894-2200

www.sos.state.co.us

Connecticut

Office of the Secretary of State

30 Trinity Street

PO Box 150470

Hartford, CT 06115-0470

(860)509-6001

www.sots.state.ct.us

Delaware

Department of State

Division of Corporations

PO Box 898

Dover, DE 19903

(302)739-3073 Ext. 2

www.delaware.gov

District of Columbia

Department of Consumer and Regulatory Affairs

941 North Capitol Street, NE

Washington, DC 20002

(202)442-4432

www.brc.dc.gov

Florida

Department of State

Division of Corporations

PO Box 6327

Tallahassee, FL 32314

(850)245-6052

www.sunbiz.org

Georgia

Office of the Secretary of State

Corporations Division

315 West Tower

#2 Martin Luther King, Jr. Drive

Atlanta, GA 30334-1530

(404)656-2817

http://sos.georgia.gov

Hawaii

Hawaii Dept. of Commerce of Consumer Affairs, Business Registration Division

1010 Richards St.

PO Box 40

Honolulu, HI 96810

(808)586-2744

(808)586-2727

http://www.ehawaii.gov/ltgov

Idaho

Office of the Secretary of State

700 West Jefferson

Boise, ID 83720-0080

(208)334-2301

www.sos.idaho.gov

Illinois

Secretary of State

Department of Business Services

Corporations Division

350 Howlett Building

Springfield, IL 62756

(217)782-6961

www.sos.state.il.us

Indiana

Secretary of State

Corporations Division

302 W. Washington St., RM E018

Indianapolis, IN 46204

(317)232-6576

www.in.gov/sos

Iowa

Secretary of State

Business Services

First Floor, Lucas Building

321 E. 12^th St.

Des Moines, IA 50316

(515)281-5204

www.sos.state.ia.us

Kansas

Kansas Secretary of State

Memorial Hall, 1^st Floor

120 SW 10^th Ave.

Topeka, KS 66612-1594

(785)296-4564

www.kssos.org

Kentucky

Secretary of State

PO Box 718

Frankfort, KY 40602-0718

(502)564-2848

http://sos.ky.gov/business

Louisiana

Commercial Division

PO Box 94125

Baton Rouge, LA 70804-9125

(225)925-4704

www.sos.louisiana.gov

Maryland

State Department of Assessment and Taxation

Corporate Charter Division

301 W. Preston St., Room 801

Baltimore, MD 21201

(410)767-1340

www.dat.state.md.us

Massachusetts

Secretary of State

Corporations Division

Commonwealth of Massachusetts

One Ashburton Place, 17^th Floor

Boston, MA 02108

(617)727-2850

www.sec.state.ma.us

Michigan

State Department of Labor of Economic Growth

Bureau of Commercial Services Corporations Division

7150 Harris Drive

PO Box 30054

Lansing, MI 48909

(517)373-1820

www.michigan.gov/cis

Minnesota

Secretary of State

Business Service Division

180 State Office Building

100 Rev. Dr. Martin Luther King, Jr. Blvd

St. Paul, MN 55155-1299

(651)296-2803

www.sos.state.mn.us/home/index.asp

Mississippi

Mississippi Secretary of State

PO Box 136

Jackson, MS 39205-0136

(601)359-1333

https://secure.sos.state.ms.us

Missouri

Secretary of State

Corporation Division

PO Box 778

Jefferson City, MO 65102

(573)751-4153

www.sos.mo.gov

Montana

Secretary of State

PO Box 202802

Helena, MT 59620-2802

(406)444-3665

http://sos.mt.gov

Nebraska

Secretary of State

Room 1305 State Capitol

PO Box 94608

Lincoln, NE 68509

(402)471-4079

www.sos.state.ne.us/dyindex.html

Nevada

Secretary of State

New Filing Division

206 N. Carson St.

Carson City, NV 89701-4299

(775)684-5708

http://sos.state.nv.us

New Hampshire

Secretary of State

Corporations Division

State House

107 North Main Street

Concord, NH 03301-4989

www.sos.nh.gov

New Jersey

New Jersey Dept. of the Treasury

Division of Revenue/Corporate

Filing Unit

PO Box 308

Trenton, NJ 08625-0308

(609)292-9292

www.state.nj.us

New Mexico

Public Regulations Commission

Corporations Bureau

PO Box 1269

Sante Fe, NM 87504-1269

(505)827-4511

www.nmprc.state.nm.us

New York

Department of State

Division of Corporations

41 State Street

Albany, NY 12231

(518)473-2492

www.dos.state.ny.us

North Carolina

Department of the Secretary of State

Corporations Division

PO Box 29622

Raleigh, NC 27626-0622

(919)807-2225

www.sosnc.com

North Dakota

Business Division

Secretary of State, State of North Dakota

600 E. Boulevard Ave., Dept. 108

Bismarck, ND 58505-0500

(800)352-0867

www.nd.gov/sos

Ohio

Ohio Secretary of State

PO Box 670

Columbus, OH 43216

(614)466-3910

www.sos.state.oh.us

Oklahoma

Secretary of State

2300 N. Lincoln Blvd.

PO Box 778

Room 101

State Capitol Building

Oklahoma City, OK 73105-4897

(405)521-3912

www.sos.state.ok.us

Oregon

Secretary of State

Corporations Division

255 Capitol St. NE

Suite 151

Salem, OR 97310-1327

(503)986-2200

www.sos.state.or.us

Pennsylvania

Department of State

Corporations Bureau

PO Box 8722

Harrisburg, PA 17105-8722

(717)787-1057

www.dos.state.pa.us/dos/site/default.asp

Rhode Island

Office of the Secretary of State

Corporations Division

100 North Main Street

Providence, RI 02903-1335

www.ri.gov

South Carolina

Secretary of State

PO Box 11350

Columbia, SC 29211

(803)734-1790

www.scsos.com

South Dakota

Secretary of State

State Capitol

500 E. Capitol

Pierre, SD 57501

(605)773-4845

www.sdsos.gov

Tennessee

Tennessee Department of State

Corporate Filings

312 Eighth Avenue North

6^th Floor, William R. Snodgrass Tower

Nashville, TN 37243

(615)741-2286

www.state.tn.us/sos

Texas

Secretary of State

PO Box 13697

Austin, TX 78711-3697

(512)463-5555

www.sos.state.tx.us

Utah

Utah Department of Commerce

Division of Corporations

PO Box 146705

Salt Lake City, UT 87114-6705

(801)530-4849

www.commerce.utah.gov

Vermont

Corporations Division

Office of the Secretary of State

81 River St.

Drawer 09

Montpelier, VT 05609

(802)828-2386

www.sec.state.vt.us

Virginia

Clerk of the State Corporation

Commission

PO Box 1197

Richmond, VA 23218-1197

(804)371-9733

www.commonwealth.virginia.gov

Washington

Secretary of State

Corporations Division

801 Capitol Way South

PO Box 40234

Olympia, WA 98504-0234

www.secstate.wa.gov

West Virginia

Secretary of State

Corporations Division

1900 Kanawha Blvd. E

Charleston, WV 25305

(304)558-8000

www.sos.wv.gov/Pages/default.aspx

Wisconsin

Department of Financial Institutions

PO Box 7846

Madison, WI 53707-7846

(608)261-7577

www.wdfi.org

Wyoming

Wyoming Secretary of State

The Capitol Building, Room 110

200 W. 24^th St.

Cheyenne, WY 82002-0020

(307)777-7311/7312

http://soswy.state.wy.us

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Separation of Duties

Churches need to protect themselves from the risk of embezzlement. One way is to separate the duties of handling the money. This is accomplished by assigning different individuals from different families (if using volunteer help) one of the following duties:

1. Transactions: This person(s) is responsible for authorizing the financial transactions of the church. This would include bill paying, etc.

2. Receipts: There should be at least two unrelated persons that are responsible for counting and depositing the income of the church.

3. Disbursements: This person(s) is responsible for completing transactions that have been approved by the person with transactional authority.

4. Signatures: It is best to have two unrelated persons sign the checks. This could include the person who created the check, however, it is better to have someone else. The pastor should never be one of the signatures.

5. Recorder: This person(s) responsibility is to record all receipts and disbursements of the church.

The majority of churches have one individual that cares for all of the above duties. Many small churches do not have the personnel to cover all the duties. Therefore, it is essential to have a different person count and deposit the income of the church from the one that disburses the money. These two people should never be relatives. Pastors should not be one of the individuals.

When money comes into the church, it should be stored in a safe until it is ready for deposit in the bank. Money should never go to an individual’s home before being deposited in the bank. The church should provide a night deposit key for the person(s) responsible for depositing the money if the church does not have a safe.

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Taxes, Voluntary Withholding

Ministers are considered voluntary withholders. A minister can request to have federal income, state income, and local taxes withheld from their pay checks. They must submit quarterly payments to the IRS for their SECA taxes.

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Treasurer

Block B1 of the ABC’s of Church Management Manual is written specifically for church treasurers. It walks a church treasurer through audits, charitable contributions, year-end completion of forms, and record keeping.

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Unrelated Business Income

If churches have income resulting from an unrelated trade or business, they must report that income to the IRS on Form 990-T. Unrelated business income can result from rental property, renting the church parking lot during the week, etc.

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Voluntary Tax Withholding

See Taxes, Voluntary Withholding

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Worker’s Compensation

Most states require churches and related ministries to have workers' compensation insurance for their employees, including clergy.

Worker’s compensation policies provide benefits mandated by law in the state where your ministry operations occur or where your employees reside. Policy covers employees only, and the benefits are provided only in relation to a work-related injury or disease as specified in the state law. The premium is based on your payroll estimates for different classes of employees.

Workers' Compensation laws are designed to ensure that employees who are injured or disabled on the job are provided with fixed monetary awards, eliminating the need for litigation. These laws also provide benefits for dependents of those workers who are killed because of work-related accidents or illnesses. Some laws also protect employers and fellow workers by limiting the amount an injured employee can recover from an employer and by eliminating the liability of co-workers in most accidents. State Workers Compensation statutes establish this framework for most employment.

The policy may also include employer's liability insurance that protects you up to the coverage limit in the event you are sued in civil court as the result of an injury to your employee arising out of the employee's job-related injury or illness.

Note: Many state workers' compensation statutes contain punitive provisions directed toward employers who fail to purchase this coverage to protect employees.

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Year-End Contributions

A charitable contribution is made at the time delivery. This comes into play at the end of the year. A member of a congregation realizes they are behind in their giving. He or she dates a check, Dec. 31, 20__, but does not place it in the offering until the first Sunday in January. The contribution must be applied towards the current year. If a check is mailed to the church, but is not received until January, it can still be applied to the previous year so long as the postmark is December 31 or earlier.

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