Trusting the Wrong “Expert” Costs Pastor Dearly

3/12/2020

Trusting the Wrong “Expert” Costs Pastor Dearly

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Pastor Albright called the office to engage in what seemed “small talk.” Then he shares the story that has cost him more than he can afford to pay.

The conversation began with an exchange of niceties, but then abruptly changed. Trusting a “wrong authority” in 2002 had cost the Pastor his Social Security Benefits. In 2000, Pastor Albright trusted someone to opt him out of Social Security. Unfortunately, the source he had trusted, filed the wrong form. Instead of opting him out of paying Ministers’ self-employment tax, the “supposed expert” had opted him out of receiving Social Security Benefits.

What You Don’t Know Can Hurt You

Evidently, the individual had convinced Pastor Albright that the form and the process was simple—that anyone could do it.

Without knowing the nuances of the Internal Revenue Service (IRS) and how to properly navigate its paperwork “mine field,” the Pastor’s “trusted source” filed the wrong form. Any novice could have made the same mistake. Although the name of the two forms are different, a novice would look at the wording and not know there was a huge difference between the two.

Pastor Albright’s source apparently saw “Application for Exemption from Social Security and Medicare Taxes. . .” and assumed that was the form to use.

Pastor’s Dilemma

When Pastor Albright called my office, he wanted to be upset with us. He thought we were the ones that had made the error. In 2018, per his request, we filed the proper form to exempt him from paying any self-employment tax.

He explained that he was at the Social Security Administration and they explained to him that he could not receive any Social Security Benefits because he had exempted himself from them.

As we do with every case, we spoke with the Social Security agent to determine the problem. It was then we learned that someone for Pastor Albright had filed the wrong form in 2000. They had taken this action 16 years prior to the Pastor becoming our client.

The Social Security Agent told the Pastor that we had filed the correct form and our action was not his problem. His problem was trusting someone who convinced him that he did not need professional assistance from a real authority. Three wrong numbers cost Pastor Albright a small fortune that cannot be reversed, fixed, or amended.

Unless Pastor Albright has made some very wise financial decisions in the past 30 years of his life and built a comfortable financial nest-egg, he will be forced to work for a paycheck all the days of his life. Because he is locked out of any Social Security and Medicare Benefits, he will never be able to enjoy retirement, and will struggle to survive the rising costs of health care.

Anyone CANNOT Do What We Do

Chitwood & Chitwood has been the Real Authority for non-profit, Church, and Clergy Tax issues for more than 80 years.

Our experts know the forms to use, the words to say, and the actions to take to limit liability to those we represent. Unfortunately, people who are too cheap or naïve to retain our services, think that it is as simple as getting a form and reading the directions.

Just because there are some directions does not mean that anyone can properly understand and implement them. Jet engines have tech manuals, but unless you are a qualified jet engine mechanic, I would not want to fly on a plane where you worked on its engines. Anyone can tinker, but it takes an expert to know where and with what to tinker.

All Pastors and Church Officials Need to Attend our Next Seminar

We conduct live seminars across the nation. At these seminars, Pastors, Trustees, Board Members, and Checkwriters can easily ascertain the difficulty involved with Church Books and Records.

Don’t assume you or anyone in your Church knows how to properly maintain your Church Books or navigate the stormy waters of the IRS.

I encourage every Pastor, Trustee, Board Member, and Church Checkwriter to call 800-344-0076 or visit us at www.cmtc.org and register for our next seminar. Pastors DO NOT only send your Board Members and You MUST ALSO ATTEND.

Just like Pastor Albright, you listened to others, and you think everything is okay, but there will come a day when you will give an account. Fix it now before it is too late.

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Our Church Management Conferences will arm you with the information you must have to shield your Church or Ministry from IRS intrusiveness; teach you how to get your Taxes to the lowest possible rate; and daily operate your Church or Ministry within IRS acceptable guidelines.

Our Conferences have been taught across the Nation for over 48 years. Because of the Penalties, Fines, and even Imprisonment that the IRS imposed on many Churches and Pastors, Dr. Chitwood felt led by the Holy Spirit to become a buffer between Churches, Ministers, and the IRS.

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2/28/2020

Trustees Plan a Church Coup to Remove the Pastor

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Twenty years ago, while praying, God directed him and his wife to move to a small town in rural Georgia. God’s directions were clear. Once he moved to the little town, he was to begin some bible studies at his home and plant a Church.

Pastor Newton had planted a couple of Churches prior to this and expected to do with this new venture what he had done with others—plant the Church, get it established and turn it over to someone to take the vision farther.

God’s Has Other Plans

Instead of turning this Church over to another Pastor, God instructs Pastor Newton that he and his wife are to be the permanent Pastors of this new work.

The Pastor and his wife soon became accepted in the community and the Church began to recognize significant growth. Pastor Newton was living every Pastor’s dream of pastoring a Church without membership or financial issues.

For twenty years Pastor Newton pastored the ideal Church, but unbeknownst to him, things were about to get ugly.

Board Members Have Private Meetings

One of the newly appointed Trustees began informally meeting with other Trustees. He would take one or two out to lunch and begin to float the idea that maybe Pastor Newton was too old to continue on in role. This Trustee reminded the others of how the community was beginning to see an influx of the millennial generation and how they would need a Pastor that could properly relate, if their Church would hope to influence these new citizens to attend their congregation.

After several of these small lunches, the particular Trustee felt he had enough influence to promote the idea to the complete Trustee Board. To make his plan work, he needed to gather all of the Board, without the Pastor.

At a gathering of all of the Trustees at his home, he was able to convince half of the Board to consider the idea.

Pastor Finds Out from Unsuspecting Source

Pastor Newton was having his car serviced, when the Service Manager informed him that he had heard that Pastor Newton was retiring and how he hoped that Pastor and his wife would continue to live in their community.

Needless to say, the Pastor was shocked to hear what he thought was a rumor. When Pastor Newton begin to question the Service Manager as to his source of information, the Pastor learned the information was disseminated via a Church member.

Once Pastor Newton returned home, he quickly called the member to discover that she had heard it from one of the agreeing Trustees’ wife.

Pastor Calls A Meeting

Pastor Newton called a Board Meeting to get facts. At the meeting he was shocked to learn the Board was split on the desire to replace him. It was then that the Pastor was told by the initiating Trustee, that if he did not resign so they could install a younger Pastor, the Trustee would make a call to the IRS to request they investigate the Church.

The Pastor had no clue the Trustee had being doing somethings that should not have been done that would create problems for the Pastor and the Church.

It All Could Have Been Prevented

Had Pastor Newton attended one of our Church Management and Tax Seminars, he would have known exactly what to do to protect the vision God had given him twenty years earlier.

Had he retained our services, we could have intervened before it escalated to the point that it split his Church and caused division among the community.

While most Pastors are admired by most of their congregation, they naïvely think that everyone in the Congregation adores them and would always have their back. That is not so. Unfortunately, some members don’t love the Pastor—they tolerate him.

Pastor Newton’s remaining years at the Church he founded were plagued with stress and sometimes depression. What should have been his greatest years turned out to be his worst. Those whom you think have your back, may be about to stab you in the back.

Don’t let this happen to you! Every Pastor, Pastor’s Spouse, Trustee, and Board Member should attend the nearest Church Management and Tax Seminar now! To register for a seminar please call 800-344-0076 or visit us at www.cmtc.org. If there is no seminar near your location, ask us how you can sponsor one, or ask to be directed directly to one of the professionals of Chitwood & Chitwood to get your Church in compliance NOW!

Remember, “It’s not what you know that will hurt you. It’s what you don’t know!”

By Dr. Michael Chitwood

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2/28/2020

IRS Pulls Out Every Law

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Pastor Simpson called our office in absolute Panic. In 80 years of our firm doing books and record keeping for Churches, I had never personally heard, or heard of any Pastor or Church member in such total despair as him.

Pastor had attended one of our seminars, but thought he didn’t need our services. In his words, “We are only a small country church.” The very thing that initiated the beginning of his problems was one of the many topics that govern Church bookkeeping.

The Ostrich Mentality Created Further Damage

When the notices began arriving from the Internal Revenue Service (IRS), the Church Check-writer threw them away. After reading the first one, she determined that the topic of the IRS notice did not apply to a Church—especially one as small as theirs.

When the Check-writer finally allowed the Pastor to see one of the many correspondences the IRS had sent, the Pastor thought the best thing to do would be to call the IRS for clarification. His call seemed to further support his and the Check-writers outlook of the situation. The agent to whom they spoke new nothing of non-profit and Church law, and proceeded to tell the Pastor that the Church should not worry—everything was ok.

Pastor Missed Another Topic Taught at the Seminar

Sometime during any seminar, we ensure we cover the court case of “Maser v. Commissioner,” (2011). The ruling in that case was as follows:

The law is clear that erroneous legal advice rendered by employees of the IRS generally is not binding on the Commissioner. Dixon v. United States, 381 U.S. 68, 72-73 (1965); Schuster v. Commissioner, 312 F.2d 311 (9th Cir. 1962), affg. in part and revg. in part 32 T.C. 998 and 32 T.C. 1017 (1959); Fortugno v. Commissioner, 41 T.C. 316 (1963), affd. 353 F.2d 429 (3d Cir. 1965). In any event, the Commissioner cannot waive the jurisdictional requirements, and jurisdiction cannot be established by estoppel.

The judge in “Maser v. Commissioner” further stated that it does not matter what an IRS agent tells you—the only thing that matters is what is written in the code.

Pastor Simpson quickly discovers what we have always known, and that is, “Cheap Advice is Always Expensive.

IRS Pulls Out All Stops

What should have been an easy fix, had Pastor Simpson and his Church engaged us at our conference, or engaged us upon receipt of their first notice, we could have solved the issue with no penalty. Unfortunately, things escalated.

Since the IRS did not receive a timely reply to their correspondences, they attacked with full force. When the investigating agent arrived at the Church, they were not in the mood for an exchange of pleasantries.

Unfortunately, and fortunately, the Church contacted us when the agent arrived. It was unfortunate because the IRS had reasonable grounds to dig deep into the records of the Church. It was unfortunate because millions of dollars in fines and penalties were about to be imposed. However, it was fortunate for the Church because we know the IRS better than they know themselves. Our expert team was able to negotiate an 80% reduction in the penalties and convince the agent to not seek criminal charges against the Pastor and Board Members.

Pastor, Board, and Church Still Suffering from the IRS Findings

While Chitwood & Chitwood was able to get the penalties dramatically lowered the result was still a very large penalty for a Church of their size. The IRS agreed to payment terms, but as part of the agreement, all Church assets were frozen, in addition to all personal assets of the Pastor, and Board Members.

To date, their assets are still frozen and some of their small congregation decided it was in their best interest to leave the Church, adding further damage to the Church’s financial standing.

Everything Could Have Been Avoided

Chitwood & Chitwood has been protecting Churches, Ministries, Pastors, and Board Members for more than 80 years. We are the best. As an offshoot of Chitwood & Chitwood, our Church Management and Tax Conferences travel across the nation teaching Church and Clergy Tax Compliance seminars.

Although time does not permit us at the seminars to teach the complexity of the IRS code pertaining to Churches and Ministries, we teach enough of the basics so a Church can determine if they should be concerned. For those who want to engage us, we drastically discount our services, sometimes as much as 75%. We do this so no Church, Pastor, or Board Member can say, “We would love to retain you, but we cannot afford it.”

It is imperative that all Pastors and Church Board Members attend a seminar near them immediately. To register for a seminar please call 800-344-0076 or visit us at www.cmtc.org. If there is no seminar near your location, ask us how you can sponsor one, or ask to be directed directly to one of the professionals of Chitwood & Chitwood to get your Church in compliance NOW!

Remember, “It’s not what you know that will hurt you. It’s what you don’t know!”

By Dr. Michael Chitwood

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9/27/2019

Tax-Exempt Status Is Now in Their Crosshairs

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Churches and non-profits have enjoyed the benefit of Tax-Exempt status for years. As long as we play by the “rules” income donated to us is exempt from Federal taxes. Most Churches have no problem playing by the “rules.” This may change very soon.

Churches Should Preach and Teach the Good News

Church agenda should be focused on getting people from a life of sin to a life in Christ. This will necessitate that we love those that may be unlovable. Because we demonstrate the love of God does not mean that we are to turn a blind eye to sin. This is what may create a problem.

A mandate of the Church is to teach people. Sometimes that may make some uncomfortable. A child may be uncomfortable making his bed or learning to do chores, but it is a necessary part of the maturing process. The Apostle Paul declared, “When I was a child, I spoke and thought and reasoned as a child. But when I grew up, I put away childish things” (1 Corinthians 13:11 NLT). Just as a child must be stretched into maturity, so must a Christian.

The Impending Dilemma

Our current Congress wants to classify as hate speech any speech, actions, etc. (including sermons), which speak negatively about an unbiblical lifestyle. If they pass their law, no Church will be able to preach and teach their biblical convictions without fear of the Government’s intervention.

This intervention would mean that Churches would lose any Tax-Exempt status, requiring them to file necessary taxes on donations they receive. It would also reduce contributions to the Church. Regardless of how many tell you they give because they love Jesus, a large proportion of Christians give because they get a tax write-off.

What You Don’t Know Can Hurt You

Unfortunately, many Pastors, Church Leaders, and members stick their “proverbial” head in the sand on issues such as this. They pretend that such a resolution would never become law, or they mistakenly think that their Church would never be affected. Either scenario will prove to be detrimental to the Pastor, Church Leaders, and affect those sitting in the pews.

This is why we do what we do. We crisscross the USA every year, sounding the alarm so Church Leaders and Pastors can do due diligence to prevent any negative action against them and their congregations.

What You Need to Do

Our team tirelessly travels as much as 200 days each year, equipping Churches with necessary information and materials to ensure they are up-to-date with the latest IRS regulations.

Regardless of how much we travel and teach, if you are not at the seminar you will be uninformed and unequipped to handle what may be headed your way. IT IS IMPERATIVE THAT YOU ACT NOW!!!

Call 800-344-0076 or visit us online at www.cmtc.org to register for the one-day Conference nearest you. This will be the best investment you can make for the future of you and your Church. Do not think you are immune. All of the prayers you can pray will not protect you when you are violating God’s Word. His Word declares, “To him that knows to do good and does it not, to him it is sin!!!” (James 4:17).

REGISTER NOW!!! You will be glad you did.

By Dr. Michael Chitwood

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9/13/2019

His Wrong Choice Cost Him Dearly

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We sent him several notices and several e-mails hoping he would register and attend that upcoming Church Management and Tax Conference. He felt it was a waste of his time to sit a few hours in a hotel conference room and listen to the latest information on current tax laws and how they affect Churches and non-profits.

Five months after his decision to not attend, he received the notification that strikes fear in the heart of most, if not all, Americans. He was notified by the Internal Revenue Service (IRS) that they were looking at the financials of him and his Church.

Delayed Action Proves Costly

This is when Pastor Thurman decided he needed our help. We agreed to accept him and his Church as clients, hoping we could fix whatever problems the IRS were targeting. Unfortunately, by the time he contacted us, the IRS had placed many of the records out of our reach.

Although we were able to file amendments for some years and lower some taxes assessed to him, we were not able to correct the years frozen by the IRS, nor did the IRS allow us to fix the Church records. Their investigation had begun.

The Huge Penalties Were Avoidable

Once the IRS was finished, the Pastor and the Board were facing possible criminal action, in addition to hundreds of thousands of dollars in fines to the Church and the Pastor.

This Pastor’s naiveté and lack of desire to attend the Church Management and Tax Conference proved much more costly than he ever dreamed. Had he attended the Conference he would have invested about $100 and about six hours of his time. He would have discovered that those areas of concern to the IRS could have been fixed, without penalty, and could have saved him, his Board, and his Church the emotional, financial, and individual pain they all now encountered.

No Free Rides

Life is designed so that everyone pays. The questions are, “When?” and “How much?” God set this principle in the Garden of Eden. Adam and Eve could pay up front by avoiding the Tree of the Knowledge of Good and Evil, or they could pay after the fact with the huge price of their expulsion from the Garden and the fall of mankind.

Those of you reading this blog will pay with a few hours of your time to learn how to correct the errors in your Church financial records or you will most likely pay later with possible IRS intervention in your business.

Everyone pays. You choose the “When” and “How much!” Choose wisely!!!

Register Now!!!

There is a Church Management and Tax Conference that is scheduled near you. DO NOT PROCRASTINATE; DO NOT WAIT FOR ANOTHER OPPORTUNITY; Register NOW. To register, call 800-344-0076 or visit us online at www.cmtc.org. Your attendance will be a very small investment for you and the future of your Church or Ministry.

We look forward to meeting you.

By Dr. Michael Chitwood

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8/15/2019

New IRS Actions Increases Its Intrusion

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While teaching a Church and Clergy Tax Conference in New Jersey, I was shocked when a lady approached me during the morning break. Her son was an employee of the IRS and told her to resign her position as Church bookkeeper. She told me she could not understand why he would adamantly insist she did, until she came to our seminar.

She realized how non-compliant her Church was with existing IRS regulations. She resigned during the break.

What really got my attention was the statement she told me. She relayed to me that her IRS employee son, had told her the IRS had hired thousands of new agents to target Churches, including hiring many to attend Church services as “spotters” to determine what violations Churches were committing. She said this would then trigger an audit from the Internal Revenue.

In addition to auditing Churches, the IRS has garnered support from a recently signed Transportation Bill which would allow the IRS expansive power to collect any taxes and penalties which were owed to the Federal Government.

The IRS Receives New Powers to Revoke Passports

In the Transportation Bill passed by Congress, they awarded the Internal Revenue Service brand new, expansive power to collect taxes. If you have a federal tax debt, beginning this month, the IRS can have your Passport revoked by simply sending a message to the State Department.

I believe that people should pay any taxes they owe, especially if they are traveling abroad. However, what possessed Congress to believe the IRS could handle this broad power effectively? They have been investigating the IRS for months over the scandal where the IRS refused to issue 501(c)(3)s to certain non-profits.

A history lesson of the IRS reveals the mistakes they have previously made in wrongfully seizing the bank accounts and property of innocent victims. What gives any indication that the IRS has changed its ways? Remember, the IRS is compiled of unelected bureaucrats, and now these same people have been given the power to block our freedom of movement, simply by a phone call or e-mail.

This will be a huge pain for all Americans. As I am typing this, the Federal Government is on a fast track to implement a new identification card and they will demand that it override any state ID such as Driver’s Licenses. When the government does this, it means your passport will be the only valid ID you will have to use at airports – even for travel within the 50 states.

Where will you be if the IRS revokes your Passport during this period? You will be limited to ground transportation.

The IRS Is Still Seizing Bank Accounts

The IRS continues to seize bank accounts without a warrant. This can be triggered by making a series of small deposits into your account. Not long ago the IRS seized $33,000 dollars from the owner of a Mexican Restaurant in Iowa. The American citizen and owner stated that she was NEVER accused of a crime, but the IRS was simply suspicious because she made frequent small deposits.

The IRS has the ability to seize a bank account even though they may not win a conviction or may not even file charges.

Our freedoms are quickly eroding. More than any other time in the history of this nation, United States Citizens are being walled in.

According to one survey, Americans have been surrendering their citizenship in droves. Many that are doing so stated the main reason is because of the overreach of the IRS.

The Problem

The crux of the problem is simply that the IRS can revoke your Passport merely by alleging that you owe money to the federal government.

They do not need the permission of a Judge, or a court review. The IRS does not warn you of their actions, nor do they give you the chance to fight the government’s decision before the revocation.

The IRS operates strictly on a “Guilty until proven innocent” basis.

Any Church, Pastor, or Minister of any kind has set themselves up for a major shock if they do not have Chitwood & Chitwood doing their books. The local CPA or Church Secretary that many have used for bookkeeping does not know how to handle the IRS and protect you and your Ministry. WE DO!

DO NOT GET BLINDSIDED BY A REVOCATION OF YOUR PASSPORT!

In Conclusion

No one knows the IRS, and Church and Ministry finances like we do. 77 years of successfully protecting Churches and Ministers make us the best in the world. Our success record is unparalleled to any other CPA or firm.

Every day that a Church, Church Leader, Pastor, or Minister procrastinates, is another day they have set themselves up for devastating shock from the IRS. Do not think it cannot happen to you. Every month, hundreds of Churches are closed, and ministers and bookkeepers are indicted simply because they trusted the financial records to a novice.

CHEAP ADVICE IS EXPENSIVE. With cheap advice you will get what you pay for, but what you get will not be what you want. God’s financial records deserve the best oversight available and that is Chitwood & Chitwood.

Visit us at www.cmtc.org or call us at 800-344-0076 to retain us or to register for an upcoming tax conference in a city nearest you.

Your ministry is to win the lost. Our ministry is to make sure you can do yours. For us this is “A Ministry – Not A Job!”

By Dr. Michael Chitwood

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4/19/2019

HER ANNOUNCEMENT SHOCKED THE CLASS

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Over the many years of teaching Church and Clergy Tax Seminars across the USA, I have had countless IRS agents in attendance. They do not come to the classes to find law-breakers. They usually come for one of two reasons: They are board members, trustees, or bookkeepers for their Church or they are on the verge of auditing a Church. In both scenarios they are there to learn Church Tax Law.

Some Interesting Stories

Usually the agents will not identify themselves (if they do) until the class is over. Since they are not there to “catch” someone, they do not want to intimidate an attendee to the level where the attendee would feel uncomfortable asking any questions.

In a recent St. Louis conference, there was an agent in the class and next door to us there was a Federal Marshal and IRS agent symposium. During morning registration an investigative IRS officer stopped by my table to asked what I did. Just prior to his question, a preacher told me he was attending the class because his board insisted, but he didn’t believe the IRS would come after Churches. The Federal Officer told us that he was a previous Pastor who had previously had severe issues with the IRS and resigned the ministry because no one in his small town was capable of properly maintaining Church books. This agent then told that Pastor, “You better listen to every thing this man (speaking of me) tells you because we are coming.”

In that same class, at the end of the day, an attendee told me he worked for the IRS and had just been voted to the Trustee Board of his Church. His words to me were, “I have heard throughout the agency that they are coming after Churches and I could not afford for my Church to be out of compliance, especially since I am an IRS agent.”

Two months later, in another city, a couple sat at the front center table. They seemed to hang on every word I taught. I noticed at morning break, at noon, and at afternoon break, they were on the phone, sometimes argumentative, sometimes pleading, and often frustrated with the conversations.

During question and answer period I noticed they would give their name, but no Church or Pastor info. At the end of the class both told me, “We are Federal Marshals and we have a dilemma. We have tried to convince our Pastor to take advantage of this program because we have discovered that the Church books are out of compliance and in total disarray. Our Pastor has refused. As Federal Law-Enforcement Officers we took an oath to uphold the law. We now have to turn in our Pastor and Church to the IRS.”

Church Bookkeeper told to Resign

At the morning break in the New Jersey seminar, a lady approached and told me that she was attending at the urging of her son-in-law who was an IRS agent. She had been doing the Church books for two weeks and her son-in-law continued to insist that she resign for her own protection. She argued with him that the books were okay.

He paid her registration fee to get her to attend. During the morning break she told me she now understood why he was insisting she resign (which she did at that break).

I asked her to share this information with the class. After the break she came forward and told the class what she had told me, but then shocked us with this tidbit: “My son-in-law is an IRS agent and has been insisting I resign my duties as Church bookkeeper—and I did that just before the break ended. The reason I did is because I have discovered our Church has serious IRS compliance issues and my son-in-law has informed me that the IRS is releasing thousands of agents to audit Churches and to attend Church services as “spotters” (undercover agents) to catch Churches in non-compliance.”

What Agents know About the Church Management Conference that Pastors Should Heed

Pastors and Board Members often feel as if they are immune to any IRS oversight. Many will leave a seminar thinking they do not have to comply with any of the codes that have been taught that day and many feel as if God is required to protect their illegal bookkeeping methods.

However, IRS agents that attend the classes know the severity of not complying with these regulations. As one agent told me, “When we walk in, it will be too late for the Church to take any action. By the time we walk in, we have them.”

You Must Attend the Next Conference NOW!!!

There may not be a conference in your area, but you do not have the luxury of waiting for one. They are coming and they are coming now to Churches all across the nation. It is naïve for a Pastor and Board Member to think they can continue to do Church books like they always have. It is naïve for a Pastor and Board Member to think they do not need to attend. Any excuse used to not attend the next conference is not wisdom.

Chitwood & Chitwood has been keeping Church books compliant for thousands of Churches for 81 years. We are the best and the most trusted firm in the nation. With us maintaining your books and records a Church will have no IRS fears or concerns.

This is why you must register NOW for the next conference. Fly in, drive, or do what you must, but this is one conference you CANNOT AFFORD to miss. To register please call 800-344-0076 or visit us online at www.cmtc.org. Once your window of opportunity closes, it may be too late for your Church (cf Numbers 14).

By Dr. Micheal Chitwood

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3/29/2019

NOW CONFIRMED—THEY ARE COMING

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I had just concluded a Church Management and Tax seminar last year when one of the attendees approached me. I noticed that this gentleman sat through the entire class, took copious notes, yet never asked one question during the question and answer sessions. Usually when they come to me privately it is something so embarrassing that they did not want others to hear it. This was not the case this time.

He began by looking around to make sure no one else was in listening distance and then told me these shocking words: “I work for the IRS and because I have just been added as a Trustee to my Church Board, I needed to know where our Church stood on IRS Compliance.”

He Immediately Had My Attention

He proceeded to tell me that he worked for the for-profit side of the IRS (his words), but he had heard they were about to hire thousands of new agents for the non-profit division. These new agents would be auditors specifically hired to conduct on-site audits of non-profit organizations—especially Churches.

I began to share what he had told me during other seminars, but the information seemed to fall on deaf ears. It seems Pastors and Church Boards think they can continue operating the way they did 50 years earlier.

His last words to me were, “The IRS is coming and the last thing I need as a Church Trustee and as an IRS employee is for my Church to be one they audit and our Pastor and us Trustees be declared out of compliance and face legal charges.”

It Has Now Been Confirmed

The IRS this year has increased the non-profit audit staff by thousands of agents. These agents will be targeting compliance issues in all non-profits, but especially in Churches. They will be targeting all 277 compliance topics that affect Churches and Pastors.

They will further target those who are not legal 501(c)(3) Churches and those who chose the 1023EZ route to 501(c)(3) status.
Although the code stipulates Churches do not have to file a 1023, they are required to obey all IRS codes and regulations that apply to 501(c)(3) organizations (Jack Taylor vs. The Commissioner).

It was further confirmed that Churches using in-house volunteers to manage Church records, would be highly scrutinized. When asked why, the agent declared, “There is no way they are able to stay abreast of all of the changes to the tax code.”

With thousands of Pastors, Trustees, Board Members, and Church Treasurers being indicted every year, those indictment numbers will soon astronomically increase.

These audits will begin in the next few weeks.

But Isn’t It Difficult for the IRS to Justify a Church Audit?

While Congress did enact section 7611 which states an inquiry may only begin when a high-level official has written information that provides reasonable belief that the Church is out of compliance—the IRS is NOT required to ensure the information it has is reasonable or reliable.

Furthermore, when the Affordable Care Act (ACA) was signed into law, one statement in those 2000 plus pages stated that anyone subject to the ACA (any entity with at least one employee) was subject to random audits.

This further opened the door.

You Must Act Now

For more than 81 years our ministry has been that of assisting and protecting Churches and Pastors against onslaughts from the IRS. Any of our clients reading this blog, you know the importance of Chitwood & Chitwood maintaining your Church books and records. For those of you who are not clients, the moment you delay may prove to be your demise.

Every Pastor and Church Board that are not clients must attend the next Church Management and Tax Conference. It is here that you will learn how to ensure you would survive should they walk into your Church.

To register please call 800-344-0076 or visit us online at www.cmtc.org. Remember, it is not what you know that will hurt you—it is what you don’t know. The IRS is coming and you and your Church are probably on their radar. ACT NOW!!! THE CHURCH YOU SAVE MAY BE YOUR OWN!!!

By Dr. Micheal Chitwood

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3/29/2019

HALLELUJAH, WE WON AGAIN

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Beginning in 2011, Freedom from Religion Foundation has kept Churches and Pastors in their crosshairs, in attempts to infringe upon benefits legally allowed to a Pastor. This month, it appears the battle is finally over.

Pastoral Occupation Among the Least Paid and Least Thankworthy

With the exception of a few mega-Church Pastors in this nation, most men and women who have answered this high call from God, are among the least thanked and least paid of all the occupational positions in America.

Most Pastors provide comfort, care, Scriptural guidance, and other Pastoral duties to congregations of less than 70 people. These men and women of God are on call 24/7. Many are awakened in the dark of late night and early morning by a phone call alerting them to a member who has just been rushed by ambulance to the Emergency Room. Many answer the late night and early morning phone calls to be notified of the death of a member or a member’s family.

A huge portion of these faithful Pastors do their tasks without grumbling and often with barely enough pay to survive week to week.

Satan’s Attack via Freedom from Religion Foundation

If these men and women of God, the Pastors of our Churches, did not struggle enough, Freedom from Religion Foundation intended to invoke further financial harm upon these Pastors by removing one of the only few financial benefits these men and women can enjoy—the Pastor’s Housing Allowance.

Without tax-free housing, many ministers across the nation would have been subjected to living in poor conditions and some may have had to resort to finding shelter in a Government-funded Housing Project.

With God’s Help, We Win Again

Two lower Federal courts ruled in favor of the Freedom from Religion Foundation’s lawsuit. The first one was overturned because Freedom from Religion did not have legal standing. However, they restructured their salaries, providing Housing Allowance for all of their employees. When the IRS denied their Housing Allowance claims, President Obama’s Treasury Secretary stated that the IRS ruling gave Freedom from Religion Foundation the necessary requirements to now have legal standing.

They refiled their lawsuit in 2016 and Federal Judge Juanita Crabb ruled in favor of their lawsuit. It has hopefully come to an end this month. This month, the Seventh Circuit Court of Appeals unanimously overruled Judge Crabb and declared Ministerial Housing Allowance to be constitutional.

Since Freedom from Religion Foundation’s initial attack on Ministers Chitwood & Chitwood has been diligently fighting on our Ministers’ behalf. With 81 years of experience protecting the rights of Churches and Ministers, we are excited to see another win for God’s servants.

Why You Need Us

Our staff has been at the forefront of all IRS changes that could affect a Church or a Minister. We know how to best protect God’s House and His servants during times of uncertainty.

With Chitwood & Chitwood in your corner, you and your Church can do what God has called you to do in your community, while leaving any stress to us.

It would behoove every Pastor and Church, who are not currently represented by Chitwood & Chitwood, to attend the next Church Management and Tax Conference. To register call 800-344-0076 or visit us online at www.cmtc.org.

By Dr. Micheal Chitwood

What You Will Learn at our Conferences

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1/15/2019

NEW UNRELATED BUSINESS INCOME TAX TO HIT CHURCHES

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Pastor Smith was really excited about what the Church was doing for him in the way of additional benefits. He shared with me that not only did he and his staff have their own parking spots, but the Church Board just voted to provide him and the staff with a private parking garage. They felt this would be more conducive for the Pastor and staff so they could enter the building without having to brave the elements each Sunday—especially during inclement weather conditions.

I hated to do it, but I had to let the air out of Pastor Smith’s sail. In the recently passed in the Tax Cuts and Jobs Act of 2017, there was an obscure provision that would target business, including Churches, with a possible Unrelated Business Income Tax, if they provided parking spaces, including parking garages, to their staff.

The Obscure Code

This obscure provision” from the tax legislation appears to impose “a tax (the unrelated business income tax) of 21 percent on the value of free parking provided” by employers, including tax-exempt organizations like churches, to their employees through a newly added section 512(a)(7) of the tax code.

This may cost Churches and non-profit organizations millions of dollars in new tax liability.

Although many Legal and Accounting experts weighed in on this they could not agree as to how Churches would ultimately be affected.

Internal Revenue Service Weighs In

The IRS finally has weighed in on the topic and has issued some interim guidelines. For Churches to limit their tax liability the IRS has issued this statement:

A key part of this guidance is a special rule, enabling many employers to retroactively reduce the amount of their nondeductible parking expenses. Under this rule, employers will have until March 31, 2019, to change their parking arrangements to reduce or eliminate the number of parking spots they reserve for their employees.” Such a change made by a church or other employer will apply retroactively to Jan. 1, 2018, the agency said, possibly eliminating the need to file a Form 990-T.

By making this change, many churches, schools, hospitals and other tax-exempt organizations may be able to reduce their associated UBTI.

Why Churches Must Engage Us Now

If any Church had to pay a 21 percent tax on the fair market value of any reserved parking spaces or a parking garage for Pastor and staff, this could prove to be very expensive.

Chitwood & Chitwood has been navigating the troubled IRS waters for more than 80 years. We know how to get the best benefits for any Churches while operating within the legal frame work of IRS regulations.

This new tax change and others are covered in our Church Management and Tax Conferences across the USA. It would behoove every Pastor, Pastor’s Spouse, and Church Leader to attend the next available Conference. To register for the next Conference please visit us at www.cmtc.org or call 800-344-0076.

You cannot afford to function as a Church in this hostile IRS climate without the knowledge we will make available to you.

By Dr. Micheal Chitwood

What You Will Learn at our Conferences

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What You Don’t Know Can Hurt You​

Pastor’s Dilemma

Anyone CANNOT Do What We Do

All Pastors and Church Officials Need to Attend our Next Seminar

By Dr. Michael Chitwood

What You Will Learn at our Conferences

God’s Has Other Plans

Board Members Have Private Meetings

Pastor Finds Out from Unsuspecting Source

Pastor Calls A Meeting

It All Could Have Been Prevented

By Dr. Michael Chitwood

What You Will Learn at our Conferences

The Ostrich Mentality Created Further Damage

​Pastor Missed Another Topic Taught at the Seminar

IRS Pulls Out All Stops

Pastor, Board, and Church Still Suffering from the IRS Findings

Everything Could Have Been Avoided

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Churches Should Preach and Teach the Good News

The Impending Dilemma

What You Don’t Know Can Hurt You

What You Need to Do

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Delayed Action Proves Costly

The Huge Penalties Were Avoidable​

No Free Rides

Register Now!!!

By Dr. Michael Chitwood

What You Will Learn at our Conferences

The IRS Receives New Powers to Revoke Passports​

The IRS Is Still Seizing Bank Accounts

The Problem

In Conclusion

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Some Interesting Stories​

Church Bookkeeper told to Resign​

What Agents know About the Church Management Conference that Pastors Should Heed​

You Must Attend the Next Conference NOW!!!

By Dr. Micheal Chitwood

What You Will Learn at our Conferences

He Immediately Had My Attention

It Has Now Been Confirmed

But Isn’t It Difficult for the IRS to Justify a Church Audit?

You Must Act Now

By Dr. Micheal Chitwood

What You Will Learn at our Conferences

Pastoral Occupation Among the Least Paid and Least Thankworthy

Satan’s Attack via Freedom from Religion Foundation

With God’s Help, We Win Again

Why You Need Us

By Dr. Micheal Chitwood

What You Will Learn at our Conferences

The Obscure Code

Internal Revenue Service Weighs In

Why Churches Must Engage Us Now

By Dr. Micheal Chitwood

What You Will Learn at our Conferences

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What You Don’t Know Can Hurt You

Pastor Missed Another Topic Taught at the Seminar

The Huge Penalties Were Avoidable

The IRS Receives New Powers to Revoke Passports

Some Interesting Stories

Church Bookkeeper told to Resign

What Agents know About the Church Management Conference that Pastors Should Heed