Tax-Exempt Status Is Now in Their Crosshairs

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

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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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

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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

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1/10/2019

Is The Person Managing Your Church Books Really Qualified

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During Church Management Conferences across the nation, I meet some of the most interesting, yet uninformed Church people in the USA. The same would hold true during a recent visit to Richmond Virginia.

During check-in Pastor Romero informed me that the only reason he was attending that day was so that his Certified Public Accountant (CPA) would attend and learn anything necessary to keep their Church books compliant. The Pastor was quick to inform me that he used the best CPA in the area and felt that the conference that day was probably a waste of time and money.

Expressions Say What Words Will Not

I thanked Pastor Romero and his CPA for attending and assured them that I could probably show them something they did not know.

Within the first few moments of the class, after taking care of necessary administration issues, I noticed Pastor Romero become more uncomfortable as the morning progressed. It was easy to see by the expressions on his face that their Church books were not as secure and compliant as he previously thought.

Things Come to a Head at Lunch

By the time I released the class for the lunch break, Pastor Romero and his CPA came to the table. The first words from the Pastor were addressed to the CPA as Pastor Romero thanked him for his hard work over the past 12 months, but that he and the Church would no longer need his services.

Pastor Romero retained us to bring his Church books into compliance and during the compliance process we discovered many errors that could have proven detrimental for the Pastor and the congregation.

Regardless of what people tell you or advertise to you, because they say they are an expert doesn’t mean they are.

Be Careful Who You Allow to Manage Your Church Books

There are many firms across the nation claiming they can do what we do. One has even advertised and deceived Pastors and Board members with an e-mail ad declaring the greatness of their firm. Unfortunately, this particular firm only began doing Church books in the past few months. This hardly qualifies them as experts!

Local CPA’s are great for small business bookkeeping tasks, but they are not specialists in the area of Church and non-profit. Church and non-profit bookkeeping is a unique specialty and demands only the elite in the field. This is where we come in.

Why You Need Us

Chitwood & Chitwood is the number one firm in the USA for Churches and non-profits. With more than 80 years of experience we know what others do not. In addition to our vast, exhaustive knowledge of Church and non-profit tax law, we have the highest reputation for being a winner. If we do your books and the IRS shows up, you don’t have to worry—we don’t lose.

Every Pastor and Church Leader must do two things immediately to ensure proper compliance and oversight of their Church books and records:

1. Attend the next available Church Management and Tax Seminar
2. Entrust Chitwood & Chitwood with your books and records

Don’t take a chance with those who say they are experts. Entrust your books with those who have proven to be the expert--Chitwood & Chitwood.

To register for the next available conference call 800-344-0076 or visit us online at www.cmtc.org. There are new tax laws that will drastically affect Churches this year. DO NOT DO MINISTRY THIS YEAR WITHOUT KNOWING THOSE CHANGES!

By Dr. Micheal Chitwood

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12/19/2018

New IRS Changes Every Church Must Know

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Pastor Jamison spoke with me concerning the Church Management Conferences scheduled for the upcoming year. During our conversation, he expressed that he didn’t believe he nor his Church needed to attend—especially since they were a small congregation.

Then I began to outline just a few of the new IRS changes that would negatively impact Churches and Pastors should they not be aware of them and take appropriate action to protect themselves. Once Pastor Jamison heard just a few of these, in depth, and the penalties he and the Church could be imposed, he registered immediately.

IRS Dangers that May Negatively Impact a Pastor

Since the Pastor is considered to be the ultimate Responsible Party for a Church, any violations and penalties incurred would first be levied against the Pastor. Some of these violations may be the result of the Church simply honoring their Pastor in simple ways.

For instance, most Churches love their Pastor. Unfortunately, I have reviewed cases where in their attempts to love and honor the Pastor, the Church action resulted in heavy financial penalties and in some cases, prison sentences for their man or woman of God.

The Simple Things

Most Churches have space specifically set aside for the Pastor. This would include things such as his or her office, a special chair on the platform or on the floor of the Sanctuary. Some Churches purchase towels for him or her to use during the service, and special bath towels to be used in the Pastor’s private bathroom.

One issue, that almost every Church practices is a special reserved parking space for the Pastor, Pastor’s spouse, Guest Speakers, and in some cases, Church Staff. I agree with all of these special items of recognition for the man or woman of God. However, the IRS does not.

Simple Methods of Honor Prove to be Very Costly

The IRS has unloaded a myriad of changes affecting Churches, Ministries, Pastors, and Ministers. Most of them are unfavorable. One of those changes involves reserved Parking Spaces.

Effective this year, individuals who are beneficiaries of reserved parking spaces and/or the Church will be required to pay income tax on those spaces. This will also mean that the Church will need to develop a comparable plan to determine a legitimate cost for the space and add it to the Pastor or Staff Member’s W-2 or to report it as Unrelated Business Income. Failure to properly report this could be construed as income tax evasion, fraud, or a few other charges which the IRS may choose to invoke.

THIS IS JUST ONE OF THE CHANGES FOR THIS YEAR—THERE ARE MANY MORE!!!

Why You Must Attend the Next Church Management Conference

Churches, Pastors, Ministers, and Board Members should not conduct any ministry in this upcoming year without first becoming aware of all the changes and what they should do about them.

Chitwood & Chitwood is the Premier Church Management Firm in the nation and will be conducting the Number 1 Church Management Conference in your area. DO NOT ALLOW THIS WINDOW TO PASS YOU BY.

To Protect yourself and your Church every Pastor, Pastor’s Spouse, and Board Member should register for the Conference in their area. Failure to do so, may cost you more than you want to pay. Let us inform you of some of these changes and how to protect your Church and Ministry. To Register for the Upcoming Conference Please Call 800-344-0076 or visit us online at www.cmtc.org. The Conferences this year are not ones you can afford to miss.

By Dr. Micheal Chitwood

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11/6/2018

Trusting the Board Lands Pastor in Hot Water

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During the Church Management Conference in Michigan, Pastor Hennessy was very adamant during the morning break. His frustration became anger the more he relayed the problem to me. Pastor had been the Senior Pastor for years and had received several invitations to attend our Church Management Conference. However, he never thought he needed to attend. In hopes of keeping his Church IRS compliant he would always send members of the Trustee Board and/or his Treasurer. The only problem was they did not take copious, detailed notes—they heard what they wanted to hear and relayed their version of the class to the Pastor.

Pastor Receives Dreadful News

Throughout the years Pastor Hennessy felt his Church was squeaky clean until he began receiving letters from the IRS concerning the Church. Within the first thirty minutes of class he knew what his Board and Treasurer had relayed to him was erroneous. THE PASTOR SHOULD HAVE ATTENDED OUR PREVIOUS CONFERENCES!!!

Scripture teaches us that there is safety in the multitude of counselors. The writer of Proverbs penned it in this manner: “Where no counsel is, the people fall: but in the multitude of counselors there is safety” (Pro. 11:14). Since Pastor Hennessy felt it unnecessary to attend, he really had no counsel and now he was on the verge of hefty fines and possibly more.

Why Every Pastor Should Attend

The IRS has a clause referred to as the “Responsible Party Provision Act.” This regulation lists those responsible for financial and criminal mistakes within a Church. The Pastor is the ultimate responsible party, and then the Board.

Unfortunately, those Pastors who feel they are too busy to attend one of these seminars are usually the ones who complain the most when they find themselves in “hot water” in regards to Church Finances and Church Compliance issues.

It is not that the Pastor shouldn’t be able to trust his or her Board in IRS Compliance matters, but since the Pastor is the one who is first targeted it seems wise counsel that he or she should attend. This doesn’t mean that he or she should attend in place of the Board—it means the Pastor should attend in addition to the Board.

You Get What You Inspect—Not What You Expect

It is imperative that the Pastor and as many Board Members are needed to make a viable decision, should attend every Church Management Conference near their area. Although the Board Member or Treasurer who attends the seminar may do their best to take sufficient notes and have sufficient understanding of the material taught, there is still safety in the multitude of counselors—one will hear something another did not hear. DO NOT DEPEND ON THE ADVICE OF JUST ONE ATTENDEE!!!

It is evident, since the Pastor will be the ultimate payer of the price exacted, he or she should attend so they may be able to reach a safe, reasonable decision as to what is needed for his or her Church.

Any Pastor too busy to attend a Church Management Tax Seminar will be the one targeted when the IRS shows up.

Who Should Attend

Every Pastor, Pastor’s Spouse, and all Board Members should attend any of our seminars in their area. As of this moment, not only are the Pastors and Board Members responsible for what happens with Church finances, according to Code Section 4958, should any Church money be misused (even if it is unintentional), the Pastor, the Pastor’s Spouse, and all Board Members and their Spouses are subject to a $10,000 fine.

If for no other reason, just to make sure you would not be assessed a $10,000 fine should be ample motivation to attend this next Church Management Conference.

Register NOW!!!

To register for the next Seminar, please call 800-344-0076 or visit us online at www.cmtc.org. YOU CANNOT AFFORD TO NOT ATTEND!!!

By Dr. Micheal Chitwood

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