Blog Archives

NEW UNRELATED BUSINESS INCOME TAX TO HIT CHURCHES

1/15/2019

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

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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Is The Person Managing Your Church Books Really Qualified

1/10/2019

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!