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All Income to a Church May Not be Tax Free

6/27/2018

The 2017 Tax Reform Act (H.R. 1) continues to reveal more surprises for Churches. One of these is the Unrelated Business Income section. In the past a Church was allowed to have fund-raisers and other Unrelated Business Income (UBIT) without a requirement to report it to the Internal Revenue Service if all of that income for the year was less than $1,000. This has changed.

In the new tax code Churches may no longer aggregate the Unrelated Business Income, but must list each separately. The Council for Non Profits interpreted the effect of the new change as:

Only the first $1,000 of unrelated business income is exempt from taxation under previous law, so the proposed changes would affect many organizations of varying sizes.

The change to UBIT could result in increased taxes on nonprofits, taking revenue away from nonprofits’ mission-related programs and services.1

The Affect On the Average Church

The average Church in the USA has a regular Sunday attendance of about 70 people. Of those, only about three percent tithe and only about 11% give in the offering. Their irresponsibility to tithe and give demands Churches to do what they must to pay the monthly bills and sometimes this includes paying the Pastor.

The Church then initiates fund-raisers to make up the difference. I know of one Church where the tithe and offering is usually within that 3—11 percent. That Church built a brand new addition with only three percent tithing and 11% percent giving any offering. When I asked the Pastor how they could do it with such small weekly support, he replied: “We have five dinners per month—one every mid-week service and one large one on the last Saturday of each month. The members donate all food and time and then every member is charged $20 for the weekly meal and $25 for the monthly meal.” The members will not tithe and give offerings as they should, but will donate food and their time and then pay for the meal which they provided.

The new change in UBIT will require Churches to report all fund-raisers and income (other than tithes and offerings) regardless of the previous law’s $1,000 dollar annual exemption.

Some Churches May Not Survive

With the new tax changes now in place, the average Church fund-raiser, yard sale, carwash, and even CD and DVD sales, may no longer be profitable for the average size Church. Once time and expense is calculated and the tax is paid on the net, the average Church will realize a net loss rather than a net gain for the Church bank account.

However, if those Churches do not take other action, they will soon have difficulty paying monthly expenses and then will have to choose between paying monthly bills or doing ministry.

Why You Must Call us Today

Chitwood & Chitwood is the premier Church Management firm in the nation. Because we have 80 years of experience we know how to bring Churches into compliance without breaking the bank and how to generate a steady flow of income for the Church to do ministry.

This is why it is imperative for every Pastor, Pastor’s Spouse, and Church Leaders to attend the next Church Management Conference. To register, please call 800-344-0076. If there is not a conference near you call and speak with Dr. Ronnie Shaw as to how bring a private conference to your area so your Church can be taught how to tap into funds that are available to assist you with the ministry God has called you and your Church to do.

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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Church Release Forms—Worth or Worthless

6/25/2018

There has been much online chatter from Church organizations and “management firms” concerning an old Kentucky court case where a Church member sued his Church and won the case in spite of the Family signing a release form for their child to attend camp.

I want to use this blog to clarify some areas of concern for Churches. Forget everything you have heard or think you know about release forms. They are usually worthless. About the only thing they may be good for is to cause Parents to think twice before filing a lawsuit against their Church.

The Facts

Courts have decided in Parents’ favor on many occasions over the years regardless of a “release form” signed by Parents absolving the Church of any responsibility for any damage or injuries occurred while Children (or the adults) were on Church sanctioned events.

In the early 1980s a Church in Missouri sponsored a youth hayride on the night prior to Halloween. All Parents were required to sign a release form prior to the Child’s participation in the event. When the tractor and wagon was returning to the Church one of the Children (he had been a problem all night for the Chaperones) climbed over the railing of the wagon. Before an adult could stop him, he fell to the concrete in the Church drive way and died. The Parents sued their Church and won a multi-million dollar lawsuit and it held up on appeal. Their “release form” proved worthless.

Regardless of your release form, a good attorney will look for wording or lack of it, find a loophole, and you will probably lose.

How Can a Release Form Be Worthless?

When courts decide in areas where “release forms” exist they use Contract Law to render their decisions. While a “release form” could be helpful, it would only be so in the event it was prepared by an actual Contract Law Attorney who would record every possible scenario which could be encountered by those to whom it applied.

If this were done, the completed document would probably be many pages and how many Church members would read the fine print? If the Parents signed the document with or without reading the fine print and an incident should occur, imagine how the reputation of the Church would be damaged in the community. It would be so damaging that ministry from that Church in the community would be invalid.

What Can a Church Do?

For any events, especially those involving minor Children, the Church should ensure there is MORE than adequate staff and volunteers to oversee all actions of the Children. Murphy’s Law (coined by Capt. Edward Muphy, USAF-1949) stated: “If there are two or more ways to do something, and one of those ways can result in a catastrophe, then someone will do it.” This has mutated over the years to: “If anything can go wrong it will.” According to Murphy he was basically stating: “Things will go wrong in any given situation, if you give them a chance.”

As Christians we should live by faith and be upbeat and positive, but we shouldn’t be stupid or negligent. You can faith, be upbeat and have a good attitude, but if you go fishing in the Dead Sea the only thing you will catch is sunburn. When many Churches are confronted with the proper manner in which things should be done, they will cut corners and bring out the “we live by faith” excuse.

Church Leaders should look for every possible scenario that could result in harm and head it off before it can cause physical, emotional, or spiritual damage—including any Church outings or Church-sanctioned events.

Why You Need Us!

As the Ultimate and oldest Church Management Firm in the nation we know exactly what you should do to protect your Church and Ministry. This and other Compliance issues are taught in our Church Management Conferences across the nation. To register for one of these one-day conferences please call 800-344-0076. Don’t gamble on your Church property and assets. Know the truth and enforce it. Contact us with your e-mail address for a brand new, Contract Attorney written, Release Form.

By Dr. Michael Chitwood

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Deacon Reports Pastor to Save Himself

6/20/2018

Deacon Smith’s Church Pastor and two board members attended a Church Management Conference in South Carolina in 2016. At the Conference they were instructed as to the legal way to keep Church books and records. They did not do what they were taught. Instead they told other board members we had told them to do things in a manner that was even more illegal than what they were currently doing.

In the spring of 2017 Deacon Smith decided to attend for his own peace of mind. At the Conference he learned the Pastor and other board members had completely misrepresented what they were taught and used it for their own personal gain.

During a lengthy conversation at the end of the class, I assured Deacon Smith that the Pastor and other board members had completely altered what they were instructed. It was then I gave Deacon some advice to which I urged him to adhere.

The Plot Thickens

Because of his love for his Church and the office of Pastor, Deacon Smith attempted to steer the Pastor and other board members in the proper direction so the Church could become legally compliant.

Instead of following his advice the situation and improprieties grew worse. The Pastor and the other board members would override any suggestions or motions Deacon Smith brought forth during any meetings.

At His Wits’ End

Unable to withstand the pressure of the illegalities of the Church any longer, Deacon called to discuss the matter at length with me a few weeks prior to this blog. After he emptied his soul of what was happening at the direction of the Pastor and other board members, Deacon Smith told me he had decided to report them to the IRS.

I suggested to Deacon that he resign his role as Deacon and as a Church Member and go to another Church. Unfortunately, because his family were charter members from more than 50 years he could not bring himself to leave what his family before him had invested their time, money, sweat, and tears to build.

I ended our conversation urging him to seriously pray before doing the actions he had suggested. It was then he told me that he had already reported them to the IRS and had detailed written records of their violations and his requests for the Church and Pastor to change.

Another Church will Bite the Dust

This same scenario plays out every week in Churches across the USA. Because of the nature of the incidents and the person reporting them, the IRS will begin a full-fledged investigation into the actions of the Church, Pastor, and board members.

According to the information Deacon Smith revealed to me the outcome will not be pleasant for the Church, Pastor, board members, or Christendom in the USA, especially that area of the country.

Why You Must Register for the Next Conference

Pastor, Pastor’s Spouse, and Church Leaders, take heed. There are only a few conference dates left for this term. Your Church is likely doing exactly what the Church mentioned above is doing. It will only be a matter of time before someone realizes it and you are reported.

Chitwood & Chitwood has helped more than 900,000 Pastors and Church Leaders in the past 40 years. We are the ultimate Church Management and Compliance firm in the Nation. At our Conferences you will quickly know if your Church is or is not legally compliant.

You do not have time or grace on your side for this decision. It is imperative that you call us at 800-344-0076 or visit us online at www.cmtc.org to register immediately. Do not allow the future of your Church and the well-being of your Pastor, his family, and Church Leaders to be in the hands of your indecision. ACT NOW!

By Dr. Michael Chitwood

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Pastor, Do You Really Love Your Community?

6/18/2018

I had spoken with Pastor Fred on several occasions during many of the conferences he had attended. Whether it was a Church Management or a Wealth Conference his response was always the same—He was doing just fine with his Church. He said he had a big vision to reach the kids in his community, but his total Church income for any given year was slightly over $100,000 and 97% of that was earmarked for administrative expenses and salaries.

Pastor Fred’s answer at every conference was, “I am waiting on God to send the finances I need to launch my vision.” Apparently Pastor had never heard the story about the car, two boats, and a helicopter. For those who of you who have already heard this anecdote, please bear with me. A man’s home was near a lake and the dam was about to burst. A Sheriff Deputy came by and told the man to leave because his house would soon be flooded. The man replied, “I am trusting God.” Soon the flood waters were up to his porch and a boat came by. The rescuers encouraged him to get in the boat because the dam had burst and a flood was coming. The man replied, “I am trusting God.” An hour later the flood water was as high as his second story balcony. Another boat came by and the rescuers again urged the man to get into the boat. The man replied, “I am trusting God.” Another hour passed and the water was to the roof of his home. The man was standing on the roof when a helicopter hovered overhead and urged the man to climb up the rescue ladder into the helicopter. Again the man replied, “I am trusting God.” The flood water overtakes the man and drowns him. In heaven he asked the Lord, “I trusted you through all of the threats of the flood, depending on you to rescue me. Why did you let me drown? God replied, “I sent you a car, two boats, and a helicopter.”

God’s Ways Are Usually Different Than Ours

Pastor Fred had been waiting for years for God to send someone to his Church with a huge bank account to fund the vision God had given the Pastor. They never came. However, he shunned several attempts by us to show him how to obtain grant funds to finance his vision.

While Pastor was waiting for God to supernaturally put money into the Church bank account, teens and pre-teens began to get into trouble with the law; they began to sell drugs; and many of them joined gangs. It was only after Pastor’s son was one of those that Pastor Fred realized that his disdain for grant money to finance his vision had actually been the cause of the kids in the neighborhood, and his son, to be arrested and go to prison.

Pastor Fred’s words were, “While I thought I was doing the right thing by waiting for God to supernaturally provide the funds, I passed up all the help available. I now realize that I really had not loved my community as much as I had proclaimed to everyone. My inaction has caused kids, including my son, to end up in prison because I didn’t love them enough to get help that was available to open the Community Youth Center and provide these kids an option other than drugs, gangs, and crime.”

God sent Pastor Fred the proverbial car, two boats, and a helicopter, but Pastor missed all of the opportunities until it was too late.

How many have gone to prison or have not been helped with their need because of your inaction?

If You Love Your Community You Will Act NOW!

The Scripture does tell us “. . .the wealth of the sinner is laid up for the just” (Pro. 13:22b). However, only God knows how the transfer is to take place. Could it be that God is using grants (which much of the $ come from unrighteous people) to bring about a wealth transfer to the Christians.

This money would fund the very community outreach which every Church dreams of, but many cannot enact.

Why You Need Us NOW!

At our Church Management Conferences we show how Pastors never have to be limited by tithes and offerings. We teach of billions of dollars that are available for CDCs and EDCs, all of which Churches may receive if they do it right.

At our Power to Prosper Conferences we teach in elaborate detail over 2 days where the money is, what needs to be done and how to do it so that Churches and their members may obtain these funds.

It behooves every Pastor, Pastor’s Spouse, and Church Leader to attend the next available Church Management Conference, or invite us to your Church to teach a Power to Prosper Conference. To attend a Church Management Conference please visit us online at www.cmtc.org or call 800-344-0076. To schedule a Power to Prosper Conference at your Church please call 800-854-5891 or 800-344-0076 and ask to speak with Dr. Ronnie Shaw. As we have helped thousands of others we can help you.

By Dr. Michael Chitwood

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Supreme Court Ruling for Christian Baker Opens Door for More Attacks Against Christians

6/7/2018

The Colorado Baker who refused to bake a cake for a Homosexual wedding was recently vindicated by the U.S. Supreme Court. Although this is good news for him, the court walked the proverbial tight rope with their decision. Their decision leaves an open door for other lawsuits to be filed against Christian Business owners simply for standing by their religious convictions.

There are currently other cases working their way through our legal system that could be good news for Christians or could cause great harm—especially to Churches, Pastors, and Church Leaders.

It Is Easy to Be Sued when Your Church is Not in Order

Take the case of Pastor Simpson (named has been changed due to the sensitivity of the issue), whose Church has been sued by a court demanding the Church return tithes and offerings paid by a member who currently is in bankruptcy.

When the court asked for the Church records of the individual’s giving records for three years, the Church was not able to produce proper bookkeeping records to demonstrate the tithe and offering pattern of the donor.

Now Pastor Simpson and his Church must find a way to provide a bankruptcy court with several thousand dollars that the donor claimed was given to the Church. This also opened other legal Pandora boxes for the Church. The cost of an attorney, a competent CPA and someone to do public relations control for the Church is proving to be more than they have the ability to afford.

The IRS is Very Clear Concerning Church Books and Records

There are currently hundreds of topics that deal with Church Accounting and Law, and unfortunately most Churches have no clue as to what they are. With more than 80,000 pages of IRS regulations (including case law pages) it is virtually impossible for any Church to know everything that is required of them for the books and records to remain compliant.

Why You Need an Outside Agency Maintaining your Church Books

Someone once said that any attorney who represents himself has a fool for a client. I am not going to go to that extreme on Church records, but knowing the capaciousness of the IRS Tax Code, I can say that any Church who is maintaining their books and records in house is a court case waiting to happen.

It may be too late to seek outside help once the IRS has begun an investigation into your records and it is usually hard to repair any damage that is present in the accounting records. Just as no Pastor would allow a sinner in their pulpit to preach to their congregation, no one that is not fully abreast of and not an expert in tax-exempt law should be in charge of the Church financial records.

Why You Need Us

Chitwood & Chitwood has been the Nation’s premier Church Accounting and Tax Law firm in the USA. With 80 years of experience we know what others do not. We can fix your books regardless of the mess they may be in, provided we get them before the IRS does.

At our Church Management Conferences across the nation we teach in-depth (as time permits) what is required in Church Accounting Law and offer resources to educate Church Pastors and Leaders in IRS Compliance requirements.

This is why every Pastor, Pastor’s Spouse, and Church Leader should attend the next Church Management Conference. It will be the best investment you make for yourself and your Church. To register for the next conference, please call 800-344-0076 or visit us online at www.cmtc.org. You will be glad you did.

By Dr. Michael Chitwood

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Child Molestation Destroys Church

6/4/2018

Jack was one of the most likeable Pastors in the history of his Church. He was not confrontational and looked for ways to handle every situation without bringing harm on anyone.

When a member asked to see him after Church, Pastor Jack readily accepted the appointment to see how he could be of assistance to one of his best members. Once the Pastor’s door was closed, the gentleman told the Pastor that the new Youth Pastor (who had just celebrated his 19th Birthday) had been intimate with his 14 year old daughter and the issue must be addressed immediately.

Pastor called the Youth Pastor into the office and the Youth Pastor confirmed there had been a sexual relationship with the young lady, but that it was consensual. Pastor Jack thought he had reached a solution to solve the issue without inflicting further harm on anyone. Pastor miscalculated and did not take appropriate action.

The young lady’s father filed criminal and civil action against the Church, the Pastor, and the Youth Pastor. The Youth Pastor was imprisoned, the Church did not have enough insurance to cover the lawsuit and had to be sold to pay damages, and Pastor Jack was no longer sought after to Pastor any Church

As a certified counselor for almost 21 years, I have had the unpleasant task of counseling hundreds who have suffered sexual abuse at the hands of those who should have been protectors—i.e. Pastors, Ministers, and Church Chaperones.

The Catholic Church has been in the news recently have been placed under the societal microscope for these and similar situations, but they are not the only guilty parties. Some of the Protestant churches in this nation, and around the world, are just as guilty.

Patriarchal Cover-Up

Catholic and Protestant churches do not have much in common, but one dark secret they both share is that of Patriarchal Cover-Up. Catholics do it to protect their Dioceses and the Vatican. Protestants do it to protect their local church image.

In Protestant circles it is falsely taught that the victim should be quiet and forgive. Although, I believe in forgiving, I also believe in consequences. Unfortunately, many of the sexual abuse cases are hard to prove without several witnesses and/or victims who are willing to come forward. This creates a dilemma for a Church that does not want its name drug through the mud during any impending trials. So, what recourse may a Christian victim exercise?

Should Christians Sue Other Christians?

According to the Apostle Paul in 1st Corinthians 6, we should not sue another believer.

1 Corinthians 6:1-6 (GWT)

1 When one of you has a complaint against another, how dare you go to court to settle the matter in front of wicked people. Why don't you settle it in front of God's holy people?
2 Don't you know that God's people will judge the world? So if you're going to judge the world, aren't you capable of judging insignificant cases?
3 Don't you know that we will judge angels, not to mention things in this life?
4 When you have cases dealing with this life, why do you allow people whom the church has a low opinion of to be your judges?
5 You should be ashamed of yourselves! Don't you have at least one wise person who is able to settle disagreements between believers?
6 Instead, one believer goes to court against another believer, and this happens in front of unbelievers.

However, we are in a day where the Body of Christ will not judge itself and therefore must, in this matter, resort to the writings of Apostle Peter.

1 Pet. 4:17a (KJV)

17 For the time is come that judgment must begin at the house of God. . .

The abused should have the right to pursue their case (if it is legitimate) in the courts of the land, if for no other reason, to force the guilty into ownership of their transgression. Notice, I said if it is legitimate. I have provided counsel in situations where the claims were not legitimate. For instance, I counseled one family because the daughter made false accusations that resulted in her father spending years in prison before she confessed that she had lied simply to punish her father for not allowing her to date a certain boy.

Sexual Abuse Reporting Policy

Every Church should have in its bylaws an explicit written policy that outlines the Church’s stance on reports of sexual abuse by any member or staff, and the reporting procedures that dictate how the abuse will be reported.

Although Pastors are bound to Priest/Penitent privilege, care must be taken to ensure the protection of the victims.

A Church with a valid Sexual Abuse Reporting Policy could easily save itself thousands of dollars in insurance premiums.

How We Can Help

Chitwood & Chitwood is the nation’s premier Church Management Expert. Our 80 years of experience has taught us to be proactive in Church matters by detailing everything within legally written bylaws.

This is why every Pastor, Pastor’s Spouse and Church Leader should attend the next Church Management and Structure Conference. At these conferences we address issues such as the one mentioned in this blog along with many more that need to be addressed so that the Church may operate in legal compliance.

To register for the conference nearest you visit us at www.cmtc.org or call 800-344-0076. Time is of the essence—your procrastination may prove to be the demise of your Church and ministry.

Guest Blog by: Dr. Ronnie Shaw

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All Income to a Church May Not be Tax Free

The Affect On the Average Church​

​Some Churches May Not Survive​​

Why You Must Call us Today​

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Church Release Forms—Worth or Worthless

​The Facts

How Can a Release Form Be Worthless?​

What Can a Church Do?​

Why You Need Us!​

By Dr. Michael Chitwood​

Deacon Reports Pastor to Save Himself

The Plot Thickens

At His Wits’ End​

Another Church will Bite the Dust​

Why You Must Register for the Next Conference

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Pastor, Do You Really Love Your Community?

God’s Ways Are Usually Different Than Ours

If You Love Your Community You Will Act NOW!

Why You Need Us NOW!

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Supreme Court Ruling for Christian Baker Opens Door for More Attacks Against Christians

It Is Easy to Be Sued when Your Church is Not in Order​

The IRS is Very Clear Concerning Church Books and Records​​

Why You Need an Outside Agency Maintaining your Church Books​

Why You Need Us​

By Dr. Michael Chitwood

What You Will Learn at our Conferences

Child Molestation Destroys Church

Patriarchal Cover-Up​

Should Christians Sue Other Christians?​

Sexual Abuse Reporting Policy

How We Can Help

Guest Blog by: Dr. Ronnie Shaw

What You Will Learn at our Conferences

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Categories

The Affect On the Average Church

Some Churches May Not Survive

Why You Must Call us Today

The Facts

How Can a Release Form Be Worthless?

What Can a Church Do?

Why You Need Us!

By Dr. Michael Chitwood

At His Wits’ End

Another Church will Bite the Dust

It Is Easy to Be Sued when Your Church is Not in Order

The IRS is Very Clear Concerning Church Books and Records

Why You Need an Outside Agency Maintaining your Church Books

Why You Need Us

Patriarchal Cover-Up

Should Christians Sue Other Christians?