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New Mileage Reimbursement Rates and How They Affect the Pastor and Church

12/29/2017

 
During this time each year Pastors begin gathering their tax information for the upcoming dreaded, personal tax returns. Pastors have many tax benefits which are not afforded the average tax payer. One of those benefits is the mileage deduction which allows the minister deductions for using his or her automobile for ministry related purposes.

Although this is a great avenue to lower the Minister’s tax liability, many Ministers and Churches do not properly document, claim, or reimburse for this deduction, which may result in serious issues for the Minister or the Church.


What Not to Do

Some Churches unknowingly provide the Pastor with an illegal fund which they call Automobile Allowance. A Church cannot give the Pastor an automobile allowance. It can reimburse him or her for gas, etc. used in their personal vehicles when used for ministry purposes. However, the Church cannot give the Pastor an amount each month to spend on his or her personal automobile.

If the Church chooses to reimburse the Pastor for actual ministry related automobile expenses, proper receipts must be given to the Church prior to the issuance of a reimbursement check. The Church must also insure those items are included in a viable reimbursement policy approved by the organization.

Under no circumstances should the Church fill the Pastor’s gas tank as reimbursement for gas he or she used on ministry related travel. If the Church fills the Pastor’s gas tank, that amount becomes taxable income for the Pastor and must be reported as such to the IRS.


What You May Do
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The Church may reimburse the Pastor for legal use of his or her automobile. It may also reimburse for actual gas used for ministry related travel. This allows the Pastor to still deduct automobile expense (minus reimbursed fuel) from his or her income tax.

There are two methods allowed for automobile expense deduction.

 - The Actual Expense Method

 - The Standard Mileage Rate Method

With either method the Pastor must keep a detailed mileage log of actual ministry related miles driven during the year. If the Pastor chooses the first method he or she must maintain appropriate expense records for gas and oil; repairs and maintenance; tires; registration fees; depreciation of the vehicle and improvements; insurance; and any other viable automobile expenses. With this method the Pastor is only allowed to deduct the percentage of those expenses which actually applied to ministry duties. For example, if his or her ministry related miles were only 30% of the total miles driven, the Pastor could only deduct 30% of his or her actual automobile expenses.

The Standard Mileage Rate is the option most used. The only record the Pastor needs to maintain is his or her actual mileage record for ministry related duties. This year the standard mileage rate has increased to 54.5 cents per mile. This means that if a Pastor drove 10,000 approved ministry-related miles, he or she could realize a tax deduction of $5,450.00.

Regardless of which method you choose or for other tax related issues, the key is great record keeping. This is why I suggest that ever minister invest in our Minister’s Income Tax guide—it is worth its weight in gold. This may be obtained at https://cmtc.americommerce.com/store/p/211-Clergy-Professional-Tax-Organizer.aspx.


You Must Attend the Nearest Church Management and Structure Conference Now


Chitwood & Chitwood has provided oversight for Churches and Ministers for more than 79 years—we are the best.

During our seminars we teach Pastors and Church leaders about IRS compliance regulations of which they should be aware, as well as providing opportunities for them to learn everything necessary to keep their Church on the cutting edge while protecting their assets. If you have yet to register for one of these conferences, I would suggest you visit https://cmtc1.org/conferences/ to select the conference nearest you and register or you may call 800-344-0076. Whichever avenue you choose, do not allow these conferences to pass you by.

Why not be a friend to a Pastor from another Church? When he or she registers and mentions your name it qualifies you for additional discounts during the day of the conference. We are excited about the opportunity to meet you and help your Church go to the next level.
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By Dr. Michael Chitwood

Beware of the Advice You Choose to Follow

12/28/2017

 
There is a principle taught in Scripture that we should be careful of the counsel we choose to listen to and heed. When King Rehoboam ascended the throne as Solomon’s successor he received advice from the seasoned advisors who advised Solomon, and he received advice from young men with whom he was raised. He chose the advice of the young because it was what he wanted to hear—not what he needed to hear (1 Kings 12). The advice Rehoboam accepted caused a revolt of ten tribes and split the kingdom.

We find this same pattern in Absalom’s battle with his father David. Absalom rejected the advice of Ahithophel (David’s seasoned advisor who had never erred in his counsel) and chose the advice of Hushai whom David had planted among Absalom’s advisors. Absalom’s choice cost him victory and led to his demise and that of Ahithophel.


Still Happening Today

These same scenarios are played out before our eyes every day. People seek advice from more than one source, only to accept the advice which they wanted to hear, rather than what they needed to hear. Those seeking counsel today seek for someone to justify their actions—not to provide correction and direction. Some pay hundreds of dollars per hour for a therapist to help them make sense of their life, but when the therapist tells them what they need to do, if the counselee does not like what he or she hears, they keep shopping for counselors until one will tell them that which is pleasant to absorb.


Pastors and Church Leaders’ Dilemma


Pastors and Church Leaders across the USA are not much different than the general population in that they also want someone to tell them what they want to hear rather than tell them the truth.

As we crisscross the USA to instruct Pastors and Church Leaders as to what they can and cannot do, as dictated by IRS and Government regulations, many of these will seek for another voice to tell them what they want to hear.

How many times have Pastors told those in their congregations what Scripture clearly dictates, only to have those Church members leave the Church in search of another congregation which will accept their sin rather than preach against it. Sin is sin and it does not matter who tells you it isn’t. Just because a person has found someone to justify their sin does not mean God does and they will be held accountable accordingly.

This same holds true with the Internal Revenue Service. Their laws are strict, and just because a Pastor and Church Leaders can find someone to tell them they do not have to adhere, those Pastors and Leaders will pay a heavy price when confronted by the IRS.

I read a recent article where a firm who sells themselves as Church Specialists were telling their clients that now a Pastor could designate his or her entire compensation to Housing Allowance, thus avoiding federal income tax. THIS IS BOGUS! The most your Housing Allowance can be is fifty percent of your total compensation package (60% in some regions of the nation). It is appealing to a Pastor to think he or she can avoid paying any income tax, but not paying required income tax is tax evasion and illegal.


This is Why You Need Us

Chitwood & Chitwood has been advising Churches and Ministers for 80 years. WE ARE THE AUTHORITY! While we seek ways for a Pastor to pay as little income tax as possible, we WILL NOT violate the law. Our firm will tell you what you need to know—not what you necessarily want to hear. It is not what you know that will hurt you—it is what you don’t know.

Some are thinking that we are trying to scare Pastors and Churches. This is far from the truth. We are like the sunshine, butter, and clay. The sun shines the same—it is the makeup of the butter that causes it to melt while the clay becomes hard and brittle. We will tell you the truth. If that truth makes you afraid it is probably because there are some issues in your Church and ministry that could bring much harm to you. No one has anything to fear if they are obeying the law. If the truth we tell you brings fear, get your House of Worship in legal compliance and the fear will disappear.

Every Pastor and Church Leader in America needs to quickly register and attend the nearest Church Management and Tax Conference. For locations and registration information visit us at www.cmtc.org or call 800-344-0076. It will be the best investment you can make for you, your Church, and its Leaders.
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By Dr. Michael Chitwood
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Are You the Next Target?

12/26/2017

 
Many years ago, Churches never worried about intrusion from the Internal Revenue Service. For the most part the IRS never sought entrance to Church affairs. This has all changed. Churches are being audited by the thousands, with many being closed, and some Pastors and Church Leaders are facing incarceration.

Churches and Church leaders should be cognizant of the methods the IRS will use to review them. Should they walk in the door, be nice, and if you are not a Chitwood and Chitwood client, I suggest you have someone do some serious praying (not in earshot of the auditor). Our clients do not have to worry. We take care of everything.


IRS First Steps

The most common way for the Internal Revenue Service to review Church records is to schedule a Payroll Audit of your Church. Recent updated instructions were made available to IRS auditors by the IRS Small Business and Self-Employed Division. These instructions detail procedures and steps the auditors should take when performing the payroll tax audits. The Pastor and Church Leaders would be wise to avail themselves of these instructions, and the records and documents needed for the audit.

Most of the time the auditor will send a letter or call the Church with a list of items needed for a Limited Scope Audit. While in some instances the auditor may perform a Field Examination by directly showing up at the Church or scheduling a visit to the Church for an interview and to gather needed records.

Once the auditor receives the requested information, the first step is always the same. He or she will determine if the Church has filed all required information returns, such as W-2s, 1099s, and 941s. If these forms have not been properly and timely filed, the auditor will open a penalty case or a backup withholding case.

The next step the auditor will take is to ensure that all Social Security and Medicare (FICA) tax is calculated properly, paid, and reported. If there are any incorrect payments, they will be added to the audit finding for those years. Periods with unfiled returns will be added to the years under audit.

There is no Statute of Limitations for unfiled returns – the number of years that could be added to the audit is unlimited.

The auditor will also check to make sure that all required forms have been properly filed. This would include 941s, W-3s, W-2s, 1099s, 1096s, and possibly 990-Ts. The auditors will request that any unfiled returns be completed and filed, and then they will review those reports for large, unusual, or questionable items.
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The auditors will verify that any taxes that have been withheld from the employees’ payroll checks have been promptly paid on time and correctly. Please understand that Churches are now subject to Electronic Filing Requirements (EFR). Those that have not yet enrolled should do so now in the Electronic Filing Tax Payment System (EFTPS) program. Do so immediately at www.irs.gov. This provides for an easy, fast payment process, and best of all the IRS sends immediate verification of receipt of payment.


The Audit Interview
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The audit is not complete without an interview of the taxpayer, unless it is a Limited Scope Audit. If it is a Field Examination he or she must tour the facility and consider what penalties, if any apply.

This can easily be the most important part of the audit. In some instances, if the interview and review of the books determine that additional taxes and penalties are unlikely, the case is not worth pursuit. However, in some cases, the auditor may determine that the facts revealed warrant an expansion of the audit.


Why You Need Chitwood and Chitwood

Clients of Chitwood and Chitwood know that in the event of an audit – Limited Scope or Field Examination – the Church knows we handle the process. Once you become our client and provide us a Limited Power of Attorney for IRS purposes, the auditors will talk to us. After all, we would be the ones to know your books.

Pastors and Church Leaders, do not attempt this audit on your own. The IRS knows 100 Tricky Questions to ask you, and trust me you do not know the right answers. WE DO!

Pastors and Church Leaders should spend their energy and focus on winning the lost to Christ and ministering to the sick and needy – not trying to do Church books or dealing with complex tax issues!

You should call and retain us immediately – the IRS is not playing games! Call our office at 800-344-0076 and let us put your mind at ease or visit our website, www.cmtc.org and register for an upcoming Church Management Tax Conference in a city near you.


DON’T DELAY – DO IT NOW!

For Chitwood and Chitwood this is “A Ministry – Not A Job!”
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By Dr. Michael Chitwood
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What You Don’t Know Can Hurt You

12/21/2017

 
He called the office distraught, needing Pastoral advice. He had attended a Church Management and Tax Conference and heard me speak about the necessity of properly structured by-laws and how each church must hold at least one Board Meeting per year. His cry to me was, “How do I structure and conduct a Board Meeting? They did not teach this in Bible College!”

Bible Colleges and Seminaries are designed to teach Pastors Theology, Eschatology, Sermon Preparation and Delivery, etc. They are not structured to teach future Pastors the “mechanics” of day-to-day Church operation and management.

Most seasoned Pastors have it figured out, but those new to the Pastorate, as yet, have no clue as to the daily requirements of administrative functions that transpire Monday through Friday. These young Pastors have zeal and passion to fulfill God’s call on their lives, but when hit with the “reality” of ministry, many leave ministry, or at the least, feel as if they have landed in something for which they did not bargain.

This is why at our Annual World Conference we open our International Congress of Churches and Ministers (ICCM) Annual Board Meeting to any who wish to attend. This allows those new to ministry the opportunity to observe the proper way to conduct the one meeting that every Church must have – “The Board Meeting.”


Set an Agenda and Structure the Board Meeting

 - Have a pre-planned agenda

This keeps the meeting focused and avoids any trivial conversation/discussion. Stick to topic and avoid letting someone other than yourself control the “flow.”

 - Adequately announce the date, time, and location

As a general rule, announce it a minimum of two weeks prior. This allows Board Members ample time to prepare and possibly add topics of discussion to the agenda.

 - Take attendance

This will serve as proof that a quorum was present in the event the meeting may be legally scrutinized later.

 - Take ample notes

Recording of every spoken word is not necessary. However, ensure that whoever is the acting Secretary for the meeting, be capable of taking copious notes that can later be transcribed into Board Meeting Minutes.

Make sure that each item on the agenda is allowed time for proper discussion, motions made and seconded, followed by a yes or no vote and whether or not the motion passed.

 - Approval of the Minutes

Board Meeting Minutes are not approved until the next Board Meeting. The first topic on the agenda should be a vote on previous Minutes, and Signatures obtained on the approval.


Board Meeting Minutes

It is imperative that Minutes are properly documented for each Board Meeting. These Minutes not only serve as an historical document; they also offer liability protection in the event of a lawsuit.
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Do not wrongly assume that as a Christian Church, you are immune from lawsuits. Church Members sue frivolously and often. In a lawsuit, the opposing attorney will seek to prove your Church or Ministry was not properly established or is not operating as a corporation. It is the Board Meeting Minutes that prove your incorporated Church is in fact operating and governing itself in a corporate manner.


We Can Help
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No organization in the United States of America provides proper Church organizational structure guidelines as Chitwood and Chitwood! We have provided this ministry for more than 77 years – we are the BEST!

We can help get your Church and Ministry on a proper foundation. For more information, or to register for one of our conferences, please call 800-344-0076 or visit us at www.cmtc.org. Do not delay. Every moment you procrastinate is a moment your Church or Ministry is susceptible to trouble you do not need.
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By Dr. Michael Chitwood
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One of Your Greatest Assets May Become Your Greatest Enemy

12/12/2017

 
Our Society has quickly become an extremely hi-tech world. In just a few short years we have developed to the point where a handheld computer or I-pad can perform more calculations quicker than the average computer of the 1990s. We have become so technologically advanced that according to one report, by the year 2030 the average individual will have as many as 19 devices on their person at any given time.

Technology is a great stride in our social, psychological, and economic advancement. Within a few short years most shopping will be done via the internet rather than fighting the crowds in a shopping mall. We have even advanced to the point where we can order our groceries online and have them delivered to our front door.

As with other entities, Churches and Ministries must become technologically advanced if they desire to be effective in this 21st Century. All successful Churches and Ministries have at least one website, while some have a website for every facet of their ministry.


Advantages of Technology for the Church

Technology has created some valuable tools for Churches. Via internet Churches are able to keep the public abreast of everything that is happening at that local house of worship. Church seekers are able to visit a website and determine if that Church may be a good fit for their family based upon the style of worship, ministries available, service times, etc.

With a website a Church can broadcast their services around the world without incurring expensive production and TV airtime costs. With the stroke of a key on a computer, the Church can e-mail blast all members or potential members of things like inclement weather closings, spur-of-the-moment meetings, and much more.

All of these things are great and have vastly improved the ability of a Church or Ministry to successfully market itself to those unfamiliar with their place of worship. But, for every pro there is a con and Church websites are no different.


Pitfalls of A Church Website

Most Churches only see the website in a positive light. Unfortunately, they have no clue as to certain restrictions and regulations they may violate while using that website to promote their Church.

Churches are nonprofit and therefore there are certain Internal Revenue regulations to which a Church or Ministry must adhere if they want to remain a legal nonprofit and protect any tax benefits to which they are entitled.

Too often Churches and Ministries rely upon the misnomer of “Separation of Church and State” to believe the IRS will not intrude upon their local Church. A Church is not exempt from IRS review. The IRS is continually looking at Churches and nonprofits for violations of the 501(c)(3) code as a means of invoking huge financial penalties that would add dollars to the US Treasury. Until now, they were somewhat limited due to a lack of agents required to provide the necessary oversight. This has changed.

The IRS has what I refer to as “website police” (website inspectors) who have the ability to view Church and Ministry websites without leaving their offices in Washington, D.C. If your Church or Ministry has anything on that website that is not allowed within the 501(c)(3) guidelines (just because it is an event happening at your Church doesn’t mean it is legal to be on the website), the IRS will revoke any tax-exempt status which you may currently enjoy (especially for the receipt of tax deductible donations), and possibly invoke fines, penalties, and in some cases, criminal charges.


Why You Need Us NOW!

Unless a website audit and review has been performed on your Church or Ministry website, you are a target.

Chitwood & Chitwood has provided proper oversight for Churches, Ministries, and nonprofits for more than 79 years. We Are The Best! Our team of legal, accounting, and IT experts will perform an audit for your Church or Ministry website to ensure there is nothing on it that would be detrimental to you. Once we finish we guarantee your website would survive an IRS inspection (provided you followed our instructions and maintained your site accordingly).

Your Church, Church Leaders, and Pastors cannot afford to become a victim to this latest IRS tool. It is imperative that you call us today at 800-225-5849 and ask to speak with Mr. Tim Haney to begin your website review.

In this upcoming year it is vital for every Pastor and Church Leader to attend the nearest Church Management and Tax Conference. At these conferences we don’t rely on scare tactics, but we will tell you the truth and you will be abreast of what is ongoing between the IRS and Churches. To see the upcoming schedule of conferences visit us at www.cmtc.org or call 800-344-0076. Time is of the essence.
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By Dr. Michael Chitwood

Why You Need Us More Than Ever

12/7/2017

 
Within the halls of both Houses of Congress in our Nation’s Capital are lobbyists who are busily attempting to influence the House and Senate in favor of their clients. This has been part of the political process for years.

Although we do not have a professional lobbyist in Washington, D.C. we work diligently with representatives, doing everything within our power, to ensure that there is a voice for the Church of the Lord Jesus Christ. With current court rulings in some “close-to-home” issues for Pastors, Chitwood & Chitwood are diligently fighting these decisions on behalf of Pastors and Churches all across the USA.

Judge Barbara Crabb of the District Court for the Western District of Wisconsin once again struck down the ministerial housing allowance as an unconstitutional preference for religion. This is currently pending an appeal to the 7th Circuit Court of Appeals. We will keep our Churches and Pastors abreast of future actions in this important Ministry matter.

In May of 2016, President Obama had issued an order requiring non-ecclesiastical, salaried employees to receive minimum compensation of $47,460.00 per year. We relentlessly saw this through to a satisfactory solution when a Federal Judge in Texas ruled it unconstitutional.

These are just two of the many areas that we took to task for Pastors, Ministers, and Churches across America.


A Friend You Can Count On

This is not something that Chitwood and Chitwood just started. We have been diligently working for Pastors, Ministers, and Churches for more than 79 years! The reason? For us it is “A Ministry – Not A Job!”

Just as Pastors have been called to preach the Gospel, win sinners to Christ, and be a Shepherd for the “flock,” we have been called to make sure that the job of the Pastor and Minister, and the function of the Church does not get bogged down with the minutiae that the world attempts to lay at the feet of the Church, which will keep Church and Pastor from fulfilling the Great Commission.

Friends are a unique bunch that comes in all types of packaging. There are the fair weather friends who are there for you during the good times. There are the friends that are “need-based” friends and are connected to you because of what you may do for them. As long as you can help them they are by your side. Then there are the real friends. These are friends who are not only with you during the good times, but also during the bad. This is Chitwood and Chitwwod. We have stood with more Pastors, Ministers, and Churches during financial and/or tax crises than any other Church Financial Firm in the USA. If you are our clients, we don’t lose. If you are not, but connect with us after the fact, we stay by your side through thick and thin, fighting diligently for your vindication (It is much easier and cheaper for us to keep the IRS from you than it is to get them off of you).

This is why we are unique in what we do! There are many copycats in America, but only one original. It is like an artist’s painting – he has the original from which many prints are made. The print may be okay, but it does not have the value of the original. In the art world only one person may own the original, while the rest settle for a copy. However, with Pastor, Minister, and Church finances, everyone can have the original – Chitwood and Chitwood. Why settle for a copy, when the original is at your fingertips?


In Closing

For years I have lived by an old proverb: “You are stuck with family, but you can choose your friends.” You will choose us because of our reputation, our quality of work, and because no situation is too hard for us – we are the best and will not leave you.

 

As the New Year is ushered in, every Pastor and Minister should make the change they know they need to make for their ministry and their Church. Do not go through 2018 without us in your corner.

 

Call 800-344-0076 NOW to connect with the only Church and Clergy tax and financial specialists in America that have the accolades that have been awarded us. Our guarantee is that we will not leave you, but work above and beyond to make sure your ministry, your Church, and your personal finances remain in compliance and worry free.
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By Dr. Michael Chitwood

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