When churches neglect payroll taxes

Experts say this is an all-too-common problem—and one church leaders cannot ignore.

By Bobby Ross Jr. | For Church Finance Today

For about five years, a financial secretary for a 200-member church quit sending payroll tax money to the Internal Revenue Service.

Instead, she pocketed the funds.

When the IRS came knocking on the church’s door, it owed about $350,000, including penalties and interest, recalled Frank Sommerville, an attorney, CPA, and editorial advisor for Church Finance Today.

In other cases, it may not be malfeasance that causes a church to neglect payroll taxes, but rather, financial problems within the congregation. Prioritizing the electric bill over the IRS, though, can have dire consequences, Sommerville warned.

A different church had a file folder marked “IRS.” Each time an envelope came in the mail from the IRS, the church would drop it in that folder, said Vonna Laue, a CPA and executive vice president of the Evangelical Council for Financial Accountability (ECFA).

A new church secretary asked about the envelope and was told, “Oh, we’re tax-exempt. We don’t have to worry about anything from the IRS.”

Wrong.

Read the full article.

This package appears on the April 2019 cover of Church Finance Today, a publication of Christianity Today.

Author: Bobby Ross Jr.

Bobby Ross Jr. is an award-winning journalist who has reported from all 50 states and 14 countries.