CPA's & Consultants Providing Business Insight To Churches & Ministries

IRS Offers Relief From Immediate Compliance With 403(b) Written Plan Requirement

The IRS issued 2009-3, providing relief during 2009 for sponsors of 403(b) plans on having a written plan in place by January 1, 2009.

In general, sponsors of 403(b) plans are required to have a written plan in place as of January 1, 2009, that satisfy the requirements of the final 403(b) regulations that were published July 26, 2007.

Under Notice 2009-3, however, they are granting relief from the requirement that the written document be in place on January 1, 2009, provided the following:

1. The plan sponsor has adopted the written plan on or before December 31, 2009.

Minnesota Mega Church Gets Small Victory in IRS Proceeding

Reverend James Hammond and his Church, Living Word Christian Center of Brooklyn Park, MN appears to have won a small victory in their most recent round with the Internal Revenue Service.

Earlier this year, the IRS asked Church to provide detailed financial information, focusing on compensation of the founder and senior pastor of the church James Hammond. The Church refused to comply, arguing that they did not have to because the request was not made by a “high ranking” IRS official, which is required by law.

IRS Issues New Mileage Rates

Effective January 1, 2009 the standard mileage rates will be:

55 cents/mile for business miles
24 cents/mile for medical miles driven
14 cents/mile driven in services of charitable organizations

Medical mileage and mileage connected with charitable organizations can be taken as itemized deductions on Federal Schedule A for taxpayers who elect to itemize.

See IRS Revenue Procedure 2008-72 for more details at http://www.irs.gov/pub/irs-drop/rp-08-72.pdf

Manage Your GuideStar© Profile

A great way for nonprofit organizations to promote their organization at no cost (did I mention it’s free?) is to update their profile on www.guidestar.org. GuideStar provides information about nonprofit organizations from a database of publicly available sources, including the tax returns (Form 990) filed by nonprofit organizations. Churches who do not file Form 990 are NOT included.

Charity IRA Rollovers

Congress extended to 2008 and 2009 the provision that allows up to $100,000 tax free rollovers to charities from IRAs by those 70 ½ or older. The individual does not have to report the IRA distributions as taxable income; correspondingly, there is no further tax deduction available for the rollover. The charity must be a public charity, such as a church, and does not extend to donor-advised funds and supporting organizations.

IRS Offers 5 Mini-Courses on Redesigned 990

The IRS has recently posted five online video presentations explaining the newly designed Form 990. They range in length from 14 – 37 minutes. If your organization meets the requirements for filing the new 990, these mini-courses could provide helpful information on the new requirements. Check them out at http://www.stayexempt.org/home_mini_courses.html.

Cracks in the Wall of Separation

In this political season, pastors and leaders on nonprofit organizations are constantly reminded to refrain from engaging in political activities or endorsing political candidates. This reminder is given with the threat of losing tax exempt status. Have you ever wondered how it came to be that churches in the United States of America have been prohibited from engaging in political activities? After all, in a nation founded on the principle of religious liberty, doesn’t the idea of separation of church and state protect the church from control or intrusion by the government?

IRS Raises Travel Per Diem Rates

IRS Raises Travel Per Diem Rates Effective October 1, 2008

FDIC Coverage Now $250,000

On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009.

See additional information at http://www.fdic.gov/news/news/financial/2008/fil08102a.html

#3 of 3 Filing for Exempt Status

In our previous posts we have discussed the criteria or the "14 point test" for churches. Churches are not required to file a Form 1023, however religious organizations with annual gross receipts greater than $5,000 must file.

In order for an organization to be tax-exempt, IRC 501(c)(3) requires the entity meet the following requirements:

1. organized and operated exclusively for religious, educational, scientific or other charitable purposes
2. net earnings may not inur to the benefit of any private individuals or shareholders