Discussion:Incorporated minister
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Discussion Forum Index --> Advanced Tax Questions --> Incorporated minister
Discussion Forum Index --> Tax Questions --> Incorporated minister
KY tax pro (talk|edits) said: | 11 April 2009 |
| TIA to anyone who can help direct me in this situation:
A local minister has formed a corporation (I believe in NV) and wants his checks to be issued to that corporation. I do not prepare his income tax returns, but I volunteer my time and have been asked to act as a signatory on the church bank account. As a CPA, I am concerned about exposure to the church and to me personally. Our firm handles several ministers and I am aware of the requirements for their tax filings. However, I am trying to find information to show their board of directors that they should NOT issue checks to the corporation. Has anyone run into this and can you give me any advice? Thanks so much, Johanna Fox Turner, CPA, CFP | |
| 11 April 2009 | |
| You've got to me kidding me. A minister with a Nevada Corporation. I take it he does not live in NV.
Tell this minister that he was likely taken for a ride, and made promises that can't be kept. Better yet, ask him to go to the people who sold him on this idea, and get them to do his taxes (and do his bookkeeping). I smell a "seminar" or some fishy website behind this somewhere. I wouldn't have this man as client because there's no way he's completely above board. I apologize in advance for my rant, but this is getting out of hand. | |
| April 11, 2009 | |
| I've been wondering, too...never seen this, and I wonder what he hopes to accomplish? I suppose it makes sense for a minister not connected to any one church or organization, so that his own ministry corp can set the housing allowance, exp. reimbursement policy, etc. If he's working for one church, then he's just wasting money big time, that should be going for some more glorious purpose. | |
| 11 April 2009 | |
| There are legititmate reasons to do this (though there are better states than NV now), but I guarantee that this man was not motivated by legitimate reasons. He was made a bunch of promises at some seminar,etc. that preyed upon his greed or stupidity (or both).
Or, perhaps one of his "minister" buddies hooked him up. I put minister in quotes so as not to tarnish the honest ones. Johanna, ask to see the brochure, that will answer a lot of questions as to what motivated him, and what's behind all this. There's a brochure or a website or a book somewhere. | |
| April 11, 2009 | |
| As Sherlock Holmes said, "It is important NOT to theorize until you have all the facts. It tends to bias the judgement." Since your bias is that ministers are mostly charlatans...that's what you expect. Let's let her 'splain it first. Then rail. | |
| 11 April 2009 | |
| beware the 'corporation sole' scam
do note that it is not spelled 'soul' | |
| 11 April 2009 | |
| I do not think that ministers are mostly charlatans. Just that a good many are nowdays: too many for comfort. "Wolves in sheeps clothing".... Jesus needs to come back and rid the temple of the moneychangers again, that's for sure. So, I guess I am biased, but I think it's a justified bias.
Then again, a lot of ministers are just plain stupid. Doctors draw a blank in finanical matters too, though they will hardly admit it. There's little doubt, however, that the Church is currently infected$$ with a group of clergy that have decided to peddle$$ everything but God's word, and they have the morals to go along with that kind of thinking. | |
KY tax pro (talk|edits) said: | 13 April 2009 |
| Thanks for your replies. He has told the church that he doesn't need a 1099, but he has said that they can see his return if they want. I haven't asked for anything further because I really don't want to get drawn any further into it. Our firm has handled many ministers and I have never run across this and any research I've done has led me to the same conclusion for our clients, that ministers are a kind of hybrid employee, as I'm sure everyone here is aware. I am not handling his taxes. Unless the church starts reporting properly, I think I'll just excuse myself.
Thanks again for your comments. | |
| 13 April 2009 | |
| KY, if you don't represent him, I don't think you're exposing your church to liability for his good or bad tax decisions, as long as you do a little due diligence on your end. If I were representing the church, I would want the following documents:
1) an employment agreement of some kind (can be very simple) where he directs the church to pay his salary to a different entity; 2) a taxpayer ID # certification for the entity; and 3) certificate of good standing from the Nevada Secretary of State (or whatever they have there). | |
| April 13, 2009 | |
| I agree. Not your problem...just make sure you do your end properly. | |
KY tax pro (talk|edits) said: | 13 April 2009 |
| Thank you, Ddaallas, but can't the church be found liable for not following IRS procedure for a minister-employee? This article [1] discusses how judge threatened a church with loss of its tax-exempt status by not handling its pastor expenses properly. To me, it is the same as an employer who pays an employer as contract labor just because the employee asked to be paid that way. | |
| 13 April 2009 | |
| The question would be who is the taxpayer? If the income is paid to the Reverend for his services as a pastor of the church the income is his personal service income. If he happens to run a traveling salvation show as Reverend Soandso Ministries, Inc. from which he draws a reasonable salary (like Billy Graham) then it would be corporation income. Aside from that, my crystal ball tells me he is trying to not render unto Caesar all that he should and that you should react accordingly. | |
| 13 April 2009 | |
| KY, my point is, it can probably be done with a bit due diligence on your end. If you simply don't want to do it because it smells fishy (I definitely think you should trust your gut instinct), I would impress on the BOD the burden of that extra due diligence and the risk of screwing it up -- especially if there's no benefit to the organization. | |
| 14 April 2009 | |
| KY, as some Mscash has pointed out, the issue is, is the minister an employee of the church or is he an employee of another ministry? You state in the original post: "A local minister has formed a corporation (I believe in NV) and wants his checks to be issued to that corporation." What is the nature of his services on behalf of your church? Is he your church's pastor? If yes, then he is an employee of your church and cannot assign his employment wages to his corporation. If he is not the church's pastor, then quite possibly he is not an employee of the church and it is appropriate for the church to pay his corporation. | |
KY tax pro (talk|edits) said: | 14 April 2009 |
| Jdugancpa,
Yes, he is the employee of the church and that is his full-tiime job. I'm sorry I was not clear in my original post; I see that it led to some confusion. He has a friend who is a traveling preacher and has no "home" congregation. When he preaches at different churches, they write the check to his corporation, which I agree is totally appropriate. I think that may be where this preahcer (the church's employee) got the idea. Thank you for your response. | |
| 14 April 2009 | |
| I find it highly suspicious that he was advised to have a Nevada corporation. In my experience, that has always been a buzz word for tax avoidance. I avoid those people like the plague. | |
