The IRS told a pastor that the love offerings given to him by members of the church were taxable. In disagreement, he sued the IRS in tax court stating that they were voluntary gifts given by members of the church. The tax court disputed with the pastor stating that the members were motivated to give the love offerings because they believed him to be a good minister and they wanted him to be rewarded. While the court agreed that gifts are not taxable, it also ruled that when a love offering is given to a minister by a church member because the church member is motivated by his or her leadership or services as a minister, then that love offering is not a gift, but rather compensation that is taxable.
This is a case where members gave pass through gifts directly to the pastor because they loved him and wanted to reward him for the work he was doing in the church and for them. The tax court ruled that even if the members wanted him to receive it as a gift, it cannot be ruled as a gift because of his relationship with the members as a minister of the gospel.
This is another reason why I strongly recommend that the minute you get ordained you apply to the IRS for self employment tax exemption so that the taxability of these love offerings is significantly reduced.
Missions Work and the United States Office of Foreign Assets Control
Every year, many churches get involved in overseas missions all across the world. It is a great way to expose both young and old to how the rest of the world experiences God. My personal experience in missions have made life long impacts that influence who I am today. My father's orphanages in Venezuela and Honduras have been wonderful mission fields for many churches across America, training many individuals every year.
Did you know that the Office of Foreign Assets Control (OFAC) administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers? They publish a list of countries and specific individual names of people that are on a terrorist watch list.
Did you know that Executive orders 13224 and 12947 prohibit all U.S. charities, including churches, from dealing with persons (individuals and entities) identified as being associated with terrorism unless first authorized by the Treasury Department's Office of Foreign Asset Control? The orders also mandate that churches and ministries be up to date with U.S. sanctioned people and countries. Additionally, the IRS requires that every church or ministry that is doing overseas missions adopt a resolution to comply with U.S. sanctions as published by OFAC.
We will be discussing this topic at all of our upcoming conferences as well as making available the OFAC list of individuals and countries that are sanctioned.