by Dr, David C. Gibbs, Jr.
I
f you consider what our country was
founded upon—if you see the moral
guidelines that drew our first leaders to
their knees in prayer—if you look at how
they formed our country’s first documents,
you can see the Christian heritage that our
founding fathers created for us, and you can
see that Christian principles are essential in
guiding this nation back to where our first
leaders meant it to be.
which we promise all
due submission and
obedience. In witness
whereof
we
have
hereunder
subscribed
our names at Cape Cod,
the 11th of November,
in the year of the reign
of our Sovereign Lord
King James, of England,
The first document our Founding Fathers
created in this New World, the Mayflower
Compact, is our first example of the godly
heritage that we enjoy. The following is this
short but important document:
France and Ireland the eighteenth, and of Scotland the
fifty-fourth. Anno Domini 1620.”
The Mayflower Compact
That emboldened statement is left out of many revisionist
history books today. These historians fail to realize
that the first settlers established their colonies first and
foremost “for the Glory of God.”
“We whose names are underwritten, the loyal
subjects of our dread Sovereign Lord King
James, by the Grace of God of Great Britain,
France and Ireland, King, Defender of the
Faith, etc.
Knowing that America’s first settlers placed God at
the forefront of their lives, we should reason that God
should also be the motivation behind any decisions in
life, especially if our daily decisions affect the lives of
many other citizens.
“Having undertaken, for the Glory of God
and advancement of the Christian Faith and
Honour of our King and Country, a Voyage to
plant the First Colony in the Northern Parts
of Virginia, do by these presents solemnly
and mutually in the presence of God and
one of another, Covenant and Combine
ourselves together into a Civil Body Politic,
for our better ordering and preservation and
furtherance of the ends aforesaid; and by
virtue hereof to enact, constitute and frame
such just and equal Laws, Ordinances, Acts,
Constitutions and Offices, from time to time,
as shall be thought most meet and convenient
for the general good of the Colony, unto
Though our country may be moving further away from
God’s truth, it is up to Christians to stand firm in our
beliefs and resolve to continue in the struggle not just
“against flesh and blood, but against principalities,
against powers, against the rulers of the darkness of this
world, against spiritual wickedness in high places.” No
doubt Satan has a plan to drive Christianity out of this
nation, but we must remain strong in our commitment.
God is faithful, and we know in Him we can do all things.
Your Legal Missionary,
If you have questions about legal matters in ministry or have questions about your religious liberty,
call our office at 1.888.CLA.1969
Pray for CLA attorneys as they assist a
Christian radio station in Missouri that
is wanting to set up a scholarship fund to
help students go to Bible college.
Pray as CLA attorneys help an
organization in Louisiana that is trying
to get approved to pass out Bibles in
public schools.
Praise the Lord that CLA was able to help
a church in Washington with policies for
working in children’s ministries.
Pray as CLA attorneys advise a Christian
school in Rhode Island legally how to
best administer prescription drugs to a
student during school hours.
Pray as CLA attorneys assist a church in
North Carolina with policies protecting
the church from legal attacks when
homosexual couples desire to attend
church activities.
Praise the Lord that CLA was able
to help a homeschooling family
in Pennsylvania that was being
questioned by local officials
simply for educating their child.
Praise the Lord that CLA
attorneys were able to help a
North Carolina church with tax
and payroll questions about work
being done at the church.
Pray as CLA legal staff assist a
ministry in Ohio that is facing
EEOC complaints from a
previous employee.
Pray as CLA attorneys help a
church in West Virginia that is
being audited by the IRS.
Tax Talk
and what your ministry should know!
“Our church doesn’t want to get
involved in all of the paperwork of
payroll reporting so we just issue a 1099MISC form to the church secretary, the
church custodian, and the Christian
school teachers each year and let them
handle their own taxes.”
Who is a “responsible person” in a church setting?
The treasurer, the senior pastor, and board members
may all be potentially liable. The primary test is
whether the person has the ability to exercise
independent judgment as to the conduct of the
financial affairs of the organization. A second test is
whether the person has the authority to sign checks
for the organization.
That statement is not as rare as it should be. The law
does not exempt churches from payroll tax withholding
just because the paperwork is bothersome.
Section 6672 of the Internal Revenue Code codifies
a 100% penalty for any person who is required to
collect, account for, and pay over federal income
and/or FICA taxes and who willfully fails to collect,
account for, and pay over these taxes. In other words,
the penalty equals the amount of unpaid taxes. If an
audit determines that $50,000 in taxes should have
been withheld and deposited with the IRS, the penalty
will be $50,000.
To be assessed the penalty you must be responsible
and willful in failing to pay over payroll taxes.
In determining who the responsible persons of the
church are the IRS will ask who are the officers
and board members; who has authority to hire or
fire employees; who determines which creditors get
paid; who signs the payroll tax returns; and who
makes the federal tax deposits? No one factor is
determinative. A bookkeeper who
simply carries out the instructions
of the pastor or treasurer will not
be considered a responsible person.
A responsible person cannot avoid
liability by delegating his authority
to another. Liability applies to all
responsible persons, and not just the
most responsible person. That means
that the IRS may assess the penalty
against one responsible person or
against more than one responsible
person.
“Willful” under IRC § 6672 does not
require a bad or fraudulent intent. It
means that the reason for not paying
the taxes was not accidental. It was
intentional,
deliberate,
knowing,
or even reckless (indifferent to the
requirements of the law).
For example, if a board member knows that payroll
taxes are not being paid (e.g. because employees
are treated as self-employed) and does nothing,
that is willfulness. A board member who receives
periodic financial statements that indicate that there
is not enough cash flow to pay payroll taxes and
does not inquire as to whether they are being paid is
willful. A pastor who directs that creditors be paid
Avoid scams before they become
cumbersome
annoyances
to your ministry efforts!
rather than tax deposits being made is willful.
A treasurer who prepares payroll tax returns but
does not make the proper tax deposits because
otherwise there is not enough money to pay the
employees what they have earned is willful. An
all too common situation is when a Christian
school experiences a drop in enrollment
and a subsequent loss of tuition. The school
administrator tells the board and the board
decides to pay the employees and creditors and
not pay the payroll taxes. The goal is to keep
the school open long enough to recover from its
“tailspin.” Despite the noble motive of keeping
the school open, the decision of the board is
willful.
To avoid the 100% penalty IRC § 6672
make sure that all of the church workers
are properly classified, that all employees
complete W-4 forms, and that all income and
FICA tax deposits are made on a timely basis.
CLA attorney Seth J. Kraus, his wife Sara, and their
daughter, Shaylen. They are looking forward to a
new little one this summer.
If you have further questions about tax-related
matters and your ministry, call the Christian Law
Association at 1-888-CLA-1969 for assistance
in these matters.
Scam artists posing as online phone
directory companies are calling or faxing
churches with unsolicited information
about their company. When churches
listen to the electronic prompts or update
their contact information over the phone
or by fax, the company alleges the church
has made a new contract with the directory
for what amounts to be a very expensive
online directory service. Churches that
dispute the charges are threatened with
collection and late fees. The Federal Trade
Commission is investigating the scam,
but these churches will wind up spending
money and time to resolve this issue.
If your ministry is unsure of the legal
ramifications of information you’re being
asked to sign or agree to verbally, please
contact us.
Are students allowed
to talk about God
in their graduation speeches?
At this time of year, the Christian Law
Association receives many phone calls asking
whether students are permitted to talk about God
or their religion in a public school graduation
or commencement speech. Let’s consider a
public high school or middle school that uses
neutral criteria, like academic performance,
to determine who will give, for example,
valedictorian and salutatorian speeches. In this
scenario, the First Amendment protects the
student’s right to speak about God or religion
in the speech and the school may not censor
this out. If the school is concerned about the
speech appearing like a state-endorsement of
religion, it can simply place a disclaimer in the
order of service bulletin.
CLA staff Michael J. Adams, M.B.A.
Can a pastor or church staff member
use the church name
to increase traffic
to his side business?
A pastor’s wife had a side business selling
items at an online auction site. In advertising
her business, she routinely used the name of
her well-known church to generate interest and
traffic to her auctions. This type of activity,
although seemingly benign, can actually
endanger a church’s tax exempt status. When a
church leader or one of their family members
uses the organization’s assets for personal
financial gain, this constitutes private inurement
in violation of IRS Code Section 501(c)(3). A
church has both tangible and intangible assets.
In this case, it was an intangible asset, the
church’s good name, used for personal financial
gain that created a legal and financial nightmare
for the ministry.