Honorarium Liability, Maybe

[VonNoble]

It seems a high number of people who become ordained at ULC officiate at weddings (if they use the ordination for any purpose at all.)

It also seems a fairly high number do a small number of weddings - ordinarily for someone they know.

And it seems most do so without intent to make money.

HOWEVER, any money you receive (no matter if you call it an honorarium or a fee) - is taxable as I understand it.

Every wedding I have officiated since 2004 - any "gift" received has been in cash (I have never one time received a check) - which means reporting that money is really a matter of your personal integrity.

So you this is a multiple choice thread....you an answer all questions or pick and choose.

The FORUM is a good place to learn from those who are out there doing.....so whatcha doing?

DO YOU REPORT THE MONEY YOU RECEIVE FOR YOUR SERVICES? (weddings, funerals....seminars, speaking fees)

HAVE YOU RECEIVED ENOUGH THAT IT IMPACTED YOUR FINANCIALS?

HAVE YOU BEEN AUDITED, QUESTIONED BECAUSE OF YOUR ORDINATION IN RELATION TO TAXES?

HAVE YOU ESTABLISHED A WAY TO HANDLE FUNDS RECEIVED BECAUSE OF YOUR ORDINATION (separate checking account, consulted with an attorney or accountant)? SHOULD YOU?

You may not have considered this aspect of dabbling with your ordination but in some cases it will take very few weddings to possibly have an impact on your financials. It is not unheard of to receive over $200 to officiate at a wedding. It is not unheard of to have the funeral director accept money on your behalf and give it to you AFTER the funeral and the family left. It is not unheard of to have an unexpected bit of money tucked into a thank you card. One time I was asked to speak at a retreat and at the retreat I stayed long enough to enjoy a meal with the group. Upon leaving, they handed me a wrapped package and told me it was a coffee cup - which it was - but inside the coffee cup there was just over $700 in cash - they had taken up a collection among the group without my knowing about it - stuffed it in a coffee cup and put it in a gift bag. I carried it home and didn't realize till the next day I had received the money.

So figuring out what you are going to do should you receive money is fairly important, perhaps.

Even if you do not intend to accept that money as part of your income - if you officiate at anything - you run that risk; it might be a good idea to check on what steps are necessary to handle the unexpected funds once received. It might (likely does) include a paper trail of receiving the money, redirecting it and recording your actions in accordance to standard business practices.

If any one has experiences that relate to the thread and I didn't ask the exact right question - please be hereby officially encouraged to offer your wisdom and experience. Lots and lot of ULC ministers have come to rely on this FORUM to learn.

Von

[panpareil]

I do not see paying taxes as a moral obligation. It is a legal one. It is no more moral to pay them than it is to not pay them. My main impetus to pay taxes is they take them from me. I go out of my way to avoid new tax liabilities.

Jesus said render unto Caesar, Brutus also had an opinion on what Caesar should get.

Nice story about the coffee cup though.

[Dorian Gray]

DO YOU REPORT THE MONEY YOU RECEIVE FOR YOUR SERVICES? (weddings, funerals....seminars, speaking fees)

I would if I had received any money.

HAVE YOU RECEIVED ENOUGH THAT IT IMPACTED YOUR FINANCIALS?

I have never received any.

You did hit the nail on the head with creating a papertrail. Document everything and in detail with supporting documentation if possible.

HAVE YOU BEEN AUDITED, QUESTIONED BECAUSE OF YOUR ORDINATION IN RELATION TO TAXES?

Not yet, Not sure how they would know as I do not claim any of the minister tax write offs. (I don’t own a home, so the standard deduction is better than long form)

HAVE YOU ESTABLISHED A WAY TO HANDLE FUNDS RECEIVED BECAUSE OF YOUR ORDINATION (separate checking account, consulted with an attorney or accountant)? SHOULD YOU?

I do, I have an accountant and access to an civilian attorney should the need arise.

[VonNoble]

I do not see paying taxes as a moral obligation. It is a legal one. It is no more moral to pay them than it is to not pay them. My main impetus to pay taxes is they take them from me. I go out of my way to avoid new tax liabilities.

Jesus said render unto Caesar, Brutus also had an opinion on what Caesar should get.

Nice story about the coffee cup though.

You are absolutely correct. More correctly stated - the morality comes from the honesty bit.

If you are required, by law, to report something - and choose not to do so - there is a certain smack of dishonesty there, perhaps.

Morally, honesty or lack there of becomes a related issue.

Sort of like stopping at a stop sign at 3 AM with no one around.

It is (as you noted) a legal issue..and s civil one.....is there is a twinge related to your integrity in all that. Are you obliged to adhere to rules which you accept by the very nature of your choosing to reside in an area that has such rules...is there an implied expectation that you agree to those terms? It seems like there might be. If there is - then choosing deliberately to circumvent them seems less moral than abiding by them or openly notifying authorities that you are not going to abide by them?

Still your posting is absolutely correct (and as always) welcome.

I would if I had received any money.

Not yet, Not sure how they would know as I do not claim any of the minister tax write offs. (I don’t own a home, so the standard deduction is better than long form)

Interesting you would bring that up. I discovered one of the parents....of one of the couples I "married" TURNED IN a deduction for giving me a gift of cash (tucked in a card...and put on the windshield of my car of all places)....giving me the money - they presumed was the same as giving it to a church and thereby a valid tax deduction or so they thought. It is no surprise the IRS did not share their view and it was not an acceptable deduction. But their listing of "me" as the entity from which they were claiming a deduction - certainly drew attention to me.

Nothing came of that moment in time....but that is I suspect one of several ways your accepting an honorarium might come to the attention of others. People talk.

Thanks for joining in Dorian. You always add some wisdom.

Von

[mark 45]

i've never made enough to have any impact on my finances,and seriously doubt i would.if it ever reached that point,then i would also have to start deducting expenses as a minister.

and yes,i have access to a tax adviser who can help me should that occur.

[Dorian Gray]

That was rather silly on thier part Von. If I give organization XYZ money and in turn they do a service or provide me a good, that isnt a donation. I great example is a good number of churches run a daycare and/or before and after school care programs. This is for a fee and generally located within the church or on its grounds. Just because it is run by a church on church grounds does not make the activity tax deductable (as donation to NPO). Childcare is tax deductable under other sections of the tax code.

[VonNoble]

That was rather silly on thier part Von. If I give organization XYZ money and in turn they do a service or provide me a good, that isnt a donation. I great example is a good number of churches run a daycare and/or before and after school care programs. This is for a fee and generally located within the church or on its grounds. Just because it is run by a church on church grounds does not make the activity tax deductable (as donation to NPO). Childcare is tax deductable under other sections of the tax code.

I agree with you. Both that it was silly and that doesn't track as do-able with even a little effort to figure it out.

When I "got to" have my lovely chat with the IRS...they said this type of thing happens all the time (incredible though it may seem.)

BTW, kudos to the IRS in regards to assistance with lots and lots of questions. I have made numerous calls to their office and they have been exemplary in being helpful and friendly EACH time. They accept the fact I am not an expert by any means and I am calling to make things right or attempt to do so.

In the example you listed, Dorian......they gave that very example to me over the phone and said someone DID try and deduct child care because the church ran the program.

When our church was in the process of "filing" our papers - the very helpful person on the phone said; I cannot stress this to you enough....please avoid going into business on church grounds. There are numerous rule changes and pending laws that will effect that venture and if at all possible just don't conduct business on church grounds and for heavens sake don't sell anything there. It muddies the water considerably"

It has been awhile since that conversation, but I heeded the message and have avoided anything happening for a profit on the church premises. I have no idea what legislation may occur but I did not mind that lady's advise. The accountant tells me we avoid a heap of paperwork keeping our books neat, clean, simple and open.

Von

[Atwater Vitki]

DO YOU REPORT THE MONEY YOU RECEIVE FOR YOUR SERVICES? (weddings, funerals....seminars, speaking fees)

Yes

HAVE YOU RECEIVED ENOUGH THAT IT IMPACTED YOUR FINANCIALS?

Not in any one year, but every dime has been reported and accounted for

HAVE YOU BEEN AUDITED, QUESTIONED BECAUSE OF YOUR ORDINATION IN RELATION TO TAXES?

Not specifically on my ordination, no

HAVE YOU ESTABLISHED A WAY TO HANDLE FUNDS RECEIVED BECAUSE OF YOUR ORDINATION (separate checking account, consulted with an attorney or accountant)? SHOULD YOU?

Yes, a very simple record. The Feds are fairly cut and dry, but each State has variations of allowable deductions if you have to travel or stay over night etc for the particular event.

I grew up with a father that despised the "Infernal Revue Service" so I had a tainted view for many years. However, I agree 100% Von, every time I've had contact, a handful of times, the IRS has been nothing but helpful, courteous and polite. Even the personal notes from the agent on the "Post-Its^®" stuck here and there in the forms packet helped me greatly. Kay and I also worked with the wife of an IRS Auditor for a couple of years and he was a super dude.

While it may be a bit old school, a simple 3-4 column ledger book (lots of nice ones at 99¢ stores) kept strictly for your officiant service and duties will help keep track of the funds received for your work. Spread sheets on the 'puter are nice, and are great as a back-up, but nothing like the ol' hands on accountability...in my book. Ledgers don't "crash" either and are easily kept out of harms way and there shouldn't be anything so complicated in keeping your officiant records as to require more than basic accounting.

Yes, nearly all monies received, whether charged by the officiant or not, will be cash. I guess that's really tradition more then requirement, but you never know who may report what. Honesty, after all, is what one does when people think other's aren't looking, right?

Blessings of Peace,

[Dorian Gray]

I agree with you. Both that it was silly and that doesn't track as do-able with even a little effort to figure it out.

When I "got to" have my lovely chat with the IRS...they said this type of thing happens all the time (incredible though it may seem.)

BTW, kudos to the IRS in regards to assistance with lots and lots of questions. I have made numerous calls to their office and they have been exemplary in being helpful and friendly EACH time. They accept the fact I am not an expert by any means and I am calling to make things right or attempt to do so.

In the example you listed, Dorian......they gave that very example to me over the phone and said someone DID try and deduct child care because the church ran the program.

When our church was in the process of "filing" our papers - the very helpful person on the phone said; I cannot stress this to you enough....please avoid going into business on church grounds. There are numerous rule changes and pending laws that will effect that venture and if at all possible just don't conduct business on church grounds and for heavens sake don't sell anything there. It muddies the water considerably"

It has been awhile since that conversation, but I heeded the message and have avoided anything happening for a profit on the church premises. I have no idea what legislation may occur but I did not mind that lady's advise. The accountant tells me we avoid a heap of paperwork keeping our books neat, clean, simple and open.

Von

That you will. Anything you have something that isn't 100% transparent and even hits at the perception of not 100% on the up and up or hints that it's FOR profit, you are just asking for problems. That isn't to say that a church cannot (or should not) have for profit activities, just that they should be done separately with funding following only from the for profit side to the non-profit side.

I have heavily involved with a chapter of a NPO called AFCEA here locally. We have 3 separate bank accounts. The first for our "operations and maintenance" or O&M funds. This is tax free funds under one set up IRS rules. We have our second account that houses or scholarship and science teaching tools grant money. This account is tax free under a different set of rules. Then we have our "holding" account were the money from fundraisers paid online is held until it is dispersed to the proper end account and is tax free under the same ruling as the first account. Money can flow from the O&M and fundraising accounts to the scholarship account but no money can leave the scholarship account unless it is going to pay a scholarship or grant. We have our own internal policy that money cannot flow from the O&M account to the fundraiser account. This helps keeps are books nice, neat and clearly showing what money is where, why it is there and what it is being used for.

We were audited last year and the IRS folks had glowing remarks about how well our books were kept and in the level of detail we had each transaction.

[BpCorey]

Honorarium is a gift for your services. Do you report what you get for your birthday?

I can imagine what the romans say to the goverment since they are in most countrys.

[Dorian Gray]

You dont get "gifts" for service...

[Hyper Real]

HOWEVER, any money you receive (no matter if you call it an honorarium or a fee) - is taxable as I understand it.

Not correct as long as your earnings are below a certain amount then you do not have to pay any taxes on it.

If you qualify you do not even have to file a tax return.

http://www.efile.com...e-a-tax-return/

Depending on your family composition even if you earn more you often still pay no taxes.

Some spiritual people actually do take a vow of poverty or a vow of leading a simple life instead of trying to amass as much wealth as possible.

And yes they are awarded in that they are exempt from paying taxes.

Edited to add:

In fact your earnings in some cases may even give you a tax credit.

Edited March 3, 2012 by hyperreal

[Dorian Gray]

Hyper, Von is right...the income is taxable (in and of itself) it only becomes non-taxable if you are below a threshold and that is because the individual (or family depending on filings) make it non-taxable after the fact.

[Atwater Vitki]

A lot of folks are big on the separation of church and state, and our Federal and State Income Tax Rates have been a bone of contention for well over 225 years here in the USA. So how is it that "the church", defined as any organized and recognized religious body, gets OFF of the IRS tax ledgers?

Myself, agree with the non-taxable income on church income, but only up to a certain amount. Tax liabilities could indeed crush many small churches yet allows for the mega-churches the same umbrella of protections. The "Crystal Cathedral" comes to mind in fairly recent news. Tens of million$ siphoned off to the Scheuller's personal accounts under this umbrella.

I mean most ULC ministers are single entity individuals that perform officiant duties for nominal fees. The little "extra" many of us make merely helps to make ends meet...a whole different beast than that of the mega-church in any neighborhood.

I'm not sure just exactly where to draw the line of income but conventional "pastorship" has become big business today. A few years ago I talked about the pastor at Modesto Covenant making $167k/yr and this past year he received a 30% increase putting him well into $225k range and the church itself has an operating budget of over $2.3M/yr...in either case...that seems an excessive amount of tax free monies going to an individual or church and this is a small church (2000 members) in the grand scheme of things.

Membership has decreased over 15% while operating expenses have increased 25%...seems to me, someone isn't doing his job very well. Any taxed CEO of any major corporation would be out on his ear if the same report got back to shareholders.

Basically, when we're talking about the average ULC minister it's a whole different ball game than the 4-6yr seminary college, 2-4yr residency, ordained minister of mainstream theologies and conventional church bodies. Since ministering, like medicine, has become more and more business orientated why should a Baptist, Methodist or Catholic priest/pastor/minister be given a free ride on taxes while a Baptist, Methodist or Catholic doctor or surgeon be made to pay taxes? They both have a (usually) loyal following, "save" lives and are so-called leaders of the community so it's title more-so than qualifications or job description that separates the two.

I'm all for giving the "little guy/family" every break possible to simply survive, but when it comes to the business end of religion, well there is certainly a lot of gray area between the black and white of what is Right.

Just a thought....

Blessings of Peace,

[Dorian Gray]

I prefer Kirby Hensley's view where all churches are taxed. It is one of the reasons he founded the ULC.

[mererdog]

When our church was in the process of "filing" our papers - the very helpful person on the phone said; I cannot stress this to you enough....please avoid going into business on church grounds. There are numerous rule changes and pending laws that will effect that venture and if at all possible just don't conduct business on church grounds and for heavens sake don't sell anything there. It muddies the water considerably"

It has been awhile since that conversation, but I heeded the message and have avoided anything happening for a profit on the church premises. I have no idea what legislation may occur but I did not mind that lady's advise. The accountant tells me we avoid a heap of paperwork keeping our books neat, clean, simple and open.

There is something fairly unnerving about a government agency telling a religious organization how to go about its business. And while I understand that they were not, strivctly speaking, giving you orders, they were telling you that if you did things in a way other than what is sanctioned, you would get into trouble. In my mind, that is an implied threat of governmental retaliation- intentional or not. It is like they are telling you that you should remember to only use the water fountains designated for people of your race, because you might get arrested if you do otherwise- if you see the connection....

Is the reduction of legal liability as important as ensuring that our rights are not violated?

Edited March 5, 2012 by mererdog

[Hyper Real]

I'm not sure just exactly where to draw the line of income but conventional "pastorship" has become big business today. A few years ago I talked about the pastor at Modesto Covenant making $167k/yr and this past year he received a 30% increase putting him well into $225k range and the church itself has an operating budget of over $2.3M/yr...in either case...that seems an excessive amount of tax free monies going to an individual or church and this is a small church (2000 members) in the grand scheme of things.

If this a 503c organization then I suspect the salary of the pastor is already beyond reasonable according to the IRS rules.

And my opinion $225,000 a year for a 2000 member congregation is beyond absurd.

[Dorian Gray]

There is something fairly unnerving about a government agency telling a religious organization how to go about its business. And while I understand that they were not, strivctly speaking, giving you orders, they were telling you that if you did things in a way other than what is sanctioned, you would get into trouble. In my mind, that is an implied threat of governmental retaliation- intentional or not. It is like they are telling you that you should remember to only use the water fountains designated for people of your race, because you might get arrested if you do otherwise- if you see the connection....

Is the reduction of legal liability as important as ensuring that our rights are not violated?

Doggie, isnt a more of a "if/then" rather then a you can not. If you want to enjoy benefit X,Y,Z, you must conform to the legal standards. If you don't, you are free to do wantever you want.

[Carl Harry Carlson]

If this a 503c organization then I suspect the salary of the pastor is already beyond reasonable according to the IRS rules.

And my opinion $225,000 a year for a 2000 member congregation is beyond absurd.

I dunno, hyper.

If a megachurch has a celebrity minister who has a big media ministry, and they pay him a huge salary, and he files a tax return like everybody else and he pays taxes on that salary, where is the problem?

To me it's only a problem if the trustees of the church are breaking their trust with the donors and paying the preacher more than he deserves and taking church resources that burden the members unfairly or prevent the church from doing its mission. And that's a judgement call. That's why the church is supposed to have trustees.

If the trustees are in the pocket of the minister and don't have to report to the flock, well, abuses can happen. I didn't/don't know that/if the IRS has guidelines on this, or if violating the guidlines could jeopardize 501( c ) (3) status. Doesn't affect my ministry, that's for sure.

Sounds to me like the Covenant is pretty successful. I wonder at what point it can be considered a business. And how generous, I wonder, are the expense accounts, untaxed, for expenses incurred by the minister?

It becomes a fair issue for us to debate when the church has an IRS 501 ©(3) status, which most churches do, because some of our lost tax revenue is going to that big salary. True. A lot of our lost tax revenue goes to charitable causes I would disagree with.

If a church doesn't have the 501©(3) then it it truly a private matter and none of our business.

But as long as we have charitable deductions, I guess we have to give a lot of latitude to the trustees of the charities to "do only what is right."

P.S. Dmn website computer keeps changing ( c ) to © unless you remember to fool it by putting a space in.

Edited March 5, 2012 by Carl Harry Carlson

[Atwater Vitki]

If this a 503c organization then I suspect the salary of the pastor is already beyond reasonable according to the IRS rules.

And my opinion $225,000 a year for a 2000 member congregation is beyond absurd.

With an operating budget of $2.3M ($95/mo per member) and his salary a part of that ($9.73/mo per member) it sounds like no big deal...on the surface. When you extend the books out the "10% theme" seems to follow through on numerous angles.

What he does for that salary is another question. Like the "friendly note" from the church secretary reminding my folks of the "suggested honorarium" to the Pastor of$75 per visit to my Dad while he was in the hospital (10 visits over 2 years)...I could've choked that they even had the nerve to send that, but my Mom sits in astonishment that I question that....say what??

A long list of like things that simply baffle me for the leader of a flock to do.

To me it's only a problem if the trustees of the church are breaking their trust with the donors and paying the preacher more than he deserves and taking church resources that burden the members unfairly or prevent the church from doing its mission. And that's a judgement call. That's why the church is supposed to have trustees.

If the trustees are in the pocket of the minister and don't have to report to the flock, well, abuses can happen. I didn't/don't know that/if the IRS has guidelines on this, or if violating the guidlines could jeopardize 501( c ) (3) status. Doesn't affect my ministry, that's for sure.

Sounds to me like the Covenant is pretty successful. I wonder at what point it can be considered a business. And how generous, I wonder, are the expense accounts, untaxed, for expenses incurred by the minister?

There is at minimum another $25-30k per year of expense accounts and charge-backs for the pastor there. Yes, it is a "Good Ol' Boy" network of brown nosers and nepotism that would defy logic to any outside observer. Somehow, much of the Membership has lost sense of common reality and replaced that with "I'm gaining my Seven Crowns in Glory of gold brick paved streets of Heaven" sheeple mentality. It honestly defies logic.

Basically 2000+ people are being reassured by the pastor that "they are indeed going to Heaven" as long as the status quo of this organization is not interfered with. Way back when, "God" told Sven and Inga that The Evangelical path is the only "right" one and that's that, end of subject, believe it or eternally die, period.

You both bring up great observations about this 501( c ) (3) institution. Going back to its inception in the 1950's, the "Church Board" has carefully sought out, recruited and hand selected for Membership various influential people within the media, seminary, local government, medical and policing agencies. My Dad sold mutual funds for awhile (1964-68) for Waddell & Reed, a very hoity-toity investment firm with a specialty department just for 501c3 status organizations, which is where he was pigeon holed. This purposed the "expansion and growth" of select congregations for new sanctuary building funds.

As a young sprout, I recall the hours and hours long dining and luncheon experiences...in other words, bored out of my mind... with my folks, the membership "Powers that Be" at MCC* and of course the Board. Even as a kid I could tell that every move made towards an investment was meticulously crafted for the benefit of W&R and MCC. My Dad quit due to the underhanded and often "over the line" terms and contracts" he would be responsible for by his signing the "deal" into being. There were many, many late night arguments between the folks during this period as Dad had a conscience that would not allow him to put greed and profit above his own credibility...there's a long story behind it all, but trying to keep it short.

The bottom line to it is the understanding I gained by witnessing the "inner circle" at work made me hate "religion" based on these experiences straight out of "Dallas" or "Peyton Place". There's absolutely nothing wrong with any business, 501c3 or not, making sound financial decisions concerning their growth, that is only smart. But when the lines of Right and Wrong are blurred deliberately, well that's a whole other story.

However, it's how those financial decisions come to fruition that often comes into question. When a for-profit business makes borderline decisions that verge on inappropriate shenanigans, everyone gets up in arms over it. A 501c3, usually has more of an image to protect. However, a church, an organization that is supposedly responsible for guiding you through the moral and ethical conundrums of Life, well, IMHO, they should be of the highest moral and ethical standing and act accordingly.

If they are willing to blur the line of their finances, how can we expect them not to do the same with our Eternal Life??

Blessings of Peace,

*Modesto Covenant Church

Just last night when talking to my Mom, (my "bi-weekly Mom-call") after a 45 minute grilling about the doctors and our "health" there just had to be that ending conversation of the ULC and how I must be careful "not to be dragged away from my Rightful teachings". No, Mom does not acknowledge my ULC Doctorate or Reverend status in any manner what-so-ever. She is convinced wholeheartedly that anyone, except a member of Evangelicals, including the Pope, will not see their Seven Crowns and Rightful Place in Heaven.

It's not just my own mother, but the whole clique over there that holds this opinion, regardless of what the Bible says. Out of the Evangelical crowd only, will the 144,000 be chosen to honor "God" with their presence...and that's not even one of the tenets of the Evangelical cannon, just what these folks in that synod have cooked up! Just makes me wonder how my sibs and I survived this sort of upbringing because it sure isn't "Right" if ya ask me.

Anyone that may question why I am a bit cynical about organized "religion", maybe that will give you a bit of understanding.

And one last thing...I don't simply "pick on" Modesto Covenant" for the sake of picking on religion. I am privy to certain information due to the charity of that church, which was very much appreciated by me an Kay when we came back from Maui. Our computers had been destroyed in shipping and Dad's buddy at MCC was nice enough to donate to us an "old" desktop computer, (2003 model Dell in January of 2006...old?) It was the one from the accounting office and somehow they "forgot" to clean the hard drive of all church business.

That 150gb hd had all the membership info, correspondence, bulletins, pastoral journal and financial records from Jan. 2001- Dec. 2005 on it. I did call and ask if they were aware of this and wanted the info to wit I was told "No, do as you wish. we're sure we can trust you to remove it".