ECCU Blog

A growing number of nonprofits are fighting to keep their property tax exemption status as they become the target of tax collectors looking to compensate for increasing deficits in state, county, and local budgets. 

For example:

• In California, a New York Times article says some nonprofits have been denied property tax exemptions because the state believes the nonprofit is providing “insufficient” benefits to local residents.
• The city of Boston has asked the largest 45 nonprofits for “voluntary” payments in lieu of taxes and has extended the program to cover any nonprofit with $15 million in revenues.
• The city of Tacoma is considering reducing the property tax exemption for nonprofit healthcare providers.
• In 2010, Hawaii unsuccessfully attempted to impose a new tax of 1% on nonprofits.
• According to the National Council of Nonprofits, some of the top policy issues faced by nonprofits are: Shifting fiscal obligations, attempts to impose new taxes, and attempts to reduce the property tax exemption.
• The Alliance Defense Fund is currently defending a church in Maine because their church property was given a property tax exemption but their parking lot and parsonage were not.

What challenges has your ministry faced regarding property tax exemptions or new taxes?

While we are all called to ministry in our local church, there are specific requirements for determining whether you are a “minister” in the eyes of the IRS.

This matters, of course, because it affects how you file your taxes. For federal tax purposes, a minister is defined by the IRS as an individual who:

• Is a “duly ordained, commissioned, or licensed minister of a church.”  (Note that the ministry must be organized as a church for the minister title to apply.)
• Performs sacerdotal functions (such as marriage and funeral services, dedicating infants, baptizing, and serving communion).
• Conducts religious worship.
• Manages responsibility in the control, conduct, and maintenance of religious organizations (including the religious boards, societies, and other integral agencies of such organizations), under the authority of a religious body constituting a church or denomination.

If this describes you, then both you and your church should handle income and tax reporting per the IRS rules: 

• Ministers are treated as self-employed for tax purposes only. (Don’t confuse this with the common-law test to determine whether an individual is an employee or self-employed. Commonly ministers are also employees.)
• Ministers pay taxes under the Self-Employment Contributions Act (SECA) when they file their federal tax returns—which means churches should never deduct FICA-type taxes (Social Security and Medicare) for a qualified minister.   However, federal, state, and local tax withholdings do apply to the minister who is an employee. (It is possible for a minister to be exempt from SECA in only a few situations.)  

Questions? Use this information as a springboard for further conversation with your accountant, tax preparer, or tax attorney.

Ministry leaders, church business administrators, and financial decision makers in Sacramento and San Jose have three opportunities to network and learn together in June.

National Association of Church Business Administration (NACBA) Chapter Meeting

Join other Sacramento-area church business administrators and financial decision makers for lunch, a presentation on human resources, and a roundtable discussion. Here are the details for this month’s meeting:

June 7 (Thursday) from 11:30 a.m. to 1:30 p.m.
First Covenant Church
10933 Progress Court
Ranch Cordova, CA 95670

This event is free and you do not have to be a NACBA member to attend. Drinks and dessert will be provided (everyone brings their own lunch).

To reserve your spot, email Monty Wood at mwood@firstcov.org.

Christian Management Association (CMA) Brown Bag Luncheons

CMA brown bag luncheons provide an informal roundtable atmosphere to network with your ministry peers and engage in a guided discussion led by an industry expert. Here are the details for this month’s luncheons: 

June 14 (Thursday) from 12:00 to 1:00 p.m.
Crossroads Bible Church
1670 Moorpark Avenue
San Jose, CA 95128

June 15 (Friday) from 12:00 to 1:00 p.m.
Epic Bible College
4330 Auburn Boulevard
Sacramento, CA 95841

These luncheons are open to all ministry executives. The San Jose luncheon is geared specifically for business administrators, chief financial officers, and IT/technology staff, while the Sacramento luncheon will be of special interest to business administrators. CMA members attend free; cost for non-members is $10 (pay at the door). Everyone brings their own lunch and no RSVP is required.

For more information about these luncheons, email Pam Boersma at pam.boersma@cmanational.org.

To learn more about these meetings, visit www.eccu.org/resources/events.

One thing many ECCU staff members have in common is competency in their area of banking expertise and involvement in ministry. Two who have solid credentials in both areas will team up with a ministry member to present the upcoming cash reserves webinar on May 31, 2012.

David Lee, who will co-present and moderate this webinar, is a ministry development officer who has been serving ministries at ECCU for 20 years. All those years plus one he’s also served on the pastoral staff of a Denver-area church. On the banking side, he’s a Certified Treasury Professional^® who is committed to equipping ministries to be more effective at reaching their communities with the gospel.

Mark Jones will co-present with David. He’s a vice president and senior banking consultant at ECCU who has spent 25 years in banking and, like David, is a Certified Treasury Professional^®. He has also served on the governing board of his church as elder/treasurer, currently works as the finance director, and is on the leadership council for Missionary Athletes International. Mark specializes in helping nonprofits effectively manage their finances.

Jim Clark will join David and Mark for this webinar. He’s the pastor of business and stewardship at First Evangelical Free Church in Fullerton, California. Jim brought a business background to the church staff in 1999. He leads the areas of finance, human resources, information systems, campus operations, risk management, and stewardship education. Jim is passionate about leadership and organizational development.

The webinar these three will present is called “Cash Reserves: Why you need them. How to build them.” I should mention that you’ll have access to all their expertise at no cost; the webinar is free. You can follow this link to register.

Are you on the board of your church or planning to be? This can be an interesting challenge when you’re not equipped with the essentials. Join Christian Management Association (CMA) members and guests in San Jose, Livermore, or Sacramento for lunch, an opportunity to hear CMA President and CEO Dr. Steve Boersma share insights on “Roles and Fiduciary Responsibilities of the Board of Directors of a Nonprofit,” and a round table discussion at this month’s lunch seminar series.

Three seminars are scheduled for May (each seminar will start at 11:30 a.m. and end at 2:00 p.m.):

May 10 (Thursday)
Crossroads Bible Church
1670 Moorpark Ave.
San Jose, CA 95128

 May 11 (Friday)
Cornerstone Fellowship
348 North Canyons Pkwy.
Livermore, CA 94551 

May 18 (Friday)
Epic Bible College
4330 Auburn Blvd.
Sacramento, CA 95841

All ministry executives are invited. CMA members attend free and cost for non-members is $40.

To reserve your spot, register online at www.sjcma.org/events.html. If you’d like to learn more about this seminar, visit www.eccu.org/resources/events or email Pam Boersma at pam.boersma@cmanational.org.