Tuesday, August 31, 2010

Does Your Church Have A Safety Issue? Are You Conducting Background Checks?

According to the National Committee to Prevent Child Abuse, roughly 900,000 incidents of child abuse cases are reported each year. And considering it’s believed that less than 10 percent of sexual abuse cases are ever reported to authorities, the number of actual incidents each year is far greater.

How safe is your church?
When it comes to risk management, talk is a great place to start, but action is required. Churches need background check programs to protect the at-risk members. Ministry leaders need to advocate for safety in services that are provided to children, youth, and the elderly.

Here’s a plan to get started. Follow this checklist to make sure all ministry groups are compliant with basic safety practices:

1. Conduct a criminal background check on all employees and volunteers who work with children and youth. Start with the staff and ministry leaders, then screen all your volunteers. Also be sure to rescreen workers with a consistent schedule that is determined by your leadership. The International Foursquare Church has implemented a policy that states their churches need to conduct background checks annually.

2. Beyond the criminal background check, always verify prospective employee and volunteer references. Ask for this information on an application and follow-up through phone calls or send out a reference survey. It can be mailed to each person listed as a reference or used as a phone interview tool.

3. Conduct personal interviews with each ministry worker annually. Many churches interview workers to make a placement decision but don’t have continued contact during their term of service. Set up a timeline to touch base with workers to update any life issues that may impact their service.

4. Provide continuing training for children’s and youth ministry workers. Training is the key to a safe ministry environment. Someone once said, “If you think education is expensive, try ignorance.” There is no replacement when it comes to making sure your workers know what to do-and how to do it.

5. Regularly review written child-abuse-prevention policies and background check programs. Safety procedures are worthless if they’re not taught and re-taught on a continuing basis. Make sure all new volunteers are aware of the policies and procedures as a part of their orientation. Retrain often as a part of your continuing education efforts.

6. Update church background check policies as needed. A policy is only effective when it’s current and applicable. Local and state laws constantly change, so you’ll need to keep up with the practices that reflect what other child-care providers are doing in your community.

Thursday, August 19, 2010

IRS Extends Filing Deadline for 990-N and 990-EZ Filers

IRS Extends Filing Deadline for 990-N and 990-EZ Filers

Tax-exempt organizations that have not filed a Form 990 since 2007 remain in danger of losing their tax-exempt status. For calendar year organizations, the first date of automatic revocation began May 17, this year. However, due to the large number of nonprofits still out of compliance, the IRS has granted a one-time special filing extension. As a result, organizations now have until October 15, 2010 to file and retain tax-exempt status. This extension applies to filers of both Form 990-N and 990-EZ.

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” IRS Commissioner Doug Shulman said. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”

List of At-Risk Organizations.
The IRS has posted a new page on its website that names the last-known addresses of organizations at risk of losing their tax-exempt status for failure to file the required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program. Organizations on the list have until October 15th to bring themselves into compliance. Note that organizations who have failed to file Form 990 for three consecutive years are at risk of losing their tax-exempt status regardless of whether they appear on this list.


Two types of relief are available for small exempt organizations – a filing extension for the smallest organizations required to file Form 990-N, and a Voluntary Compliance Program for small organizations eligible to file Form 990-EZ. To comply, small organizations required to file Form 990-N should go to the IRS website, complete the form, and electronically file it by Oct. 15, 2010.

Under the Voluntary Relief Program, larger tax-exempt organizations eligible to file Form 990-EZ (but not eligible to file Form 990-N) must file their delinquent annual information returns by October 15 and pay a compliance fee which is between $100 and $500 depending upon the organization’s revenues. Details about the VCP are on the IRS website , along with frequently asked questions.

Note that the relief program is not available to larger organizations that are required to file the Form 990 or the Form 990-PF.

Donations to At-Risk Organizations. The IRS will keep today’s list of at-risk organizations on its website until Oct. 15, 2010. Organizations that have not filed the required information returns by that date will have their tax-exempt status revoked, and the IRS will publish a list of these revoked organizations in early 2011. Contributions from donors who contribute to at-risk organizations will qualify for the charitable contribution deduction until the final revocation list is published.

For more information, check out the IRS’ You Tube video on the topic.

Tuesday, August 3, 2010

Clergy, Mileage Logs and The IRS

Church Leaders Should Understand The Mileage Code

It is important for church leaders to recognize that the tax code imposes strict limitations on the use of the standard mileage rate.

A taxpayer kept a log of his travel. Each day, he noted the beginning and ending mileage but did not note each place he stopped or the business purpose of the stop. For three years he claimed deductions for 67,910 miles, 62,456 miles, and 58,616 miles for the business use of his cars. The IRS audited his returns for these years, and denied a deduction for any of these miles on the ground that they were not adequately substantiated. The taxpayer appealed to the Tax Court. Royster v. Commissioner, TC Memo. 2010-16 (2010)

The court noted that a deduction is not allowed for the business use of a car unless the taxpayer substantiates:
(1) The amount of such expense,
(2) the time and place of the travel, and
(3) the business purpose.

In the absence of adequate records, a taxpayer "may alternatively establish an element by his own statement, whether written or oral, containing specific information in detail as to such element" and by "other corroborative evidence sufficient to establish such element." However, the tax code specifically precludes the deduction of automobile expenses on the basis of an approximation or a taxpayer's uncorroborated testimony.

Why it matters to churches
The standard mileage rate is a convenient way for taxpayers to compute a tax deduction for the business use of their car. Employers, including churches, can use the mileage rate to compute the amount of a reimbursement to be paid to employees for the business use of their cars. In either case, it is essential for the taxpayer to be able to prove the following:

The miles for each business use of the car;
*Total miles driven during the year;
*Date of each trip;
*Business destination;
*Business purpose.

A failure to maintain a logbook or other documents that substantiate these items may result in the denial of a tax deduction, or in the treatment of an employer reimbursement as nonaccountable (and therefore reportable as taxable income).