Nonprofit Law/Love Offering
Our church do not have full-time Pastors or co-workers. We don't have regular payroll, except medical compensation to preachers. Currently, we give congregation the choice to specify their receiver's name, including preacher, mission and needed people.
By study IRS tax law, we need some clarification from you.
Q1. IRS has GIFT rule to prevent TAX deduction if donation is for individual. Is there a law against make personal donation, if not report as tax deduction? (Annual report will classify all donation with specific name as Non-Tax Deductible category, and there is no 1099-MISC for the receiver#
Q2. If donor give love offering to "Preacher fund", then church distribute between 2 preachers, will this be TAX deductible?
Q3. If donor give love offering to "Preacher with name", church put it in "Preacher fund", then distribute among 2 preachers, will this be TAX deductible?
Q4. If donor give love offering to "Mission: Mexico", then fund will wire to an individual receiver, will this be TAX deductible?
Q5. If donor give love offering to "Mission", then fund will distribute among needed mission, will this be TAX deductible?
Q6. If donor give love offering to "Love Offering: #Individual)", will this be TAX deductible?
Q7. If donor give love offering to "Love Offering fund", then church distribute among needed people, will this be TAX deductible?
1. People may certainly give money to whomever that want to. Note that your church will not be giving to people acknowledgements of donations for such funding, where they name the beneficiary.
I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. As your named activity is simply a pass-through of funds, it does not effect your churches federal exemption. However, in order for the church not to have the funds treated as "income" and "expenses" for income tax purposes, I would need to draft an agreement between the donor and the church. I would be willing to work on that matter, but I would need to spend a substantial amount of time and that would be beyond the scope of my offer of free services. If you want to inquire about hiring me for such work, please contact me directly to the email address below.
2. I am assuming that the neither of the two preachers are related to the donor. In any case, deductibility is only if the funds are not determined by the donor to go to any named individual or individuals. If the donor indicates the funds are to go to particular 2 named individuals then the IRS treats the funds as if they are gifts directly to those 2 named individuals and, then, of course, that gift would not be deductible as charitable contributionss for federal income tax purposes.
3. Same as #2 above.
4. It depends how many persons are missionaries for the church in Mexico. If a small number, then see #2 above.
5. Same as #4 above.
6. No, as you wrote earlier "IRS has GIFT rule to prevent TAX deduction if donation is for individual."
7. Generally yes, as long as the church's grants are to benefit the whole community.
www.irs.gov/pub/irs-pdf/p3833.pdf starting on pdf page 13 as to the
discussion of "Charitable Class"
--start of excerpt ---
The group of individuals that may properly receive
assistance from a charitable organization is called a charitable
class. A charitable class must be large or indefinite enough that
providing aid to members of the class benefits the community as a
--end of excerpt ---
If the church does not comply, then it jeopardizes its exempt status with the IRS and the donor may not receive a deduction if the IRS revokes the exemption back to the date of the donation.
which is Revenue Procedure 90-4
Harvey Mechanic, Attorney at Law -
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.