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About John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com.

Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill College

You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > tax fraud in undesignated offerings?

Tax Law (Questions About Taxes) - tax fraud in undesignated offerings?

Expert: John Stancil, CPA - 11/8/2009

Question
QUESTION: I understand that when the donor of a designated offering exerts undue control over the gift, then it is not tax deductible. However, what about undesignated offerings?

Let me give you a situation that happened last week in my church. Two deacons decided to purchase a new oven for the kitchen. The other needed repairs, and a repairman was scheduled. They decided to purchase the stove, have it installed, and the total bill was over $2K. The bill then came to the church office.

The situation, which is one that happens quite often, is that one man gives the go-ahead for the purchase of a specific item for the church, he orders the contract work or calls the store for delivery of the item, and roughly the amount of the cost of the item or work appears in the offering plate as an undesignated offering the following Sunday.

Is this legal? Can the church get in trouble for this (is it perhaps unwise but not necessarily illegal)?

Thank you for your help.

ANSWER: Colin,

Thanks for your question.

The situation you describe is not be the best of situations, as it shows a serious lack of internal control within the church financial affairs. Per se, it is not illegal, but if the obligation incurred by the church was something from which this person benefited, there could be some tax/legal ramifications.

On the surface, though it is simply someone meeting the needs of the church.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Thank you for your quick and helpful advice.

There is one error in my story. The check he gave was designated on the check, "For the stove." I do not want to discourage members helping the church, but I also want to obey the law. I have heard this is ok for tax deduction, and I have heard it is not.

I am really very confused at this point regarding designated offerings. My understanding is that if they are going toward the mission of the church generally, then it can be tax deductible. What about offering for a church member to go to the mission field? Love offering for evangelist? building fund that designates specific expenditures (playscape, parsonage renovation, etc?) I have heard mixed answers.

Thank you very much.

Answer
If the church is holding a "special offering" for a specific purpose - evangelist, parsonage renovation, whatever, contributions to that fund are tax deductible. What is not deductible is a situation where a member gives an amount designated to the church and designates it for a particular purpose not contemplated by the church) or to a specific person (benevolence for Joe Smith).

Hope this helps.

John Stancil, CPA

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