Separation of Church and State Part II - 30 Pieces of Silver
Tuesday, August 31, 2004 (02:20:08)

Posted by Rod

Separation of Church and State (30 Pieces of Silver) The roots of many problems surrounding the separation of church and State lie closer to home than you might imagine. Your local church may be a snake in the barrel. That's a powerful statement and I can prove it. This article might open a big can of worms for most Christians and churches. It will not be popular with many pastors or church board members because it reveals facts about church management they don't want to discuss, especially with their congregation. Most local churches have no right to complain when their speech is censored by the government because they have relinquished their rights to freedom of speech for a few pieces of silver. How do you expose someone's secret sin in a loving manner? No matter how you do it, someone will complain. I guess you just speak the truth and be ready to defend it.

These days, no one thinks it strange for a church to be incorporated as a 501c3 non-profit organization. In fact, most people expect it. Churches have only been doing this for the last fifty years. Prior to that, the vast majority of churches were not incorporated and they were still exempt from taxes. Churches have always been tax exempt because they never came under the jurisdiction of the State or under the government's taxing authority. Why then did churches adopt this recent and redundant practice? Because the government said they had to. In 1954, churches were added to section 501c3 of the tax code, making those who register, tax-exempt. Technically, churches, who were already tax exempt, registered so they could be tax exempt. It doesn't make sense, but not much in government does. Lyndon B. Johnson sponsored the bill when he was a Senator.

According to the IRS, "churches are automatically tax-exempt and tax-deductible" without having to apply for tax-exempt status. A 501c3 classification from the State cannot grant permission to function as a church when the constitution has already done that. A 501c3 merely is a legal document that registers the church and brings it under the authority of the State because when anyone incorporates, they become a creature of the State. The State is sovereign over all corporations and dictates how corporations will conduct business. By filing corporate papers, the church becomes subordinate with the State. They sign an agreement with the State regarding what they will and will not do or say. The church is allowed to exist so long as it abides by the rulings of the State. For example, corporate law dictates a mandatory governing hierarchy that every 501c3 organization establishes, President, Secretary, Treasurer, etc. A yearly corporate tax is paid to the State, which grants the incorporated church the right to function as a church within the State.

All this may seem a bit foreign to the average lay person, but pastors are well-versed in the church/government relationship, for it is the basis of their existence in the community and the very core of their lives as a taxpayer or shall we say, a tax-exempt citizen. Most of the tax wizardry takes place behind closed doors. The church members seldom, if ever, are aware of just how the church is governed by the State.

If you ask why this is taking place, you might hear, "It's just something that has to be done," or "It's the law," neither of which is the truth. The fact of the matter is, the 501c3 church agrees to submit to State rule in exchange for certain privileges, not afforded to the average taxpayer. By now, some pastors reading this might be getting nervous because I am referring to an abyss into which most pastors have fallen. While many pastors preach long and loud against the evils of money and the government, they won't tell you they have sold their church to the government in exchange for a few pieces of silver, for the secret is that pastors of 501c3 churches are afforded the greatest tax write-offs of any citizen.

Did you know that pastors of a 501c3 church can write off everything in and around their home? They can write off the dishes in their cupboards, the furniture in their house, the clothes in their closet and even the fertilizer they put on their lawn. Imagine being able to write off your car, fuel, your wife's birthday cake and your dog's food. The IRS allows pastors to do all of this and all they ask in return is for the registration of the church with the government. If you do not believe this is true, corner your pastor, in the presence of others, and ask him. Ask him about his housing allowance and line item deductions. Don't bother asking the music director or Sunday School teachers. Only the pastor and associate pastor are afforded these tax benefits because they are considered by the IRS to be the most influential members of a church.

Many things that take place in the church today would change overnight if the church were not registered. Pastors would be free to preach the Word without fear of losing their cherished tax benefits. There would probably be no State marriage licenses because a pastor of a 501c3 church is required to process a State license whenever he performs a marriage ceremony. I'll bet you didn't know that's the reason, did you? The Bible does not require a license to get married. Remember, a license grants you permission to do something. A driver's license grants you permission to drive a car. A license on your car grants you permission to drive it on public roads. A business license grants you permission to operate a business in your area. A pastor is required to be licensed, giving him or her the permission to perform pastor's duties in a 501c3 church. Everyone gets a license. Everyone is granted permission. Everyone does what the State tells them to do.

The IRS even tells the church how it will perform charitable acts within the community. For example, a 501c3 church is allowed to give food, shelter, clothing and emergency services. 501c3 churches are not allowed to give money to someone in need. You might say, "We don't give money because you never know what the person will do with it." That's not true. A church doesn't give money to the poor because they could lose their 501c3 status and the pastor would lose his tax write-offs.

A 501c3 church is not allowed to make any cash transactions. Every penny must be recorded. The money trail must be exhaustively documented and reported. Remember, it's all about the money. The pastor knows it. The church board knows it. The congregation is unaware of the intricate reasons even though every 501c3 church has a business meeting every year, which is also mandated by the State. During this meeting, you might hear some numbers telling you how the church is doing financially. You will never hear the details of how and why the church is doing business with the State because "you wouldn't understand." That's the answer most pastors give when asked why they don't talk about these things. The fact is, people would understand and they wouldn't stand for it. The church/State relationship is clouded by fancy legalese. A lay person is told the church has a "charter", but most people fail to realize that is just another way of saying the church is a business corporation, registered with the State. A charter is nothing more than papers given to the State when someone requests permission to operate as a church. Technically, they request permission to operate as a 501c3 corporation, which a church does not need to function, but needs to afford pastors tremendous tax benefits. It also allows you to use your financial gifts as tax-writeoffs, but as I said earlier, you can do that without giving to a 501c3 church. This is not Biblical.

There are many healthy churches who have refused to climb in bed with the State and IRS. Pastors of these churches may or may not choose to purchase a license (remember that word?) and the congregation still receives tax benefits for their tithes and offerings. The non-registered church is free to function according to Biblical principles. The pastor is not prohibited from speaking certain things from the pulpit, which is a right granted by the First Ammendment of the Constitution, whereas the pastor of a 501c3 church is forbidden to say certain things pertaining to politics, laws and political candidates, a right granted to every other citizen in the United States. The pastor of a 501c3 church relinquishes rights to freedom of speech in exchange for special tax benefits. It's all about the money. It's the government's way of saying, "Keep your mouth shut about how we run the government and we'll give you money."

This year, watch groups are sending representatives into church congregations to listen to sermons and collect written material to make sure pastors are abiding by their agreement with the government. If they find any violations, the IRS will revoke the church's tax-exempt status and stiff penalties will be applied to the church and its membership (you). This means they make sure your pastor does not recommend a particular political candidate or attempt to sway anyone on issues at the poll. It is legal for a church to support a voter registration drive if carried out carefully. If the church's tax-exempt status is revoked, the donations you wrote off as deductions immediately become taxable.

Here are some links to prove what I have said about the watch groups. I am sure you can find more.
Conservative Group to Watch Liberal Churches in Virginia for Tax Violations
Coalition keeps close watch on church political activities
Group to watch liberal churches


Here is some information your pastor and church board already knows.

Ministers as Defined by the IRS
(from the IRS website)

"Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination.

If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes."

The IRS ignores what the Bible says and has defined what a minister is. The registered church rejects Biblical principles and agrees with the IRS.

Notice the words, duly ordained, commissioned or licensed. The IRS does not mandate licensing, but offers it as an option to determine the office of minister within a church. The IRS does not mandate a degree from a Bible college or theological seminary. The IRS mandates that a minister be affiliated with a "church or church denomination, and then it goes on to define a church.

Pastors may apply for Social Security exemption if they participate in a recognized retirement plan. More about this later.


Churches as Defined by the IRS

Congress has never dared to pass a law that defines what constitutes a church, other than to say "a church or convention or association of churches", which is like saying that the definition of a duck is "one or more ducks".

The IRS bravely goes where no political man has dared to go by publishing the following list of things a church must do to be recognized as legitimate.

1. A distinct legal existence
2. A recognized creed and form of worship
3. A definite and distinct ecclesiastical government
4. A formal code of doctrine and discipline
5. A distinct religious history
6. A membership not associated with any other church or denomination
7. An organization of ordained ministers
8. Ordained ministers selected after completing prescribed studies
9. A literature of its own
10. Established places of worship
11. Regular congregations
12. Regular religious services
13. Sunday schools for religious instruction of the young
14. Schools for the preparation of its ministers.

The IRS ignores what the Bible says in its definition of a church The registered church rejects Biblical principles and agrees with the IRS.

Let's look at these one at a time.

1. A distinct legal existence

This is not a Biblical mandate! The IRS requires this because a minister, as defined by the IRS, has extensive tax exemptions. Those exemptions are dependent upon serving in a registered 501c3 church. Understand that the 501c3 status is granted by the State and not the IRS. Once that status has been granted by the State, a church must then submit those papers to the IRS before tax exemption is granted on a federal level. Remember, it's all about the money. You must ask ask the State for permission to function as a church before the IRS will extend tax deductions to the pastor and members. The pastor is motivated to register his church with the government.

Remember, to be recognized as a minister, the IRS states the church must be registered with the State.


2. A recognized creed and form of worship

Recognized by whom? I guess if people are attending the "church" then they recognize what they believe. So...DUH! The statement, "a form of worship" is arbitrary. People worship in so many different ways. At least the IRS does not dictate how we will worship...yet. If or when it does, I am sure we will see a change in church liturgy.


3. A definite and distinct ecclesiastical government

Someone has to be in charge and the IRS wants to know who that somebody is in case "somebody" doesn't follow the rules. Remember, the IRS is only interested in where the money comes from and where it goes. The IRS has no other reason to exist.


4. A formal code of doctrine and discipline

I guess this leaves the Unity Church out, doesn't it? In our area, they have billboards on the side of the highway saying that you can come to their church and worship who and however you want. Then again, maybe that broad code is considered formal by the IRS although the doctrine and discipline part gets fuzzy.


5. A distinct religious history

Distinct is an arbitrary term whose definition is subject to IRS scrutiny. History is another arbitrary term. Technically, yesterday is history. So if you said "G-d" yesterday, you would have a religious history.


6. A membership not associated with any other church or denomination

The IRS says you cannot belong to more than one church. This is not Biblical. In fact, the Bible doesn't reference church membership at all, but that's another story. Remember the IRS defines a church as having a "distinct legal existence." You can give offerings to more than one church, but you are not considered members of those ministries. Did you ever wonder why some churches request that you "transfer" your membership from one church to another? That way, the pastor and church board can legally claim you as a member of their church.


7. An organization of ordained ministers

(See the definition of minister) Obviously, all churches want a minister, but ministers is plural in this ruling. The IRS does not consider a person a minister unless they are affiliated with a church that is registered with the State. Notice the golden handcuff? It's pretty, yet confining. Everyone is wearing one these days. They have been the fashion for fifty years.


8. Ordained ministers selected after completing prescribed studies

Prescribed studies is an arbitrary term whose definition is subject to IRS scrutiny. Technically, if a State-governed, 501c3 organization tells you to read John 3:16, you have completed your prescribed studies.


9. A literature of its own

Apparently a church cannot use anyone else's literature (whatever that means) This stipulation also leads one to believe a church is not a church unless it prints something of its own. Fire up that mimeograph machine.


10. Established places of worship

Okay, you Christians will STOP worshipping God anywhere you want! The church is required to provide the established place. This shows the IRS' lacks the basic understanding of God and worship. This requirement, however, does not dictate the location of the "places of worship" which means it could be the Internet or in Uncle Wally's garage, but I am not so sure Uncle Wally will allow a State-governed church to dictate what he sings and how he worships, which it could do because worshipping there would make Uncle Wally's garage an entity of the State-governed church. Uncle Wally probably wouldn't attend a State-governed church in the first place.


11. Regular congregations

Okay, maybe the Internet might not comply with this IRS restriction unless the congregation can be validated, which means we need to know your identities, home addresses, etc. Ah, now we might know why churches keep a membership list, don't we? This might mean that if the church is registered with the State, so are the members. Feeling queasy yet? You might want to start.


12. Regular religious services

We assume this means a pre-established schedule of services, but the restriction doesn't say. I have been to some churches where I wouldn't consider the services regular. Would the IRS consider your church services regular?


13. Sunday schools for religious instruction of the young

The IRS mandates that a 501c3 church WILL conduct Sunday School (or whatever you want to call it) According to this ruling, the 501c3 church must have a training program for the youth and it must be held on Sunday. No training program, no church.


14. Schools for the preparation of its ministers.

The IRS states a 501c3 church MUST have an organized school. Remember, this is the IRS definition of a church and not a denomination. This is not Biblical.

For the most part, most churches will be left alone if they are affiliated with a denominational school of theology, but the IRS reserves the right to leverage any or all of these requirements to determine the validity of a churches existence. In short, you are not a church unless the IRS says you are.

What does this all mean? It's simple really. Church corporations submit to the State in return for tax-exempt status. The pastor relinquishes his right to freedom of speech and gets a license (permission) to preach. The church registers its members and tracks their financial history. (It's all about money) The State tells the church how it will function and limits its freedom of speech in return for tax deductions. Got that?

Consider this. According to the IRS, the Apostle Paul was not a minister because he was not affiliated with a church registered with the government. He probably didn't want to write off his cable television or toothpaste anyway. What do you think Jesus would have said about those who participated in this charade? Yeah, we all know the answer to that one, but according to the IRS, Jesus would not be considered a "minister" of the Word either, nor would the disciples. However, the Pharisees would be considered ministers. This gives one cause to pause, doesn't it?

Don't scream about separation of church and State if your church has voluntarily sold itself to the State for a few pieces of silver. The government has paid a lot of hush money in the form of tax deductions, to silence pastors. In return for their investment, they want them to HUSH!

Pastors need to be honest about this unholy Church/State relationship with their congregations. Church members need to understand and decide if they want to keep their tax deductions for contributions or forfeit those for the furtherance of the Gospel of Jesus Christ. Church members need to decide if they wish to continue attending their State governed church.

When a church marries the State, it cannot complain about its bed partner. Agreed?


What's the Answer?

The problem with registering with the State and IRS is that once you do, they will never let go. This means that even if you notify them of your desire to relinquish your 501c3 status, you are already on their books and they expect you to continue to abide by your original commitment. They want to know where the money is and who has it.

A 501c3 church can spawn another organization with a different tax classification (another corporation), but the connection between the two is still documented with the State and IRS. The only hope for escape is for people to put their foot down and demand a change in the way their church does "business" with the government. Church members need to walk out and find another place to worship. Attend a church where the pastor does try to serve God and his tax deductions.

Technically, if you attend a non-501c3 church, your tithes and offerings are "probably" still tax deductible whether you receive a receipt or not. Here's why. A church is a non-profit organization (or should be), correct? When you give your money to such an organization, you are trusting them and holding them responsible for how that money is spent. Your "intent" is considered in your financial dealings as much when you give to a 501c3 corporation as a non-501c3 corporation. Consider this. I'll bet you do not have a photocopy of your church's 501c3 non-profit status, do you? If not, you just might not be real sure if your tax deductions are legal or not, are you? The answer is, "Yes, you are sure" because the IRS takes your "intent" into consideration on your giving. Otherwise, every giver would be required to maintain a copy of proof the recipient was registered with the State and this is a burden that no one wants to accept. The IRS is not after you, it is after the pastors because they are the ones with the most influence over Christians. They are also the ones who can hand them a list of church members and their giving history. And you thought your privacy was intact at church. Don't worry. They might only come after you if they audit your church and find financial improprieties, which probably won't happen, right?

The choice is simple. Walk away from the bondage of the IRS's golden handcuff called tax deductions. That's not the reason real Christians give anyway and it pollutes the giving process. Consider the possibilities that you might not receive God's blessing for your tithe if you write it off your taxes. Remember, if you receive your reward here, you won't receive it in heaven. Now, we're getting into the real meat of the problem aren't we? Everyone seems to have been bought with a few pieces of silver. Jesus purchased your soul on the cross. You have no right to sell it to the State or IRS or even a State-governed (501c3) church.

Here are some links for good legal information.


IRS Church Definition
Proper Disclosure of Tax Deductibility
Religious Counseling: Duties of Disclosure
Tax Provisions Affecting Clergy


More links (read them all)
501c3 Facts
Political Speech by Churches
501c3 Church Forum
The Age of Non-Profits
Five Reasons Why Christians Should Not Obtain a State Marriage License
Setting Pastors Free from the IRS Speech Police
Miami Church Runs Afoul Of IRS Rules
Church, state and politics


Other interesting bits of information:
A pastor can be sued for malpractice if he or she gives bad advice or counseling that results in a dissolution of marriage, physical or emotional harm. These cases are easily won when it can be proven that a pastor has not been properly schooled in certain levels of psychological counseling. For this reason, some pastors carry malpractice insurance, which the church usually pays for.

A church can be audited by the IRS and State. It happens more than you think. If the audit reveals problems in accounting practices, the church members can be audited as well. Ask your tax consultant for advice.

When you have a special offering for a guest speaker in your church, the church is required by law to obtain a copy of that speaker's 501c3 non-profit or tax exempt status before handing over any contributions. The church is also required to withold 40% of the offering and file a 1099 form if the speaker cannot provide the necessary documentation. The church cannot hand the cash from the offering to the speaker. It is required by the IRS to deposit it into the church's bank account and write a check. Remember, the church is not allowed to deal in cash. Failure to follow these basic rules can result in EXTENSIVE tax penalties for the church and possible revocation of its tax exempt status. Remember, it's all about the money.

This tidbit of information is ugly! If a legal judgment is imposed on a church (or any corporation), the monies used to pay that judgment are not to be paid with money collected by charitable donations. Money paid toward a legal judgment is not tax-deductible. A church can easily be audited to make sure money paid out did not come from non-profit coffers. Church members cannot deduct contributions toward these judgments from their taxes. The church is required by law to inform givers that certain money will be used for non-charitable purposes and is therefore not tax deductible. How would you like to be audited by the IRS because you gave money to a church that was forced to pay on a legal judgment? How many millions of dollars have recently been paid out by the Catholic church? Can you see the impending storm of IRS audits coming?

Here is just a quick overview of some of my experience in these matters.
Over the years, I have learned more about church finances and taxes than I wanted to know. I have served as a church board and council member. I have spoken at great lengths with pastors and more than one tax attorney regarding this topic. At one time, the retainer fee for my business tax attorney was $700 per month. I got my money's worth. I once wrote a computer program to help churches track their membership, offerings and expenses. It took me weeks to find out why reports generated by this program appeared to be flawed at one particular church. I went to the pastor several times for answers to accounting and management questions and to find out how and why certain items were being entered. I eventually discovered the awful reason for the unusual reports. The pastor was purchasing certain items for his home, like a big-screen television. He would then present the receipt to the church treasurer, who would reimburse him for the purchase because he was "entitled to certain line item deductions". (I thought that was weird too.) The pastor would then keep the receipt for the purchase and write it off his taxes. THIS IS NOT LEGAL! The pastor was receiving double payment, putting himself and the church at risk with the IRS. When I discovered this atrocity, I went to the pastor and was violently attacked for my accusation. I went to the council, as prescribed in scripture, and recommended an internal audit by an outside agency. They called in a reputable company to do an audit. Horrified at their findings, the auditing firm eventually called me. I refused to answer their questions because I didn't want to taint their view or findings. I told them to do their job and send their report to "interested parties."

Based on the findings of the audit, the church headquarters ultimately revoked the church's charter and repossessed the church building, which was eventually sold. The pastor's wife divorced him, sold their house and moved away. The pastor went to Australia on a "missions trip" and hasn't been seen since. The church headquarters swept the entire thing under the carpet. Everyone and everything just "went away." This happens more than you might imagine.

Did you know that the Assemblies of God pastor retirement plan, headquartered in Missouri, is not approved by the IRS and pastors and churches still write off contributions to this fund. When I asked them how they got by with that, the retirement fund representative told me "the government doesn't usually mettle in our affairs because we are a church." That was almost twenty years ago. Trust me, the IRS mettles more now than it used to.

Remember that it's all about the money. The Bible says we cannot serve God and money. The local 501c3 church is attempting the what God says can't be done.

Disclaimer: I am not talking about your church in this article. I am talking about those other churches. Surely your church and pastor are not guilty of anything mentioned in this article. Your pastor would never take a tax deduction for his television, carpet or trip to an amusement park. Your church is not a registered State entity. This should go without saying, but it doesn't so I'll say it. (these disclaimers are sadly necessary for certain individuals) I am not stating that pastors are bad. I am not stating that churches are bad. I am stating that pastors and members of 501c3 churches have no right to complain when they are unhappy with the way the government treats them because they have agreed to the rules of engagement. I am also stating that 501c3 church registration and IRS recognized tax-exempt status for churches is in violation of the scriptures and don't tell me we are to do what the leaders of our country say. If Jesus took that narrow approach, you wouldn't be saved today.

Whenever anyone exposes sin within a sacred institution, they are usually attacked by those who are either guilty or ignorant of the facts. There will undoubtedly be a storm of less than loving comments spawned by this article. All I ask is that you substantiate your comments and accusations with scripture and how it applies to Federal and State law and IRS statutes. Take some time to research the facts, State laws and IRS statues and your church's business practices before submitting a rebuttal. Failure to do so might prove to be publicly embarrassing.

Now that you know the truth, you have some decisions to make. Your pastor may not have considered these issues in this light. You may have to "explain" things to him after you have called him to accountability. If you are a pastor, tell your congregation the truth and consider cleansing your church and yourself of State regulations. Adhere 100% to Biblical principles and manage your church accordingly. Once this is done, then you can say anything that is on your heart because your heart will be clean and so will your conscience.

The line has been drawn. God is calling the church to purify itself. He is calling us all to holiness. We cannot fulfill the calling as long as we make deals with the government and sell the church for a few pieces of silver. If you don't like what the government is doing, give them their money back and serve the Lord.


- Rod
No, Gentle Ministries is not registered as a 501c3 organization.
I am sure you now understand why.
Yes, I am an ordained pastor.
Yes, I can perform "church" ceremonies unhindered by governmental censorship.
I have not relinquished my right to freedom of speech.
No, I don't write off my dishes, dog food or fertilizer.
I don't take tax deductions for my charitable giving.
100% of all donations go into the ministry.
I receive no salary or financial benefit from Gentle Ministries.
I have the right and responsibility to speak the truth.


Copyright (c) 2004 Rod
Use without permission is prohibited
You may not post this on a website without permission
You have my permission to make copies of this article and hand them out at church as long as you maintain the copyright notice.

Read Part I of this series.

-----------------------------
Here is an email I received (12/08/05) and my responses to the writer's remarks and requests for more information.
-----------------------------

> I am sort of in a debate with a pastor and some others right now, all I am
> trying to do is put out the warning to Gods people on the 501c3
> incorporated church. I have sent him so much and pretty much exhausted the
> subject I can not seem to find the facts that he wants (he is 501c3 by the
> way) on how 501c3 does get extra benifets somehow vs. just being
> incorporated he wont get past the fact that only the one church pierce
> creek got their exemption taken away. do you know of others?

This one is simple to prove. Have him post in next week's church bulletin, his recommendations for political party affiliation or his opinions regarding the war in Iraq. Doing so will immediately place your church's 501c3 status with the IRS in jeopardy and he knows it. If he won't publish the content, you have your answer. If he does, send that bulletin to the IRS and see what happens. You'll get your answer. Your church will lose its 501c3 status, which is not a bad thing if your pastor is interested in serving the Lord and doesn't care about his tax benefits.

If what he says to you is true, your pastor won't mind at all. We both know he will mind, so this exercise will serve to smoke the snake out of the woodpile.

> I found tex
> marrs, but this pastor still argues that he was only a ministry not an
> official church.

From IRS Publication 1828
Individual Activity by Organization Leaders
The political campaign activity prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax-exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions. http://www.irs.gov/charities/charitable/article/0,,id=120703,00.html

Google this: church IRS status politics
You'll be there a while reading case after case.

Read this article
http://www.christianitytoday.com/yc/8y4/8y4060.html
Print it off and hand it to your pastor.

> in your article you state specific write offs like house
> and tv etc. but he denies that is true.
> where is the source, is there an
> official document?

He lied. Pure, plain and simple, he lied.

http://www.ub.org/ministers/Finances/housingallowance.html
----------------------------------
excerpt follows (read the whole thing)
----------------------------------
The parsonage allowance can include a wide variety of things needed to furnish and maintain the home, its contents, and its yard. Here are some expenses which can be covered by the housing allowance:

* Rent, mortgage payments, down payments, property taxes, mortgage interest.
* Utilities: heat, electric, non-business telephone, water, cable TV, sewer, garbage.
* Insurance for the home and contents.
* Improvements, repairs, and upkeep.
* Furnishing, appliances, cookware, decorator items (curtains, pictures, linens, wallpaper, bedding).
* Yard tools and machines.
* Anything needed to maintain the home and what’s inside--lightbulbs, carpet and curtain cleaning, cleaning supplies, mower maintenance.
----------------------------------

Here is a great way to clear this up. Ask him to show you his last year's income tax filing. He won't allow it, I'm sure. If he doesn't, then you have your answer. If he does and is not claiming those things, then you either have a pastor who is unaware of his tax benefits or he is noble and refuses to take them.

Here is some other reading on the subject.
http://www.cbuskohl.com/pastors_comp.htm

Spend the $30 and get the book from a CPA
http://www.cbuskohl.com/clergy_tax_preparation.htm


I have a habit of calling someone's bluff when they are either threatening me or lying to me. In this case, you are not being given the truth. Call his bluff and then hold your ground.

If your pastor refuses to show you his income tax filing and you want to push the issue, go to the church board and have them request it. If he fails to produce it, they should reconsider his tenure. Additionally, if he defrauds the IRS with his filing, the church is then audited as well. You'd better have a good accountant on the church board or shut the lights off and lock the door on your way out.

More reading:
http://www.ub.org/ministers/Finances/clergytaxes.html
http://taxprof.typepad.com/taxprof_blog/political_news/
Specifically, READ THE FOLLOWING.
http://www.acsblog.org/bill-of-rights-2326-the-irs-in-the-pulpit.html

Download this Word doc and read it very carefully, especially the parts about marriage licenses.
http://www.thechurchatsalem.net/THIRTYWAYS.doc


One other thing I didn't cover in the article, but will do so in a follow-up article. Ask your pastor if he is an employee of the church or an independent contractor. Independent contractors have greater control over their write-offs and many pastors leverage this classification. It is the church's responsibility to determine the correct classification. If the pastor does not meet the necessary criteria as an independent contractor, the church is held liable by the IRS. That's a whole other can of worms that needs to be opened.
http://www.unity.org/faq/faqchurch.html

If the pastor opts to be an independent contractor, the church gives him a 1099 instead of a W2 and he then writes off everything as an expense of doing business as an independent pastor. That is why there are so many traveling evangelists and guest speakers. The write-offs are astounding! Your church submits a 1099 to each individual to account for the "love offerings" your church gives to them if they are over $750, I believe. I might be wrong on the exact dollar amount, but that's what it used to be. Your church MUST write the guest a check and NEVER give cash, EVER. If they do, they will lose their 501c3. The IRS demands that churches keep excellent records and NEVER deal in cash. If your 501c3 church ever hands a guest speaker cash from the offering, walk away and find another church.

Feel free to write anytime. I won't back down from what I said and neither should you. Understand that you are stirring up some serious trouble in your church. You may not like the answers you ultimately get. Somehow, I don't think that bothers you.

Many blessings!

- Rod