RESOLUTIONS & AGREEMENTS FOR CHURCHES TO MEET IRS REQUIREMENTS
These resolutions are written in General form. To be certain they apply to the unique situations of you and the church, please consult professional assistance. If these are not properly established, the results could be the loss of all tax benefits. Contact your attorney, accountant, or another qualified professional to review your specific requirements. These resolutions can be approved by the church board if they are so authorized by the church body.
1. SET UP ADMINISTRATION ACCOUNT: This resolution sets up and authorizes the ministerial administration account. There should be at least 3 signatures on the account with 2 signatures required on EACH check.
BE IT HEREBY RESOLVED AND DESIGNATED THAT THE (NAME OF CHURCH) ESTABLISH AN ADMINISTRATION ACCOUNT CALLED (NAME OF ACCOUNT) AND LOCATED AT THE
(NAME OF BANK).
THIS ACCOUNT IS TO BE FOR THE USE OF REIMBURSING THE PASTOR AND IS TO BE UNDERSTOOD THAT IT IS OWNED BY THE CHURCH AND MONIES PLACED IN THIS ACCOUNT ARE NOT INCOME TO HIM. HE IS TO USE THIS ACCOUNT TO REIMBURSE VARIOUS MINISTRY AND CHURCH RELATED EXPENSES AS AUTHORIZED BY THE CHURCH AND TO PAY HIS PERSONAL COMPENSATION. THE FOLLOWING NAMES ARE TO BE ON THIS ACCOUNT AND ARE AUTHORIZED TO SIGN CHECKS (NAMES).
2. MEDICAL INSURANCES EXPENSES: The church can pay for the medical insurance expenses of the minister.
THE CHURCH AGREES TO ESTABLISH A MEDICAL INSURANCE PLAN FOR THE PASTOR. THE PASTOR IS REQUIRED TO KEEP THE RECEIPTS OF ALL MEDICAL INSURANCE REIMBURSED TO HIM AND ALL EXPENSES ARE TO BE PAID FROM THE ADMINISTRATIVE ACCOUNT. THESE EXPENSES AS PAID, ARE NOT INCLUDED AS INCOME TO THE PASTOR, NOR CAN HE DEDUCT THEM AS PERSONAL TAX DEDUCTIONS. THIS MEDICAL INSURANCE PLAN IS TO BE IN ACCORDANCE WITH THE INTERNAL REVENUE CODE.
3. LIFE INSURANCE: The church can pay for a Group Term Life Insurance policy for coverage up to $50,000 without it being income to the pastor.
THE CHURCH AGREES TO PAY FOR A “GROUP TERM LIFE INSURANCE” POLICY ON THE PASTOR FOR COVERAGE UP TO $50,000. THE PASTOR WILL HAVE THE RIGHT TO
SELECT THE POLICY AND THE BENEFICIARY. SHOULD THE COVERAGE EXCEED $50,000, THE PASTOR WILL BE RESPONSIBLE TO PAY THE DIFFERENCE IN PREMIUM. THIS WILL BE PAID OUT OF THE ADMINISTRATIVE ACCOUNT.
4. MINISTRY EXPENSES: Various expenses can be paid from the administrative account as reimbursements to the pastor. (Be sure that no personal expenses are paid from this account.)
THE CHURCH HEREBY AUTHORIZES THE PASTOR TO PAY FOR ALL MINISTRY RELATED EXPENSES OUT OF THE ADMINISTRATIVE ACCOUNT. THESE EXPENSES INCLUDE, BUT
ARE NOT LIMITED TO SUPPLIES, DUES AND SUBSCRIPTIONS, BOOKS, TAPES, ENTERTAINMENT, VEHICLE EXPENSES, BUSINESS PHONE, OFFICE SUPPLIES, MEMBERSHIPS, DUES TO DISTINCT AND NATIONAL HEADQUARTERS, AND MONIES PAID BACK INTO THE CHURCH GENERAL FUND. THIS IS TO BE CONSTRUED AS REIMBURSEMENT FOR MINISTRY RELATED EXPENSES. (For auto expenses… see your accountant for advice)
5. RETIREMENT: The church can establish a retirement fund for the pastor and can pay all or a portion of the retirement from the general or administrative account. Be sure that it is established in accordance to all Internal Revenue regulations.
THE CHURCH AGREES TO ESTABLISH A RETIREMENT FUND FOR THE PASTOR. THE FUND IS TO BE WITH (NAME OF COMPANY OR ORGANIZATION) IN ACCORDANCE WITH
ALL INTERNAL REVENUE REGULATIONS. THE CHURCH AGREES TO PAY THIS FROM (EITHER GENERAL OR ADMINISTRATIVE ACCOUNT) IN THE AMOUNT OF $_________.
THIS FUND IS SO DESIGNATED THAT IT BELONGS TO HIM, AND SHOULD HE RESIGN AS PASTOR OR LEAVE FOR ANY REASON, IT IS UNDERSTOOD THAT ALL FUNDS ARE
SOLELY HIS.
6. HOUSING ALLOWANCE: The Internal Revenue authorizes a housing allowance for licensed or ordained pastors. These monies are not taxable to federal income tax, but must be included for self-employment tax, unless the minister has filed the Form 4361 exemption.
A. If the pastor owns or rents his home: THE CHURCH HERE BY ESTABLISHES A HOUSING ALLOWANCE FOR THE PASTOR IN ACCORDANCE TO THE INTERNAL REVENUE CODE SECTION 107, AND IS TO BE PAID FOR ACTUAL EXPENSES THAT INCLUDE THE HOUSE PAYMENT (OR RENT), UTILITIES, TAXES, INSURANCE, UPKEEP, AND THE COST OF FURNISHING THE HOME. THESE AMOUNTS ARE TO BE PAID FROM THE (NAME OF ACCOUNT) AND ARE TO BE INCLUDED AS SELF-EMPLOYMENT INCOME ONLY FOR THE PASTOR.
B. If the church has a parsonage to furnish the pastor: THE CHURCH HEREBY ESTABLISHES A RENTAL VALUE FOR THE CHURCH PARSONAGE. THIS AMOUNT IS TO BE $__________ PER MONTH. THIS MONTHLY AMOUNT (PLUS ANY UTILITIES, INSURANCE, UPKEEP, AND COST OF FURNISHINGS) IS TO BE INCLUDED AS SELF-EMPLOYMENT INCOME ONLY ON THE PASTOR’S TAX RETURN AND IS TO BE ESTABLISHED IN ACCORDANCE WITH THE INTERNAL REVENUE CODE SECTION 107.
C. For the evangelist: AFTER CONSIDERING THE REQUEST OF REV. __________, OUR EVANGELIST TO ESTABLISH A HOUSING ALLOWANCE AND DESIGNATE $______________ OF HIS OFFERING (HONORARIUM) AS HOUSING, A MOTION WAS PASSED TO ADOPT SUCH. BE IT RESOLVED THAT OF THE TOTAL AMOUNT PAID TO THE EVANGELIST, WE HEREBY DESIGNATE $_______________ AS PARSONAGE ALLOWANCE.
NAME OF CHURCH (ORGANIZATION)
ADDRESS OF CHURCH
SIGNATURE___________________________ TITLE ___________________
SIGNATURE___________________________ TITLE ___________________
DATE_____________________
7. MINISTER’S INCOME STRUCTURE. The following resolution is an example of what should be provided annually by the church compensation committee so that the compensation to the minister will be authorized.
BE IT HEREBY AUTHORIZED THAT FOR THE YEAR _____________, THE COMPENSATION PACKAGE OF THE MINISTER OF THIS CHURCH, REV. ___________________,
INCLUDE THE FOLLOWING ITEMS.
A MAXIMUM SALARY OF $____________________________________(OR) A PERCENTAGE OF TITHES WHICH IS ________________________%, AND HOUSING ALLOWANCE AS PREVIOUSLY STATED BY RESOLUTION, AND AUTO OR TRAVEL ALLOWANCES OF $___________________, AND EXPENSE OR REIMBURSEMENT
ALLOWANCES OF $___________________, AND RETIREMENT BENEFIT PACKAGE OF $_____________________, AND OTHER FORMS OF COMPENSATION IN THE AMOUNT OF $_____________________
THIS COMMITTEE, AS AUTHORIZED BY THE CHURCH, HAS REVIEWED AND PREPARED DOCUMENTS TO JUSTIFY THE ABOVE AMOUNTS FOR OUR MINISTER. WE HAVE
DETERMINED, TO THE BEST OF OUR ABILITY AND PLANNING, THAT THE AMOUNTS MENTIONED ARE FAIR COMPENSATION BASED ON THE WORKLOAD, INVOLVEMENT,
TENURE, ETC., OF OUR MINISTER AND ARE IN NO WAY EXCESSIVE AMOUNTS. THIS RESOLUTION IS ONLY FOR THE YEAR 19___.
(Note: This resolution can be so arranged to meet the various requirements of individual churches. Please consult professional assistance for further details.)
PLEASE NOTE: Resolutions #1 – 5 are to be established only once for each pastor, however, resolution #6 and #7 MUST be reestablished on an annual basis at the church annual business meeting.
Self-Employment Agreement
The following is an agreement that needs to be put into operation so that the pastor is not construed to be an employee. This will allow the pastor to file his tax return as a self-employed individual.
-AGREEMENT-
This agreement, entered into this ______________ day of ________19___, between _________________________________ hereinafter referred to as “church” and __________________________ hereinafter referred to as “minister” to wit,
The said church hereinto agrees that the said minister is duly the pastor of the church, and shall have the right to act as the pastor of the assembly and fulfill all duties of such.
The minister shall have the right to go about normal pastoral duties without the day to day direction of the church, and the church does not instruct the minister as to the manner in which the pastoral duties are performed. This agreement is only for the purpose to state that the relationship of the minister to the church is of a self-employed nature and not of an employee. The minister does not meet the requirement of the definition of an employee as stated in the Internal Revenue code.
The church warrants that no taxes are withheld from monies paid to the minister, nor is it responsible to do so. The minister agrees that he/she is totally responsible for all income taxes or self-employment taxes payable because of his/her self-employed status. This does not hereinto mean that the church could not, if desired, remit to the minister an additional remuneration such as a bonus, to help defer this responsibility if said church wishes. If the church did remunerate to minister this type payment, it would be rendered as additional self-employed income to the minister.
This agreement does not replace any other agreement between said parties, whether verbally or written, and can be terminated by either party at any time. This agreement will automatically terminate upon the resignation of the minister from the church.
This agreement is to be effective for years beginning after
_______________________.
___________________________ _____________________________
Church Minister
By: ______________________ ____________________ _________________
(The original source and/or publisher of the above material is unknown.)
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