Monday Jun 05, 2023

Ep 26 ~ Love Offerings: Free Gift or Taxable Income

Churches sometimes collect “love offerings” from the congregation for a pastor, visiting minister, volunteer, or staff member in recognition of services rendered.


There really is a lot of confusion over this topic – so much so that pastors from both large and small churches have been prosecuted and convicted of tax evasion over unreported love offerings.


One of the most interesting cases was Felton vs. Commissioner TC Memo 2018-168

the Tax Court held that Rev. Wayne R. Felton of Holy Christian Church in St. Paul Minn. received taxable compensation from members of his congregation rather than personal gifts, despite the contributions' designation as gifts,

Consequently, the Tax Court applied a four-factor test drawn from case law to objectively determine the donors' intent:

  • Whether the donations were provided in exchange for services
  • Whether the minister or other church authorities requested the donations; 
  • Whether the donations were part of a routine, highly structured program and given by individual church members or the congregation as a whole
  • Whether the minister received a separate salary from the church, and, if so, its amount in relation to the donations



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