Thanks to reduced funding to the IRS by Congress, the audit rate for individual tax returns has declined from 291,000 field audits in fiscal year 2014 to 267,000 in fiscal year 2015. The number of correspondence audits increased from 951,000 for fiscal year 2014 to 961,000 for fiscal year 2015. The revenue from examinations fell…

A significant portion of clergy audits include Schedule C and Form 2016. The Schedule C is a one-page tax schedule used by self-employed to report their business income and expenses on their personal federal income tax return. Form 2106 would report ministry related expenses as an employee of the church. The good news is that…

The frequency of payroll audits has surged over the last five years and churches are facing increased payroll scrutiny. Most payroll audits have traditionally focused on whether or not a church is misclassifying an employee as an independent contractor, thus avoiding Social Security, Medicare and other payroll taxes. Churches misclassify anywhere from 10 percent to…

In a previous article “Clarifying the IRS Rules About Endorsing Candidates From The Pulpit,” we wrote about the IRS rules and regulations concerning churches/clergy officially endorsing political candidates. Throughout the election season, the IRS was inundated with complaints regarding the churches officially endorsing candidates. Recently, Bloomberg BNA talked with Russell Renwicks of the IRS Tax-Exempt and…

Here is a hot spot on clergy returns that can raise the chances of scrutiny by the IRS. Ever wonder why some tax returns are audited by the IRS while most are ignored? Well, there’s a whole host of reasons to this age-old question. The IRS audits only about 1% of all individual tax returns…