Aside from the training that comes with a new hire, the church is also required to report their employment to the designated state agency for which you reside. Failure to do so is a direct violation of The New Hire Reporting Program which was mandated by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. New hire reporting information can be used for a number of different reasons, the most common being the collection of child support, reveal fraud in unemployment compensation, workers’ compensation and welfare programs. 

The church is required to report certain criteria for each new hire. Federal law requires you provide the following:

  • Name, address, and social security number of the employee
  • Date the employee first performed services for pay
  • Name, address, and federal employer identification number of the employer.

Church can report their new hire using either the information on the employee’s federal W-4 (Employee’s Withholding Allowance Certificate) or a New Hire Report (equivalent form) that requires the same information. Federal law states employers have 20 calendar dates from the date of hire to report their new employee.

Civil penalties can be imposed by the state if the church fails to report their new hires. Legally, the fine cannot exceed $25 per employee with a maximum of $500 if the failure is due to a conspiracy between the employer and the employee. Depending on the state the church reports in, there are different reporting time frames, penalties, and methods for reporting.

As the church, be sure to familiarize yourself with your state’s rules and regulations surrounding newly hired employees and how you can report their employment.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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