Willful or Intentional Disregard Sec. 6672 - 100% penalty “Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof,shall in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not collected for and paid over”
Code Section: 7201 Action: Willful attempt to evade or defeat tax. Penalty: A felony, with a criminal penalty of up to $100,000 (up to $500,000 for a corporation), and imprisonment of up to 5 years (or both).
Code Section: 7204 Action: Willful failure to provide a W-2 to employees, or willfully including false information in a W-2. Penalty: A misdemeanor, with a criminal penalty of up to $1,000, and imprisonment or up to 1 year (or both).
Form W-2 Wage and Tax Statement W-2C if you make a mistake on the W-2 Form W-3 Transmittal of Wage And Tax Statement W-3C if you make a mistake on the W-3
Form W-2G Certain Gaming Winnings (Including Raffles) For more information on reporting requirements for gaming activities, see IRS Publication 3079, Gaming Publication for Tax-Exempt Organizations
Form W-9 Request for Taxpayer Identification Number Before you pay someone you need their Federal ID Number or their Social Security Number
Form 941 Employer’s Quarterly Federal Tax Return Three types of taxes: Income taxes, Employee’s FICA, Employer’s FICA (non-ministerial) Taxes paid monthly if taxes are $50,000 or less in the lookback period Taxes paid bi-weekly if taxes are more than $50,000 onlyFile 941 Quarterly even if you have only ministerial staff new oneSee IRS Publication 15 (www.irs.gov) - download a new one (use a payroll service and you will not have to deal with this ) Form 941X - To correct mistakes
Penalties For Paying Late 2% - Deposits made 1 - 5 days late 5% - Deposits made 6 - 15 days late 10% - Deposits made 16 or more days late 10% - Deposits made at an unauthorized financial institution, paid directly to the IRS, or paid with your return. 15% - Amounts still unpaid more than 10 days after the date of the first notice the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. (See IRS Publication 15) (Use a payroll service and you will not have to deal with this )(Use a payroll service and you will not have to deal with this )
Form 944 Employer’s Annual Federal Tax Return Small employers that have been notified by the IRS to file Form 944 ($1,000 annual tax liability or less - see form instructions) may use the form; other employers required to file must use Form 941.
Form 945 Annual Return of Withheld Federal Income Tax This form is used to report withheld federal income tax from nonpayroll payments Gambling winnings, backup withholding (28%). Guest speakers or others when they do not have the Federal ID number or Social Security number Form 945X - To correct mistakes
Form 990, 990-EZ, 990N CHURCHES NOT REQUIRED TO FILE THESE Return of Organization Exempt From Income Tax Form 990-N (electronic postcard), Electronic Notice for Tax Exempt Organizations Not Required to File Form 990 or 990-EZ
Form 990-T Exempt Organization Business Income Tax Return For more information on unrelated business income, see Unrelated Business Income Tax (UBIT) IRS Pub 1828 Form is due when income is $1,000 or more
Form 990-W Quarterly Estimated Tax on Unrelated Business Taxable Income (UBIT) for Tax-Exempt Organization
I-9 Must be filled out by all employees and filed separately from employee file must fill out All employees (new employees and those hired since Nov. 6, 1986) must fill out section of Form I-9 and churches must fill out section two Do not file Form I-9 with U.S. Immigrations and Customs Enforcement (ICE) or USCIS. whichever is later Do not file Form I-9 with U.S. Immigrations and Customs Enforcement (ICE) or USCIS. Form I-9 must be kept by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials (e.g., Department of Homeland Security, Department of Labor, Office of Special Counsel).
1099 Misc Issued to self-employed for income tax or non employees. Issued if paid more than $600 annually Not needed for a corporation or for anyone who will receive a W-2 from another employer for work done before Name, address and SS number needed before 1099 can be issued. Get the info before payment is made and have them fill out a W-9 1099 is corrected by reissue of the 1099 with the box at the top mark checked 1096 is the Transmittal form for 1099 misc
Form 5578 Annual Certification of Racial Nondiscrimination If a church has a school, the Annual Certification of Racial Nondiscrimination must be filled out (form 5578) 15 th day of 5 th month after close of fiscal yearForm is due 15 th day of 5 th month after close of fiscal year preschools through universitiesThis includes preschools through universities Church must have written nondiscrimination policy-known to community in newspaper
Contributions All cash donations less than $250 must be substantiated by either bank record (canceled check) or written communication from the charity the declarationAll donations over $250 must be substantiated by written communication from the charity with name of donor and “the declaration” on statement Non Cash Property over $250 in value must have description No goods or services were received for contributions except that which was spiritual in nature.
Contributions Form 8283 Non Cash gifts in excess of $5,000 (except securities) must be appraised by an accredited appraiser and IRS Form 8283 must be used to document the gift. The church will sign the Form 8283 to acknowledge the receipt of the items. Receipt must be given no later than date of donation or tax return due date
Contributions Form 8282 If Non Cash gifts in excess of $5,000 are disposed of within 3 years of receipt, (except securities) the church will need to file Form 8282 and send a copy to the IRS and give a copy to the donor within 125 days of disposition
Other Forms to Fill Out Salary Reduction Form for 401k & 403b Housing Allowance form (ministers) New W-4
Other Areas to Know About Americans with Disabilities Act Political Activities of Churches Regulation of Charitable Solicitations Federal and State Securities Laws Copyright Law Zoning Law and Churches Building Codes Nuisance Eminent Domain
Where to Find Forms IRS – Mail or Local IRS office IRS website – www.irs.gov CA Franchise Tax Board – www.ftb.ca.gov CA Board of Equalization – www.boe.ca.gov
Form DE-542 (CA) Independent Contractors MUSTWHO MUST REPORT: EITHER ORAny business or government entity (defined as a “Service-Recipient”) that is required to file a Federal Form 1099-MISC for service performed by an independent contractor (defined as a “Service- Provider”) must report. You must report to the Employment Development Department within twenty (20) days of EITHER making payments of $600 or more OR entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier. This information is used to assist state and county agencies in locating parents who are delinquent in their child support obligations.
DE-1NP (CA)– Employment Form for Non-Profits within An employer is required by law to file a registration form with the Employment Development Department (EDD) within fifteen (15) calendar days after paying over $100 in wages for employment in a calendar quarter, or whenever a change in ownership occurs
DE-34 (CA) REPORT OF NEW EMPLOYEE(S) WHO MUST BE REPORTED: all employers within 20 days of their start-of-work dateState law requires all employers to report all newly hired or rehired workers to EDD within 20 days of their start-of-work date. State and county agencies use this information to assist them in locating parents who are delinquent in their child support obligations. An individual is considered a new hire on the first day in which he/she performs services for wages. An individual is considered a rehire if the employer/employee relationship has ended and the returning individual is required to submit a W-4 form to the employer.
DE-9 (CA) - Quarterly Wage & Withholding Report Can be done online www edd.ca.gov State version of IRS 941
Calif. Form 3500A Exemption Request – Exemption from California Annual Minimum Tax
CA Franchise Tax unless Every church or ministry that incorporates in the state of California has to pay a minimum tax of $800.00 per year unless the church or ministry files for an exemption. The exemption is not automatic! Form FTB-3500 or FTB-3500A Churches get these notices because they never filed for the exemption. In order to apply for the exemption, you need to file Form FTB-3500 or FTB-3500A. If you have recently incorporated (within the last 4 years), and have not filed for the exemption, consider doing it immediately.
Out of State Guest Speakers Withholding 7% of all honorariums over $600 paid to guest speakers that live outside the state Did you know that the state of California requires all churches and ministries to withhold 7% of all honorariums over $600 paid to guest speakers that live outside the state? (Prior to 2010 - $1,500) Report to the state on form 592-B the amount of earnings and the amount of withholdings. 10% of the entire honorarium The penalty for not withholding is at least 10% of the entire honorarium. This is a penalty against the church
Calif. Statement of Information Updates your church office address Updates your Principal Officers; Pastor (CEO), Secretary, Chief Financial Officer (Treasurer in small church) Must be done biennially No cost Penalty for not doing so: possible Corporate Status Suspension See your status http: // kepler.sos.ca.gov
California Certain Gaming Winnings (Example Raffles) For more information on reporting requirements for gaming State of CA - http. // ag.ca.gov/charities/raffles.php
California Sales & Use Tax SALES TAX: Form BOE – 400 SPA Due: January 31, Following the end of tax year www.boe.ca.gov Know the difference between Tax E vasion & Tax Avoidance USE TAX: Form BOE – 401-DS - BOE Pub. 79B
For further information Rod Wiltrout - Church Finance Specialist California So. Baptist Convention rwiltrout@ csbc.com David Rutledge EA, CEP, RFC HarvestNET Ministries info@ yourchurchmatters. com www. yourchurchmatters. com