“Love Offerings” – Legal or Illegal?

Pastors and ministers of religious institutions have come under increased scrutiny that relates to cash practices, and the proper accounting and reporting required for each.

He was the Pastor of a good Church in the mid-Atlantic region. The Church paid its obligations promptly each month. To look at it from the outside looking in everything seemed fine. The un-manifested problem however was the Pastor. He felt as if the Church was not properly supporting him (though it was, based on the size and income of the ministry).

Pastor H. decided the best way to supplement his income was to receive “Love Offerings” each week that would be earmarked as such. This Pastor began to remove the cash from the offerings. If any individual wrote a check for that “Love Offering” the Pastor would simply remove that amount of cash from the collection thereby leaving the check to be deposited to the Church’s account.

One of the Elders approached the Pastor in love and expressed his concern for the actions of the man of God. The Pastor defensively replied, “I bring it in, I should be able to take it out.” Whether or not someone blew the whistle, or it was the result of other issues, the IRS began their audit.

Unfortunately, the Judge and jury would not accept the Pastor’s arguments. The Pastor discovered himself in a “prison ministry” of which he had no desire or anointing to fulfill. He went to prison!

Legal versus Illegal

Every Pastor I know is elated when they receive the proverbial “Pentecostal Handshake,” i.e. money placed into their hands. Often these warriors of the Gospel received different types of cash as part of their operations and activities. These cash payments could consist of contributions, “love gifts,” honorariums, cash donations or donations of items or property. It is vital for ministers to understand the terms and what such payment may represent under IRS regulations.

For something to be a true “gift” and considered a nontaxable event, it must meet several criteria that was outlined under the original Duberstein case. That with which God desires to bless you, may curse you if not transacted properly. What you do not know can hurt you!

Not all “Love Offerings” are taxable, but many of them are. It is when the Pastor, minister, or Church does not know the difference that it creates conflict that may lead to penalties or possible imprisonment. Just because a “Love Offering” is made as a charitable contribution to a church or tax-exempt religious ministries does not constitute it as a tax free gift to ministers or Pastors.

When “Love Offerings” are formulated properly they can be tax exempt. Herein lies the problem – most Churches, Pastors, and ministers do not know the difference between demarcation lines of legal or non-legal.

What Does God Say?

God wants to bless His people, especially those serving in front-line ministry. 1 Timothy 5:17-18 declares, “Let the elders that rule well be counted worthy of double honor, especially they who labor in the word and doctrine. For the Scripture says, ‘Thou shall not muzzle the ox that treads out the corn. And, the laborer is worthy of his reward.’”

Since God desires for ministers and Pastors to be financially blessed, to whom does the responsibility lie to see that they are blessed? Galatians 6:6 answers this question. “Let him that is taught in the word communicate