Taxes and Ministry
March 01, 2015
On March 19, from 5:30-7:00 p.m., in the Carriage House on Westminster's campus, Lynne Shropshire, M.A.C. Student, will hold a seminar entitled "Unique Tax Benefits: A Guide for Pastors and Churches."
Westminster Theological Seminary is excited to offer this seminar to its community and friends. Through it we wish to offer help to current and future pastors on the unique features of U.S. tax laws that apply to them and to help church financial team members with financial accountability and stewardship of church financial resources.
Lynne has a unique view on the little understood world of church finances, pastoral compensation, and taxation. She also has a great burden to bring clarity to this oft-confusing part of law, helping pastors and churches understand tax benefits and be in compliance with tax law.
We spoke with Lynne recently to find out a bit more about her and about what she will be discussing on March 19
1. What is your experience in financial consultation?
I received a B.S. in Accounting from Virginia Tech and an M.Ac. with a concentration in taxation from the University of Arizona. I started my career as a CPA with Deloitte, working as a senior accountant in their tax department. My dream was to teach, so when I received an offer to teach undergraduate and graduate accounting, I left Deloitte to become an accounting instructor at LaSalle University. That was my favorite job! But when my husband and I were ready to start a family, I left teaching to set up my own tax consulting practice so it would be possible for me to work from home. After 15 years as a consultant, I left public accounting to move into corporate accounting, becoming the financial manager of my husband’s engineering consulting firm. It was only in the last few years that I started to consult in the clergy and church taxation area. I got into the field because our church needed help! As I was trying to find them help, I became acutely aware of the drought in tax practitioners that specialize in church and clergy taxation. So, to help our church, I immersed myself in studying and understanding the tax provisions for churches, and was astounded by the complexity of the law, but excited by the significant benefits that these complex provisions provide for pastors and for churches. It stirred in me a passion to help churches and pastors understand these provisions so they can both honor God through compliance and also benefit from their unique tax-favored status.
2. What are some of the unique issues that churches face financially?
Our tax laws are so complex that they are incomprehensible to most taxpayers. Former Treasury Secretary Paul O’Neill once lamented, “Our tax code is so complicated, we’ve made it nearly impossible for even the Internal Revenue Service to understand.” Clergy taxes can be especially frustrating because their unique provisions are both complex and often even controversial. On a limited budget, it can be difficult to find and afford expert help. But here is the good news! If you are able to navigate through these complex provisions, there is a treasure chest of tax advantages available to your church and its pastors.
3. How can a lead pastor, or the head of staff at a church (if it isn't the pastor), be well-informed about financial and tax issues?
It is a challenge for any of us to be well-informed regarding the ever-changing tax code. Church leaders will have made great strides if they simply obtain a working knowledge of the areas that provide the most challenges and have a list of resources they can look to for specific guidance. In most cases, the problem starts because the responsible parties don’t even realize there are specific tax provisions that speak to their common, everyday ministry decisions. At the seminar, we will discuss the areas that most commonly pose challenges and will offer a list of resources that can offer guidance to the financial teams. The first step is to know when to ask for help!
4. What challenges are churches facing in today's financial situation?
Lack of resources is likely the most serious challenge to churches’ finances. And, by that, I’m not just referring to insufficient funds but also the decrease in servant hours. Another area of concern revolves around the groups that are working through the courts to challenge the constitutionality of the tax-favored status of churches, through challenging the pastor housing allowance. The housing allowance alone accounts for 700 million dollars a year in tax benefits. And, if it is declared unconstitutional, there is concern that the church real-estate tax exemption may eventually be affected as well.
5. What are some typical weaknesses many churches have when it comes to their money?
If the primary identity of the church is ministry, business automatically becomes a secondary consideration, a necessity to facilitate the primary identity of the church. And yet, as representatives of Christ, churches ought to function like the humblest and most honorable nonprofit corporations, highly accountable and as lean as possible in order to put ministry and service first. Strapped for resources, churches often have to depend on well-meaning volunteers for the financial operations of the church. Without expert help establishing and monitoring accounting practices and internal control, the church is at a significant risk for non-compliance. Finding a competent treasurer, and then investing in regular continuing education for him or her, may be the most financially responsible way to stay (or get) on track.
6. What is your goal for the seminar on March 19? Why should someone come?
The tax code is like a foreign language. And by spending over 30 years in the field, “I speak tax.” God has laid on my heart the desire to help pastors and other church leaders translate the code so they can take full benefit of the incredible tax benefits available to pastors and help their churches honor God through compliance with the law. We only have an hour and a half; so, in that time, my goal is to raise awareness through an overview of the most challenging areas, work through some practical examples, answer as many questions as possible, and direct pastors to resources for future direction and education. You should come if you have any influence over the financial management of your church’s resources and are looking for financial management tools to help.
