Speaker accepts "contributions" to church

The speaker could well be an independent contractor, so the chuch can probably get away with issuing a 1099 instead of a W2.

But for the speaker the "contributions" are taxable, just as tips at restaurants are taxable. The money is paid with respect to services performed, whether there is a legal obligation to pay or not. Because of that, such payments are taxable.

___ Stu

I think the issue is whether the contributions the listeners pay the church is deductible. If they paid the speaker directly then no deduction as it is a personal expense, but when they channel the money through a church, they get a deduction.

If that's the case, it seems to me the issue would be whether the church is performing its exempt purpse when presenting the speaker. This is not a quick and easy call. If the talk concerns social issues, my guess is that it is likely the IRS would determine it to be within the church's exempt purpose.

In that case, the contributions would be deductible to the donors and not taxable to the church.

However if it's determined not to be pursuant to the church's exempt purpose (e.g. it's too political or commercial) then the donations would not be deductible, and the church would have to recognize unrelated business income. ___ Stu

On 1/20/2012 1:08 PM, snipped-for-privacy@yahoo.com wrote: ...

While not the subject of the post which had to do only w/ the end recipient's position, they (the contributors) probably are taking the deduction; whether they are justified in doing so is, in my mind, at least questionable.

The contribution is supposedly received in lieu of any services rendered; a tacit/implied understanding that the contribution is in fact, a reimbursement to the speaker for giving the talk is, to my way of thinking, a violation of that.

If the contribution ended up at an organization that was charitable rather than to the individual and it was to support their work, that could be "clean enough" (to use a technical term :) ) but this smells.

What sayeth the pros?

Interesting points.

I guess my concern is for the overall transaction, and whether my prospective client would be participating in a sham, the people he performs the service would be getting a deduction, when they might not if they paid him directly. .

As far as a contribution to a church "paying for services", I think it is implicit - and perhaps explict, that amounts put into the basket go to pay the minister, church staff, and even individuals who the parishoners may not have contact with (or get any benefit from) such as missionaries. This fellow might be looked a missionary. I have done quite a bit of work with churches over the years, so I recognize the unique types of animals they are. But I don't even know if he has any relationship with the church other then to funnel the payments through.

Part of me is say "OK", but I'm also getting a queazy "gut feeling" - but can't place my finger on exactly what the legal problem is.

Yeah, the 'pass-thru' nature rankles one's queasy button.

But, Stu's remarks came after I had posted mine and that and reflection makes me think it's possibly ok depending on the specific circumstances.

The "services rendered" is for a specific service to the specific contributor so the general fund contributions do go to the various overhead costs, etc., etc., etc., ... If the donor gave something and the church did a specific beneficial to him service, that would be the prohibited action.

So, overall, I guess I'm thinking if it's a thing that really is within the church mission, the contributors are probably ok--what the rules are about the individual other than it obviously is taxable to him I'm not so clear on. Certainly the church can and does pay for services they need to keep their mission going whether it is directly to a ministerial function or the plumber to unstick the drain in the dining room after too much fried chicken grease from the covered dish supper. :)

If the "contributors" know that the church is going to pass all the receipts on to the speaker, even if there's no contractual requirement to do so, I think the IRS would view this as equivalent to them paying the speaker directly. It's similar to you giving gifts to two people, with an expectation that one of them will then regift to the other -- you can't use this scheme to get around the gift tax limit.

A gift to a nonprofit isn't the same as other gifts. Normally a gift to one person with the understanding that it will then be turned over to a third person will be treated as a gift directly from the first to the third person.

But there is nothing wrong with giving a gift to a charity on the basis that it be used for something specific, as long as the use is within the extempt purpose of the nonprofit.

It happens all the time. I don't see why this would be any different, especially since the spectators don't care where the money goes - as far as they're concerned they're giving it to the church.

___ Stu

I gather that there are rules about gifts intended for specific individuals.

R's, John

Yes, they're generally not allowed.

But that's exactly the question - were the contributions in this case intended to be directed necessarily to the speaker? Do the spectators know the payment arrangements? Do they care? As far as they're concerned, they are giving money to the church, and the church is paying the speaker, and the amounts paid and received may or may not be related.

But there is also another question here. Is there commercial value to the speaker's talk apart from conveying religious doctrine? If so, any contribution can only be deductible to the extent it exceeds that commercial value.