An Illinois court ruled recently that the state can’t tax a religious ministry to underprivileged children. The Illinois Department of Employment Security had attempted to assess unemployment compensation taxes to By the Hand Club For Kids, a ministry of The Moody Church, reversing the Department’s previous determinations that By the Hand was nontaxable since its creation in 2001.
When is a volunteer an "employee"? The question is a complicated one, but the Sixth Circuit recently rejected the Department of Labor's attempt to require a church-owned enterprise to pay all volunteers a minimum wage. A church run by controversial televangelist Ernest Angley owns a for-profit restaurant buffet. Angley would recruit church members to serve as volunteers for the restaurant. The Department of Labor sued alleging that the workers were "employees," arguing 1) that there was no such thing as a "volunteer" for a for-profit entity, and that 2) the workers were coerced by their pastor and thus were not truly volunteers. The District Court agreed. Facing a judgment of $388k, the restaurant closed during the litigation.
Transit benefits can be a great employer-provided perk to employees, whether provided for mass transit or parking, and whether paid directly to transit and parking companies or to employees. As a result of recent federal legislation known as the Tax Cuts and Jobs Act (“Act”), however, employers may no longer deduct such transportation fringe benefits as their own deductible business expenses. Moreover, nonprofit employers that provide this employer-provided perk must report and pay tax on the value provided as taxable “unrelated business income.” On the other hand, employees may still contribute their own earned wages through a pre-tax salary reduction program. Confusing? Here are the key legal details and related employment adjustments that may be warranted in light of the Act’s passage, for both taxable and tax-exempt employers.