The IRS Comes to Church: The Rowe Clergy Tax Investigation

Are churches and other houses of worship immune from IRS scrutiny against them and their ministry staff? The current bar is exceedingly high for the IRS to pursue religious institutions (collectively “churches”). But the bar is not insurmountable, particularly when it comes to clergy members’ individual tax liability. The recently decided case of Rowe v. United States demonstrates that churches may be subject to IRS scrutiny, through audits against their clergy members despite special procedural safeguards for such religious institutions.

Taking Aim at New Nonprofit Parking Tax: Can This Please Be Undone?!

Does your church or other nonprofit provide parking at its facility to employees, at no cost? As a result of the 2017 Tax Cuts and Jobs Act, employer-provided parking fringe benefits are now – oddly enough – taxable to employers. In a strange twist for nonprofit employers, that means that they will now owe “unrelated business income tax” on the economic value of such parking benefit with the corresponding legal obligation to file IRS Form 990-T returns.

State Sales Tax Liability in Wayfair’s Wake

Are nonprofits that sell goods liable for state sales tax, like for-profit businesses? And does the answer change if sales are made via the Internet? Nonprofits may indeed owe state sales tax for their sales, depending on their specific activities and extent of available state nonprofit exemptions. In the wake of the U.S. Supreme Court’s June 2018 South Dakota v. Wayfair, Inc. decision, such liability may include online sales – for both businesses and nonprofits. This is huge news for giant retailers like Wayfair and Amazon, but what does it mean for nonprofit sellers?