Religious Institutions Update: January 2016

Nathan A. Adams IV is a Partner in our Tallahassee office.

Timely Topics

The Internal Revenue Service (IRS) issued on Dec. 17, 2015, a memorandum instructing its examiners not to conduct employment tax audits of churches without getting in touch with a high-ranking Treasury Department official. The change puts an additional burden on the IRS if the agency seeks to examine employment tax compliance. The requirement grounded in 26 U.S.C. §7611 had been applied exclusively to examinations involving churches' tax-exempt statuses and unrelated business income. Section 7611 requires a high-level Treasury official to confirm that he or she reasonably believes on the basis of the facts and circumstances recorded in writing that the church may not be exempt, by reason of its status as a church, or that the church may be carrying on an unrelated trade or business or otherwise engaged in activities subject to taxation. The rule also requires written notice to the church