Worth Noting
We recently attended a conference on church tax and legal issues. Here are a few take-aways worth noting:
The IRS and the Department of Labor have recently hired more staff to review and enforce employment law violations. Contract labor is (and always has been) an area that they pay special attention to. If you issue a 1099 to any staff member, you should review to see if they should be receiving a W-2 instead. Even if you reviewed this last year, you should contact an employment attorney to review it again, as the new administration has recently changed many of the rules. These changes mean that your employee handbook should also be reviewed to make sure it complies with any rule changes. Also, if you issue a W-2 and a 1099 to the same person, this will be flagged by the IRS.
Compensation in any form to interns is considered compensation. This includes tuition payments made directly to their school. These payments should be added to their W2 form.
Never throw away old insurance policies. As some states are removing the statute of limitations on some crimes, it may be necessary to know who the insurer was decades ago if you are pulled into a lawsuit.
Finally, please make sure that the employment attorney and or any professionals that you use are familiar with and have experience with churches. There are unique rules for churches that differ from other non-profits.