Alabama Pastor Goes to Prison for Love Offerings!
By Raul Rivera
A pastor in Alabama, Gregory Louis Clarke, was sentenced to 21 months in prison for assuming that the love offerings he received from his church were gifts to him.
Over a period of several years he received many love offerings from the church for purposes such as car allowances, appreciation gifts and other offerings that he did not consider as normal salary for the performance of his services. He mistakenly believed that if the church gave him a salary and also passed on to him love offerings given by church members, he could receive the love offerings as a gift and not report them as taxable income.
This is a common mistake among many ministers and church boards. What is even more scary is that under new regulation (Treasury Regulation 53.495), members of the board of directors can also be held responsible for approving love offerings or knowing that they are occurring without being reported on the pastor's W-2 and not doing anything about it.
What should you do if you have been receiving love offerings?
It is possible that you may have received love offerings this past tax year of 2008. Because it is tax season, there is no better time than now to make sure that you get it right. It is not too late to correct the mistake if you act quickly. Below is a 3 step plan to correct any misconceptions about love offerings and how they affect churches and pastors.
- Recognize that there is a mistake and educate the board of directors.
- Tally up the grand total of all love offerings and gifts, as well as car and cell phone allowances paid to you by the church.
- Report the grand total from above on Form W-2, along with your regular salary.Why did the IRS audit the church?
The IRS began a tax inquiry because of an anonymous letter it received claiming wrongdoing. The tax inquiry soon became a full blown audit of church records that bled into the pastor's own personal taxes. Under Section 7611, the IRS is required to look into any report made by any person that sounds believable. It really is that easy! That is all that is needed. Just one disgruntled person and the IRS can come knocking at the church's door.
Ignorance is not an excuse!
Throughout the entire court case against Pastor Clarke his attorneys argued that he did not break any laws because he erroneously believed that love offerings were gifts and therefore not taxable income. He even had several pastors testify that when he preached at their churches, the honorariums were given to him as gifts. That argument was not enough to convince the jury that he was innocent. This is a wake up call for all pastors. Now is the time to get your church books in order. Do not let this moment pass you by without you taking action. Your heart may be right, but if your books are not, the idea of prison ministry may just be the motivating factor the Lord want to use to get you moving towards better stewardship!
One Last Word About the Pastor Who Went to Prison for Mishandling Love Offerings!
I have received so many questions and comments about the Alabama pastor who went to prison for failing to report love offerings that I feel it is appropriate to write about it one more time.
Pastor Gregory Clarke's conviction rested mainly on the argument that a church could not give its pastor a love offering and classify it as a gift because the church is his employer. Even though it may be a love offering or "gift," it must be reported on his tax return. Do not let this discourage you! Love offerings are a wonderful thing. The IRS is not outlawing them and neither is the IRS declaring that love offerings are wrong. As a matter of fact, the IRS likes it when a church gives their pastors love offerings. The IRS believes that there is a lot of love in this world for pastors. The only thing that the IRS asks of pastors is that they share the love.