Our church has made a few mistakes. What can we do about them?
By Raul Rivera
What to do about past mistakes!
Many churches that we serve have made mistakes in the the past and are wondering what they can do to correct them. These errors range from years worth of unreported love offerings, to missing W-9's and 1099-Misc forms, to lost board meeting minutes. Some mistakes, like misplaced W-9's, can easiliy be fixed, while others cannot. Missing board meeting minutes, fortunately, is a problem that can be solved with a little diligence and organization.
What the IRS thinks of missing minutes!
Churches will live and die by their board meeting minutes. In an IRS compliance audit, what your minutes do or do not document could sink or save your church. If some of your minutes have gone missing, or you do not have any minutes at all, you can conduct a special board meeting with the board of directors to discuss documenting past decisions. You will also need to make your most accurate, good faith estimates of times and dates when certain desicions were made. At this special meeting, you must make to document the following items:
- Salaries for pastors, directors and officers.
- Approval of love offerings taken up for the pastor.
- The ordination of any and all ministers of the church. *This one can have big repercussions.*
- Financial reports of the income and expenses for the church. You must show that the directors have looked at the reports and have approved them by a majority vote.
- Approval of Section 62, Accountable Reimbursement policy.
- All of the organizational board meeting requirements.
While this list could go on forever, these specific items need to be corrected as soon as possible and all within one board meeting. However, your list may be longer and will take more time to prepare. The key is to correct your mistakes while you still can. The worst thing you can do is try to correct them while in the middle of an IRS tax inquiry or audit. Agents do not think highly of hasty corrections. On the other hand, if an agent sees that errors were corrected well in advance of the IRS inquiry or audit, they will tend to accept those corrections and not consider them to be out of compliance.
What about the mistakes that I cannot correct?
Unfortunately, there are some mistakes that cannot be corrected! These range from improperly reported love offerings to missing 1099-forms. There are just some things that cannot be undone. If you find yourself facing these issues, you must face them head on. Decide that from this day on, your ministry will be diligent to do things right. You must also trust that His grace is sufficient to carry you through your mistakes as well as your moments of success. At our conferences we discuss these mistakes and how to keep the past from repeating itself.