Chitwood & Chitwood, 5746 Marlin Road Suite 500, Chattanooga, TN (2026)

10/14/2026

Short-term mission trips can inspire generous giving, but the way those gifts are received and documented matters.

Pastors, trustees, and church administrators: when donations are raised for a trip, keep the church, not a named participant, in control of the funds.

A sound process should:

• State the ministry purpose and trip budget in advance.
• Invite gifts to support the church’s mission-trip program, not “John Smith’s trip.”
• Avoid representing any gift as refundable or guaranteed to fund one individual.
• Have the church review requests, approve participants, and retain discretion over how funds are used.
• Record gifts in the church’s contribution system and issue accurate acknowledgments. Donors should receive documentation from the organization, not a personal receipt from a participant.

If a trip is canceled or someone cannot go, the church should not automatically refund donors or treat the money as belonging to that participant. The board should document its decision and, consistent with the gift’s purpose and governing documents, apply remaining funds to a similar ministry purpose or another appropriate church missions use.

This is more than bookkeeping. Clear policies, board minutes, budgets, participant approvals, and donor communications help protect the church from private-benefit concerns and strengthen accountability.

Is your missions-giving process documented, from the initial appeal through handling unused funds?

General educational information, not tax or legal advice.

10/14/2026

Pastors, trustees, treasurers, and church administrators: Treasury and the IRS have signaled that additional guidance is coming on how the Johnson Amendment applies to religious organizations.

The core rule remains: organizations exempt under Section 501(c)(3) may not participate or intervene in a political campaign for or against a candidate for public office. Leaders are asking what that means for internal communications, issue advocacy, candidate appearances, and voter education.

Practical steps: review teaching and publishing calendars; adopt a board-approved communications policy; document approval for public statements and media; keep voter resources strictly nonpartisan; seek professional review before publishing.

General educational information, not tax or legal advice. Consult a qualified professional.

10/12/2026

Before the first shovel hits the ground, your church or ministry should have a clear plan for pledges, restricted gifts, and construction financing.

Not every promise to give is treated the same. A written, unconditional pledge may be recognized as a contribution receivable depending on its wording, collectibility, and your accounting policies. A general “intention to give” generally is not. Review pledge-card language before launching the campaign, especially when commitments include conditions tied to a project, matching goal, or future event.

Establish a separate restricted fund or account for the campaign, and record building gifts and pledges distinctly from operating contributions. Before signing construction contracts, confirm that the board has approved the total project budget and financing, including contingency, and document that approval in meeting minutes or a written resolution.

Also understand the financing details: draw schedules, retainage, change-order approvals, lien waivers, contractor documentation, and the difference between a construction loan and permanent financing. Match expected pledge collections to draw timing, and identify how any temporary cash-flow gap will be covered without straining operations or payroll.

Retain pledge records, donor acknowledgments, board approvals, budget amendments, contracts, change orders, lender statements, draw and retainage schedules, lien waivers, invoices, and certificates of insurance.

Review your project documentation with your board and a qualified adviser before moving forward. This is general educational information, not tax, legal, or construction advice; treatment depends on the facts and your organization’s accounting policies.

10/07/2026

A remote or traveling employee can create payroll obligations in a new state, even when your church or ministry has only one physical location.

For multistate staff, state income tax withholding is generally tied to where services are physically performed. Limited reciprocal agreements may change the result, and remote employees may require state-specific setup and updated withholding information.

State unemployment insurance (SUTA) registration, wage reporting, rate notices, and deposits may be required wherever employees work. Depending on the facts, a multistate employee may be reportable under one or more state rules. Local or municipal taxes, and state paid-leave, disability, or family-leave withholdings, may also apply.

Do not overlook traveling staff, guest speakers, missionaries on home assignment, or temporary work in another state. Short-term or threshold-based rules can still create obligations.

Review your payroll footprint by confirming each employee’s work location and residence changes, reviewing remote-work arrangements, registering where required, verifying state and local payroll setup, updating withholding elections and SUI rates, filing on each state’s schedule, and reconciling payroll filings to the general ledger.

Review these arrangements annually and whenever someone relocates or begins working remotely.

This is general educational information, not tax or legal advice. Requirements vary significantly by state.

10/05/2026

Does your church, ministry, or faith-based nonprofit operate more than one unrelated business? The UBIT “silo” rule under Section 512(a)(6) generally requires unrelated business taxable income to be calculated separately for each unrelated trade or business. A loss from one activity generally cannot offset income from another.

Activities are identified at the organization level and grouped using two-digit NAICS codes. Each activity needs its own income and expense computation, deductions must be properly allocated, and net operating losses must be tracked by silo. These rules also affect the $1,000 gross-income filing threshold and Form 990-T reporting.

Possible examples include a thrift store, ongoing advertising arrangement, rented commercial kitchen, parking operation, camp or retreat rental program, and certain investment-related activities.

Practical steps include:
• List every revenue stream that may generate UBIT.
• Determine whether each activity is regularly carried on and substantially related to your exempt purpose.
• Assign the appropriate NAICS code.
• Maintain a separate ledger for each activity.
• Document how shared costs (such as utilities, staff time, insurance, and space) are allocated.
• Keep worksheets supporting each silo and review the analysis annually and before adding a new revenue stream.

Review your activities and documentation with a qualified tax adviser, especially when evaluating net operating losses. This is general educational information, not tax or legal advice; treatment depends on your organization’s specific facts.

10/02/2026

Churches and faith-based nonprofits that invest in qualifying clean-energy or energy-efficiency property may be able to receive certain federal energy credits through an elective payment (“direct pay”) election, even when they have little or no federal tax liability.

A successful election requires more than installing the property. Pre-filing registration with the IRS must be completed for the correct legal entity and each qualifying property. The election is then made on Form 990-T for the applicable taxable year, with required schedules and registration number(s).

Timing matters, but recent IRS relief automatically gives eligible organizations an additional six months for Form 990-T when making an elective payment election. In some situations, Form 8868 may still be filed to help avoid rejection. Rejected elections generate IRS notices, and the organization’s books and records must support the election and credit amount.

Before filing, confirm that you have:

Property placed in service in the correct year; invoices, contracts, and placed-in-service documentation retained; the credit recorded and reconciled in your accounting system; any basis-reduction or recapture rules tracked; and the status of credit proceeds, unrestricted or donor-restricted, reviewed.

Review the registration, filing, and supporting documentation with a qualified CPA or tax adviser, and reach out with questions.

This is general educational information, not tax or legal advice. Eligibility depends on the specific facts and current IRS guidance.

10/02/2026

Pastors, trustees, and church boards: If your church provides a clergy housing allowance for 2027, it should be designated before the year begins, and documented in a written resolution.

Why does this matter? An informal conversation or after-the-fact approval generally is not enough. The resolution should identify the minister, the calendar year, the specific housing allowance amount (or a clearly defined formula), and confirm that it is part of the minister’s compensation. It should be approved and recorded in the official minutes before payments begin.

Eligible housing expenses commonly include rent or mortgage payments, utilities, insurance, property taxes, repairs, maintenance, and furnishings, as applicable. The income-tax exclusion is generally limited to the lesser of the amount designated, the amount actually used for housing, or the home’s fair rental value.

Important distinction: A properly designated housing allowance is generally excluded from federal income tax, but it is generally included when calculating clergy self-employment tax. Additional limits and individual circumstances may apply.

As your church sets next year’s compensation and budget, now is the time to review the numbers and prepare the documentation. Chitwood & Chitwood can help your ministry establish appropriate clergy compensation and housing allowance procedures.

09/30/2026

Church leaders, payroll tax deposits deserve more than a quick glance: they can create personal exposure for the people responsible for making them.

A practical checklist:

• Federal income tax withheld from employees, plus the employees’ share of F**A, are “trust fund” taxes. They are held for the IRS, not available for other church expenses.

• A responsible person may include the treasurer, board members, an administrator, or anyone with authority over payroll payments and tax deposits.

• Deposits must be made through EFTPS according to the church’s assigned schedule. Generally, monthly depositors pay by the 15th of the following month, while semiweekly depositors pay based on the employee payday. The IRS determines the schedule using the organization’s payroll tax lookback period.

• The Trust Fund Recovery Penalty can equal 100% of unpaid withheld taxes. Personal liability may attach even when there was no intent to evade taxes: and it is not limited to the church’s legal entity.

Do your church’s payroll systems clearly identify who approves payments, track EFTPS deadlines, and confirm every deposit was submitted on time?

Chitwood & Chitwood helps churches and ministries build reliable payroll systems that keep deposits accurate, documented, and on schedule. Reach out if your team would benefit from a payroll review.

09/30/2026

As year-end approaches, some donors age 70½ or older may choose to support your church through an IRA charitable rollover, also called a qualified charitable distribution (QCD). A few careful procedures can help protect accurate records and provide financial peace of mind.

Year-end QCD checklist:
• Confirm the distribution comes directly from the IRA custodian to the church. A check payable to the donor and later re-gifted does not qualify as a direct QCD.
• Document the request in writing, including the donor’s name, custodian, date, amount, and designated fund or purpose.
• Record the gift at the amount actually received.
• Provide an acknowledgment describing the contribution without assigning a value, and state that no goods or services were provided.
• Reconcile the deposit to your contribution system and the custodian’s transfer documents. File all related correspondence with the gift record.
• Follow restricted-fund procedures when a designated fund or purpose is named.
• Watch the calendar. Transfers must be completed by December 31, and custodians may set earlier processing deadlines.

For donors, a QCD is generally excluded from income rather than claimed as a charitable deduction and may satisfy a required minimum distribution. Eligibility questions should be directed to the donor’s tax adviser.

This is general educational information, not tax or legal advice. Have questions about recording IRA distributions, endowment gifts, or designated gifts? Contact the Chitwood & Chitwood team.

09/28/2026

Before an outside group uses your church facility, make sure the agreement protects your congregation, property, and ministry.

A thorough facility-use process should address:

• Certificate of insurance: Request current documentation before access is granted.
• Additional insured requirements: Confirm whether your church should be listed on the policy and that the wording meets your requirements.
• Liability coverage: Review coverage types, limits, policy dates, and exclusions that may affect the activity.
• Written compliance procedures: Document approval, payment, safety expectations, repairs, cleanup, and responsibility for damages.
• Ongoing monitoring: Keep certificates and agreements organized, and verify coverage remains current for recurring users.

A certificate of insurance is an important starting point: but it should be reviewed alongside the facility-use agreement and your church’s risk-management procedures.

Does your church have a consistent process for third-party groups using its space? Clear documentation today can help prevent confusion and costly problems later.

When questions arise, coordinate with your insurance professional and legal counsel to confirm your requirements.

Chitwood & Chitwood

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