Court Rules that "Gifts" to Pastor Are Taxable

A tax court in Minnesota has ruled that contributions made directly as “gifts” by congregants to their pastor are taxable income. The case centered on Pastor Wayne Felton of Holy Christian Church in St. Paul, Minnesota, and monetary gifts of over $200,000 that Pastor Felton received from parishioners during 2008 and 2009. Judge Mark Holmes, in his decision that the love gifts to the pastor were indeed taxable, quoted Scripture as well as legal precedent.

“In addressing the core issue, Judge Holmes cited numerous Bible references and provided a very thorough analysis of applicable law, relevant cases, and other authority,” according to Michael Batts, Managing Partner of Batts Morrison Wales & Lee. “Judge Holmes noted that the law in the area of gifts for ministers is not abundantly clear. In the end, however, he agreed with the IRS’s position.”

The court also agreed with the IRS’s assessment of a 20% penalty for “substantial understatement” of income.

Read more in the full article from Batts Morrison Wales & Lee.

Read the full court opinion in Felton v. Commissioner of Internal Revenue.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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