Ministers Will Get Special Attention from Auditors

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July 10, 2009

A new audit guide published by the IRS tell examiners to be on the lookout for several potential trouble spots. 

The IRS highlights the possibility of incorrectly figuring the tax-free housing allowance and failing to pay Self-Employment Contributions Act (SECA) social security tax on it. The IRS is also focusing on wrongfully claiming to be exempt from SECA tax and deducting business expenses that are attributable to tax-exempt income (such as the housing allowance). The application of the so-called "Deason" rule regarding expenses related to tax-exempt income could be especially troubling as few ministers follow this rule.

http://www.irs.gov/businesses/small/article/0,,id=210018,00.html

Source:  Internal Revenue Service

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