Religious and Charitable Organizations
Religious organizations should carefully assess their roles in facilitating payments by individuals to or for the benefit of leaders of their organizations and in reporting taxable payments to the leaders of their organizations, to help ensure that their leaders are knowledgeable about, and compliant with, applicable tax law.
When afforded the opportunity, religious organizations should provide the IRS and/or the Treasury Department with numerous real-world examples of circumstances in which payments commonly referred to as "love offerings" are made, received, and distributed.
The Giving Public
Donors should carefully evaluate the tax treatment of payments made to or for the benefit of individual religious leaders. Donors should ensure that amounts deducted as charitable contributions on their individual tax returns qualify for such treatment.
The religious community would benefit greatly from a higher degree of clarity in the guidance surrounding payments commonly referred to as "love offerings." We recommend that the IRS and/or the Treasury Department provide clear and authoritative guidance to religious organizations, their leaders, and their donors regarding the tax treatment of payments made directly by individuals to leaders of religious organizations and the tax treatment of payments by individuals that benefit leaders of religious organizations in circumstances where religious organizations facilitate the payments. The guidance would be most helpful if it addressed both deductibility by donors and taxability to religious organization leaders. Multiple clear, real-world examples would be essential. We recommend that the IRS/Treasury issue the guidance in proposed form with a substantial opportunity for the religious community to provide comments. In fact, it would be most helpful if the IRS and/or Treasury Department reached out to religious leaders prior to drafting guidance for initial input and for real-world examples. When the guidance is final, we recommend that it be well-publicized and included in IRS Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, Publication 1828, Tax Guide for Churches and Religious Organizations, and Publication 526, Charitable Contributions.