Review the church's accountable expense reimbursement plan. If you don't have a written plan, establish one.
Test expense reimbursement substantiation. Not in your church, of course, but in some other churches, the pastoral staff may not be adequately forthcoming with expense substantiation. Is the business purpose for travel recorded? For meals, does the documentation reflect not only the date and the amount, but who participated in the meal and the business purpose of the meal?
Review worker classifications. Are you treating workers as independent contractors who really have significant employee characteristics?
Review taxable and non-taxable fringe benefits. Be sure that all taxable fringe benefits—like property transfers, Christmas gifts, and more—are reflected on Forms W-2.
Check Form 1099-MISC filings. For independent contractors, is a Form 1099-MISC being filed for all applicable payments of $600 or more in a year?
Check the completeness of the Form W-4 file. Be sure there is a Form W-4 in the file for each staff member for each year.
If a church makes monthly payments to the college where the pastor's daughter attends to cover her tuition costs, are these payments tax-free?
No. These payments must be included in the pastor's taxable compensation.
Dan Busby is president of the Evangelical Council for Financial Accountability (ECFA)—an accreditation organization that sets standards for governance, financial management, and fundraising/stewardship for churches and other nonprofits across the country.