Churches sometimes collect “love offerings” from the congregation for a pastor, visiting minister, volunteer, or staff member in recognition of services rendered.

There really is a lot of confusion over this topic – so much so that pastors from both large and small churches have been prosecuted and convicted of tax evasion over unreported love offerings.

One of the most interesting cases was Felton vs. Commissioner TC Memo 2018-168

the Tax Court held that Rev. Wayne R. Felton of Holy Christian Church in St. Paul Minn. received taxable compensation from members of his congregation rather than personal gifts, despite the contributions' designation as gifts,

Consequently, the Tax Court applied a four-factor test drawn from case law to objectively determine the donors' intent:

Whether the donations were provided in exchange for services
Whether the minister or other church authorities requested the donations;
Whether the donations were part of a routine, highly structured program and given by individual church members or the congregation as a whole
Whether the minister received a separate salary from the church, and, if so, its amount in relation to the donations

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Ep 26 ~ Love Offerings: Free Gift or Taxable Income 18:38 Share

The Church Finance & Minister Tax Podcast- Church finances, Minister Taxes, Minister payroll, IRS Compliance

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Ep 26 ~ Love Offerings: Free Gift or Taxable Income