Unpaid Payroll Taxes: A Hidden Liability for Churches and Leaders

A recent case in the for-profit world underscores the potential threat.

The News

“A company’s CFO is liable for its past-due employment taxes, a court says. He had control over the company’s bank account and oversaw all aspects of the firm’s operations and finances, including payroll, tax return preparation and personnel matters. He knew that the firm failed to deposit payroll taxes and file tax returns when due. He had check-signing authority and paid creditors before the IRS. That makes him liable for the tax shortfall” (The Kiplinger Tax Letter, Feb. 8, 2019)

Why is this issue relevant to churches? The IRS watches this issue closely, doling out billions of dollars in fines and penalties for unpaid employment taxes every year. This means pastors and church board chairs must make certain all employment-related taxes are being withheld and remitted, on time and in full, every quarter. Failure to do so can lead to fines and penalties for both churches and individuals alike.

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