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Church Law & Tax Update
 Welcome!Friday, May 2, 2008

Featured Resource:Church Computer Safety

Welcome! When First Baptist (not the church's real name) hired a network engineering firm to help them with their computer system, they never dreamed they were inviting in thieves. But when employees of the firm saw the scope of information saved in the church's database, they copied it and rented the list to businesses that wanted to reach people in their community, segmenting it by various demographics—including contributions!

So begins Nick Nicholaou's article, "A Vulnerable Asset," which appears in this month's issue of our sister publication, Your Church magazine. Nicholaou provides simple steps for protecting your church's critical data from loss or theft. So does our featured downloadable resource—Church Computer Safety.

Also in this issue:
Blessings as you keep your ministry safe, legal, and financially sound.

Marian LiautaudMarian Liautaud




Marian V. Liautaud
Editor, Your Church Resources
churchlawandtaxupdate@yourchurch.net

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 Featured Article

A Vulnerable AssetA Vulnerable Asset
Simple steps can protect critical data from loss or theft.


Data is one of the most valuable assets a church has, but trying to figure out what it's worth so we can adequately protect it is challenging. Protecting data isn't difficult, but the task must be approached as deliberately as the fire and security protection we apply to our church buildings.

Finish article.




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 One-Minute Summaries
 By Richard R. Hammar, J.D., LL.M., CPA

Brief summaries of the most recent legal updates that affect churches.
  • A New York court ruled that a school has no legal duty to protect students against criminal assaults after they leave school property, and as a result a school was not responsible for injuries suffered by a high school student who was assaulted by another student while on his way home. [See Recent Developments in the May/June 2008 issue of Church Law & Tax Report.]
Subscribe to Church Law & Tax Report to read about these and many more recent developments that affect your church. Call 800-222-1840.

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Church Law & Tax ReportProtect Your Church!
Church Law & Tax Report provides you with timely, practical information you can trust to help you understand and comply with legal developments and tax reporting obligations that directly impact church ministry. Subscribe today!

 Tax Calendar

Deadlines You Should Know About!

May 10
  • Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) may file their employer's quarterly federal tax return (Form 941) by this date instead of April 30 if all taxes for the first calendar quarter have been deposited in full and on time.
May 15
  • Annual certification (for calendar year 2007) of racial nondiscrimination by a private school exempt from federal income tax (Form 5578) must be filed by this date by schools that operate on a calendar year basis. Fiscal year schools must file the form by the 15th day of the fifth month following the end of their fiscal year. This form must be filed by preschools, primary and secondary schools, and colleges, whether operated as a separate legal entity or by a church.
 Ask Richard

Ask Richard
Answers to your legal questions.


Richard HammarRichard Hammar is an attorney, CPA, and best-selling author specializing in legal and tax issues for churches and clergy. A graduate of Harvard Law School, he is the author of more than 100 books, including Pastor, Church, & Law and the annual Church and Clergy Tax Guide. He also writes the Church Law & Tax Report and has contributed to numerous journals and publications.

Q:When a church staff member is suspected of viewing online pornography, do other staff or board members have the right to access that person's computer and investigate, or would the church risk being liable for invasion of privacy?

A:Many states recognize "invasion of privacy" as a basis for liability. Invasion of privacy may consist of any one or more of the following: (1) public disclosure of private facts; (2) use of another person's name or likeness; (3) placing someone in a "false light" in the public eye; or (4) intruding upon another's seclusion.

Read more.



Can Church Members Examine Church Records?Can Church Members Examine Church Records?

An organization that fails to comply with a request for the inspection of tax-exempt applications may be assessed a penalty. Learn more about church records in this special report. $9.95.

 You Be the Judge

No Such Thing as a Free Lunch?No Such Thing as a Free Lunch?



A pastor takes staff members out to lunch every Tuesday. Church business is always discussed, at least briefly, during these lunches. The church treasurer does not report the church's reimbursements as taxable income to the staff members because she believes that the lunches qualify as business expenses that can be reimbursed by the church under its accountable reimbursement arrangement.

Take the quiz first, then check the summary for all the details.
  1. A church has three pastors who for many years have gone out to lunch every Friday. Church business is almost always discussed at these lunches. The cost of these lunches is always charged to a church credit card, and the church treasurer has never reported the church's reimbursements as taxable income to the pastors by including it on their W-2 forms. The church is handling lunch expenses correctly.
    True or False
Finish quiz & read more.



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