Sales Tax Exemptions for Churches

Are churches exempt from sales tax when purchasing items? In most cases, probably not.

Perhaps the following questions/answers taken from The Louisiana Department of Revenue website will prove helpful:

Are sales to churches and nonprofit organizations subject to sales tax?

Yes, sales to churches and nonprofit organizations are subject to sales tax unless they are specifically exempted by statute. The designation of tax-exempt status by the IRS provides for an exemption only from income tax and in no way applies to sales tax.”

How do I get a sales tax-exempt number for a non-profit organization?

Non-profit organizations are not generally exempt from sales tax on purchases in Louisiana. The tax exemption applies to income tax for the corporation. For more information on exemptions for nonprofit organizations, see Form R-20125, Sales Tax Exemptions for Nonprofit Organizations.”

According to Page 5 of Form R-20125, Sales Tax Exemptions for Nonprofit Organizations, state statutes previously excluded churches and synagogues from paying sales tax on purchases of bibles, song books, and literature used for religious instruction, but a federal court issued an injunction preventing this exclusion in 2006. This publication states that “[u]nless and until the judicial injunction is lifted, these exclusions cannot be claimed. Churches, synagogues . . . will be required to pay the state sales or use tax on all of their purchases, including those previously excluded from taxation.”

Because this publication appears to have last been updated in 2015, ministry leaders are encouraged to consult with a locally licensed attorney or tax professional regarding whether the ministry is able to receive an exemption from sales tax on any purchases at this time.

Because tax laws can be very complicated, ministry leaders are encouraged to consult with a local CPA or tax attorney who can help them stay in compliance with all local, state, and federal laws.

Building a Disciple-Making Ministry

A book summary of “Building a Disciple-Making Ministry, The Timeless Principles of Arthur Flake for Sunday School and Small Groups” Compiled by Ken Braddy and Allan Taylor, LifeWay Press 2020

Churches, Sunday Schools and Small Groups are cautiously and slowly making a comeback after a difficult year of the COVID-19 pandemic.

This short book revisits a tried and true process to enable SS/SGs to effectively reach people for Christ, teach people about Christ, and minister to people in Christ’s Name.

Arthur Flake was a businessman, entrepreneur, lay church leader, evangelist, and a “Sunday School Man,” who led Southern Baptists’ Sunday School Department. Flake was a trainer, editor, author, and a growth and change agent.

He developed what became known as “Flake’s Formula” for Sunday School, a five-step process for strengthening and growing small group Bible study and ministry.

They are:

  1. Know the possibilities;
  2. Enlarge the Organization;
  3. Enlist and train leaders;
  4. Provide space and resources; and
  5. Go after the people.

As church leaders make prayerful plans for their churches and small group ministries to resume effective work, this short book and Flake’s principles should prove helpful. I have limited copies of this book. If you would like for me to send you a copy, please email me at Jeff.Ingram@LouisianaBaptists.org.

Religious Freedom Webcast Recap

This past week on January 11, 2021, Brotherhood Mutual Insurance Company, GuideStone Financial Services and Louisiana Baptists hosted a webcast on Religious Freedom During COVID-19 and Beyond.

The Brotherhood Mutual webcast panel included: Michael Allison, Vice President and Chief Counsel’ Steve Case, Assistant Vice President and Senior Corporate Counsel; and Kyle Johnson, Senior Corporate Attorney.

The past few years, particularly 2020, have brought dramatic changes to our nation, and our churches. It looks like 2021 will also be a challenging year.

The webcast covered the following areas of concern for churches:

  • Emerging Religious Freedom Issues for Churches and Ministries
  • How can a Ministry Protect its Religious Beliefs Against Legal Threats?
  • How can a Ministry Align its Facility Use with its Sincerely Held Beliefs?
  • How can a Ministry Address Employment Issues Related to Morals and Values?
  • What should Ministry Leaders Know About Gender Identity Issues?
  • How Concerned Should ministries be about Governmental Actions and Challenges?
  • If a Ministry is sued for Standing up for its Beliefs, will Insurance Coverage be available?

These are issues every church and ministry needs to address with their insurance provider, church by-laws, employee handbook, code of conduct, and other documents.

If you missed the webcast or would like to watch the 1½ hour presentation you may do so here.

Brotherhood Mutual has also provided an excellent and free pdf resource entitled, “Religious Freedom Protection: Shepherding Ministries in a Time of Change,” that is also available to download.

There are also many other free resources for churches and ministries at: www.brotherhoodmutual.com and LouisianaBaptists.org/about/directory/evangelism-church-growth/adults/church-administration.

If you have additional questions, please contact Jeff Ingram, at Jeff.Ingram@LouisianaBaptists.org or 318.449.4295.

Critical Coverage Gaps

Does your Church’s Insurance Policy Contain Critical Coverage Gaps? An updated booklet by Brotherhood Mutual encourages churches and ministries to regularly review their insurance coverage in a rapidly changing world.

Consider:

Religious Freedom Protection: claims related to your church’s belief-based decisions and activities. Examples include refusing to marry a same-sex couple or limiting the use of your facility to certain groups.

Worldwide Liability Protection: are your short-term mission groups traveling outside the U.S. covered for medical expenses, as well as liability suits and hiring local legal counsel while overseas?

Sexual Acts Liability Protection: this would cover claims against your ministry or other innocent insureds related to a leader or worker’s sexual misconduct.

Security Operations Liability Protection: this includes claims against your church, its leaders and/or security team members when enforcing your security policies.

Traumatic Incident Response Protection: this would cover expenses your church incurs while responding to a traumatic incident; for example, counseling costs, legal counsel in responding to the media, victims, and to law enforcement.

Directors and Officers Liability Protection: offers protection for individuals, employees, volunteers, spouses of leaders for financial damages caused by alleged wrongful activities of church leaders.

Legal Liability Defense Cost Reimbursement: addresses issues like, lawsuit for breach of contract, employee claims of bodily injury not covered by workers compensation, and wrongful termination of an employee not covered by the policy.

Counseling Liability Protection: this covers claims against your church, its pastors, lay counselors, employees, volunteers in relation to counseling on your church’s behalf.

These would be good questions to ask your church’s insurance agent or broker to determine if your church’s current insurance coverage is adequate for the rapidly changing world we’re called to minister and witness.

This free resource booklet can be downloaded at brotherhoodmutual.com/gaps/critical-coverage-gaps.

If your church has questions regarding church administration issues, contact Jeff Ingram at Jeff.Ingram@LouisianaBaptists.org and at 318.448.3402.

Church Administration Resources are also being added here.