IRS changes could impact year-end gifts

irs-990This past week, I attended a meeting of the local NACBA chapter that invited a guest speaker to address the new IRS guidelines lead by a local CPA specializing in church tax issues and audits. Just to be clear, I didn’t attend this workshop because I love accounting. In fact, during my freshman year in college, I took Accounting 1 for three weeks — that’s right: three weeks! — when I realized it wasn’t for me.

I attended this event because there are so many external forces that can impact ministries. Whether it’s local building code changes, utility company rates, tax-exempt status, The Affordable Care Act, or IRS regulations, we need to be aware of things that can impact our churches and congregations. If we, as church leaders, aren’t staying current with these items, we can find ourselves in a very precarious position.

While reviewing the “brief” overview of the tax law changes (23 pages, condensed from hundreds of pages), one item grabbed my attention more than others. It’s a change in a rule staring after 2013 that could impact year-end giving by some of your “senior-saints.”

For the past several years, we’ve had a popular (although temporary) rule that allowed an individual who’s at least 70.5 years young to make a qualified transfer of up to $100,000 from his or her IRA directly to a qualified charity, and exclude the IRA transfer from income. The IRA transfer to the charity also counts toward the owner’s “required minimum distributions” for the year.

While this rule has been extended the past two years, it’s unlikely that it will be extended again. In light of that, if you have any people who are within this age bracket and are considering a sizable year-end gift from an IRA to your ministry, this might be the last year they can do it without paying the IRA distribution fees and other associated tax implications.

On the positive side, the IRS has finally developed some new guidelines for Estate and Gift Tax rules. While it has permanently increased the maximum estate tax rate from 35 percent to 40 percent, it has added a provision to permanently provide exclusions for gift and estate tax for amounts less than $5.25 million. What this mean is, people no longer have to play all the goofy games of trust accounts, annuities and the like to shelter their hard-earned estates, which they desire to gift to their family or other organizations. If an estate is less than $5.25 million, it’s not taxable. That’s a positive move for families and many charitable organizations that might now be the beneficiary of such gifts.

What you don’t know can hurt you, so make sure your church is staying current with tax law changes. If you need additional information, please contact me and I’ll send you the brief.

Tim-Cool-bloggerTim Cool is project executive at Visioneering Studios in Charlotte, NC, and founder of Cool Solutions Group. Since 1986, Cool has served the church community in the areas of construction, facility planning and facility management. He can be reached at This blog originally appeared on his blog, “Cool Conversations Live.”


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