The Arizona Constitution permits taxation of all real estate, improvements to real estate, and, for that matter, all personal property—with certain exemptions determined both within the Constitution itself and in the Arizona Revised Statutes. Among the latter exemptions, as you may have already guessed, is an exemption for churches and religious organizations. But it isn’t just as simple as any property the church owns being exempted from property tax. Read More
It is important for religious institutions to properly classify workers as either employees or independent contractor. Classifying a worker as an employee triggers tax withholding, unemployment, and other requirements that are not relevant when a company hires an independent contractor. Read More
Members of religious congregations often rely on their clergypeople in times of uncertainty and distress, and the offering of penitence is even a core practice in some faiths. Naturally this often entails the disclosing of personal and otherwise private information—the sort of disclosures that people generally like kept secret for any number of reasons. Because of how important this is in the practice of religion, the clergy-penitent legal privilege has long been an observed in Arizona, as in the US more broadly. Read More
The First Amendment to the United States Constitution prohibits the government from either the establishment of religion or prohibiting the free exercise of religion. The meaning and application of the First Amendment has been hotly debated. One such are of ongoing debate is in the realm of employment law. Religious institutions are after all employers. So how does employment law intersect with the First Amendment? Read More
There are some forms of real property that are exempted from taxation in Arizona. This includes property owned by churches and religious organizations. But not all such property will necessarily be exempted—it has to meet certain requirements. Read More
There are numerous government grant programs that provide money for all sorts of things. Is it permissible for a church to participate and receive government grant money? The answer to that question can sometimes be complicated, but the Supreme Court has determined that there are certain cases where the government will violate the Constitution if it prohibits a church from participating in a grant program. Read More
The tension caused by the Establishment and Free Exercise Clauses of the First Amendment to the United States Constitution is fairly well known. This tension creates a sometimes hazy line that has spawned numerous cases. One of the issues raised in this area is whether the courts have jurisdiction to resolve church disputes. And, as is common in this area of law, the answer is “yes and no,” and the answer depends on a number of factors. Read More
When most people think about what a “minister” is, a certain picture or church experience may come to mind. However, for purposes of employment law, the term “minister” has a broader definition than just the person who preaches a sermon or presides over a wedding or funeral. For purposes of employment law, employees who are considered “ministers” trigger First Amendment protections for their position that prevent the government from forcing a religious organization or church to retain an unwanted employee. Read More
Section 7611 of the Internal Revenue Code is known as the “Church Audit Procedures Act.” It governs the conditions under which the IRS may initiate a church tax inquiry or examination. Naturally, given the heightened protection of churches under the US Constitution, the IRS is limited in when it may investigate a church and it must demonstrate specific criteria before it may even take the first step in launching an investigation.
Employee business expenses in the religious organization context are usually treated the same as employee business expenses in any other business context. The IRS treats the way these expenses are taxed in different ways depending on the means by which they are paid: whether through an accountable or a non-accountable plan. These different types of plans serve to differentiate whether the payment made for a given set of expenses is considered to be part of an employee’s income.