Mega-Church Issues (2 of 6)

During the NACBA conference I briefly attended a session facilitated by Glenn Woods and Bill Gruenewald that discussed issues relating to Mega-Churches. One of the key issues for churches of all sizes is record retention.

Part of developing a strong internal control structure is defining what and how long certain information will be retained and maintained. Best practices for boards and management includes discussing and adopting a record retention policy. It is important to determine where the information will be filed, (electronically, on-site or off-site) security of the information and condition for maintenance (heat and dampness may be destructive to certain files).

Information such as tax returns and governmental reports affecting a ministry's taxes should be maintained permanently. However, most backup records, such as receipts documenting income deductions should only be kept for seven years. The IRS calls for a six-year statue of limiations for tax receipts. The IRS has 3 years from the date the return is filed to question or audit the return.If the IRS can prove an omission of at least 25% of income, the time period doubles to six years. Therefore, the seven-year period gives a one-year cushion beyond the IRS limit. While most churches are not required to file tax returns, ministries and ministers are required to file selected forms. These rules apply to any entity or individual that must file. So be prepared and retain certain information.

What kind of information should be retained and for how long? See our next post.