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Supreme Court Sides With Colorado Web Designer’s Free Speech Claim

Lorie Smith worried Colorado would use its anti-discrimination laws to force her to create websites celebrating marriages she does not endorse.

Richard R. Hammar, Attorney, CPA
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The First Amendment’s guaranty of free speech prohibits a Colorado public accommodations law from forcing a website designer with Christian beliefs to create messages with which she disagrees, the United States Supreme Court ruled.

A 6-3 majority favored the designer in its decision published in June of 2023 (303 Creative LLC v. Elenis, 600 U.S. 570). Although the ruling drew from speech—rather than religious—protections found in the First Amendment, the outcome represents another in a long line of victories for religious liberty proponents dating back more than a decade.

Churches and church leaders will find the 303 Creative ruling important in at least one way. It demonstrates the possible ways a church can assert First Amendment defenses if the church falls under a state or local public accommodations law and gets penalized for violating the law due to its religious activities.

‘A credible threat’ of penalty

The Colorado Anti-Discrimination Act (CADA) bars places of public accommodation from discriminating based on disability, race, creed, color, sex, sexual orientation, gender identity, gender expression, marital status, national origin, or ancestry in the provision of goods and services to the public.

The law first drew attention from the Supreme Court several years ago. That’s when Colorado’s civil rights division sanctioned a bakery owner for refusing to make a cake for a same-sex couple’s wedding. Lower courts affirmed the state’s actions.

But in 2018, a 7-2 ruling from the Supreme Court reversed the lower court decisions and returned the case to Colorado for reconsideration. The court said the record showed the civil rights division exhibited hostility toward the baker’s religious beliefs, violating his constitutional rights (Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, 138 S. Ct. 1719 (2018)).

During the Masterpiece Cakeshop litigation, the website designer filed her lawsuit. She became worried CADA would require her to create wedding websites for same-sex couples, which goes against her religious beliefs.

The state had yet to sanction her. But her lawsuit was allowed to proceed because she established “a credible threat that . . . Colorado will invoke CADA to force her to create speech she does not believe or endorse,” wrote Justice Neil Gorsuch in the Supreme Court’s majority opinion.

Such a threat violated the designer’s free speech rights, the Court decided.

“[I]n this particular case Colorado does not just seek to ensure the sale of goods or services on equal terms,” the Court held. “It seeks to use its law to compel an individual to create speech she does not believe.”

The Court also ruled that “no public accommodations law is immune from the demands of the Constitution . . . and when a state public accommodations law and the Constitution collide, there can be no question which must prevail.”

Creating customized messages

The designer operates a graphic design business. She wanted to expand it to include services for couples seeking websites for their weddings. Her websites will provide couples with text, graphic arts, and videos to “celebrate” and “convey” the “details” of their “unique love story.”

A created website will be “expressive in nature,” designed “to communicate a particular message.” That message includes how the couple met, their backgrounds, and their families. It also includes their future plans and information about their upcoming wedding.

All text and graphics will be “original,” “customized,” and “tailored” creations.

The designer’s company name will also appear on every web page created.

The designer said her graphic design business is open to customers regardless of their race, creed, sex, or sexual orientation.

But by expanding her company’s services to include wedding websites, she worried Colorado’s public accommodations law would “force her to convey messages inconsistent with her belief that marriage should be reserved to unions between one man and one woman,” the Court noted.

The designer acknowledged her views about marriage may be unpopular.

But, the Court said, she insisted the Constitution protects such a view.

A district court rejected the designer’s claims. A federal appeals court affirmed the district court’s decision. The designer then appealed to the Supreme Court.

The Supreme Court’s decision

The Supreme Court began its majority opinion by noting if there is any “fixed star in our constitutional constellation,” it is the principle that the government may not interfere with “an uninhibited marketplace of ideas.” West Virginia Bd. of Ed. v. Barnette, 319 U. S. 642 (1943).

The Court continued:

The First Amendment protects an individual’s right to speak his mind regardless of whether the government considers his speech sensible and well-intentioned or deeply “misguided,” and likely to cause “anguish” or “incalculable grief.” And equally, the First Amendment protects acts of expressive association. . . . Generally, too, the government may not compel a person to speak its own preferred messages.

The Court noted the designer’s unique, customized wedding websites qualified as “pure speech,” entitling her to the maximum protection under the First Amendment guarantee of free speech, and concluded:

In this case, Colorado seeks to force an individual to speak in ways that align with its views but defy her conscience about a matter of major significance. In the past other States … have similarly tested the First Amendment’s boundaries by seeking to compel speech they thought vital at the time. But, as this Court has long held, the opportunity to think for ourselves and to express those thoughts freely is among our most cherished liberties and part of what keeps our Republic strong. Of course, abiding the Constitution’s commitment to the freedom of speech means all of us will encounter ideas we consider “unattractive,” “misguided, or even hurtful.” But tolerance, not coercion, is our Nation’s answer. The First Amendment envisions the United States as a rich and complex place where all persons are free to think and speak as they wish, not as the government demands. Because Colorado seeks to deny that promise, the [district court’s] judgment is reversed.

Relevance to church leaders

This case protects Christian business owners from potential liability under public accommodations laws when goods or services involve speech.

But there is another aspect of this ruling that may be of even greater importance to churches. The Court majority emphasized that constitutional protections will prevail anytime they “collide” with a state public accommodations law. This is especially notable, given the uncertainties that often arise for churches whose activities may or may not fall under state and local public accommodations laws.

The first public accommodations laws were enacted by a few states in the late 19th century. That number has steadily increased and by 2023 most states have enacted such a law.

But public accommodations laws vary by state. To illustrate:
  • All public accommodation laws bar places of public accommodation from discriminating against patrons based on several enumerated categories, including some, or all of, the following: race, color, national origin, gender, religion, disability, marital status, and sexual orientation.
  • In recent years, a growing number of state public accommodation laws have banned discrimination based on marital status, sexual orientation, and sexual identity. According to the National Conference of State Legislators, “18 jurisdictions prohibit discrimination based on marital status, 25 prohibit discrimination based on sexual orientation, [and] 24 prohibit discrimination based on gender identity.”
  • Some state laws exempt religious organizations, but others contain no explicit exemption.

Many pastors employed by conservative congregations worry public accommodations laws may be used to compel them to accommodate persons who do not share the church’s biblical worldview or values.

Learn more: Search public accommodations laws, including ones affecting your church, through Church Law & Tax’s 50-State Public Accommodations Laws Report, a downloadable resource.

An oft-mentioned concern pertains to the use of church property. To illustrate, assume that a church with an orthodox view of marriage and human sexuality rents its sanctuary to the public as a means of raising revenue.

A gay couple contacts the pastor requesting use of the sanctuary for their wedding.

Does the fact that the church rents its sanctuary to the public make it a place of public accommodation and subject the church to liability if it rejects the gay couple?

After the 303 Creative decision, if a state or local public accommodations law is defined to include churches, or if such a law is construed by a court or administrative agency to include them, churches now can assert a constitutional defense to coverage based on the First Amendment’s free exercise or nonestablishment of religion and free speech clauses.

Dig Deeper: “Public Accommodations Laws”—part of Church Law & Tax’s series on “15 Things Richard Hammar Wants Pastors to Know,” looks more closely at the application of public accommodations laws to churches and clergy.

Prior to any actions taken by a court or administrative agency, though, church leaders should review the following seven questions, preferably in consultation with qualified legal counsel. Doing so will help identify potential legal liabilities, and possible ways to minimize those liabilities:

Is there a public accommodations law in my city or state?
  • If so, what types of discrimination does it prohibit?
  • Does the law provide an exemption for churches?
  • If the law provides an exemption for churches, are there any conditions that must be satisfied?
  • If the law does not contain an explicit exemption for churches, what is the official position of the civil rights agency tasked with enforcement of the law? Does the agency take the position that churches are exempt? And if so, do any conditions apply? For example, does the exemption apply to churches that rent their properties to raise revenue?
  • If a state or local civil rights agency tasked with enforcement of a public accommodations law claims that it applies to churches that are engaged in commercial or other activities unrelated to exempt religious purposes, does church coverage only apply during the use of church property for the unrelated purpose, or more broadly to include all uses of church property?
  • Does the church’s constitutional rights of religion and speech take priority over a public accommodations law?

303 Creative LLC v. Elenis, 600 U.S. ___ (2023)

Matthew Branaugh, attorney and editor of Church Law & Tax, contributed to this report.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: Getty/Bloomberg Creative

Supreme Court’s ‘Groff’ Decision Makes It Harder to Reject Religious Accommodations Requests

Bivocational pastors and church planters working secular jobs should pay attention to what the Groff decision means.

Matthew Branaugh, Business Owner
Bio

An employer that receives an employee’s religious accommodation request under Title VII of the Civil Rights Act of 1964 must work to grant it unless the employer can demonstrate it would cause a substantially negative result to its business.

Title VII prohibits employment discrimination on the basis of race, color, national origin, gender, or religion.

Greater protections for religious beliefs, practices

For more than 45 years, lower courts have referenced a lower standard employers could use to evaluate religiously affiliated requests, which made it easier for employers to reject those requests.

The Court’s new clarification (Groff v. DeJoy, 600 U.S. ____ (2023)) provides greater protections for employees who encounter work situations that potentially clash with their religious beliefs and practices, including wearing specific religious attire and Sabbath observation.

Bivocational pastors and church planters especially will find the outcome helpful as they juggle ministry work with secular employment.

But it’s important to also note the standard only applies to employers subject to Title VII—those engaged in interstate commerce and having at least 15 employees.

Background Reading: Title VII of the Civil Rights Act of 1964 prohibits covered employers from discriminating against any employee on account of the employee’s religion. Employers are required to “reasonably accommodate” employees’ religious practices, so long as they can do so without undue hardship on the conduct of their business. Many states’ civil rights laws have a similar provision.

While the latest ruling doesn’t ensure every accommodation request will be granted, it does ensure an employer can’t reject one unless it demonstrates a substantial burden “in the overall context of [its] business” would arise by granting it, wrote Justice Samuel Alito for the Court.

More than ‘de minimis’

Alito wrote that most lower courts have incorrectly “latched on to ‘de minimis’ as the governing standard” for evaluating religious accommodation requests.

The term “de minimis” (very small or trifling), was briefly mentioned in a 1977 Supreme Court ruling involving an airline worker who sought a religious accommodation under Title VII (Hardison v. Trans World Airlines, Inc., 432 U.S. 63 (1977)).

Though the Court favored the airline in Hardison, the Court’s majority was more focused on “undue hardship” for its analysis—language drawn from Title VII itself, Justice Alito wrote.

Even the US Equal Employment Opportunity Commission (EEOC) has interpreted Hardison’s outcome to mean “more than a ‘de minimis cost’ test,” he added.

Subsequent lower court decisions nevertheless embraced the “de minimis test,” Justice Alito continued, which “has blessed the denial of even minor accommodation in many cases, making it harder for members of minority faiths to enter the job market.”

Groff asked for Sundays off

Gerald Groff is an Evangelical Christian who worked for the United States Postal Service (USPS) in Pennsylvania.

After his USPS office began handling Sunday deliveries for Amazon in 2013, Groff—who wished to follow the Bible’s teaching about not working on the Sabbath—requested and received a transfer to an office unaffected by the Amazon relationship.

About four years later, though, Groff’s new post office also began making Sunday deliveries for Amazon. Groff was told he was required to work Sundays.

Groff made informal arrangements to cover shifts, but eventually sought a religious accommodation. While his lawyer conceded the request was never rejected, Groff believed it was denied in practice, including through the receiving of discipline.

The USPS contended Groff’s request created turmoil at the post office, including one mail carrier’s decision to quit and another’s decision to seek union help. Groff quit and filed his lawsuit soon after.

The Court in Groff declined to rule on whether USPS showed a substantial burden arose from Groff’s request. Instead, it sent the case back to the lower courts to decide it.

The Court also declined to specify “what an employer must prove to defend a denial of a religious accommodation,” Justice Alito said. “(B)ut we think it reasonable to begin with Title VII’s text … the key statutory term is ‘undue hardship.’ In common parlance, a ‘hardship’ is, at a minimum, ‘something hard to bear.’ Random House Dictionary of the English Language 646 (1966) (Random House). Other definitions go further.”   

Alito continued: “So considering ordinary meaning while taking Hardison as a given, we are pointed toward something closer to Hardison’s reference to ‘substantial additional costs’ or ‘substantial expenditures.’”

Such considerations should take “into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, ‘size and operating cost of [an] employer,’” Justice Alito said.

A caution about ‘undue hardships’

The Court also noted certain “undue hardships” that employers cannot use.

“(A) hardship that is attributable to employee animosity to a particular religion, to religion in general, or to the very notion of accommodating religious practice cannot be considered ‘undue,’” Justice Alito explained. “If bias or hostility to a religious practice or a religious accommodation provided a defense to a reasonable accommodation claim, Title VII would be at war with itself.”

EXAMPLE 1. Pastor Craig is the pastor of a small church. To augment his compensation, he decides to look for a job with a secular employer. After a few months of searching he finds a position with Amazon as a driver. However, Amazon decides not to hire him when it discovers that he would not be able to work on Sundays because of his pastoral duties at the church. Craig sues Amazon for violating Title VII’s ban on religious discrimination in employment. Title VII of the Civil Rights Act of 1964 has made it unlawful for covered employers to “refuse to hire” any individual because of such individual’s religion. Under Title VII, employers are required to “accommodate” the “reasonable religious needs” of employees unless doing so would impose an “undue hardship” on them. In the past, an undue hardship was interpreted to mean “more than a de minimis (i.e., minimal) cost” to an employer for accommodating an employee’s religious practices. But as the US Supreme Court now recognizes, such an interpretation is meaningless since a “minimal cost” would be present in virtually every case, meaning that employers would not need to accommodate the religious practices of employees. The Court invalidated this interpretation in the Groff ruling, and replaced it with a new one: “We hold that showing more than a de minimis cost . . . does not suffice to establish undue hardship under Title VII. . . . Undue hardship is shown when a burden is substantial in the overall context of an employer’s business. . . . This fact-specific inquiry . . . comports with . . . the meaning of undue hardship in ordinary speech.”

The key point is that it will be more difficult for employers to avoid a duty to accommodate employee religious practices under the Court’s new definition of undue hardship.

EXAMPLE 2. Same facts as the previous example, except that Pastor Craig was hired by a local business with 10 employees. It is important to point out that Title VII only applies to employers having 15 or more employees. So, in this example, Title VII would not apply, meaning that Pastor Craig could not sue the prospective employer for religious discrimination under federal law. Note, however, that several states have similar laws to Title VII, and these laws generally require fewer than 15 employees to apply.

Church Law & Tax Co-Founder and Senior Editor Richard R. Hammar contributed to this report.
Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.
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Colorado Supreme Court Overturns Part of Sexual Abuse Claims Law

The Colorado Supreme Court says the Child Sexual Abuse Accountability Act goes against the state’s constitution.

Richard R. Hammar, Attorney, CPA
Bio

In June of 2023, the Colorado Supreme Court ruled that a portion of the state’s Child Sexual Abuse Accountability Act (“CSAAA” or “the Act”) violates the state’s constitution.

The court specifically struck down a portion of the law allowing certain lawsuits otherwise barred by the statute of limitations.

Prior to CSAAA’s passage, Colorado law only permitted claims for six years after they occurred or for the six years after a victim either turned 18 or discovered (often through counseling) that they had been abused.

Law expanded victims’ rights

Colorado lawmakers passed the CSAAA in July of 2021 for victims of sexual misconduct while participating in a youth-related activity or program. It took effect on January 1, 2022.

Victims can bring civil claims for damages against their abusers and the organizations that managed the activities or programs if the organizations knew or should have known about the risk of sexual misconduct.

CSAAA also established a three-year window for victims to bring forward claims that allegedly occurred between January 1, 1960, and January 1, 2022. The Act said claims could be made between January 1, 2022, and January 1, 2025, regardless of whether previously available causes of action were barred by a statute of limitations.

Additionally, the law established other significant rights.

First, the Act said “(t)here is no limitation on the time to bring a claim for sexual misconduct that occurs on or after January 1, 2022.” Second, the law voids “purported pre-incident waivers” as a matter of public policy, meaning victims no longer can be asked by an alleged abuser or organization to waive their rights to bring civil actions. And third, the act waives immunity for any claims brought under it against government employees and government entities.

Victims can seek up to $387,000 against public entities and up to $1 million against private entities.

‘New right of relief’

Some lawmakers found that many civil claims brought by adults who were sexually abused as children are often dismissed due to the statute of limitations. The Colorado Attorney General estimated that most adult survivors don’t come forward on average until the age of 53, according to the Associated Press.

Key Point: The statute of limitations specifies the deadline for filing a civil lawsuit. Lawsuits cannot be brought after this deadline has past.

In drafting the law, lawmakers wanted the CSAAA to create “a new right for relief for any person sexually abused in Colorado while the person was participating in a youth-related activity or program as a child,” while not attempting to revise “any common law cause of action that is time-barred.”

The latter issue raised concerns during the lawmaking process.

Questionable constitutionality

Before CSAAA’s passage, a law professor told Senate Judiciary Committee members the bill was, in his opinion, unconstitutional, retrospective legislation.

“By creating a whole new cause of action,” the professor testified, the bill “imposed new obligations on past actions, which is literally what the Supreme Court has said is forbidden.”

CSAAA supporters pointed to the need for giving victims a remedy, despite questions about the law’s constitutionality.

Almost instantly challenged

Soon after CSAAA took effect, plaintiffs “A.S.” and her husband, “B.S.,” brought a claim against a former high school athletic coach and a school district. The plaintiffs alleged the coach sexually abused A.S. between 2001 and 2005, when A.S. was a minor.

Without CSAAA, the claim would have otherwise been time-barred by the statute of limitations.

A lower court ruled against the plaintiffs. The plaintiffs appealed to the Colorado Supreme Court.

Supreme Court expresses concerns about retrospective legislation

The Colorado Supreme Court ruled that the CSAAA violates article II, section 11 of the Colorado Constitution (the “retrospectivity clause”). This section prohibits the legislature from passing any law “retrospective in its operation.” CSAAA, the supreme court continued, “amounts to unconstitutional retrospective legislation as applied to the plaintiffs’ claims under the Act against the defendants [and] and accordingly, we affirm the district court’s order granting the defendants’ motions to dismiss.”

The Court observed:

We certainly understand the General Assembly’s desire to right the wrongs of past decades by permitting such victims to hold abusers and their enablers accountable. But the General Assembly may accomplish its ends only through constitutional means.

The retrospectivity clause of the Colorado Constitution prohibits retroactive legislation that creates a new obligation, imposes a new duty, or attaches a new disability with respect to past transactions or considerations. By creating a “new right for relief” that attaches liability for conduct predating the Act and for which any previously available cause of action would be time-barred, the CSAAA does just that. The CSAAA is therefore unconstitutional as applied to the plaintiffs’ claim in this case. Accordingly, the district court’s order granting the defendants’ motions to dismiss is affirmed.

The supreme court also noted that other portions of the law remain valid:

We do not hold that the CSAAA is unconstitutional in its entirety, or that all claims made under the CSAAA are precluded by the retrospectivity clause. Our holding does not affect claims brought under the CSAAA for which the previously applicable statute of limitations had not run as of January 1, 2022.

Extender laws have widespread support

In recent years, several states have passed laws eliminating or extending the statute of limitations for child abuse claims that were time-barred under prior law.

The purpose is clear and compelling—to provide a “second chance” to victims of childhood sexual abuse who, for whatever reason, were unable to bring a civil claim against their abuser prior to the expiration of the statute of limitations.

These laws have widespread public support.

But these same laws might put churches and denominations into an indefensible position.

In decades-old abuse claims, memories have faded, and personnel have changed. Often few if any staff or members are even aware of the alleged incident or the perpetrator. Moreover, church leaders don’t know if the church had liability insurance coverage at the time of the incident that may be implicated.

With this trend in state laws, this case demonstrates that, in some cases, the equities still may tip in favor of defendants.

This case also demonstrates the ways that states are more aggressively pursuing rights for victims. The Colorado Supreme Court emphasized the CSAAA was not struck down in its entirety. The law still includes language effectively attempting to eliminate time bars for alleged acts occurring after January 1, 2022. It also voids any waivers signed by victims that attempt to take away their rights to seek civil remedies.

Church leaders should understand state laws

Church leaders should be aware of any extension or amendment of the statute limitation for sexual abuse claims in their state. They also should note the increased efforts by legislatures to afford more rights to victims. This means the church may have to defend against cases that are many years and even decades in the past.

Church leaders should also recognize expanded rights to victims for acts perpetrated in the recent past and in the future.

Sound risk management, and permanent retention of all liability insurance policies, are imperative practices.

Aurora Public Schools v. A.S., (Colo. 2023).
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Boy riding an All-Terrain Vehicle
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Off-Campus Liability and Churches

Off-campus liability is an ongoing questions for churches and church leaders to address in light of these key cases.

Richard R. Hammar, Attorney, CPA
Bio

Is off-campus liability a potential reality for churches? It’s an important and ongoing question that church leaders need to address. That’s because many events and activities occur beyond a church’s building and property.

Several courts have addressed this issue in cases involving both churches and non-religious charities.

We’ve summarized several key cases below. Non-religious charities are included because of the relevance of such cases to churches.

Leaders should:
  • Review the facts involved with each case.
  • Review the decisions made by the courts involved.
  • Review the key takeaways and questions to address.

Doing this will position leaders to assess potential legal and risks liabilities associated with off-campus activities.

Church picnic ATV accident

A Sunday School class teacher organized a church picnic that was conducted on the property of a church member. The pastor of the church attended the picnic but played no role in its planning or operation.

The Sunday school teacher notified church members about the picnic during a Sunday school class and a paper was passed around for members to sign up to bring food.

The teacher also encouraged church members to bring their friends and family to the picnic.

Church members provided the food, not the church. Other things like rifles and an all-terrain vehicle (ATV) were brought by church members.

A church member volunteered to bring his ATV to the picnic. The member was “pretty sure” that he asked the permission of the teacher and the property owner where the picnic was being held if he could bring it. However, he was sure that “nobody requested him to bring it.”

The picnic attendees included a couple and their 15-year-old son (“driver”), who brought a friend (and fellow church member) (“passenger”) along.

The driver was driving the ATV during the picnic, with the passenger riding on the back, when he took a turn too sharply and lost control of the ATV. The ATV rolled onto the passenger’s leg, breaking his ankle. The accident occurred on a public road one or two miles off the property where the picnic was hosted.

After the accident, an attorney representing the passenger’s parents asserted claims against the driver’s parents and the church. No claims were asserted against the owner of the ATV.

A dispute arose as to insurance coverage. The church’s insurance company insisted that it did not provide insurance coverage for the accident. The court noted that “it is undisputed that the church is the named insured under the policy” and so the issue under consideration was whether the parents were also insureds under the policy.

The church’s insurance company insisted that it did not provide coverage for the accident. The court noted the policy defined an “insured” as: any of your members, but only with respect to their liability for activities they perform on your behalf, or at your direction and within the scope of their duties.

The court noted that the “pertinent policy language is clear and unambiguous and … does not cover every activity undertaken by a church member that happens to be related to a church event.”

The court concluded that a church may be responsible for injuries occurring on a member’s property, but only if the activity causing the injury was done on “behalf of the church or at its direction, request, or benefit.” The court concluded that there was no evidence that the church was “involved in any way with the decision to allow the driver to operate the ATV.”

The court referred to a prior case, Philadelphia Insurance Company v. N. Texas Annual Conference, 2018 WL 2322071 (Texas App. 2018). In the Philadelphia Insurance case, a church member collided with a skier while snowboarding on a church-sponsored ski trip.

After the skier sued the church member, the church’s insurer filed a declaratory judgment action seeking a declaration that it had no duty to provide coverage for the accident because the church member was not covered by the policy. The court agreed with the insurer, finding that the church member was not covered under the policy because his snowboarding activity was not done on behalf of the church or at its direction, request, or benefit, even though the ski trip was sponsored by the church “for the purpose of strengthening their faith and encouraging their participation, membership and advancing the [church’s] mission.”

The Florida court agreed:

The same reasoning applies here. Although the church picnic attended by Liam and his parents was advertised during a Sunday School class at the church and was intended to promote fellowship amongst church members [the driver and his parents] were merely attendees of the picnic and their decision to allow the driver to operate the ATV was not done on behalf of the church or at its direction, request, or benefit. Thus, the [parents] were not insureds under the church’s insurance policy.

The court concluded that a church may be responsible for injuries occurring on a member’s property, but only if the activity causing the injury was done on “behalf of the church or at its direction, request, or benefit.”

The court also concluded that there was no evidence that the church was “involved in any way with the decision to allow (the boy) to operate the ATV.”

ASI Insurance Company, 2022 WL 2760479 (N.D. Fla. 2022).

Considering the Florida court’s decision, church leaders will want to learn the circumstances involved in—and the outcomes of—the following cases involving off-campus events.

Halloween hayride presents scary scenario

A North Carolina court ruled that a church could be liable for serious injuries suffered by a woman. The woman was seriously injured when she fell after stepping in to prevent a child from falling from a church-sponsored Halloween hayride. She was both impaled and dragged by the trailer carrying the riders.

A trial court later dismissed her lawsuit, but an appeals court found the trial court had erred in several areas:

Overloading

The woman claimed the church organized the hayride and determined what precautions should be taken for the riders’ protection. The church decided whether the lighting on the trailer was adequate and how many passengers were permitted on each ride.

The appellate court concluded that the trial court erred in dismissing this basis of liability.

Negligent supervision

The woman alleged the church failed to exercise reasonable care in the supervision of the children on the hayride as demonstrated by the fact that: (1) there was a lot of loud screaming and horsing around; (2) the light illuminating the trailer was insufficient to properly illuminate the entire bed, preventing proper visibility and supervision by the adults present; and (3) a child was close enough to the edge of the trailer bed to be within easy reach of one walking alongside of it.

The appellate court acknowledged that “where an adult host or supervisor is entrusted with and assumes the responsibility for the welfare of a child, they have a duty to the children to exercise a standard of care that a person of ordinary prudence, charged with similar duties, would exercise under similar circumstances.”

The amount of care that is required “increases with immaturity, inexperience, and relevant physical limitations.” 

The appellate court concluded the woman alleged facts indicating that the welfare of the children on the hayride had been entrusted to the supervisors appointed by the church for purposes of safely operating the hayride.

Therefore, the appellate court decided the trial court erred in dismissing the negligent supervision claim against the church.

Key takeaways:
  • Hayrides may result in death or serious injuries to participants.
  • A church may be liable for such injuries based on negligent supervision of the activity, inadequate lighting, and overloading.

Clontz v. St. Mark’s Evangelical Lutheran Church, 578 S.E.2d 654 (N.C. App. 2003).

Deadly after-school party

Two students of a church-operated secondary school (the “school”) formally invited several other students to an “end-of-the-year party” in their home.

Alcohol was consumed in the house and in cars. One student (the “victim”) and a classmate drank alcohol in the victim’s car for an hour, and then went into the party with the remainder of their alcoholic drinks.

Hours later, the victim and his friend died when the victim’s vehicle collided with a tree at about 100 mph. The friend died instantly. The victim, whose blood alcohol was .09 percent, was paralyzed.

The victim and his parents (the “plaintiffs”) sued the school, the religious diocese that they alleged controlled the school, the school’s principal, the parents of the two students who hosted the party, and the convenience store that sold the alcohol to the victim and his friend. The plaintiffs and the school principal settled for $1.1 million, but the case involving the other defendants proceeded to trial.

Following a legal concept known as comparative negligence, jury awarded the plaintiffs more than $55 million in damages. They apportioned 53 percent of the negligence to the plaintiffs, and 25 percent to the school. They apportioned another 20 percent to the parents at whose home the party took place, and 2 percent to the person who bought the alcohol at the store for the victim and his friend.

The trial court allowed a $1.1 million setoff in the award for the settlement with the school principal. The court also entered an amended final judgment against the school and diocese for $13 million.

The school and the diocese appealed.

The state appellate court described two rules used in deciding if a school (or church, or any other youth-serving organization) is legally responsible for injuries to students during off-premises activities:

School-sponsored events. A school may be responsible for injuries to students during an off-site “school-sponsored” event. The court noted that the “sponsor” of an event is one who pays for it or takes responsibility for it. In this case, “no resources of the school were used to conduct the party. High schools may be said to sponsor a prom away from the school premises, but the event is on official school calendars; faculty and staff ordinarily attend and chaperone; and the boundaries of liability are normally the boundaries of the school-sponsored venue.”

School-related events. The court noted that the broader category of school-related events “requires some connection to the school’s academic and extracurricular programs. A school athletic team’s participation in a scheduled competition at another location is obviously school-related.” The court referred to Florida Supreme Court ruling that a school club’s off-premises meeting was school-related, subjecting the school to liability for negligence. Rupp v. Bryant, 417 So.2d 658 (Fla. 1982). In that case, the activity that caused a student’s tragic injury was officially prohibited by the school (a hazing ceremony).

The appellate court concluded that the victim in this case was not injured during a school-related event. It cited the following factors in reaching this conclusion:
  • There was no extracurricular or student “organization” over which the school or principal could have exercised control. As a result, there was no duty to do so.
  • There was no “club” that had been recognized, endorsed, or supervised in any way by the school.
  • The off-premises activity was planned, hosted, and attended by a collection of students “having no name, group identity known to the school, or school-related purpose.”
  • The two student “hosts” did not ask for or obtain the school’s permission to conduct the event. And the academic school year was complete when the students left the school premises (before the event began).

Key takeaway:

This case gives guidance for churches and church-run schools that hold off-site bible studies, parties, club meetings, recreational activities, and athletic events. Here are some points to note:
  • Knowledge of an off-premises activity is not necessarily a basis for liability. There must be something more. The court concluded that liability may arise for either a “sponsored” event or a “related” event.
  • A school, church, or other youth-serving charity may be responsible for injuries to minors during an off-site “sponsored” event. The court noted that the characteristics of a “sponsor” of an event include the following: (1) A sponsor pays for it or takes responsibility for the event; (2) the event is on its official calendar; (3) one or more of the sponsor’s employees typically attend as chaperones.
  • The court also noted that a school can be liable for injuries to students during “school-related” events that involve “some connection to the school’s academic and extracurricular programs.” The court cited a school athletic team’s participation in a scheduled competition at another location, or a school club’s off-premises meeting. The court noted that the school’s duty of supervision extends to such activities if the group is officially sponsored by the school and the school reserves the authority to control its activities.

Archbishop Coleman F. Carroll High School, Inc. v. Maynoldi, 30 So.3d 533 (Fla. App. 2010).

Soccer club liable for injuries

An Arizona appeals court upheld a $7 million verdict against a youth soccer club because of permanent brain injuries suffered by a motorcyclist (“victim”) struck by a vehicle driven by a 16-year-old girl (“driver”). The driver was deemed to be driving carelessly while transporting other minors to a scheduled practice called by a club coach.

The victim’s guardian sued the soccer club, claiming that it was responsible for the driver’s negligence based on the legal doctrine of respondeat superior, which makes an employer responsible for the negligent acts of its employees while acting in the course of their employment. This principle has been extended to uncompensated volunteers acting negligently within the course of their duties on behalf of an organization.

A jury found the soccer club 1 percent at fault. It found the coach 16 percent at fault, and the driver 83 percent at fault.

However, the soccer club was responsible for paying the entire verdict based on the respondeat superior doctrine.

The soccer club appealed.

The appeals court noted that, in determining whether a charity is liable for off-campus injuries, two factors must be considered.
  • “Whether the actor has submitted herself to the directions and control of the one for whom the service is done and (2) whether the primary purpose underlying the act was to serve another.”

The court concluded there was sufficient evidence to find the driver subjected herself to the club’s control on the day of the incident. The court also concluded that the primary purpose of her actions was to serve the club.

In support of this conclusion, the court noted that, on the day of the accident, the coach directed the players to meet at a predetermined location and carpool to practice instead of relying on parents to provide transportation. Furthermore, there was evidence the coach asked the driver to drive herself and her teammates because she had one of the bigger vehicles.

The court concluded that reasonable persons could find the driver performed this task primarily for the club’s benefit. Under club rules, she “had a general obligation to transport herself to and from practice, but she had no obligation to transport several of her teammates, as the coach requested that she do.”

The court pointed to evidence that the club exercised control over the 16-year-old’s driving to and from the practice site. The driver testified that, as the team was preparing to leave the practice site, the coach gave her directions back to the mall and directed her to follow him in his vehicle.

The appellate court also rejected the soccer club’s argument that the doctrine of respondeat superior could not apply to the driver’s “informal and temporary” conduct. It cited two cases as examples of court rulings finding that a nonprofit organization may be vicariously liable for the negligence of a one-time or occasional volunteer who injures a third-party while using his or her personal vehicle to transport goods or persons for that organization, so long as the organization exercised sufficient control over the volunteer’s actions.

Bartell ex rel. Hoesel v. Mesa Soccer Club, 2010 WL 502993 (Ariz. App. 2010).

Jury left to decide issue of ‘vicarious liability’

A baseball coach instructed his team to meet at the high school before a game. At the school, he asked for volunteers to drive to the game and a 16-year-old player (“Reel”) volunteered to drive himself and several players in his father’s SUV. While returning from the game, Reel was involved in an accident that injured two players in his vehicle and killed another.

A lawsuit was filed and named the American Legion post that sponsored the baseball team as a defendant. The post moved for the case to be dismissed, but based on the case’s facts, the court found it was for the jury to determine whether the driver was an agent of the American Legion post and whether that American Legion post was vicariously liable for Reel’s negligence.

Daniels v. Reel, 515 S.E.2d 22 (N.C. App. 1999).

“Agent of the church” status opens door for negligence lawsuit

A church member (the defendant) volunteered to deliver cookies to sick and infirm church members as part of the church’s Christmas program.

While making deliveries, he turned his vehicle into the path of a motorcycle. This resulted in severe injuries to the motorcycle driver, including the amputation of his left leg.

An Indiana court later found sufficient evidence for the jury to conclude the defendant was an agent of the church and subject to its control, thereby making the church responsible for his negligent driving. The court noted that the defendant drove at the invitation of the church, and the defendant had participated as a driver on previous Christmases. The court also noted the church picked the delivery date and provided the cookies. The church also organized the list of shut-in members who were to receive the cookies. The church also chose the people to whom the defendant was to deliver the cookies.

Trinity Lutheran Church, Inc. v. Miller, 451 N.E.2d 1099 (Ind. App. 1983).

Deadly crash and administrator’s knowledge of off-campus drinking

A high school senior died in a car crash after an end-of-year, off-campus party. The student had a blood alcohol content of .13 percent.

A faculty advisor and principal had prior knowledge of the students’ intent to consume alcohol at the party.

The trial court and a Washington state appeals court both ruled in favor of the school. This, despite the principal’s and faculty adviser’s knowledge and inaction. The plaintiffs appealed.

The appeals court followed other cases determining that “the nexus between an assertion of the school district’s authority and potential tort liability springs from the exercise or assumption of control and supervision over [a student] organization and its activities by the appropriate agents of the school district.”

The appellate court pointed to a disclaimer in the school’s student and parent handbook: “THE SCHOOL WILL NOT BE RESPONSIBLE FOR ANY EVENT THAT IS NOT OFFICIALLY SANCTIONED BY THE ADMINISTRATION.”

In this case, the party “was not officially sanctioned.” In addition, “the school’s policy in the handbook does not change the fact that the incident occurred at a time when the school had no duty to supervise the students” since it occurred after the end of the school year.

Rhea v. Grandview School District, 694 P.2d 666 (1985).

School liable for off-campus hazing injury

A school was found liable for negligence when a student was injured in a hazing incident during an off-campus, school-related club meeting.

The school’s duty of supervision extended to the activity because the event was both authorized and sponsored by the school, which reserved to itself the authority to control the club’s activities, and the fact that that club had a faculty advisor.

Rupp v. Bryant, 417 So.2d 658 (Fla. 1982).

‘Individual’ versus authorized capacity

A college was not responsible for a tragic accident during an off-campus excursion to celebrate the end of the school year because the teacher who drove the group did so in his individual capacity, after classes were officially concluded, and without authorization by the school.

Fernandez v. Florida National College, Inc., 925 So.2d 1096 (Fla. App. 2006).

Conclusions

The article summarized above demonstrates that churches may be liable in some cases for injuries occurring off of church premises.

Liability is virtually certain when an injury occurs during an official, scheduled event. These cases assist church leaders in evaluating the potential risk of off-campus activities, especially those involving minors.

Great care must be taken when planning such events in order to reduce the risk of injury and church liability.

In exercising such care, leaders should ask the following questions when evaluating upcoming events and activities for off-site events:
  • Is our church directing, requesting, or benefiting from the activity or event? If so, courts will view the activity or event as an official one, expanding the church’s legal and risk liabilities.

If the event or activity is officially church-related, leaders should evaluate the risks of injury or death. They should then take steps to minimize problems, including (but not limited to):
  • assigning adequate staff and volunteers to supervise and assist;
  • ensuring adequate lighting and other safety measures are present;
  • limiting crowd size or the number of participants at a given time;
  • determining proper screen and selection of individuals who will drive; and,
  • seeking professional businesses skilled in the high-risk events or activities that can instruct, supervise and train before, during, and after the event or activity.

Church leaders oftentimes learn about an unfolding plan for an event or activity but are uncertain whether it can be characterized as an official church activity. In those instances, the following questions may be helpful for evaluating the plans:
  • Is the activity or event planned by a group or committee recognized, endorsed, or supervised by the church?
  • Have those involved with the planning sought permission from the church?
  • Have those involved with the planning requested resources (including money or materials) from the church? Has the church provided any?
  • Has the church’s staff or leaders controlled or directed any parts of the planning, including transportation arrangements, dates and times, locations, or other logistics?
  • Has the church officially promoted the activity or event through announcements on its website, its bulletin, its calendar, and/or during its worship services?
  • Will any church staff members attend the event or activity in their official capacity?

A “yes” to any of these questions likely increases the possibility the event or activity will be viewed as a church-related one.

If leaders become concerned about this increased possibility, qualified legal counsel—as well as counsel with the church’s insurer—may help determine the best steps to take to help reduce risks and ensure the event or activity fulfills its specific purpose.

Lastly, as the court in Rhea v. Grandview School District concluded, a church policy specifically stating it will not be responsible for any event that it does not officially sanction may be prudent.

While such a policy does not fully shield the church, particularly if answers to one or more of the above questions is “yes,” it still demonstrates the church’s official position.

As an act of ministry, the church also might consider providing specific steps that an individual or group should take to have the event or activity officially sanctioned by the church.

Further Reading: This church was found not liable for injuries sustained by a teenager at an off-campus church event. Click here to find out the specifics.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: Vasil Nazar

Key Tax Dates July 2023

Key tax dates include filing Forms 8274 and 941, and meeting monthly or semiweekly filing requirements.

Richard R. Hammar, Attorney, CPA
Bio

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2023 the lookback period is July 1, 2021, through June 30, 2022), then withheld payroll taxes are deposited monthly.

Tip: The 2023 Church & Clergy Tax Guide is available—order a print copy today (while supplies last) or download the .pdf version now.

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2023 the lookback period is July 1, 2021, through June 30, 2022), then the withheld payroll taxes are deposited semiweekly. This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Also note that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.
July 2023 Tax CalendarDownload

July 28, 2023: File employer exemption—Form 8274

Churches hiring their first nonminister employee between April 1 and June 30 may exempt themselves from the employer’s share of Social Security and Medicare taxes by filing Form 8274 by this date (nonminister employees are thereafter treated as self-employed for Social Security purposes). The exemption is only available to churches that are opposed based on religious principles to paying the employer’s share of Social Security and Medicare taxes.

July 31, 2023: File Form 941

Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the second quarter of 2023 by this date. Enclose a check in the total amount of all withheld taxes (withheld income taxes, withheld Social Security and Medicare taxes paid by the employee, and the employer’s share of Social Security and Medicare taxes) if less than $2,500 on June 30, 2023.

Note: If a date listed for filing a return or making a tax payment falls on a Saturday, Sunday, or legal holiday (either national or statewide in a state where the return is required to be filed), the return or tax payment is due on the following business day.

Note: You must use electronic funds transfer to make all federal employment tax deposits. This is generally done using the Electronic Federal Tax Payment System, a free service provided by the US Department of Treasury. If you don’t wish to use EFTPS, you can arrange for your tax professional, financial institution, or payroll service to make deposits on your behalf. Failure to make a timely deposit may subject you to a 10-percent penalty.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Part 1 of 4: Prepping for a Church Meeting

Preparation is key in holding an effective church meeting.

Sarah E. Merkle, Attorney
Bio

Editor’s Note: Prepping for a church meeting is as important as the meeting itself. Continuing her look at effective business meetings through the hypothetical lens of Liz Jones, an experienced business administrator at First Church, Sarah E. Merkle walks us through the three-step process of planning, defining, and ordering a meeting agenda.

This four-part series is offered in support of Merkle’s “Mastering Meeting Basics.”

An effective church meeting can go a long way toward healthy and effective decision-making. Planning the meeting, therefore, is key.

Planning a church meeting: The problem

Liz Jones needs an effective business meeting plan.

Last year, First Church’s annual business meeting didn’t go so well. This year, Pastor Steve Hayes has asked Jones to fix that.

Jones, an experienced business administrator, knows preparation will be key. The congregationally led church is 16 years old and recently surpassed 500 members.

As the church grows, the need for meetings to go well only grows, too.

A few things went wrong at last year’s annual meeting:
  • It ran too long.
  • Discussion over pricey upgrades to the church’s audio/visual equipment went in circles.
  • A key decision related to making a minor tweak to one of the church’s bylaws got delayed because proper notice wasn’t given ahead of time to members.

The next annual business meeting—planned for Sunday, January 8, 2023, at 12:30 p.m.— is still several months away, but Jones knows she needs to work fast to plan and organize it well.

A general search online yielded some ideas. Then she came across a Church Law & Tax article series by Sarah E. Merkle, an attorney with impressive credentials and experience helping churches, nonprofits, businesses, and organizations run meetings.

The article covering meeting preparation especially caught her eye. On a whim, she sent Merkle an email explaining her circumstances. A short while later, Merkle emailed back.

Creating an effective church meeting plan

Merkle couldn’t provide specific advice to Jones because legal ethics don’t allow it when an attorney-client relationship doesn’t exist.

But Merkle generally described steps Jones can take to put a better plan together.

Step 1: Get your to-do list in order

Put the church’s articles of incorporation, bylaws, and policy manuals all within arm’s reach, and read through them to note any dates by which things must happen. Whether nominating new board members or approving an annual budget or adopting a pastor’s housing allowance, these dates create deadlines—and to-do lists that should get completed by the appropriate meeting before the corresponding deadline.

For the annual business meeting, recurring dates include submitting board nominations whenever one or more members finish their terms, and getting congregational approval for the next year’s fiscal budget. This year, only the latter needs to happen.

Step 2: Define the agenda.

Merkle explained that initial formalities need to be addressed, such as approving the minutes of the last business meeting, plus adopting the agenda for this one.

From there, First Church needs its next fiscal budget approved. It also typically uses the annual business meeting to share updates from the church’s ministries, facilities, and financial health committees. This year, it also faces several other important decisions—it’s about to call a new associate pastor. It is also contemplating repaving its parking lot.

In the past, First Church has typically saved the biggest—and often most controversial—decisions for the end of its annual business meetings.

That’s what happened last year when the church wrestled with the audio/visual proposal. It was costly, members wanted to debate it, and, given that the meeting was already running long, frustrations mounted as a vote was pushed through.

Merkle cautioned Jones about prioritizing the agenda a certain way only because it’s “how the church has always done it.”

With the list of agenda items defined, Merkle said she asks these questions to further understand the potential flow for the agenda:
  • Who should speak or present on behalf of any of the agenda items? The chair of the associate pastor search committee, for instance, should plan to talk about the candidate and explain the process used for the search, including the qualifications sought and the other people interviewed.

All presenters should be identified and contacted early to get them started with their respective presentations.
  • What resources do these individuals need to succeed with their remarks? This might include PowerPoint and other audio/visual support—and it may require staff time to assist the presenter, especially if he or she is a volunteer.
  • What information about an issue can be given to members ahead of time to help them learn and understand what the issue is about? For the associate pastor role, that might include a biography of the candidate. For the parking lot project, it might include an explanation about why it’s needed, the potential costs, and the ministry impact it can deliver.
  • What notice is required under the church’s governance to ensure an issue can be voted on? Last year’s bylaw change didn’t provide proper notice—and this year, the church’s governance requires notice before members can vote to call any pastor.

Step 3: Ordering the agenda

The last major step is to order the agenda.

“There’s no right or wrong answer here,” Merkle wrote. “It’s more important to ask certain questions to decide how to do it. What are you ultimately wanting to accomplish at this meeting? Prioritize the agenda based on what needs to be decided for the healthy functioning of the church over the next 30 to 45 days.”

One evaluation is to anticipate controversies.

“Is everyone coming to the meeting because they are already angry about the issue? If so, then it needs to be earlier in the agenda,” Merkle wrote. “Is everyone coming calm, but an issue on the agenda may anger them? If so, then don’t schedule anything afterward that is heavy or serious—keep it straightforward.”

Another evaluation is the pros and cons of each item happening at specific times on the agenda.

With the associate pastor role, there are positives to placing it early on the agenda. Most people likely will attend because of this specific decision, and they’ll have more energy early in the meeting. One negative, though, is that updates about ministry and financial health may shape how people decide—and those reports would likely come later.

Relatedly, there are pros and cons to placing the item later in the agenda, too. The pro is that all information should be in hand. The con is that people are tired.

For Jones, the order is starting to take shape. Leading the agenda with the ministries, financial health, and facilities reports should start things on a positive note. The facilities report will then include the parking lot project.

From there, the agenda will shift into the associate pastor discussion and decision, since the meeting is still relatively young and the new role’s impact on the church’s mission and operations will be better understood.

Plus, adding the position directly influences the church’s healthy functioning within the next 45 days.

Lastly, the agenda will address approval of the next annual budget.

Jones now can begin working on contacting the individuals she needs to speak on the various topics, and the timetables needed to notify the congregation about the associate pastor vote.

“I’m really glad you reached out,” Merkle wrote. “The thought put into an annual business meeting can turn it into something invigorating. The time you’re using now to prepare can make a massive difference in how people feel—helping them see the big picture and celebrate the church’s direction.”
Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.
Correcting Improper FICA withholdings
Image: Getty/Kameleon007

Q&A: Correcting Improper FICA Withholdings

What to expect when correcting improper FICA withholdings for a pastor.

Elaine L. Sommerville, CPA
Bio

Q: Our church has been withholding FICA for its pastors, in some instances for years—or even decades. We recently learned this is a mistake. How do we fix this?

Wages paid to ministers are not included in the definition of wages for the purposes of withholding FICA/Medicare tax. This includes the related employer matching of these taxes by the church.   

Instead, ministers must pay into the Social Security/Medicare systems through self-employment tax calculated on Schedule SE with their personal tax returns (unless they obtain an exemption). 

Tip: Elaine’s expertise on FICA, payroll, FLSA, and a host of other key topics are on full display in Church Compensation: From Strategic Plan to Compliance. Pick up your copy today.

FICA withholding rules are confusing

Improper FICA withholdings is not uncommon. Churches often incorrectly withhold and match the FICA/Medicare taxes on ministers. If the IRS determines this treatment has occurred, it takes the position that the church has determined the employee is not a minister for payroll tax purposes. This may affect the taxation of other benefits. That’s because it’s impossible to claim to be a minister for one portion of the rules but not for another.

For an example of how the incorrect withholding of a minister’s payroll taxes can prove so consequential, look no further than the housing allowance that qualifying ministers are eligible to receive.

The housing allowance is one of the most valuable tax benefits available to ministers. If a church treats a minister incorrectly and withholds and matches the minister’s FICA/Medicare taxes, then the IRS views him or her as an employee, not a minister. The IRS then would tax the housing allowance paid by the church for the minister, representing a sizable financial loss for the minister. 

Correcting Improper FICA Withholdings

Churches that have improperly withheld/matched a minister’s FICA/Medicare taxes should amend the payroll reports for the three tax years open under the statute of limitations.

This requires amending quarterly Forms 941 and annual Forms W-2. Taxes paid will be refunded to the church. And, because it mistakenly overpaid its taxes, the church will not face any penalties.

The minister will need to report the compensation as self-employment income for the past three years. This is done by amending the related Forms 1040.

The minister also needs to pay the related self-employment tax owed. Interest will be calculated on the tax owed when he or she amends the Forms 1040. 

These amendments can be complicated, so a church may require professional assistance in filing the related amended reports and returns.

Learn more:

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

Part 4 of 4: Minding Meeting Minutes

Holding an effective church meeting includes knowing who should be keeping minutes and how they should be kept.

Sarah E. Merkle, Attorney
Bio

Editor’s Note: Minding meeting minutes is both an oft-misunderstood and under-appreciated part of a church business meeting. Continuing her look at effective business meetings through the hypothetical lens of Liz Jones, an experienced business administrator at First Church, Sarah E. Merkle shows the important roles that meeting minutes play.

This four-part series is offered in support of Merkle’s “Mastering Meeting Basics.”

Long before First Church’s annual business meeting arrived, Liz Jones mapped out a plan for getting the meeting’s minutes taken, too.

Before proceeding, though, she first needed to clear up some misconceptions about who should take minutes. Some assumed it would be the church secretary. Others assumed it should be Jones as the church business administrator.

Neither assumption was correct.

Instead, the responsibility of taking minutes falls to the church board’s secretary.

Jones reached out to Tom Erickson, the board secretary, and scheduled a meeting ahead of time to go over his duties.

“I’m nervous about this task, to be honest,” Erickson confided to Jones when they met. “I have a hard time capturing everything said in a conversation—there’s so much to keep track of.”

“Don’t worry,” Jones responded. “I’ll help you understand exactly what we need. And remember, I’m attending the meeting, too. There should always be someone backing you up at a meeting, and I can do that for this meeting.”

Recording what is done, not said

Jones then walked Erickson through the key tips for taking effective minutes.

“You’re not recording the meeting. You’re not transcribing the meeting,” she explained. “You’re recording what was done, not what was said.”

Erickson nodded but looked slightly confused.

“But to record what was done, don’t we need to know who said what—who supported what, who opposed what, that kind of thing?” he asked.

“No—that’s a common mistake many church leaders make,” Jones answered. “So much of what happens just needs to be a brief, general description. For instance, when Cindy Martinez gets up to give the facilities report, it doesn’t have to be detailed. It should just say, ‘The facilities chair gave a report on behalf of the facilities committee, including details on proposed projects for the parking lot, children’s ministry wing, and HVAC system.’ That’s it.”

Jones paused as Erickson jotted down some notes.

“Is there ever a time when specific details need to be included, though?” Erickson asked.

“Yes,” Jones responded. “Mainly when votes are taken. You need to record the outcomes. If specific counts are made, you need to capture the votes for and the votes against.”

Erickson scribbled down a couple more notes.

“So, this is really about just making sure ultimate decisions and directions are recorded for future reference—not a play-by-play,” he said.

“Exactly,” Jones responded. “And when the next business meeting comes, they’re already prepared and ready to be presented for approval as a way to formally document those decisions and directions.”

A closer look at the minutes

Erickson heeded Jones’s advice. Because he wasn’t focused on recording every word said, he found the task much more manageable—and capturing highlights and high-level details came more easily than he expected.

This especially proved true during the extensive discussion about the proposed facilities projects. Erickson knew he would have gotten flustered trying to note each perspective shared about support or opposition—and objectively representing the remarks would be next to impossible anyway.

After First Church’s annual business meeting, he cleaned up the notes he typed during the meeting. To his credit, he needed Jones’s backup notes for only one thing—the official vote count (243 to 13) in favor of the candidate for the new associate pastor role.

Erickson’s draft minutes looked like this:

First Church

Annual Business Meeting

January 8, 2023

12:30 p.m.

Board Chair Terry Christensen called the annual business meeting of First Church to order at 12:35 p.m.. A quorum was present.

Agenda

By unanimous consent, the agenda was adopted as presented.

2022 Annual Business Meeting Minutes

By unanimous consent, the minutes of the January 9, 2022 annual business meeting were approved as distributed.

Ministry Update

Outreach Coordinator Joy Allman provided an update on the progress of various ministries of the church, noting that the children’s ministry was experiencing significant growth and that the church leadership was exploring a new missions opportunity in Ecuador.

Finance Committee

Alex Armstrong, chair of the Finance Committee, provided an overview of the financial reports distributed to the membership, noting that member giving has been steady and that the building and property loan from 2016 remains the church’s only outstanding debt.

Facilities Committee

Cindy Martinez, chair of the Facilities Committee, provided an update on the state of the Church’s facilities. On behalf of the Committee, Ms. Martinez moved that the Facilities Committee obtain bids to begin the following capital projects during the next fiscal year: repave the parking lot, and replace the HVAC system; and, that the Facilities Committee be authorized to proceed with these projects, provided they do not exceed a combined total cost of $200,000. The motion was adopted as amended.

Associate Pastor Search Committee

Russ Moore, chair of the Associate Pastor Search Committee, provided an overview of the associate pastor search, including the Committee’s process for identifying and vetting candidates. On behalf of the Committee, Mr. Moore moved that First Church call Karl Miller to be associate pastor of First Church. The motion was adopted, with 243 in favor and 13 opposed.

2023–2024 Budget

On behalf of the Finance Committee, Alex Armstrong moved that the 2023–2024 budget be adopted as distributed. The motion was adopted.

Adjourn

By unanimous consent, the meeting adjourned at 2:00 p.m.
Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

Part 3 of 4: Making Every Vote Count

Holding an effective church meeting includes understanding the four basic types of votes, and knowing which one is best.

Sarah E. Merkle, Attorney
Bio

Editor’s Note: Making every vote count in a church business meeting takes many forms. Continuing her look at effective business meetings through the hypothetical lens of Liz Jones, an experienced business administrator at First Church, Sarah E. Merkle illustrates the various types of votes that can be taken at a business meeting, and the methods for calculating their outcomes.

This four-part series is offered in support of Merkle’s “Mastering Meeting Basics.”

Before First Church’s annual business meeting, Liz Jones met with Terry Christensen, the church board’s chairwoman, to go over the four types of votes that can be conducted. The two looked closely at each option, weighing their benefits and drawbacks and assessing when they might prove most useful.

The homework pays off as the annual business meeting unfolds.

Vote Type 1: General or unanimous consent vote

“This type of vote is great for noncontroversial matters,” Jones told Christensen during their prep. “It also speeds up the meeting.”

The two agreed she’d use them for the first items on the agenda: adopting the agenda for this meeting and approving the last business meeting’s minutes. She followed that plan in the meeting’s first moments.

“First, we will approve the agenda for this meeting. Are there any objections to today’s agenda as presented?” she asks. Then, as Jones coached her, she pauses and counts to three. “Hearing no objection, the agenda is approved.”

Christensen clears her throat, then leans into the podium microphone again. “Next is approving the minutes from the last business meeting. Are there any corrections to the minutes as distributed?”

Three more seconds pass with silence. “Hearing no objection, the minutes are approved,” she says.

Jones told Christensen the likelihood of objections to either of these agenda items was very small. Had one arisen, though, she would have simply resorted to a voice vote.

Vote Type 2: Voice vote

Like Jones predicted, members discussed the proposed motion from the facilities committee with zeal.

A proposed amendment to that motion—in which bids would be sought for projects involving the church’s parking lot and HVAC system, but not for repainting the children’s ministry wing—went through lengthy discussion.

After nearly 20 minutes, Christensen senses it’s time to move things along. To do so requires a motion to close debate, followed by a second to that motion, then followed by approval by a two-thirds majority. With 300 members present, Christensen opts to use a voice vote.

“All of those in favor of closing the debate on the amended motion as presented, say ‘Aye.’”

The ‘aye’s’ boom across the room.

“All opposed, say ‘No.’”

Only a smattering of ‘no’s’ arises across the sanctuary. Christensen feels confident that two-thirds voted in favor.

Now it’s time to see if enough support exists to approve the motion as amended with the children’s ministry project removed.

This time, only a majority is needed. Christensen again opts for a voice vote.

“All of those in favor of the motion as amended, say ‘Aye.’” Christensen says.

Another hearty round of ‘aye’s’ fills the sanctuary.

“All opposed, say ‘No.’”

A strong number of ‘no’s’ spread across the sanctuary, too.

It’s too close to call.

Vote Type 3: Raised hand or standing vote

During the prep, Jones told Christensen about the usefulness of a “raised hand or standing vote” option. “You use this when a voice vote is too close to call. You can also use it if you need the exact vote count noted in the meeting’s minutes,” Jones explained. “It’s a really effective way to keep things moving when the vote itself doesn’t need to be kept in secret.”

With the voice vote on the parking lot and HVAC projects too close, and no apparent need for secrecy involved with either decision, Christensen chooses a standing vote.

“The chair was uncertain, so we’ll conduct a standing vote,” she says into the microphone. “All of those in favor, please stand.”

A large contingent of individuals across the sanctuary rise.

“Please sit down,” she says. “Now, all of those opposed, please stand.”

Another sizable group rises. It’s still too close to call, even visually.

Christensen asks those standing to sit. She then asks those in favor to stand again.

Two tellers attending the meeting to count votes then proceed to count off those who are standing. Upon finishing, Christensen asks supporters to sit, then asks those opposed to stand. The two tellers then have those who are opposed count off.

The result: Those in favor measured 102, while those opposed measured 101—the closest margin possible.

“The motion as amended passes,” Christensen says.

Vote Type 4: Ballot vote

Going into the annual business meeting, Jones knew the calling of an associate pastor would need a ballot vote. Not only is it a significant decision, and one that members may not wish to openly vote about, but the church’s bylaws require at least two-thirds of those present and voting to approve a decision like this.

A ballot vote ensures an accurate and official count is taken and documented with the meeting’s minutes.

Anticipating this, Jones worked ahead of time with Russ Moore, chair of the Associate Pastor Search Committee, to review the church’s membership roll.

She made certain enough notice was provided to all members about the expected vote during the meeting. And she made certain enough ballots were created and available on the day of the meeting.

Jones also ensured the ballots were printed with the actual question and appropriate responses for members to select. It didn’t have to be fancy—it just simply read, “I am in favor of calling Karl Miller to be associate pastor of First Church,” followed by boxes with “YES” and “NO” next to them. No signature was required since the bylaws didn’t require one and the desire for secrecy weighed heavily.

Counting votes

The ballots for Miller’s candidacy were collected. Two tellers quickly went through them.

Among the 300 members present at the meeting, 256 cast votes.

Jones recalled Sarah E. Merkle’s article on voting and the formula needed for determining at least a two-thirds majority. Here, since there were 256 members present who voted, the tellers would take 256, multiply it by 2, then divide it by 3 to determine the number of votes needed for a two-thirds approval. Since the mathematical result to this formula—170.6—wasn’t a whole number, the tellers rounded up to the nearest whole number, which is 171.

Tip: The formula for determining a two-thirds majority is (N x 2)/3 where N is the number of people present who voted. When the result is not a whole number, the number is rounded up to the nearest whole number.

For Miller, the members overwhelmingly approve his call by a margin of 243 to 13.

Christensen breathes a sigh of relief, partly because of the need to get Miller started soon, and partly because the controversy with the facilities projects earlier in the meeting was much closer—and almost didn’t pass.

Part of the reason why was because the calculation for a majority vote works differently from the formula for calculating a two-thirds vote. With a majority, the number of members voting is multiplied times 0.5. If a whole number results, then a 1 gets added. If a fractional number results, then it gets rounded up to the nearest whole number.

Tip: The formula for determining a majority vote is N x 0.5, where N is the number of people voting. If a whole number results, add 1. If a fractional number results, round up to the nearest whole number.

In the facilities motion as amended, 203 people voted. Multiplied by 0.5, the result was 101.5, and rounded up to the next whole number, the figure was 102. That meant the motion barely passed.

But it passed nonetheless, and as the meeting headed toward the home stretch, Christensen and Jones believed no major obstacles remained in the way. The church’s budget information was presented well in advance, and support already existed for the variance built in for the facilities projects.

Christensen and Jones were right: A voice vote on the approval of the budget overwhelmingly passed.

The meeting finished. Pastor Hayes considered it a major success.
Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

Part 2 of 4: Managing Meeting Motions

Knowing how to make—and manage—a motion is a crucial aspect of a successful church business meeting.

Sarah E. Merkle, Attorney
Bio

Editor’s Note: Managing motions during a church business meeting is essential to ensuring the meeting accomplishes its intended purposes. Continuing her look at effective business meetings through the hypothetical lens of Liz Jones, an experienced business administrator at First Church, Sarah E. Merkle explains how to plan, draft, and make a meeting motion.

This four-part series is offered in support of Merkle’s “Mastering Meeting Basics.”

Liz Jones spent months preparing the agenda for First Church’s annual business meeting. As her work progressed, it became apparent that the facilities committee’s report would suggest more potential work would be needed than just repaving the church’s parking lot.

One motion—and possibly more—would likely come up for facilities-related needs.

Cindy Martinez, the facilities committee’s chair, sent an email to Jones several weeks prior to the meeting warning her as much.

Martinez detailed the parking lot project. She also relayed desires from some individuals to repaint the children’s ministry wing, as well as preliminary concerns from others about the church’s aging HVAC system (though some contend the concerns are premature).

The primary tension point? Next year’s proposed annual budget doesn’t account for the expenses to do all three.

“We already know there will be differing opinions about which projects need to be addressed, and which should get priority,” Martinez wrote to Jones. “At least a few also believe the church should borrow some money now and do all three projects, with the goal to have the loan paid off in two years.”

Planning the motion

Working through Sarah E. Merkle’s article on motions, Jones decides the smart approach will be to have Martinez present the facilities committee report, including the three possible projects. But Jones gets nervous about the ensuing discussion and how things might bog down in the meeting.

She again reaches out to Merkle with an email. Merkle replied soon after, reminding her she couldn’t provide legal advice but could generally help.

“In general, it’s smart to come to a meeting with a proposed motion drafted,” Merkle wrote. “You don’t want all the information presented about all the projects, say all three need to happen, and stop there. At that point, someone will just present a motion that isn’t well-crafted.”

Jones confers with the finance committee chair, Alex Armstrong, about how next year’s annual budget is taking shape. He tells her a potentially reasonable budget amount for the developing projects based on current financial projections, pending bids for the projects.

Jones then proceeds to help Martinez craft a draft motion that reads as follows:

RESOLVED, that the Facilities Committee obtain bids to begin the following capital projects during the next fiscal year:
  • Repave the parking lot;
  • Replace the HVAC system;
  • Repaint the children’s ministry wing; and,

that the Facilities Committee be authorized to proceed with these projects, provided they do not exceed a combined total cost of $200,000.

Making the motion

The annual business meeting day arrives and 300 voting members show up, more than enough to satisfy the quorum requirement for First Church’s annual business meeting.

As planned, the agenda begins with the ministries, financial health, and facilities reports.

The ministries report includes exciting developments for First Church, such as big growth in its children’s ministry and a new missions opportunity in Ecuador.

Armstrong’s financial health report reads mostly positive, too. First Church’s only debt is the loan it received to purchase its building and property from another church about seven years ago. Giving over the past year remained steady, a welcome development after years of local and national economic uncertainty.

Then it’s Martinez’s turn to provide her committee’s report on the facilities. She references the packet of information sent out to members a couple of weeks before the meeting.

Martinez uses the PowerPoint that Jones helped create to provide descriptions and photos detailing the parking lot’s rapid deterioration, which was already evident when First Church bought the property seven years ago. She also explains the children’s ministry’s growth, and the children’s ministry director’s desire to freshen things up. Then she discusses some of the HVAC system’s recent problems, including an unexpected breakdown last winter that left the building colder than usual for worship one Sunday.

Martinez finishes and makes the motion that Jones helped her prepare. Since it comes from the committee, the motion doesn’t require anyone to second it.

“Is there any discussion?” asks Terry Christensen, the church’s board chairwoman.

Jones shifts uncomfortably in her first-row seat. This would be the first opportunity for the meeting to go off the rails.

Lively discussion

The discussion was as lively as Jones and Martinez anticipated. Thankfully they warned Christensen ahead of time so that presiding over it wouldn’t surprise her.

Some members express immediate opposition to the repainting. “The wing doesn’t look that bad, and the money should be used for the HVAC,” an older man opines.

Another member jumps in: “I move we strike the children’s ministry wing repainting from the motion.”

“Is there a second to the amendment?” Christensen asks. Since the amendment didn’t come from the committee, a second to this motion is needed. The older man seconds the motion.

“Is there discussion about the amendment?” Christensen asks.

A young mother raises her hand. “I know repainting may seem unnecessary. But we’ve heard about how the children’s ministry has grown,” she says. “Anyone who serves downstairs knows how dingy everything looks.”

Other members speak up. Some support the repainting. Others oppose it. One suggests doing all three but borrowing money, which elicits a somewhat snarky response from a longtime member who boasts how the church has historically avoided debt beyond its mortgage. Eventually, a majority votes to adopt the amendment.

Discussion then resumes on the motion as amended. Nearly 20 minutes pass. Sensing it’s time to move things along, a longtime member makes a motion to close debate that gets seconded and then approved by a two-thirds majority of the votes cast.

Now it’s time to see if enough support exists to approve the motion as amended with the children’s ministry project removed. Another voice vote must be done, but this time, only a majority is needed to approve it.
Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

Four Steps Needed For An Effective Church Meeting

Parliamentarian Sarah E. Merkle partners with Church Law & Tax to show church leaders how to hold an effective church meeting.

The Editors and Sarah Merkle

Church Law & Tax Senior Editorial Advisor Sarah E. Merkle understands the importance of planning and holding an effective church meeting.

“Many church members and leaders don’t know the risk to churches that do not understand parliamentary procedure or carefully follow it,” Merkle says. “There can be legal implications for not keeping minutes of actions taken by the church. Churches that don’t think through quorum or are careless about voting or the election of officers will often find themselves in a procedural mess. And spiritually, a congregation may experience strife and contention if there is a lack of good leadership or poor member involvement in church business. Avoid problems by following principles of parliamentary procedure and good governance.”

In this companion to “Mastering Meeting Basics,” Merkle offers this hypothetical case study, a four-part series on how to plan, hold, and document an effective church meeting. From planning the meeting to making motions, and from taking votes to capturing minutes, this series can offer valuable insights.

Any church leader responsible for planning and holding effective church meetings should bookmark this resource.
Image: Getty/Mansoreh Motamedia

Recommended Reading

Church Disruptions and How to Respond

Church disruptions are top-of-mind for many faith leaders in today’s fractured landscape. Read on for valuable tips, insights and recommendations.

The Editors

Dealing with church disruptions is not a normal part of the weekly worship experience. But in today’s climate, faith leaders must plan for them.

As Rich Hammar notes in Pastor Church & Law, 5th Edition, churches are under no obligation to let people disrupt worship services. And, in reality, church leaders have the law on their side when it comes to church disruptions:

“Churches do not have to tolerate persons who disrupt religious services. Church leaders can ask a court to issue an order barring the disruptive person from the church’s premises. If the person violates the order, he or she may be removed from church premises by the police and may be found to be in contempt of court.“

Bookmark this recommended reading list (and subscribe to Church Law & Tax today for full access) for help navigating these situations.

Learn how to ask a disruptor to leave your church to picking. Pick up a few tips on diffusing a potentially dangerous situation in “Responding to a Dangerous Person“, and hear from the head of security at Saddleback.com on what matters most in mass shooting response plans inside “Mass Shooting Preparation is All About Planning—Not Panic.”

Disruptive Church Members

An adult male who exhibited bizarre behavior in his church and community could not be involuntarily committed to a psychiatric hospital since he was not a danger to himself.
Image: Todd Watermann

Key Tax Dates June 2023

Key tax dates in June include housing allowance designations, quarterly payments, and monthly or semiweekly requirements.

Richard R. Hammar, Attorney, CPA
Bio

Monthly requirements

If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2023 the lookback period is July 1, 2021, through June 30, 2022), then withheld payroll taxes are deposited monthly.

Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church or organization need not deposit the taxes.

Tip: The 2023 Church & Clergy Tax Guide is available—order a print copy today (while supplies last) or download the .pdf version now.

Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Semiweekly requirements

If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2023 the lookback period is July 1, 2021, through June 30, 2022), then the withheld payroll taxes are deposited semiweekly.

For paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday.

For all other paydays, the payroll taxes must be deposited on the Friday following the payday.

Large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

June 15, 2023: Quarterly estimated tax payments for certain employees and churches

Filing for certain ministers and self-employed workers

Ministers who have not elected voluntary withholding and self-employed workers must file their second quarterly estimated federal tax payment for 2023 by June 15. A similar rule applies in many states to payments of estimated state taxes.

Nonminister employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay FICA taxes) are treated as self-employed for Social Security. They are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they ask their employing church to withhold an additional amount of income taxes from each paycheck that will be sufficient to cover self-employment taxes (use a new Form W-4, Step 4(c), to make this request).

Payments for unrelated business income tax liability

A church must make quarterly estimated tax payments if it expects an unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure your estimated taxes. Quarterly estimated tax payments of one-fourth of the total tax liability are due by April 15, June 15, September 15, and December 15, 2023, for churches on a calendar-year basis. Deposit quarterly tax payments electronically using the Electronic Federal Tax Payment System (EFTPS).

June 30, 2023: Review housing or parsonage allowance designations

Now is a good time to review the 2023 housing or parsonage allowances designated for all ministers on staff. If an allowance designated for 2023 is clearly below actual housing expenses, then the church board should consider declaring a larger portion of the minister’s remaining compensation as a housing or parsonage allowance.

A church is free to designate any portion of a minister’s compensation as a housing allowance but remember that clergy who own their home cannot claim a housing allowance exclusion greater than the fair rental value of the home (furnished, including utilities).

Therefore, the allowance ordinarily should not be significantly more than this amount.

Note: If a date listed for filing a return or making a tax payment falls on a Saturday, Sunday, or legal holiday (either national or statewide in a state where the return is required to be filed), the return or tax payment is due on the following business day.

Note: You must use electronic funds transfer to make all federal employment tax deposits. This is generally done using the Electronic Federal Tax Payment System, a free service provided by the US Department of Treasury. If you don’t wish to use EFTPS, you can arrange for your tax professional, financial institution, or payroll service to make deposits on your behalf. Failure to make a timely deposit may subject you to a 10-percent penalty.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: Getty/Andrii Dodonov

IRS Again Alerts Employers to Improper ERC Claims

Third parties are using aggressive tactics and lucrative promises related to ERC claims.

The Editors

Editor’s Note: On September 14, 2023, the Internal Revenue Service (IRS) announced it has immediately stopped processing new Employee Retention Credit (ERC) claims “amid [a] surge of questionable claims.”

Concerns raised by tax professionals, coupled with aggressive marketing to ineligible applicants, “highlights unacceptable risk to businesses and the tax system,” the agency said.

The IRS will continue processing previously filed claims and pay out claims it approves, it said, but processing times will take longer as the agency applies more scrutiny to address fraud concerns.

The IRS also said it is finalizing details to help entities victimized by “aggressive promoters” who have used repeated advertising and direct-contact methods to entice claim applications without carefully evaluating whether an entity truly qualifies for the credit.

Taxpayers who already have a claim submitted, but fear they were misled–including churches and small businesses–will be eligible for a special withdrawal option as well, the IRS said. It plans to announce details for the option soon.

The IRS said more than 600,000 claims remain unprocessed.

Church Law & Tax will continue to monitor developments.

The Internal Revenue Service (IRS) is again warning employers, including churches, to exercise caution if they’re contacted by a third party regarding the Employee Retention Credit (ERC).

The ERC is legitimate. However, third parties are using aggressive tactics to try and entice employers to seek it, and sometimes, the third parties aren’t carefully evaluating an employer’s eligibility, putting the employer in jeopardy with the IRS.

In other instances, the third parties have fraudulent intentions altogether.

Church Law & Tax began warning churches about illegitimate or fraudulent activities surrounding the ERC in February.

A bit of background reading:

Many churches may be eligible for the ERC, a provision providing employers relief due to hardships experienced in the early days of the COVID-19 pandemic. Specific criteria must be met, however.

“The aggressive marketing of the Employee Retention Credit continues preying on innocent businesses and others,” said IRS Commissioner Danny Werfel, in the agency’s latest alert. “Aggressive promoters present wildly misleading claims about this credit. They can pocket handsome fees while leaving those claiming the credit at risk of having the claims denied or facing scenarios where they need to repay the credit.”
Join Church Law & Tax today for access to thousands of helpful articles, resources, expert analysis and live webinars.

The IRS provided a list of “warning signs” that employers should look for when dealing with a third party about the ERC, including:
  • Unsolicited calls or advertisements mentioning an “easy application process.”
  • Statements that the promoter or company can determine ERC eligibility within minutes.
  • Large upfront fees to claim the credit.
  • Fees based on a percentage of the refund amount claimed. This is a similar warning sign for everyday taxpayers, who should always avoid a tax preparer basing their fee on the size of the refund.
  • Aggressive claims from the promoter that the business receiving the solicitation qualifies before any discussion of the group’s tax situation. The ERC is a complex credit that requires careful review before applying.
  • Wildly aggressive suggestions from marketers urging businesses to submit the claim because there is nothing to lose. Those improperly receiving the credit could have to repay the credit—along with substantial interest and penalties.

“These promoters may lie about eligibility requirements,” the IRS added. “In addition, those using these companies could be at risk of someone using the credit as a ploy to steal the taxpayer’s identity or take a cut of the taxpayer’s improperly claimed credit.”
Video
Image: Getty/blackred

WATCH: The Dangers of Raising Money For One Thing—And Spending It On Another

Church leaders would do well to pay attention to this fraud lawsuit against a Michigan archdiocese.

Matthew Branaugh, Business Owner
Bio

In this update, Church Law & Tax Editor and Attorney-at-Law Matthew Branaugh highlights a fraud lawsuit out of Michigan to explain the risks of churches raising money for one thing, only to spend it for something else.

The key lesson centers on the idea that a legal doctrine known as “ecclesiastical abstention,” may not always shield churches and church leaders from lawsuits, particularly in financial matters.

Meanwhile, search our state-by-state database of latest and most impactful legal developments affecting church leaders, nationwide.

Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.
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Part 4 of 4: The ‘Discovery Rule’ and What It Means for Abuse Victims and Churches

The discovery rule is an exception to the statute of limitations with far-reaching implications for both abuse victims and churches.

Richard R. Hammar, Attorney, CPA
Bio

Editor’s Note: Child abuse scandals continue to garner widespread media attention as well as the attention of lawmakers nationwide. As more victims come forward, often years or decades after suffering alleged abuses, they learn their state’s statute of limitations prevent them from seeking damages from the perpetrator or, when relevant, the perpetrator’s employer through civil lawsuits. These time bars have become subject to changes—and in some instances, outright removals—by state legislatures in an effort to help victims.

This four-part series focuses on this continuing trend, helping churches and church leaders understand the potential ramifications. This part looks specifically at the “discovery rule,” an exception to statutes of limitation long available to victims—and especially relevant to churches in states where extensions or removals of statutes of limitation have not occurred. This rule also applies in states where extensions have been granted, but deadlines still exist.

Some states have adopted, either through legislation or court decision, a limited exception to the statute of limitations known as the discovery rule.

Under this rule, the statute of limitations does not begin to run until a person “discovers” that his or her injuries were caused by a particular event or condition, or, with the exercise of reasonable vigilance, should have discovered the connection. It does not matter how long ago the injury occurred.

The discovery rule has been applied most often in the following three situations:

1. Medical malpractice. In some cases, medical malpractice is difficult, if not impossible, to recognize until after the statute of limitations has expired. To illustrate, if a surgeon inadvertently leaves a scalpel in a patient’s body during an operation, and the patient does not discover this fact until after the statute of limitations for medical malpractice has expired, the patient should not be denied his or her day in court. Under the discovery rule, the statute of limitations begins to run not when the malpractice occurred, but when the patient knew or should have known of it.

2. Child molestation. Some courts have applied the discovery rule in cases of child sex abuse. These courts have concluded that young children may “block out” memories of molestation and not recall what happened for many years. The statute of limitations does not begin until the victim’s eighteenth birthday, or until the victim knew or should have known that his or her emotional or physical injuries were caused by the acts of molestation. Some courts that have applied this rule have limited it to victims who were very young at the time of the molestation. Adults who claim that they repressed memories of abuse occurring when they were adolescents often have a difficult time convincing juries that they are telling the truth.

3. Seduction of adult counselees. Some courts have applied the discovery rule in cases of sexual contact between a minister and an adult counselee. These courts have concluded that adults who engage in such acts with a minister may attempt to repress their memory of them or be so intimated by the authority of the minister that they lack the capacity to file a lawsuit.

Key point. Any rescission or extension of the statute of limitations in child sex abuse cases, or any “revival” of child abuse claims barred under prior law, presents extraordinary difficulties for a church that is sued as a result of an alleged incident of sexual misconduct that occurred many years ago. In some cases, church leaders cannot even remember the alleged wrongdoer, much less the precautions that were followed in selecting or supervising this person.

Several courts have been reluctant to apply the discovery rule in cases of child abuse because of the difficulty of repressing knowledge of such events, especially for victims who were adolescents at the time the alleged abuse occurred. As one court noted, “The discovery rule does not generally apply to claims from a violent assault because the plaintiff is usually aware of the assault.” Doe v. Jesuit College Preparatory School, 2022 WL 2352953 (Tex. App. 2022).

Example. A federal court in Vermont ruled that an adult who claimed to have been sexually abused by a nun some 40 years earlier could sue a Catholic diocese for his alleged injuries. 

An adult male (the plaintiff) began receiving intensive psychotherapy for what he alleges were severe emotional problems. As a result of this therapy, the plaintiff claimed that he discovered he was the victim of “childhood sexual abuse, physical abuse and psychological abuse” allegedly occurring 40 years ago when he was a resident of a church orphanage.

The plaintiff filed a lawsuit against “Sister Jane Doe,” the alleged perpetrator (whose identity was unknown) and various religious organizations allegedly responsible for hiring and supervising Sister Jane Doe.

The plaintiff alleged in his lawsuit that he had “used all due diligence, given the nature, extent, and severity of his psychological injuries and the circumstances of their infliction, to discover the fact that he has been injured by the sexual abuse.” The diocese urged the court to dismiss the case on the ground that the statute of limitations had expired long before.

Under Vermont law, when a plaintiff sues to recover damages for injuries “suffered as a result of childhood sexual abuse,” the lawsuit must be brought within “six years of the act alleged to have caused the injury or condition, or six years of the time the victim discovered that the injury or condition was caused by that act, whichever period expires later.”

The diocese claimed that since the alleged abuse occurred over forty years ago it is reasonable to assume that the plaintiff should have discovered the cause of his injuries long ago. It also argued that forcing it to defend against an alleged injury occurring so long ago violates the very purpose of a statute of limitations—relieving defendants of the difficult if not impossible task of defending against such claims.

The court rejected these arguments and ruled that the statute of limitations had not expired on any of the plaintiff’s claims (except for assault and battery, which the court deemed to be unrelated to childhood sexual abuse). The court observed that under Vermont law, the test is when the plaintiff in fact discovered that his injuries were caused by childhood abuse, and not when he reasonably could have made this discovery. Barquin v. Roman Catholic Diocese, 839 F. Supp. 275 (D. Vt. 1993).

‘Active Concealment’ and fraud can also extend statutes of limitations

Some courts have permitted the statute of limitations to be suspended in limited circumstances, including fraud or the “active concealment” of the existence of a civil claim against a wrongdoer.

Example. A Tennessee appellate court ruled that in a lawsuit alleging that church entities were negligent regarding the sexual abuse of minors by a pastor, the trial court erred in dismissing the complaint based on the statute of limitations when the victims alleged that efforts were made by certain of the church defendants to hide the sexual abuse and a “whitewash” ensued because the victims alleged fraudulent concealment, and that statute of limitations did not begin to run until after the lawsuit was filed. Doe v. Presbyterian, 2022 WL 1837455 (Tenn. App. 2022).

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Part 3 of 4: A New Federal Law May Expand Abuse Victims’ Rights to Pursue Damages

The Eliminating Limits to Justice for Child Sex Abuse Victims Act of 2022 places no time limits on when victims can sue.

Richard R. Hammar, Attorney, CPA
Bio

Editor’s Note: Child abuse scandals continue to garner widespread media attention as well as the attention of lawmakers nationwide. As more victims come forward, often years or decades after suffering alleged abuses, they learn their state’s statute of limitations prevent them from seeking damages from the perpetrator or, when relevant, the perpetrator’s employer through civil lawsuits. These time bars have become subject to changes—and in some instances, outright removals—by state legislatures in an effort to help victims.

This four-part series focuses on this continuing trend, helping churches and church leaders understand the potential ramifications. This part looks specifically at changes made by Congress as a way to offer victims a path to seek legal remedies if their states’ statutes of limitations have not been extended.

In 2022, Congress enacted the Eliminating Limits to Justice for Child Sex Abuse Victims Act. This Act provides that “there shall be no time limit” for filing civil lawsuits for any of the following federal sex offenses:

Federal offenseCitation
Forced labor18 USC 1589
Trafficking for forced labor18 USC 1590
Sex trafficking18 USC 1591
Aggravated sexual abuse18 USC 2241(c)
Sexual abuse18 USC 2242
Sexual abuse of a minor18 USC 2243
Sexual exploitation of children18 USC 2251
Selling or buying children18 USC 2251A
Certain activities relating to material involving the sexual exploitation of minors18 USC 2252
Certain activities relating to material involving the sexual exploitation of minors18 USC 2252A
Production of sexually explicit depictions of a minor for importation into the United States18 USC 2260
Transportation generally18 USC 2421
Coercion and enticement18 USC 2422
Transportation of minors18 USC 2423

It remains to be seen how effective this legislation will be since most sex abuse claims are brought in state court. However, it likely will benefit victims of child sexual abuse whose claims are barred by state statutes of limitation.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Part 2 of 4: Is Your Church Prepared for a Decades-Old Abuse Claim?

Pastors, church boards and everyday church members should understand the liability that can come with a decades-old abuse claim.

Richard R. Hammar, Attorney, CPA
Bio

Editor’s Note: Child abuse scandals continue to garner widespread media attention as well as the attention of lawmakers nationwide. As more victims come forward, often years or decades after suffering alleged abuses, they learn their state’s statute of limitations prevent them from seeking damages from the perpetrator or, when relevant, the perpetrator’s employer through civil lawsuits. These time bars have become subject to changes—and in some instances, outright removals—by state legislatures in an effort to help victims.

This four-part series focuses on this continuing trend, helping churches and church leaders understand the potential ramifications. This part looks specifically at the legal, financial, and administrative tolls a church may face if a civil lawsuit dating back years or decades moves forward in the courts.

Church leaders must understand that their church is probably not in a financial position to respond to an abuse claim reaching back several decades, and that in some cases, liability for an abuse claim could extend to board members or even individual members.

The motivation behind states extending victims’ rights when it comes to abuse involving churches is both understandable and laudable: Legislators want to “give voice” to persons sexually abused as minors who, for whatever reason, were reluctant or unwilling to bring their claims in court.

After all, several studies have demonstrated that most child abuse victims find it difficult to seek remedies for their claims in civil court. This is often due to one or more of the following factors:
  • Repressed memory of the abuse.
  • Shame and embarrassment.
  • An unwillingness to publicly disclose in court the details of the abuse.
  • An unwillingness to testify in court regarding the details of the abuse.
  • An unwillingness to confront one’s abuser in court.
  • A reluctance to disclose the details of the abuse to family and friends who may know nothing about it.

But church leaders need to understand that if a church’s assets are below the amount a victim is seeking in court, and a church’s insurance coverage is insufficient to cover the claim, then the victim’s attorney may seek to recover damages against the personal assets of church board members.

Churches are financially ill-prepared to meet new claims

But many churches, schools and other defendants are not adequately positioned to answer for abuse that happened before current staff and members were born.

Unfortunately, insurance policies that are several years or decades old are often discarded by church staff who see no point in keeping them and adding to the general “clutter” in the church office, and most churches do not have liability insurance providing coverage for claims of sexual abuse alleged to have occurred years or decades in the past.

Even if liability insurance is available and no exception applies, the policy often will provide low limits of coverage for providing a defense and paying toward any damages awarded.

In any event, if a liability insurance policy for the year that a case of child abuse occurred is not available, then bankruptcy must be considered. This would involve identifying all church assets that are available to pay a sex abuse claim, including buildings, vehicles, bank accounts, and so on.

Furthermore, liability might extend to board members or even individual members if a church’s assets are far below the amount a victim is seeking in court.

Federal law and the laws of most states protect volunteers and uncompensated board members of tax-exempt corporations (including churches) from personal liability for their decisions as members of the board.

However, there are exceptions.
  • In most states, the immunity of uncompensated church board members does not extend to willful and wanton acts or gross negligence, or to board members of unincorporated churches. To illustrate, if an old claim of child abuse occurred because of a failure by the board to institute reasonable protective policies and procedures, it is possible that this will constitute gross negligence. This will expose the board members to the personal liability exception.
  • Immunity statutes providing limited relief to church board members only apply to uncompensated directors. This is an important point for church leaders to understand. Some churches provide limited amounts of compensation to board members. These may include a gift or stipend at Christmas, or non-accountable expense reimbursements. Even limited forms of compensation jeopardize the significant protection that uncompensated directors enjoy from personal liability, making it important for church leaders to review any future examples of compensation provided by the church to its board members.

Also note that some courts have suggested that members of an unincorporated church may be personally liable for the acts and obligations of other members, or the church itself, opening the door for victims to recover damages from individual members if the church cannot pay out of its own assets and insurance.

Understanding insurance is key

Clergy and church leaders evaluating possible abuse claims past or present need to understand the insurance coverage their churches possess (or possessed in the past). Of particular importance is whether a church secured an occurrence policy or a “claims made” policy.

Claims made and occurence insurance policies

“Occurrence” policies only cover injuries that occur during the policy period, regardless of when a claim is made.

Advantages to an “occurence” policy:
  • Covers any injury that occurs during the policy period, regardless of when a lawsuit is filed
  • No “prior acts” coverage needed if a church maintains a succession of “occurrence” policies

Disadvantages:
  • Does not cover lawsuits filed during the policy period for injuries occurring prior to the policy period.
  • Insurance premiums usually higher than for a “claims made” policy.

A “claims made” policy covers injuries for which a claim is made during the policy period if the insured has continuously been insured with claims made policies with the same insurer since the injury occurred.

Advantages to a “claims made” policy:

  • Covers any lawsuit filed during the policy period, regardless of when the injury occurred
  • Coverage limits are the current limits, not the limits in effect when the injury occurred
  • Insurance premiums often are lower than for an occurrence policy  

Disadvantages:
  • Must have carried “claims made” insurance continuously with the same insurer from the date of the injury to the date of the claim, or have purchased “prior acts coverage,” which can be costly.
  • A brief lapse in insurance coverage for any reason can result in no “claims made” coverage
  • Coverage for prior claims is lost if a church switches from a “claims made” to an “occurrence” policy
  • When a policy expires or is terminated, for any reason, coverage ceases (even for claims that are later made for injuries occurring during the policy period)
  • Claims for injuries occurring in more than one year may be filed during the same year, meaning that the policy’s “aggregate” coverage limit is more quickly reached (the aggregate limit is the total amount the insurer will pay out during that year for all covered claims)
  • Claims must not only be made during the policy period to be covered—they also must be reported to the insurer (a technicality that is sometimes overlooked)

“Prior acts” coverage, available for an additional cost and at the insurer’s discretion, covers claims made during the current policy period for injuries occurring in the past when the insured carried insurance with another insurer.

Example: A church purchases “claims made” counseling insurance from Company A each year for several years. It switches to an “occurrence policy” with Company B this year.

A lawsuit is brought against the church this year for an alleged act of counseling malpractice that occurred three years ago. The church’s policy with Company A will not cover this claim since the claim was not “made” during the policy period (even though it occurred during the policy period). Had the church not switched insurers this year, the claim would have been covered. Does the policy with Company B cover the claim? No, since the injury did not occur during the policy period.

As a result, there is no coverage for this claim. Note that the result would have been the same had the church purchased a claims made policy from Company B, unless it also purchased “prior acts” coverage.

This example illustrates an important point. Churches should not switch from a claims made to an occurrence policy (with the same or a different insurer), or switch claims made insurers, without legal counsel.

Church leaders should ensure that liability insurance policies are never discarded. Policies often are the only means of establishing the existence and availability of insurance for old claims—both now and in the future.

Church leaders should periodically review the policies and procedures the church has adopted to address the risk of child abuse and ensure both their adequacy and consistent application.

Insurance ‘archeology’

If a church cannot locate an insurance policy covering a case of child abuse occurring many years in the past, the services of an “insurance archaeologist” may be helpful. Insurance archaeologists are trained to locate missing insurance policies. Even if successful, conditions may apply. Further, the coverage limits under old policies often will be far below the damages sought, making the services of an archaeologist of limited value in many cases.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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Part 1 of 4: More States Expand Victims’ Rights to Sue for Abuse

New laws extend, and in some cases, eliminate statutes of limitations for filing civil lawsuits in connection with abuse cases.

Richard R. Hammar, Attorney, CPA
Bio

Editor’s Note: Child abuse scandals continue to garner widespread media attention as well as the attention of lawmakers nationwide. As more victims come forward, often years or decades after suffering alleged abuses, they learn their state’s statute of limitations prevent them from seeking damages from the perpetrator or, when relevant, the perpetrator’s employer through civil lawsuits.

These time bars have become subject to changes—and in some instances, outright removals—by state legislatures in an effort to help victims.

This four-part series focuses on this continuing trend, helping churches and church leaders understand the potential ramifications. This part looks specifically at how many states are changing statutes of limitation, and court cases illustrating how those changes affect the legal process.

Most states have several statutes of limitations specifying the deadline for filing a civil lawsuit seeking a legal remedy (such as compensation) for an injury that can range from a breach of contract to a personal injury to property damage. Different deadlines apply for different types of claims.

Key point 10-16.4 The statute of limitations specifies the deadline for filing a civil lawsuit. Lawsuits cannot be brought after this deadline has passed.

There are a few exceptions that have been recognized by some courts:

(1) The statute of limitations for injuries suffered by a minor begins to run on the minor’s eighteenth birthday.

(2) The statute of limitations does not begin to run until an adult survivor of child sexual molestation “discovers” that he or she has experienced physical or emotional suffering as a result of the molestation.

(3) The statute of limitations does not begin to run until an adult with whom a minister or church counselor has had sexual contact “discovers” that his or her psychological damages were caused by the inappropriate contact.

(4) The statute of limitations is suspended due to fraud or concealment of a cause of action.

Persons who do not file a lawsuit by the deadline specified by law generally have no legal recourse.

But state lawmakers, federal lawmakers, and courts have come up with a variety of ways to extend the statute of limitations for injuries to minors, particularly as it relates to sexual abuse and molestation.

A report released in 2022 by CHILD USA notes:
  • 50 states have eliminated the statute of limitations for child abuse criminal claims.
  • 18 states have eliminated a statute of limitations for some or all child abuse civil claims.
  • 27 states have enacted “revival statutes” that “revive” child sex abuse claims that expired under prior law.

Case Studies

North Carolina

An adult male sued a religious denomination in 2022 for injuries he sustained as a result of being sexually abused by a house parent at a denomination–run orphanage. A North Carolina appeals court observed:

The Sexual Assault Fast Reporting and Enforcement Act (“the Act”) was enacted in 2019 to “strengthen and modernize” our sexual assault laws. Among other revisions, the Act extended to ten years the statute of limitations for a civil action based on sexual abuse suffered while a minor.

Further, it provided that “a plaintiff may file a civil action within two years of the date of a criminal conviction for a related felony sexual offense against a defendant for claims related to sexual abuse suffered while the plaintiff was under 18 years of age.”

The Act also contained a provision, effective from 1 January 2020 to 31 December 2021, that revived “any civil action for child sexual abuse otherwise time-barred under [prior law] as it existed immediately before” the Act’s passage. Doe v. The Western North Carolina Conference of the United Methodist Church, 871 S.E.2d 877 (N.C. App. 2022).

New York

Example 1: The plaintiff, a 69 year old male, sued a church and others for sexual abuse from 1960 to 1964 by two persons associated with his Boy Scout troop, the suit was not time-barred because the Child Victims Act … extended the statute of limitations to bring a civil action based on sexual abuse until the child victim reached the age of 55, and … created a one-year revival window for time-barred claims, which was later extended by the Governor for an additional year regardless of the victim’s age. LG 67 Doe v. Resurrection Lutheran Church, 164 N.Y.S.3d 803 (N.Y. App. 2022).

Example 2: A federal district court in New York made the following comments regarding a sex abuse case:

On February 14, 2019, former New York Governor Andrew Cuomo signed into law the Child Victims Act. … The Child Victims Act allows individuals who were sexually abused as children to assert civil claims that had previously been barred by the statute of limitations. Specifically, the CVA extends the statute of limitations for actions against ‘any party whose intentional or negligent acts or omissions are alleged to have resulted in the commission of child sexual offenses.’

Those actions must be brought before the plaintiff reaches the age of 55. The CVA also created a ‘window of time’ during which previously time-barred claims alleging child sexual abuse could be brought. … After the CVA became law, more than 200 previously time-barred actions alleging child sexual abuse were brought against the Diocese and certain individuals and organizations affiliated with the Diocese.

Together, these suits allege acts of sexual abuse dating back more than six decades. The Diocese provided notice to its former insurers and requested that they defend and indemnify the Diocese in accordance with the requirements in the individual policies. The filing of more than 200 claims, and the possibility of additional claims, led the Diocese on October 1, 2020, to file for bankruptcy protection pursuant to Chapter 11 of the United States Bankruptcy Code. Roman Catholic Diocese of Rockville Ctr. v. Certain Underwriters at Lloyds, 2021 WL 4027020 (S.D.N.Y. 2021).

Old abuse claims pose challenges for both victims, churches

While the motivation behind such laws is understandable, churches will likely struggle to defend themselves against claims arising from decades-old abuse cases.

This is due to several factors, including:
  • memories have faded,
  • witnesses are dead,
  • alleged living witnesses have no recollection of the abuse,
  • few, if any, church members have any knowledge or recollection of the abuse,
  • no documentary evidence exists pertaining to the alleged abuse,
  • the victim has no corroborating physical evidence pertaining to the abuse, such as letters, email, social media posts, and photographs,
  • the victim cannot identify the alleged perpetrator,
  • a lack of evidence that the victim reported the abuse to parents, friends, or church staff.

Some courts have noted that the following factors tend to corroborate claims of child abuse occurring many years or decades ago:
  • an admission by the abuser,
  • a criminal conviction for the abuse,
  • a victim’s documented medical history of childhood sexual abuse,
  • contemporaneous records or written statements of the abuser, such as diaries or letters,
  • photographs or recordings of the abuse,
  • an objective eyewitness’s account,
  • evidence the abuser had sexually abused others,
  • “… proof of a chain of facts and circumstances having sufficient probative force to produce a reasonable and probable conclusion that sexual abuse occurred. …” Moriarty v. Garden Sanctuary Church of God, 534 S.E.2d 672 (SC 2000).
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

4-Part Series: Expanding Abuse Victims’ Rights and What It Means for Churches

As state and federal lawmakers understandably expand abuse victims’ rights, Church Law & Tax examines what it all means for churches.

Richard R. Hammar, Attorney, CPA
Bio

Child abuse scandals continue to garner widespread media attention as well as the attention of lawmakers nationwide. As more victims come forward, often years or decades after suffering alleged abuses, they learn their state’s statute of limitations prevents them from seeking damages from the perpetrator or, when relevant, the perpetrator’s employer through civil lawsuits. These time bars have become subject to changes—and in some instances, outright removals—by state legislatures in an effort to help victims.

This four-part series focuses on this continuing trend, helping churches and church leaders understand the potential ramifications.

Part 1: More States Expand Victims’ Rights to Sue for Abuses

Part 2: Is Your Church Prepared for a Decades-Old Abuse Claim?

Part 3: A New Federal Law May Expand Abuse Victims’ Rights to Pursue Damages

Part 4: The ‘Discovery Rule’ and What It Means for Victims and Churches
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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