Kobojunkie:

Roflmao!!!! Roflmao!!!! Roflmao!!!!
You came on this, and posted the question below I responded telling you that the messiah frequented the temple, so why can’t pastors, and you somehow think I am the one bringing salvation or works of righteousness into this?

Roflmao!!!! Roflmao!!!! Roflmao!!!!
Apparently, not the whole bible since the same Bible tells you that the messiah frequented the temple. Roflmao!!!
Oh boy!!

http://www.irs.gov/pub/irs-pdf/p1828.pdf


Net Income Subject to the UBIT

Churches and religious organizations, like other tax-exempt organizations, may engage in income-producing activities unrelated to their tax-exempt purposes, as long as the unrelated activities are not a substantial part of the organization’s activities. However, the net income from such activities will be subject to the UBIT if the following three conditions are met:

■ the activity constitutes a trade or business,
■ the trade or business is regularly carried on, and
■ the trade or business is not substantially related to the organization’s exempt purpose. (The fact that the organization uses the income to further its charitable or religious purposes does not make the activity substantially related to its exempt purposes.)


Exceptions to UBIT

Even if an activity meets the above three criteria, the income may not be subject to tax if it meets one of the following exceptions: (a) substantially all of the work in operating the trade or business is performed by volunteers; (b) the activity is conducted by the organization primarily for the convenience of its members; or (c) the trade or business involves the selling of merchandise substantially all of which was donated.


In general, rents from real property, royalties, capital gains, and interest and dividends are not subject to the unrelated business income tax unless financed with borrowed money.


Examples of Unrelated Trade or Business Activities

Unrelated trade or business activities vary depending on types of activities, as shown below.

Advertising

Many tax-exempt organizations sell advertising in their publications or other forms of public communication. Generally, income from the sale of advertising is unrelated trade or business income. This may include the sale of advertising space in weekly bulletins, magazines or journals, or on church or religious organization Web sites.

Gaming

Most forms of gaming, if regularly carried on, may be considered the conduct of an unrelated trade or business. This can include the sale of pull-tabs and raffles. Income derived from bingo games may be eligible for a special tax exception (in addition to the exception regarding uncompensated volunteer labor covered above), if the following conditions are met: (a) the bingo game is the traditional type of bingo (as opposed to instant bingo, a variation of pull-tabs); (b) the conduct of the bingo game is not an activity carried out by for-profit organizations in the local area; and (c) the operation of the bingo game does not violate any state or local law.

Sale of merchandise and publications

The sale of merchandise and publications (including the actual publication of materials) can be considered the conduct of an unrelated trade or business if the items involved do not have a substantial relationship to the exempt purposes of the organization. [b]

[b]Rental income

Generally, income derived from the rental of real property and incidental personal property is excluded from unrelated business income. However, there are certain situations in which rental income may be unrelated business taxable income:

■ if a church rents out property on which there is debt outstanding (for example, a mortgage note), the rental income may constitute unrelated debt-financed income subject to UBIT. (However, if a church or convention or association of churches acquires debt-financed land for use in its exempt purposes within 15 years of the time of acquisition, then income from the rental of the land may not constitute unrelated business income.),
■ if personal services are rendered in connection with the rental, then the income may be unrelated business taxable income, or
■ if a church charges for the use of the parking lot, the income may be unrelated business taxable income.

Parking lots

If a church owns a parking lot that is used by church members and visitors while attending church services, any parking fee paid to the church would not be subject to UBIT. However, if a church operates a parking lot that is used by members of the general public, parking fees would be taxable, as this activity would not be substantially related to the church’s exempt purpose, and parking fees are not treated as rent from real property. If the church enters into a lease with a third party who operates the church’s parking lot and pays rent to the church, such payments would not be subject to tax, as they would constitute rent from real property.
Whether an income-producing activity is an unrelated trade or business activity depends on all the facts and circumstances. For more information, see IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations.

must_a_far:

when does it become substantial relationship? when churches and mosques start selling books instead of spreading the word contained in their holy books.

“Any Nigerian who earns salary must pay tax. Church workers who earn salaries are taxable. Pastors, church workers must pay tax. “No Nigerian is above the law. Anyone who qualifies to pay tax must pay. The bible gives us injunction to be law abiding. We are spiritually obliged to pay taxes,” he stated.

yommyuk:

good point u made concerning the small churches @Kobojunkie
However in my opinion "Materiality" will take care of that. Are these so called small churches part of a bigger setup or just a stand alone?

yommyuk:

Yes, The govt has ignored it's duties for so long. But I put that down to probably when a few decades ago we had less churches.

yommyuk:

Just like in the uk, uptil the late 80s cow leg was a give away untill when there was a surge in its demand. Its no more free u pay up to £3.50 for it.

yommyuk:

My point is there must be accountability accross the board. be it small, big or Mega. If there is no accountability, the system will be open to malpratice and exploitation . Even majority of these so called small churches fiddle with the little they have

enziga:

@ Tpiah,
Mr God is not to be mocked,
Is God being mocked with this taxation exercise?

No2Atheism:

Why does a Pastor need to go to church considering that even the Messiah himself decided to pay tax.

enziga:

@ Tpiah,
Mr God is not to be mocked,
Is God being mocked with this taxation exercise?

If you are saying tax them all, are you also saying all NGO's and other non-profits that sell books, CD's and DVD's ought to be taxed?

biina:



@topic
I think the first step is to have the churches tender their accounts. They should submit their audited books like any other institution.
Then we would be in a better position to address the taxation question.

bawomolo:

yes it is called a sales tax. 

By the way, are you saying that creflo dollar, and the other dude REFUSED the IRS access to their financials? When did this happen?

Huh?? Are you saying the purchasers ought to pay sales tax on their purchases in this case? Or are you saying the churches should pay sales tax on profits made? which one?

bawomolo:

congress and not the IRS.

bawomolo:
Yes they should pay a tax on their profits.

Kobojunkie:

Since we do not have the legal facts on Nigeria on hand here, are you saying that churches in America pay a tax on profits from sales of books and media to raise money for operation costs as well?

bawomolo:

why should what tax American churches pay be a concern?

MrCrackles:

Kobojunkie

Regarding your last post,
Is this now a new development prompted by the uproar of pastors not to pay?
Could Fashola have bowed down to pressures?

Well, I hope fashola allows the people to vote on that cause I sure know I would vote against such, would rather we stick to enforcing what we have in the books as of now.

yommyuk:

How will materiality take care of anything here? Many of the small churches in Nigeria are not part of larger churches.

Materiality in the sense that the govt should set a threshold in terms of "size of the congregation" and "revenue generated"
if a church revenue is above the limit set by the govt. Then accounts of such must be made transparent to the authorities.

yommyuk:

Even the so called small churches have to file some kind of summarized a/c (May be not in much detail as the Mega ones).
No organisation should be allowed be it church, mosque, or whatever to setup and be collecting money from citizens without
due autorization and complying to regulation.

yommyuk:

I was using the cow leg as an concept. i.e systems and contingency plans must be put in place for growth and development in any sector.
3 decades ago you may find max. 1 church per street. No it is 20 per street. How do u deal with that. You set a system that demands compliance. if not every tom and harry moves in and we have a situation that grows out of control

yommyuk:

The bottom line is paying taxes on revenue generated. I agree the tax collectors are not credible. There is no system in place to check and control their activities. which is another topic . In my opinion, hopeless situations call for drastic measures.

bawomolo:

are you in favor of the current tax code because it favors churches?

bawomolo:

would you mind the issue of federal character to be voted on?

Kobojunkie:

I don't think so.
At the end of the day, we are still speaking of Nigeria here; a country that has so many of the right laws but failing to implement most every one of them. We have really, in my opinion, good tax laws already. The same tax laws we had in the state before everything went to hell in a hand basket. Why should we change it now? Because some churches are big and we cannot deal with that fact? Because we cannot accept the fact that people will always choose to put their money where they want and we want to control how big a church or a non-profit can grow, if not, we cry foul?
Again, the tax laws we have in Nigeria are similar to those we have here in America. Problem is simply that the laws are not effectively implemented in Nigeria’s case. There is no need to change them, only make them more effective. However, if we have decided that it is time we put a limit to how big a congregation can grow and how much money individuals can donate to any cause or group, then we better be ready to face the consequences of such a, in my opinion, ridiculous move.

Kobojunkie:

Show me how the current tax code FAVORS churches.

Voted on, in what case? Isn’t it already in the constitution and hence legal, and as someone pointed out earlier applied in much the same way others laws in that country are currently are?

bawomolo:

tax exemption is a favor and not a right.

bawomolo:
i'm speaking about an amendment to the constitution