Fast Offering funds and tax

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Mikerowaved
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Fast Offering funds and tax

Postby Mikerowaved » Sun Mar 23, 2008 2:10 pm

I'm in Utah, so we record sales tax on reimbursement checks in order to get a refund from the state, but something that puzzles me is, when would a check written from Fast Offering funds ever have a sales tax that would need to be recorded?
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Postby russellhltn » Sun Mar 23, 2008 7:32 pm

Mikerowaved wrote:when would a check written from Fast Offering funds ever have a sales tax that would need to be recorded?


I think the real question is - when the church pays bills for someone in need, does the tax portion then become reimbursable?

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Postby aebrown » Sun Mar 23, 2008 7:36 pm

Mikerowaved wrote:I'm in Utah, so we record sales tax on reimbursement checks in order to get a refund from the state, but something that puzzles me is, when would a check written from Fast Offering funds ever have a sales tax that would need to be recorded?


Various utilities have sales tax; it's also conceiveable that other taxable items might appropriately be purchased using fast offerings funds. Any sales tax paid by the Church in Utah is reimbursible, so it needs to be recorded so that the state can refund it. The state doesn't care whether the church is buying paper clips or paying a phone bill -- the Church still gets reimbursed for sales tax paid.

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Postby Mikerowaved » Sun Mar 23, 2008 8:17 pm

RussellHltn wrote:I think the real question is - when the church pays bills for someone in need, does the tax portion then become reimbursable?

Exactly. I would think not. Say a check is cut from fast offerings to pay a phone bill for Widow Jones, I would doubt very much the Church could claim a tax reimbursement for the state tax on that bill, since the Church is paying it in behalf of Sister Jones who IS obligated to pay that tax.
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Postby russellhltn » Sun Mar 23, 2008 10:24 pm

Mikerowaved wrote:Say a check is cut from fast offerings to pay a phone bill for Widow Jones, I would doubt very much the Church could claim a tax reimbursement for the state tax on that bill, since the Church is paying it in behalf of Sister Jones who IS obligated to pay that tax.


I understand your point, but that's one for the tax lawyers. It's possible that in this case MLS is smarter then we are. ;)

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Taxes on Supplies bought from FO

Postby mtolman-p40 » Mon Mar 24, 2008 11:01 am

I agree with the discussion about taxes when you are paying a bill (i.e utilities etc) on behalf of someone.

However, when something is bought under the FO account as a supply for the purpose of say fixing a house (leaking pipe, roof job etc) then there certainly are taxes that the church should be able to recover. In our region, we went to help out with Katrina a few years ago and many supplies that actually went onto/into homes were bought that way if they were not on the supply trailers sent by SLC (which- by the way- they sent 10 or so 18 wheelers - THANKS).
In these cases, where we had to buy extra tarps etc, the taxes should be able to be recovered. In my experience, we rarely have something that would have recoverable taxes, but it does happen.

Perhaps a different request would be : Can we have a flag on the entry that indicates whether or not taxes should be recoverable along with a couple of examples ? Then as we enter them, we could make the approriate selection. Then again, overthinking this issue: perhaps SLC decided that the relative occurrence frequency was so low that it wasn't worth the effort to try and recover.

Mike

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Postby aebrown » Mon Mar 24, 2008 11:29 am

Mikerowaved wrote:Exactly. I would think not. Say a check is cut from fast offerings to pay a phone bill for Widow Jones, I would doubt very much the Church could claim a tax reimbursement for the state tax on that bill, since the Church is paying it in behalf of Sister Jones who IS obligated to pay that tax.


We are talking about sales tax here -- no other kind of tax. The way I see it, it is not Sister Jones who is obligated to pay the sales tax, but rather the purchaser of the service. The Church happens to be purchasing the service in this case, and under Utah law, the Church doesn't have to pay sales tax, so the sales tax on the phone bill is refundable.

However, the bottom line for all of us who are not tax attorneys and don't legally represent the Church's tax position is: we have been instructed to fill in the sales tax paid for ALL checks we write (in Utah and other areas where we have been told to enable the sales tax feature in MLS). We are not asked to make a judgment as to whether sales tax is refundable for particular check categories or particular expenditures. If sales tax is paid, write the amount on the check. Period.

I personally think it's safe to assume that the very smart people in the Church's tax department have figured this out and have already given us the appropriate instructions.

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Postby Mikerowaved » Mon Mar 24, 2008 4:25 pm

Alan_Brown wrote:The way I see it, it is not Sister Jones who is obligated to pay the sales tax, but rather the purchaser of the service. The Church happens to be purchasing the service in this case, and under Utah law, the Church doesn't have to pay sales tax, so the sales tax on the phone bill is refundable.

I would have to respectfully dissagree. Yes, the Church has exempt status from paying sales tax on goods and services that are part of running the organization. I can see how expenses from budget funds would fit into that category, but in this scenario, Sister Jones' phone is not part of the Church's overall organization, so I can't see how it would qualify.

Alan_Brown wrote:However, the bottom line for all of us who are not tax attorneys and don't legally represent the Church's tax position is: we have been instructed to fill in the sales tax paid for ALL checks we write (in Utah and other areas where we have been told to enable the sales tax feature in MLS). We are not asked to make a judgment as to whether sales tax is refundable for particular check categories or particular expenditures. If sales tax is paid, write the amount on the check. Period.

I personally think it's safe to assume that the very smart people in the Church's tax department have figured this out and have already given us the appropriate instructions.

Again, I would have to respectfully dissagree. I have not seen any specific instructions as to sales tax on fast offering expenses. If you have any such information, I would be very interested. Claiming more tax reimbursement from the state than the Church is entitled is not a position I would like to put them in.

mtolman wrote:However, when something is bought under the FO account as a supply for the purpose of say fixing a house (leaking pipe, roof job etc) then there certainly are taxes that the church should be able to recover.

Now that actually makes sense to me.
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Postby aebrown » Tue Mar 25, 2008 5:50 am

Mikerowaved wrote:I would have to respectfully dissagree. I have not seen any specific instructions as to sales tax on fast offering expenses. If you have any such information, I would be very interested. Claiming more tax reimbursement from the state than the Church is entitled is not a position I would like to put them in.


Here are the specific instructions from the Record Keeping FAQ:

Question:
Should I record sales tax for expenses in MLS?
Answer:
All units in Canada should record the goods and services tax in MLS. In the United States, units in the states of Utah and North Carolina should record sales tax in MLS. To do this, complete the following steps:
1. Click theEditdrop-down menu.
2. SelectSystem Options.
3. Click theFinancestab on the left side of the screen.
4. Find the Finance option titledEnter Tax Amounts on Expenses
5. Make sure the box to the left of the option is checked.
6. If it is not checked, check the box and then clickSave.


With the tax box checked, a Tax field appears on the Enter Expenses screen. The amount in the Tax field is transmitted to Church headquarters. The church is authorized a certain percentage of tax rebate by Canada, Utah, and North Carolina. This percentage is used to calculate the amount of tax that is returned to the units.



As you can see, there is no mention of any exception. It simply states that units "should record sales tax in MLS." While I can see some potential logic in your position, it is mere conjecture. The fact remains that the Church has not given us even the slightest hint that there would be an exception for fast offerings checks or any other category.

We don't start imagining cases where 9% tithing might be more appropriate -- the scriptures and the handbook say it is 10%. Since there are no exceptions mentioned, we don't create them out of thin air. If someone wonders if people named Steve should pay 9% tithing, we know the answer. We don't need to find documentation that says all people named Steve are to pay 10% tithing to be confident that this is indeed the case. From a documentation point of view, this is an analogous situation. The statement to record sales tax is simple, with no exceptions mentioned. Therefore I am very confident that we are to fill in the sales tax for all checks. I know that I am not qualified, and I sincerely doubt that you are qualified, to make exceptions to the stated policy. But if you are really curious, you could ask the Church Tax Department.

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Postby jbh001 » Tue Mar 25, 2008 7:49 am

Alan_Brown wrote:As you can see, there is no mention of any exception. It simply states that units "should record sales tax in MLS."
This wasn't your point, but there is an exception. All states except Utah and North Carolina DO NOT enter tax. That's 48 exceptions. And Canada is an exception unto itself (um, no offense intended). :D


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