Pastor also Deemed CEO by IRS, Consequently subject to fine

In structuring church governance it is very difficult to avoid including the CEO role (of the church as an incorporated organization) as intrinsically within that of being the pastor, since all staff are generally appointed by and report to him. This defacto dual role of the pastor brings sobering liability as illustrated by the IRS case below, upheld by the Federal District Court.

 “A federal District Court in North Carolina has affirmed a Bankruptcy Court decision holding that the founder and “Chief Apostle” of a church, who had the powers of president and CEO of the corporation, is personally liable for payment of withholding taxes for church employees when the church failed to remit the amounts due.  The Court has rejected a claim that an interpretation of her powers, based in part on a reading of the church’s bylaws, violated the Apostle’s and the church’s rights under the First Amendment of the U.S. Constitution. (Vaughan v. Internal Revenue Service, E.D. NC, No. 4:11-CV-222, 7/16/12.) (From NP Issues news page Oct-Nov. 2012)

I consistently argue that a vigilant (and diligent) governing body, elders or otherwise, is the best protection a pastor can have. But oversight diligence has to be via a set of articulated principles by which the church is run, i.e. called policies—covering all areas of risk to which the church is subject.

RMB