Many churches, in an effort of blessing their pastors, present ministers with all-expense paid trips to the Holy Land. With the goal of blessing their pastors, churches often use these trips to commemorate special occasions and do not take into consideration the IRS’s view on such gifts.
Can a church consider a trip to the Holy Land as a nontaxable gift to a minister?
Unfortunately, according to Richard Hammar, who is a scholar on Church and Clergy taxes, a trip to the Holy Land in most cases should not be treated as a nontaxable gift if either of the following are true:
The trip is provided to honor the minister for his or her faithful services on behalf of the church (birthday, anniversary, ministry anniversary, etc.).
Or, the trip is provided to enhance or enrich the minister’s own ministry.
If, however, a church sends a minister to the Holy Land for the primary purpose of engaging in religious activities, then the church’s payment of the documented expenses incurred by the minister may be non-taxable as an accountable reimbursement of business expenses.
The Big “if”
The big “if” on whether a trip is considered as a taxable or nontaxable gift lies in who is benefitting from the trip. Many churches try to include ministry opportunities in for the minister and believe this makes the trip nontaxable. If the minister is ultimately benefiting from the trip in terms of experience or knowledge, even with those ministry opportunities tucked in, then the trip is likely to fall into the category of a taxable gift. The reason for this is that a trip to the Holy Land that benefits one’s ministry is not considered a business expense under current law; IRC 274(m) of the tax codes provides that “no deduction shall be allowed…” for expenses of travel as a form of education.
On the other hand, if the minister was visiting the Holy Land on a mission trip with the express purpose of engaging in religious activities then the trip could be considered a nontaxable business expense. If the trip is considered a nontaxable business expense, then the expenses much be documented as in an accountable plan.
If you have any questions on additional gifts for ministers or other nontaxable gifts available for ministers, reach out to us here. We would love to partner with your church and help you bless your ministers.