The following information was received from Payroll for Pastors regarding new tax laws that will impact many churches.  If you have questions about this article or the new tax law, please contact Doug Lohrey, Colorado Baptists’ Associate Executive Director/CFO, 303-771-2480 ext 224 or dlohrey@cbgc.org

Dear Church Leader,

We continually monitor changes in the payroll tax laws that specifically impact pastors and churches. We want you to be aware of a significant change that is taking place as a result of the Affordable Care Act that will impact many churches who pay or reimburse individual health insurance premiums and have more than 1 employee and less than 50 employees. Churches that do not comply with Internal Revenue Service Notice 2015-17 by June 30, 2015 will be subject to a $100 per day per employee penalty.

Here is a summary of Notice 2015-17:

  • Employers can pay or reimburse health insurance premiums on individually purchased policies pre-tax through June 30, 2015.
  • By June 30, 2015, employers must stop paying for or reimbursing individual health insurance premiums unless they have just one employee. After that date, ACA penalties will be incurred if individual health care payments or reimbursement arrangements are continued.
  • If employers have only one employee, they can continue reimbursing health care premiums on a pre-tax basis, even past June 30, 2015.
  • Employers who have more than 1 employee and less than 50 employees and are not in a bona fide group plan but want to continue to help pay insurance costs need to change the way this is done after June 30, 2015, to avoid penalties. The way to do this is to increase salaries to cover health care premiums without requiring that the salary increase be used only for that purpose.

We strongly recommend that if your church is not in compliance with IRS Notice 2015-17, that you are by June 30, 2015.

*This notice provided by Tom Werth, Managing Partner

Payroll for Pastors
6535 Green Bay Rd.
Kenosha, WI