Non-Church Related Income
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Table of Contents Non-Church Related Income ………………………………………………………… 002 Rental Income ………………………………………………………………….. 003 Sale of Non-church Related Items ………………………………………….. 004 Receiving and Reporting Sales Tax ………………………………………… 005 Federal Tax on Income-Producing Activities …………………………… 006 References and Resources …………………………………………………………... 007 Forms………………………………………………………………………………………008 Facility Rental Policy …………………………………………………………. 009 Facility Rental Application …………………………………………………… 011
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Non-Church Related Income Churches and religious 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 (i.e. revenue from recycling bin on property). However, the net income from such activities will be subject to the Unrelated Business Income Tax (UBIT) if the following three conditions exist ■ the activity constitutes a trade or business, ■ the trade or business is conducted on a regular basis, 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.)
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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 categorized as unrelated business taxable income and be subject to unrelated business income tax (UBIT): â– 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.) â– if personal services are rendered in connection with the rental, then the income may be unrelated business taxable income, or â– if a church charges for the use of its parking lot, the income may be viewed as unrelated business taxable income. See Facility Rental Forms
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Sale of Non-church Related Items A Church may obtain UBIT from other sources. For example, a church might be required to collect sales tax on behalf of the state or local tax jurisdiction when it acquires proceeds from on-site vending machines or from the sale of books in the church book store. The sale of admission tickets to an event (as opposed to a suggested donation) may also require collection of sales tax. In certain areas, the rental of a significant part of the church building to an outside entity may require the collection of a use tax. The methodology for reporting and paying these taxes varies greatly, and the Treasurer should ensure that any such reports and payments are processed within the required time limits.
See State Taxing Agencies, http://www.taxadmin.org/fta/link/
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Receiving and Reporting Sales Tax Tax laws for local and state jurisdictions vary greatly, so the Treasurer is urged to contact an accountant or other resource when faced with issues regarding state and local taxes. In general, most jurisdictions require that a sales tax be collected whenever a church sells a good or product.
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Federal Tax on Income-Producing Activities If a church or other exempt organization has a gross income of $1,000 or more for any taxable year from the conduct of any unrelated trade or business, it is required to file IRS Form 990-T, “Exempt Organization Business Income Tax Return,” for that year . If the church is part of a larger entity (such as a separate 501 ( c ) 3), it must file a separate Form 990-T if it has a separate EIN. Note: Form 990-T is due by the l5th day of the 5th month following the end of the church’s tax year. [IRC section 512(b)(12) provides a special rule for parishes and similar local units of a church. A specific deduction is provided which is equal to whichever is lowest, $1,000 or the gross income derived from any unrelated trade or business regularly carried on by such parish or local unit of a church.] See IRS Publication 1828 for more information.
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REFERENCES AND RESOURCES Internal Revenue Service Publication 1828 http://www.irs.gov/pub/irs-pdf/p1828.pdf Internal Revenue Service Publication 990 T http://www.irs.gov/pub/irs-pdf/i990t.pdf
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FORMS
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YOUR MCC FACILITY RENTAL POLICY (SAMPLE 1) The Board of Directors has established fees for use of facilities of the Your MCC. We wish to provide a community service by making the facility available when possible. Fees are designed to cover overhead and operating costs. It should also be understood that fees for the use of the facility are in addition to the Administrative Fee and Security Deposit Fee listed below. Fee Schedule for Non-Members Church Auditorium · $125 – Four hours or less (Includes use of kitchen for serving purposes only and area adjacent to kitchen).. Additional $25 per hour (Rentals over four hours, not to exceed a $75.00 maximum. Thus, rental for an all-day event would be $200.) Administrative/Custodial Fee – $50 to open/close the church Security Deposit – $100.00 A separate personal or organizational check or cash is required. The Security Deposit will be returned upon inspection of the building after rental use to ensure that no damage has occurred or additional janitorial service is required. Fee Schedule for Members 1. $50 for personal gatherings other than stated in paragraph 2. 2. No charge for weddings/commitment ceremonies and memorial services/funerals. Terms 1. Fill out the Application for Use form and return it to the Office Administrator. The application will not be considered as officially accepted until it has been signed as approved and appropriate fees have been paid in full. 2. Use of premises for any illegal purpose is prohibited. If it appears that any group contracting for use of the premises intends such use, any Board member or Minister may cancel such contract, immediately. 3. This church has a no smoking policy. 4. Any group using the building, rooms, or facilities of the Church by arrangement shall hold the church, the Board of Trustees, and its employees free and harmless from any loss, damage, liability, cost or expense that may arise during or to be caused by use of the church property by such group. 5. The Administrative Fee is a basic fee primarily intended to make sure that the building is locked, secured, and left in good order following authorized use. 6. The primary purpose of the church facility is to fulfill the purposes, programs, and functions of the church itself. Any scheduled church function shall
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take precedence over any other use. When scheduling conflicts arise, the TBD will decide which group has first choice or priority to use the rental space. Generally, members come first; long-term renters are second; and onetime renters are third. 7. The facilities shall be used for the purpose described in the Application for Use of Facilities and not for any other purpose. 8. No equipment, staging, furniture, etc. shall be brought into the facility other than that which is clearly stated in the Application for Use of Facility. 9. It is not, in general, our intention to have our facilities used by commercial, business, and/or "profit-making" organizations. All applications of this nature must, therefore, be approved by the Board of Directors 10. Use of Kitchen: church dishes, silverware, pots and pans, tablecloths and towels are not to be used unless rented. The kitchen may be used for the purpose of serving, but not the preparation of meals unless you hire one of our Licensed Food Handlers. Kitchen is to be cleaned after use. 11. Nothing may be attached to building walls. 12. The main floor office, downstairs offices, the nursery, and classrooms are not for rent and are not to be entered. 13. The name of the church is not to be used in any way that would indicate church sponsorship of an event. 14. The seating capacity of the auditorium is TBD. Capacity of the area adjacent to the kitchen is TBD. These limits are not to be exceeded. 15. Keys will not be given without a security deposit and a multiple use contract.
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BUILDING RENTAL APPLICATION (SAMPLE 1)
Name / Description of Event : ______________________________________________ Sponsored by Member? : Yes
No
Member Name: ________________________
Event Date* ___/___/___ Event Time___________ (please include setup/break down) *If this is a recurring event please note here with frequency details: ______________________________________________________________________ Area(s) requested:_______________________________________________________ Approximate number of people attending event ________________________________ Items requested for use ( i.e. # of chairs) ______________________________________________________________________
CONTACT INFORMATION Name: ________________________________________________________________ Address: ______________________________________________________________ City/State/Zip: __________________________________________________________ Contact Number with Area Code: ___________________________________________ I agree to abide by all Rules and Regulations for Use of Facilities of the Your MCC and have agreed upon the fees as shown on the attached.
Applicant Signature: ______________________________ Date ______/______/_____
Approved by: _____________________________________ Date _____/_____/______
Security Deposit Received: _______________________ Returned: _______________
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BUILDING USE FEE SCHEDULE
Sanctuary* / hour: $ 0.00 Chapel* / hour: $ 0.00 Auditorium* / hour: $ 0.00 Kitchen* , **/ hour $ 0.00 Chairs (each): $ 0.00 Coffee Urns (each): $ 0.00 Piano per hour: $ 0.00 Tables (each): $ 0.00 Add additional items here: $ 0.00 Clean up Fee: $ 0.00 Licensed Food Handler Requested: Yes
No
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FACILITY USE REQUEST FORM (SAMPLE 2) FOR COMMUNITY USE
Name of Group:_________________________________________________________
Contact Person:_________________________________________________________
Address: ______________________________________________________________
Phone: (Day) _____________ (Evening) ________________ (Fax) _______________
Email: ________________________________________________________________
Date(s) of Event: ______ to ______ Time of Event: _____ AM/PM to _____ AM/PM
Space Requested
Audio Equipment
_____ Sanctuary/Community Room
______ Sound System
_____ 1st Floor Classroom
______ Microphones
_____ 1st Floor Fellowship Area
______ Number of Microphones
_____ 2nd Floor Library
______
_____ Kitchenette
______ Request permission for alcoholic beverage use
Keyboard
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Contact Information
Event Coordinator: ______________________________________________________ Phone: (Day) ____________ (Evening) _________________ (Fax) _______________ Email:
___________________________________________________________
Clean-Up Person: _______________________________________________________ Phone: (Day) ____________ (Evening) _________________ (Fax) _______________ Email:
___________________________________________________________ (A clean-up person can be provided by the church at a rate of $50, payable in advance.)
Sound Technician: ______________________________________________________ Phone: (Day) ____________ (Evening) _________________ (Fax) _______________ Email:
___________________________________________________________
(A sound technician can be provided for you from the church at a rate of $25 per hour in advance.)
Keyboardist: ___________________________________________________________ Phone: (Day) ____________ (Evening) _________________ (Fax) _______________ Email:
___________________________________________________________ (Church Musician may be available for your use - rate would be individually negotiated.)
Will your group require a key to the facility?
_____ Yes
_____ No
(Key Deposit of $25 is to be paid when key is received and refunded upon its return.)
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Space Usage Fees Space usage fees include set-up and clean-up time. A Minimum deposit of 50% of the total space usage fee is due at time of confirmation; the balance is due at time of set-up or by one hour prior to the beginning of the event, whichever is earliest. Cleaning Deposit A Cleaning Deposit of $100 is due at the time of set-up, or one hour prior to the beginning of the event. This deposit is fully refundable given that the facility is cleaned accordingly after usage. This deposit may be retained fully, or refunded in partial increments, if the cleaning is deemed incomplete. An opportunity to “make good” by tending to the cleaning infraction will be offered if it is determined that a portion of this fee is to be otherwise retained. Facility
½ Day Rate (Min)
Full Day Rate
Sanctuary / Community Room
$125
$250
1st Floor Classroom
$25
$50
1st Floor Fellowship Area
$50
$75
Not available
Not available
2nd Floor Meeting Room
$25
$50
Key Deposit (refundable)
$25
$25
2nd Floor Library
Amount Due (calculate)
Other Total Due Less Deposits Balance Due
I have read and agree to abide by the Facility Use Policies and Stipulations for Community Events. I understand that failure to comply with these terms will result in the immediate cancellation of the event. _____________________________________
________________
Signature of Event Coordinator
Date
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(For Internal Use Only)
Date Request Received:
___________________
Facilities Committee Representative Date Approved:
___________________
Key Issued:
_____ Yes _____ No
Permission given for Alcohol Use:
_____ Yes _____ No
ABC License Received:
_____ Yes _____ No
Deposit Amount:
$_________
____ Check #
____ Cash
____ Credit
Account Number: _________________________________ (Exp) _____________
Name as Appears on Credit Card: ________________________________________
Signature: ___________________________________________________________
Balance Due:$__________________
Date Due:__________________
Balance Received By:_________________________ Date Received:______________
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FORM 990-T
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