The Dangers of Using Church Credit Cards
- Posted by: Todd
- Posted on: Tue, January 29, 2008
- Viewed 41
- (4) comments so far
1. Credit card charge receipts are not given to the church.
The credit card statement will not count as receipt for IRS record-keeping requirements. If the person making the charge does not provide a receipt, then the treasurer should report the credit card charge as taxable income to that person. The receipt should be provided within 60 days of the credit card charge for church business expenditures. A short note taped to the church credit card could remind the user the importance of keeping receipts. The note could be as simple as, “Receipts are required for all credit card charges.” The note could even be more direct, “If receipts are not saved, then the charge will become taxable income to the user.”
2. Personal charges are made accidentally or intentionally on the church credit card.
A personal credit card charge on the church credit card creates a serious tax problem with the IRS. In extreme cases, personal purchases on the church credit card could involve not only civil penalties, but criminal charges being filed against the person. If personal charges are made, the church should be immediately reimbursed for the amount charged or the credit card charge will be deducted from the next employee’s paycheck. Personal charges should never be made on the church credit card.
3. The church credit card is used for the convenience of church members or employees.
The church credit card should be used for items purchased in the normal course of daily business operations. Charges could include items like office supplies, special on-line orders, fuel charges on church-owned vehicles, or large ticket items. The church credit card should be used for the convenience of the church, not the church members or employees. Expenses associated with an employee accountable reimbursement plan should be reimbursed by a monthly reimbursement check. Likewise, church members should be reimbursed by a check for out-of-pocket ministry expenses.
4. The church has not developed church credit card expenditure policies.
Clear policies for church credit card expenditures should be outlined to avoid any misunderstanding or misuse of the church credit cards. Each person authorized to use the church credit card should sign a statement acknowledging his agreement to adhere to the terms of the church credit card policy.
5. Credit card purchases bypass the church’s purchase order system.
Sometimes, it is more convenient to charge a purchase on the church credit card than to wait for a church check to be written. This practice is okay unless the church’s purchase order system is bypassed by the credit card purchase. Churches need to be sure even credit card purchases are subject to the church’s purchase order approval process.
6. The church credit card is not handled as securely as a personal credit card.
The same preventative and protective measures should be followed for the church credit card as a personal credit card. If fraud occurred, then the church credit card company should be notified immediately after discovering the problem.
You can read more here...
Does your church have a credit card? If so, do you have strict policies for its use? And have you ever had any problems with the usage of a church credit card?
Keith Hamilton has a great article over at LifeWay.com about the use of church credit cards. Keith writes, "It is difficult for the church to operate without its own church credit card. Many churches pay for business expenses by a church credit card. Likewise, if handled properly, the church credit card raises less of a concern with the IRS in handling church-ministry expenses. However, many churches do not realize the dangers of church credit cards. The following church credit card perils should alert churches to potential risk of church credit cards. Once a church realizes the potential risk, then the church can respond by taking the appropriate steps to avoid these common dangers..."
Comments
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Peter Hamm on Tue, January 29, 2008
All these pitfalls are easy to avoid with good accountability and financial management. Our bookkeeper is AMAZING at keeping us in line. We have had no problems whatsoever with our church Credit Cards.
Mark Triplett on Tue, January 29, 2008
Same here. To use the church credit card for most any purchase requires a purchase order/check request.
The main reason that our church even has a credit card is to purchase items online. It is a help to do this instead of opening accounts at vendors where we only purchase once or twice a year.
Joe Louthan on Tue, January 29, 2008
This 700+ Advertising Firm I worked for refused to hand out credit cards. For somebody such as myself who worked in IT with all the small little monthly/yearly hits (domain registrar), this can be a pain.
However, I am sure it kept costs under control.
Tip on Mon, July 06, 2009
Hey. Is love supposed to last throughout all time, or is it like trains changing at random stops. If I loved her, how could I leave her? If I felt that way then, how come I don’t feel anything now?
I am from Germany and also now am reading in English, please tell me right I wrote the following sentence: “Tags unsecured credit card debt consolidationunsecured credit card debt consolidation programs by art gibit happens to a lot of people you take out too many loans or have too many credit cards and continually use them beyond your ability to keep up with the payments, or worse, you lose your job.Free credit report without a credit card.”
:-( Thanks in advance. River.
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