Guidelines for Receiving Pastoral Ministers in the United States

D-12 | Civil Law Considerations—Financial Law

Prohibition Against Political Intervention.

In the

capacity as a representative of a US diocese, epar-

chy, parish, school, hospital, religious order, or

other section 501(c)(3) tax-exempt organization, a

religious worker or seminarian may not endorse or

oppose any political candidate or otherwise inter-

vene or participate in a political campaign on behalf

of any candidate.

Fund Raising Restrictions.

The immigration issues

chapter of these

Guidelines

summarizes restrictions

on US fund-raising activities by R and F visa holders.

Many diocesan or eparchial policies prohibit unau-

thorized parish-based fund-raising appeals. In addi-

tion, both universal and particular canon law and

US tax law provisions raise significant obstacles to

fund raising by international religious workers under

diocesan, eparchial, or parish auspices, whether for

personal or family needs or for the support of reli-

gious or charitable organizations/works in their

countries of origin.

Contributions to Catholic organizations rec-

ognized as tax-exempt under section 501(c)(3) of

the Code are deductible by individual US donors.

Contributions made directly to or indirectly for

the benefit of foreign charities, including foreign

parishes, dioceses, eparchies, and religious insti-

tutes are

not

deductible by individual US donors.

Contributions nominally made to US organizations

that serve as mere conduits for transmission of contri-

butions to foreign organizations are

not

deductible.

The conduit situation frequently arises at the parish

level, when an international religious worker may

solicit contributions from parishioners under parish

auspices for the benefit of a parish, religious insti-

tute, or charitable organization in his or her home

country. Parishes should not authorize or facilitate

such conduit contribution arrangements and must

not provide charitable contribution substantiation

statements to donors.

63 Additional information about permitted and prohibited political

intervention is available on the USCCB website at

www.usccb.org/

ogc

under the heading Political Activity Guidelines.

64 IRC § 170(c)(2); Rev. Rul. 63-252, 1963-2 C.B. 101; Rev. Rul.

66-79, 1966-1 C.B. 48; Rev. Rul. 66-79, 1966-1 C.B. 48.

65 Issuance of a false substantiation statement may subject the parish or

other issuing entity or its representative to IRS penalties for aiding

and abetting the understatement of tax liability under section 6701

and, depending on the facts and circumstances, for directly or indi-

rectly promoting an abusive tax shelter under section 6700.

Case Study 2

Father B. was an R-1 visa priest serving in a US par-

ish. The needs of the Church in his country of origin

were great. Father B. approached a wealthy parishio-

ner to request a large contribution to an orphanage

in his home diocese. Although the contribution was

intended for the foreign orphanage, Father B. advised

the parishioner to make her check payable to the US

parish in order to qualify for a tax deduction. Father B.

assured the parishioner that he would personally carry

the funds to the orphanage during his upcoming home

visit and further guaranteed that the parish would issue

the required IRS substantiation statement to enable

the parishioner to deduct the contribution on her tax

return. This contribution, although nominally made to

the US parish, was earmarked for transmission to the

foreign orphanage and is not deductible under section

170 of the Code.

This case illustrates how attempts to circumvent

federal law regarding charitable contribution deduc-

tions can make the parish liable for payment of sub-

stantial IRS penalties. The attempts at circumvention

also risk allowing the funds to be misappropriated for

purposes other than charity or even diverted for ter-

rorist purposes. Additionally, these improper and ille-

gal maneuvers may violate currency restrictions in the

United States or other countries.

Addressing Additional Legal/

Financial Issues

The US legal system is complex and multilayered,

involving laws, rules, and regulations at the fed-

eral, state, and local levels. The income and social

security tax rules relating to international religious

workers constitute a distinct specialty area of tax

practice. If possible, local practitioners with exper-

tise and experience in this area, particularly in the

Catholic context, should be enlisted to assist com-

pliance efforts. In developing policies at the local

level, it is imperative that dioceses, eparchies, reli-

gious orders, and seminaries involve legal counsel

and financial and human resources professionals to

ensure uniformity of practice and coverage of rele-

vant state and local law issues.

In addition to relevant policy documents, initial

orientation, and child protection training provided