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Travel Expense of Board Members and their Spouses

When a board member of a church or ministry attends the organization’s board meeting, the board member’s spouse may occasionally travel with him or her to the board meeting site. Some ministries reimburse the board member’s travel expenses, while others also reimburse the spousal’s travel costs.

Questions often arise concerning the propriety of reimbursing spousal travel expenses in these situations. While the tax rules are sparse in this area, there are several issues worthy of consideration.

  • Both spouses are board members. In a few ministries, particularly those focusing on marriage and family issues, both spouses are duly elected board members. The election of both spouses is permitted, and perhaps may even be mandated, by the ministry’s bylaws. A reimbursement by the organization of all the travel expenses for both spouses is justified.
  • Spouses who are not elected members of the board. With most ministries, the spouses of board members are not board members in their own right. When a non-board-member spouse travels to a board meeting site and has his or her expenses reimbursed by the ministry, does this represent taxable income to the spouse? Should the ministry issue a Form 1099-MISC for the board member? Should the Form 990 reflect the Form 1099-MISC amount as compensation paid to the board member?
    1. No travel expenses are paid for the spouse of a board member, but the spouse is invited to one or more meals. The board member and his or her spouse may have traveled to the board meeting in the same car and stayed in the same hotel room, representing no additional expenses for the ministry. The only spousal expenses paid by the ministry are for one or more meals during which the spouse of the board member participated. Most organizations would consider the cost of the meals as a nominal amount and not report the amounts as taxable to the board member. It is not clear if the IRS would treat this amount as de minimis or not.

    2. Travel expenses paid by the ministry for the spouse of a board member. The tax aspects of board member spousal travel reimbursements could depend on the activities in which the spouse participates. For example, in a few rare situations, spouses are expected to attend the board meetings, participate in board discussions as non-voting members, and perhaps are even listed in the board minutes as non-voting board members in attendance. Even if the minutes are properly written to reflect the spouses as non-voting members and excluding them from quorum requirements, participation by spouses in board meetings could raise confidentiality and perhaps other issues. However, from a tax perspective, this level of participation could provide the basis for tax-free reimbursements of the spousal travel expenses to the meetings, based on their performance of bona fide services (see Treas. Reg. § 1.13205(4)(1)).

      Generally, a board member’s spouse performs little or no service to a church or ministry during its board meeting. In these instances, the value of spousal travel would generally be a personal benefit to the board member (or the spouse) since the trip does not qualify as an exclusion from income. If the spousal travel expense is $600 or more in a calendar year, the organization should file Form 1099-MISC for the board member (or the spouse) and reflect the same amount on Form 990 as compensation paid to the board member (if the board member is the one receiving the Form 1099-MISC).

      Since the board member (and spouse) are disqualified persons under the intermediate sanction rules, a failure to report spousal travel as taxable income could result in a penalty to the board member and the requirement to repay the spousal travel expense reimbursements to the organization, plus interest from the date of the board meeting to the date of the repayment. The church or ministry would be prohibited from paying the penalties for board members or forgiving any of the repayment since doing so would result in an additional excess benefit transaction.

  • Reimbursement of mileage to board members. While actual vehicle expenses could be reimbursed to a board member, the complexity of calculating and allocating the appropriate amount of depreciation generally makes this option impractical. Most churches and ministries use the simpler IRS standard mileage rate.

If vehicle expenses are not reimbursed, board members who itemize their deductions could claim a charitable mileage deduction at the standard charitable mileage rate (set at 14 cents per mile by statute). Tax law does not specifically address whether board members are eligible for mileage reimbursement at the standard charitable mileage rate (lower) or the standard business mileage rate (higher).

If mileage is reimbursed by the organization using either rate, reimbursement should be based on adequate documentation (contemporaneous mileage records and the ministry purpose of the trip). As volunteers, board members are generally considered to be ineligible for travel reimbursement based on the per diem method (see IRS Revenue Ruling 67-30).

  • Charitable gift receipting when travel expenses are paid by a board member. The earlier sections of this document refer to potential reimbursement of travel expenses of a board member (and spouse). If a board member (or spouse) is eligible for reimbursement of travel expenses, they are also generally eligible to receive a charitable gift acknowledgment for expenses paid by the board member (or spouse) in lieu of submitting the expenses for reimbursement by the organization. Conversely, expenses that are ineligible for reimbursements generally do not qualify for the issuance of a charitable gift acknowledgment by the organization.

 


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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