Skip to main content

Organizations That Can Ordain (or License)

Question:

A writer of Christian books wishes to enjoy the benefits of ministerial status. What organizations can ordain (or license) him to the gospel ministry? The minister plans to launch his ministry career from these books and would like to get a ministerial license through this ministry.

Answer:

The most frequent instance when a minister must provide proof of his status relates to the filing of Form 4361 applying for exemption from social security tax. The instructions to the form state the following:

"Enter the date you were ordained, commissioned, or licensed as a minister of a church...

"Attach a copy of the certificate (or, if you did not receive one, a letter from the governing body of your church) that establishes your status ...

"[E]nter the legal name, address, and employer identification number of the denomination that ordained, commissioned, or licensed you ...

"You must be able to show that the body that ordained, commissioned, or licensed you ... is exempt from federal income tax under section 501(a) as a religious organization described in section 501(c)(3). You must also be able to show that the body is a church (or convention or association of churches) described in section 170(b)(1)(A)(i).

"[Y]ou can attach a copy of the exemption letter issued to the organization by the IRS. If that is not available, you can attach a letter signed by an individual authorized to act for the organization stating that the organization meets both of the above requirements."

While denominational polity differs, as a member of an independent Baptist church, I believe (from a theological standpoint) that only a local assembly of believers in Jesus Christ can recognize the call to the gospel ministry upon a qualified member of the church. The IRS readily accepts this type of recognition as well. Other churches may certainly have different methods for ordination or licensure but I cannot attest to their defensibility before the IRS.

Comments

  1. Does the IRS have time limits between when the minister was licensed and when he can begin the exemption?

    ReplyDelete
  2. Please see January 29, 2009, post: "Timing for Opting Out of Social Security"

    ReplyDelete

Post a Comment

Popular posts from this blog

Housing Allowance and Form 1099-MISC Reporting

Question:

A church provides its minister a housing allowance, but for other purposes it believes that it must report the full amount of compensation (including the non-taxable housing allowance portion) on Form 1099-MISC (in order to demonstrate the full earnings of the minister). If the church reports his compensation,including the housing allowance, on Form 1099-MISC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040?

Answer:

This questions brings up a couple of issues. First, most ministers are properly classified as employees who receive Form W-2, not as independent contractors who receive Form 1099-MISC. On Form W-2, Box 1 for taxable compensation is reduced reflecting the church's designation of a portion of his pay as non-taxable. Then in Box 14, it typically reports as a memorandum item his additional non-taxable, housing allowance compensation. In the situation addressed in the question, this Form W-2 reporting may or may not a…

Heath Care Sharing Ministries and the SE Insurance Deduction

Question:

Can payments made to a health care sharing ministry (e.g., Samaritan Ministries, Christian Healthcare Ministries) which are exempt from the Affordable Care Act be deducted from income as a self-employed (SE) insurance deduction?

Answer:

First, to be technical, "health care sharing ministries" (IRS exemption D) provide participants an exception from Shared Responsibility Payments (ACA penalties), but don't connote other tax benefits.

Second, a health care share ministry does not qualify as health insurance. One does not pay what the IRS considers to be premiums, but instead shares the health expenses of others. And according to IRS Pub 535, in order for self-employed individuals to qualify for a SE insurance deductions they must be to pay premiums for qualifying health insurance. 


Church Car Purchase for Pastor

Question:

A church would like to purchase a car for the pastor's use. What is the best method to accomplish this goal? Should the car be titled in the pastor's name? What will be the tax consequences of this arrangement?

Answer:

The church has two main alternatives for this purchase: 
Title the car in the pastor's name and reimburse him for business expensesTitle it in the church's name and treat personal use as taxable compensationThere are fewer immediate tax consequences for the latter. Since both are viable options, we will discuss both situations in this post.

If the church chooses to give the car to the pastor and register it in his name, he is free to use it for whatever personal use he desires with no tax consequences. However, the fair value of the car is taxable as compensation at the time it is given to the pastor. Internal Revenue Code section 102(c) clearly states that gifts given to employees by their employers are taxable compensation. The church can reimburs…