December 11, 2015

Commissioned Missionary and Housing Allowance

Question:

I am a commissioned missionary of a local church. Do I qualify for a housing allowance tax exclusion?

Answer:

In order for any missionary or minister to qualify for a housing allowance, the individual must fit the IRS’s definition of a minister. Let’s review the qualifications of ministerial treatment as noted in the IRS’s Minister Audit Technique Guide.
Treas. Reg. § 1.1402(c)-5(b)(2) provides that service performed by a minister in the exercise of the ministry includes:

1. Ministration of sacerdotal functions;

2. Conduct of religious worship;

3. Control, conduct, and maintenance of religious organizations (including the religious boards, societies, and other integral agencies of such organizations), under the authority of a religious body constituting a church or denomination.

Treas. Reg. § 1.1402(c)-5(b)(2) also provides that whether service performed by a minister constitutes conduct of religious worship or ministration of sacerdotal functions depends on the tenets and practices of the particular religious body constituting the church or denomination.

Treas. Reg. § 1.107-1(a) also provides examples of specific services considered duties of a minister, including:

1. Performance of sacerdotal functions;

2. Conduct of religious worship;

3. Administration and maintenance of religious organizations and their integral agencies;

4. Performance of teaching and administrative duties at theological seminaries.

The duties performed by the individual are also important to the initial determination whether he or she is a duly ordained, commissioned, or licensed minister. Because religious disciplines vary in their formal procedures for these designations, whether an individual is “duly ordained, commissioned, or licensed” depends on these facts and circumstances.
Conclusion: A commissioned missionary qualifies for a minister’s housing allowance if he meets the IRS’s definition of a minister and performs services in the exercise of his ministry as noted above in Treasury Regulations Sections 1.107-1(a) and 1.1402(c)-5.

2 comments:

  1. For further clarification, what would constitute "duly commissioned" in the case of a church commissioning a missionary for ministerial service outside of the immediate context of the sending church. How would a church substantiate that commissioning to the Federal Government?

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    Replies
    1. Thank you, Mark, for your questions. We posted a follow-up blog post in response. Please use the below link to access.

      Church Commissioning a Missionary: http://ministrycpa.blogspot.com/2015/12/church-commissioning-missionary.html

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