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Secular Income and Vows of Poverty

Federal
State:
Key point. Attempts to avoid taxes on wages earned from secular employment by taking a vow of poverty and assigning the wages to a "religious order" are considered fraudulent by the IRS and courts, and result in substantial penalties.

A federal appeals court rejected a minister's attempt to avoid taxation of his secular income by taking a vow of poverty and "assigning" his income to a religious order. A man (the "defendant") was designated as a minister by a mail-order religious order, took a vow of obedience and a vow of poverty, and transferred title to all of his property to the order. He also assigned to the order all income earned from his secular employment, either endorsing their employment checks in favor of the order or directing his employer to deposit his earnings directly into various accounts of the order. The minister's home, now owned by the order, was designated as a parsonage, ...

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Posted:
  • February 20, 2015

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