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Pastor, Church & Law

written by Richard R. Hammar, J.D., LL.M., CPA

The Pastor-Church Relationship—Compensation

Volume 1 . Chapter 2 . § 2-03
Key point 2-03. Clergy compensation consists of a number of items that often are not well understood. Clergy compensation that is unreasonable in amount may jeopardize a church's tax-exempt status or trigger "intermediate sanctions" in the form of excise taxes that can be assessed against a recipient of unreasonable compensation.

There are four aspects to clergy compensation that should be understood by church leaders: (1) the definition of compensation; (2) the concept of reasonable compensation; (3) legal entitlement; and (4) compensation planning and strategies. Each of these four topics is addressed below.

The definition of compensation and the compensation planning are addressed fully in the following two companion resources—the annual ...

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