Pastor, Church & Law

§ 1.04

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Key point 1-04. A number of federal and state statutes use the terms ordained, commissioned, or licensed minister. If these terms are defined by a statute, then this definition ordinarily controls even if it conflicts with the definitions adopted by a religious body. If they are not defined by statute, then the civil courts will define them based on applicable precedent.

It is sometimes important to determine whether a minister is ordained, commissioned, or licensed. To illustrate, the Internal Revenue Code exempts wages paid for services by "a duly ordained, commissioned, or licensed minister of a church" from income tax withholding;[40] I.R.C. § 3401(a)(9). permits a "duly ordained, commissioned, or licensed minister of a church" to apply for exemption from Social Security coverage under certain circumstances;[41] Id. at § 1402(e). treats a "duly ordained, commissioned, or licensed minister of a church" as self-employed for Social Security purposes (if not exempt);[42] Id. at § 1402(c). and excludes the costs of renting or maintaining a home (and the fair rental value of a church-provided parsonage) from the gross income of a "duly ordained, commissioned, or licensed minister of a church."[43] See generally I.R.C. § 107; Treas. Reg. § 1.107; Rev. Rul. 78-301, 1978-2 C.B. 103; IRS Publication 517. Housing allowances are discussed in detail in R. HAMMAR, CHURCH AND CLERGY TAX GUIDE.

The Military Selective Service Act exempts "duly ordained ministers" from training and service.[44] 50 U.S.C. App. § 456(g)(1). The Federal Unemployment Tax Act and many state unemployment laws exempt "service performed by a duly ordained, commissioned, or licensed minister" from unemployment compensation coverage.[45] See, e.g., I.R.C. § 3309(b); MO. REV. STAT. § 288.034(9).

From a legal perspective, what is the meaning of an ordained, commissioned, or licensed minister? Unfortunately, this terminology is nowhere defined in the Internal Revenue Code for purposes of federal tax law. As one court has observed, the Code and regulations "do not attempt to say what a minister `is,' but only what a minister `does.'"[46] Salkov v. Commissioner, 46 T.C. 190 (1966). See also Haimowitz v. Commissioner, T.C. Memo. 1997-40 (1997) ("[a]s a judicial body we are loath to evaluate ecclesiastical authority in the various religious disciplines"). A few courts have given some hint as to the legal meaning of this terminology for federal tax purposes. In a case involving the eligibility of a Jewish cantor for a housing allowance, the Tax Court observed that while a housing allowance is available only to an "ordained, commissioned, or licensed minister," there is no requirement "that the ordination, commissioning, or licensing must come from some higher ecclesiastical authority. In a religious discipline having the lay democratic character of Judaism and lacking any central ecclesiastical organization, this ministerial authority can be conferred by the church or congregation itself." The requirement that a minister be "ordained, commissioned, or licensed," noted the court, "is to exclude self-appointed ministers" from the special tax provisions available to clergy.[47] Id. See also Wingo v. Commissioner, 89 T.C. 922 (1987); Silverman v. Commissioner, 57 T.C. 727 (1972); Rev. Rul. 78-301, 1978-2 C.B. 103.

This case suggests that local churches may ordain, commission, or license clergy if they are not affiliated with any denomination or association of churches that credentials clergy. It is an open question whether a local church can ordain, commission, or license a minister if it is affiliated with a denomination that itself ordains, licenses, or commissions clergy (and there is no provision in the organizational documents of the denomination for the credentialing of clergy by local churches). In some cases, such churches ordain, commission, or license clergy solely for tax-savings purposes (i.e., to qualify a church worker for a housing allowance exclusion or for exemption from Social Security coverage). The Tax Court's decision in Lawrence v. Commissioner is relevant in this context, since it warned that a local church's attempt to "commission" a minister was ineffective since the commissioning had been "nothing more than a paperwork procedure designed to help him get a tax benefit [a housing allowance exclusion] … without giving him any new status."[48] 50 T.C. 494 (1968).

Other factors that will be relevant in determining whether a local church can ordain, commission, or license clergy in a way that will be recognized by the federal government include the following:

• Recognition by the denomination. Does the denomination recognize the ministerial status of ministers who are ordained, commissioned, or licensed by affiliated churches? For example, can such ministers participate in denominational benefit programs that are available to ministers, and can they vote at denominational meetings?
• The church's charter and bylaws. Does the church's corporate charter or any other governing document (i.e., bylaws) authorize the church to ordain, commission, or license ministers? If such documents are silent regarding the authority of the local church to confer ministerial credentials, this would tend to support an IRS determination that the church's conferring of ministerial credentials (to quote the Lawrence case, discussed above) is "nothing more than a paperwork procedure designed to help [the individual] get a tax benefit … without giving him any new status."
• Church practice. Does the local church have a history or practice of ordaining, commissioning, or licensing ministers? If not, this would tend to support an IRS determination that the church's conferring of ministerial credentials (to quote the Lawrence case, discussed above) is "nothing more than a paperwork procedure designed to help [the individual] get a tax benefit … without giving him any new status."
• Duties. Have the duties of the minister changed since he or she was ordained, commissioned, or licensed by the church? If not, this would tend to support an IRS determination that the church's conferring of ministerial credentials (to quote the Lawrence case, discussed above) is "nothing more than a paperwork procedure designed to help him get a tax benefit … without giving him any new status."
• Theological training. Did the minister have any formal theological training prior to being ordained, commissioned, or licensed by the church? If not, this would tend to support an IRS determination that the church's conferring of ministerial credentials (to quote the Lawrence case, discussed above) is "nothing more than a paperwork procedure designed to help him get a tax benefit … without giving him any new status."
• Pastoral experience. Did the minister have any pastoral experience in a local church following his or her ordination, commissioning, or licensing (including conducting worship and administration of sacerdotal functions)? If not, this would tend to support an IRS determination that the church's conferring of ministerial credentials (to quote the Lawrence case, discussed above) is "nothing more than a paperwork procedure designed to help him get a tax benefit … without giving him any new status."
• Commissioning. In some cases a church that is affiliated with a denomination that ordains and licenses ministers will "commission" staff members in order to make them eligible for a housing allowance. The Tax Court's decision in the Kirk case (discussed at the beginning of this chapter) is one of the few cases to specifically address the meaning of commissioning.[49] Kirk v. Commissioner, 51 T.C. 66 (1968). The court concluded, "'Commission' means the act of committing to the charge of another or an entrusting; and 'license' means an official document giving permission to engage in a specified activity. Petitioner is a member of a church which provides for the ordination of ministers. He does not claim to be ordained. Nor is he 'licensed' in the sense that he has any official document or other indicia of permission, formally conferred upon him, to perform sacerdotal functions. We do not think he is 'commissioned.' No congregation or other body of believers was committed to his charge. The duty of spreading of the gospel, either by sermon or teaching, was not formally entrusted to his care. Petitioner here is merely a non-ordained church employee." It should be noted that this case dealt with an employee of a denominational agency who performed no sacerdotal functions and never conducted worship.

Key point. The IRS will never question the authority of a church to ordain, commission, or license anyone it wants. However, it may determine whether a person qualifies for ministerial status under federal tax law.

The Tax Court has observed that "the phrase `ordained, commissioned, or licensed' is a disjunctive phrase such that a minister need only be ordained or commissioned or licensed to be a minister [for tax purposes]."[50] Wingo v. Commissioner, 89 T.C. 922 (1987). Further, the Court has noted that the terms "minister of the gospel" and "ordained, commissioned, or licensed" are rooted in Christian practice, and they are not meant to exclude the functional equivalents of ordained, commissioned, or licensed clergy in other religions and sects. For example, the Court has stated that "although `minister of the gospel' is phrased in Christian terms, we are satisfied that Congress did not intend to preclude those persons who are the equivalent of `ministers' in other religions."[51 ]Salkov v. Commissioner, 46 T.C. 190 (1966); Silverman v. Commissioner, 57 T.C. 727 (1972).

It is questionable whether an entity that is neither a church nor a religious denomination can ordain, commission, or license a minister for tax purposes, since these terms are so inextricably linked, in terms of history, practice, and etymology, with churches and religious denominations.

The classic legal definition of ordination (in a context other than federal tax law) was given by the Supreme Court of Connecticut in an early decision: "To ordain, according to the etymology and general use of the term, signifies to appoint, to institute, to clothe with authority. When the word is applied to a clergyman, it means that he has been invested with ministerial functions or sacerdotal power."[52] Kibbe v. Antram, 4 Conn. 134, 139 (1821). Similarly, one court has observed:

A duly ordained minister, in general acceptation, is one who has followed a prescribed course of study of religious principles, has been consecrated to the service of living and teaching that religion through an ordination ceremony under the auspices of an established church, has been commissioned by that church as its minister in the service of God, and generally is subject to control or discipline by a council of the church by which he was ordained.[53] Buttecali v. United States, 130 F.2d 172, 174 (5th Cir. 1942).

The Military Selective Service Act defines duly ordained minister of religion as follows:

[A]ny person who has been ordained, in accordance with the ceremony, ritual, or discipline of a church, religious sect, or organization established on the basis of a community of faith and belief, doctrines and practices of a religious character, to preach and to teach the doctrines of such church, sect, or organization and to administer the rites and ceremonies thereof in public worship, and who as his regular and customary vocation preaches and teaches the principles of religion and administers the ordinances of public worship as embodied in the creed or principles of such church, sect, or organization.[54] 50 U.S.C. App. § 466(g)(1). But cf. Yeoman v. United States, 400 F.2d 793 (10th Cir. 1968) (exemption from armed services for ministers available only to leaders of religious faiths, not to members in general); United States v. Dyer, 272 F. Supp. 965 (N.D. W. Va. 1967), aff'd, 390 F.2d 611 (4th Cir. 1968) (seminary education not a prerequisite to obtaining ministerial exemption); United States v. Hestad, 248 F. Supp. 650 (W.D. Wis. 1965) (Selective Service Act's definition of ordained takes precedence over definition adopted by particular cult).

If a statute or regulation pertaining to ordained ministers defines the term ordained, then the courts will apply this definition even if it conflicts with the definitions adopted by churches and other religious organizations. If a statute or regulation does not define the term ordained, then the courts ordinarily apply the most relevant judicial precedent in defining the term. They are not bound in such cases to defer to the definitions adopted by religious bodies themselves. To illustrate, a Jehovah's Witness was denied exemption from military service on the ground that he was not an "ordained minister" despite his claim that he was engaged "full time" in the ministry.[55] United States v. Hestad, 248 F. Supp. 650 (W.D. Wis. 1965). This is consistent with the general principle that ecclesiastical definitions and terminology cannot be affected by civil law and are absolute in an ecclesiastical context, but they may be superseded by statutory or judicial definitions in the limited context of civil law.

The term licensed minister is used by many religious bodies to denote a status inferior and preliminary to ordination. Commissioning is a procedure followed by some churches which do not recognize formal ordination. It is usually an investiture of authority to perform religious functions on behalf of a congregation, and thus is analogous to ordination. Some religious bodies commission missionaries, even though the prospective missionaries are already licensed or ordained. The IRS has held that for purposes of the Internal Revenue Code, commissioned or licensed ministers of religious bodies that provide for ordination will not be included within the term ordained, commissioned, or licensed minister unless they "perform substantially all the religious functions within the scope of the tenets and practices of their religious denominations" as an ordained minister.[56] Rev. Rul. 78-301, 1978-2 C.B. 103. See R. HAMMAR, CHURCH AND CLERGY TAX GUIDE.