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:
the definition of compensation;
the concept of reasonable compensation;
legal entitlement; and
compensation planning and strategies. Each of these four topics is addressed below.
Resources. The definition of compensation and the compensation planning are addressed fully in the following two companion resources—the annual Church and Clergy Tax Guide and the biannual Compensation Handbook for Church Staff. You can obtain both resources from the publisher of this text.
This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."
Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.