Q: Our minister’s ordained status lapsed for a few months this year due to his failure to timely renew his credentials with our denomination. How does this affect his housing allowance for the year?
How Do Lapsed Credentials Impact a Housing Allowance?
Technically, a housing allowance is only available to an “ordained, commissioned, or licensed minister.” If a minister’s credentials lapse due to a technical defect, the housing allowance is not available for the period of the lapse.
Can Reinstated Credentials Restore Eligibility?
If and when the minister’s credentials are reinstated, an argument could be made that the reinstatement “relates back” to the beginning of the year, effectively correcting the technical defect that caused the lapse. While this is a plausible argument, it has not been definitively addressed by any court.
Implications for Ministerial Duties During Lapse
Even during a lapse, it could be argued that the minister retains the ability to:
- Perform marriages and baptisms;
- Qualify for clergy privilege in legal matters; and
- Carry out other sacerdotal functions.
However, the validity of this position is subject to interpretation and should be discussed with a qualified tax professional or legal advisor.
Why Further Guidance Is Recommended
Because no court has directly ruled on this issue, no definitive answer is possible. Ministers and church leaders should consult with a qualified tax professional to navigate this complex situation and ensure compliance with IRS guidelines.
FAQs About Clergy Housing Allowance and Credentials
What is a clergy housing allowance?
A clergy housing allowance is a portion of a minister’s compensation designated for housing expenses, which can be excluded from taxable income.
Can a minister with lapsed credentials claim a housing allowance?
No, during the period when a minister’s credentials have lapsed, they technically do not qualify for a housing allowance.
Does reinstating credentials retroactively restore eligibility?
It could be argued that reinstating credentials corrects the lapse retroactively, but no definitive court ruling exists on this matter.
What steps should a church take during a credential lapse?
Churches should work with a tax professional to evaluate the situation and ensure compliance with applicable tax laws and IRS regulations.
Conclusion
Lapsed credentials can impact a minister’s housing allowance eligibility, though reinstatement might provide an argument for retroactive correction. Because this issue has not been addressed by courts, seeking guidance from a tax professional or legal advisor is highly recommended. For more information, consult resources like the Church & Clergy Tax Guide.
