The Housing Allowance: May a Female Children’s Minister Claim the Housing Allowance?

Increasingly, Churches of Christ are hiring women as “ministers” — typically as children’s ministers but also in other capacities. This gives rise to the question: May they claim the housing allowance?

The Internal Revenue Code allows a “minister of the gospel” to exclude a “housing allowance” from gross income for federal income tax purposes (but not for FICA or Self-Employment Tax purposes). It’s a great benefit for ministers — who are often severely underpaid.

Details will be found at IRS.gov.

In the Churches of Christ, we don’t have any rules for ordaining a minister. Many denominations, of course, require a very formal licensing process, but in the Churches of Christ, there are no rules or, more precisely, the rules are whatever the elders of a given congregation say the rules are.

To qualify for the housing allowance, she must both be a “minister” for tax purposes and perform ministerial functions. These are not quite the same test.

Is she a “minister” for tax purposes?

IRS Publication 517 defines a “minister” as —

Ministers defined. Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination.

If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes.

Now, for a preacher, it’s no problem to see them as “ministers” by this definition. And nearly all churches would allow a “teen minister” or “minister of spiritual formation” to fulfill these same functions. But a female minister … well, it’s not so easy.

“Sacerdotal functions” is not a Protestant sort of word. Merriam-Webster defines it as —

of or relating to priests or a priesthood

And going back to Martin Luther, nearly all Protestants would insist that all members are priests.

More challenging is having authority to “administer ordinances or sacraments.” In Church of Christ language, that means the Lord’s Supper and baptism. And very few of our congregations would allow a female to preside at the Lord’s Table or administer baptism in a Sunday morning service, even if given the title of “minister.” Just so, very few Churches of Christ would allow a female to “conduct religious worship,” such as by preaching or leading singing or a prayer. (I’m not arguing that this is right; just that this is the way it is.)

Well, that’s not entirely true. Most of our congregations would allow a woman to do any of these things in an all-female assembly, such as a ladies retreat. Some would allow a woman to baptize in a private setting.

Interestingly, I suspect most of our congregations would be more troubled by a woman baptizing someone than presiding at the Lord’s Table in an all-female assembly. And that’s not for theological reasons but because it’s such an unfamiliar thought! If you’ve grown up in the Churches of Christ, it’s just understood that only men baptize. In fact, in most Churches, only a “minister” baptizes — for no reason other than custom. There’s no doctrinal basis even among the most conservative Churches for refusing a father the privilege of baptizing his children.

But a woman baptizing? We’ve never even considered the possibility. But if a woman can accept a role of authority over other women, such as by leading a communion service, surely she could baptize someone — especially a female someone. I can’t think of any theory under which a woman would never be allowed to baptize.

Is she performing ministerial services?

IRS Publication 517 states,

Most services you perform as a minister, priest, rabbi, etc., are ministerial services. These services include:

Does this mean that a “minister of education” is necessarily not a “minister” for tax purposes? I don’t think so. In that particular Baptist denomination, ministers had to be ordained, and that minister was not ordained under the rules of the denomination.

More recent decisions have even made clear that formal ordination is not required if you perform the actual duties of a minister. Quoting from the same Audit Guide —

In Rev. Rul. 78-301, 1978-2 C.B. 103, the IRS followed the Tax Court decisions in Salkov and Silverman and held that a Jewish cantor who is not ordained but has a bona fide commission and is employed by a congregation on a full-time basis to perform substantially all the religious worship, sacerdotal, training, and educational functions of the Jewish denomination’s religious tenets and practices is a minister of the gospel within the meaning of IRC § 107. Revenue Ruling 78-301 revoked and modified prior revenue rulings to the extent that they required that an individual must be invested with the status and authority of an ordained minister fully qualified to exercise all of the ecclesiastical duties of a church denomination to be considered ministers under IRC §§ 107 and 1402.

In Knight v. Commissioner, 92 T.C. 199, 205 (1989), the Tax Court considered whether a licentiate of the Cumberland Presbyterian Church (a status that was less than full ordination), who had not filed a timely exemption from self-employment tax, was a duly ordained, commissioned, or licensed minister in the exercise of required duties who was thus liable for self-employment tax. The petitioner argued that he was not formally ordained as a minister and could not administer church sacraments or participate in church government. Thus, he could not be a minister subject to IRC § 1402(c). The court rejected this view, and looked at all the facts. In concluding that he was a licensed minister, it cited the facts that he was licensed by the church, he conducted worship services, and he was considered by the church to be a spiritual leader. The court also noted the petitioner preached, performed funerals, visited the sick, and ministered to the needy within the context of his duties for the church.

Thus, if Lawrence has any continuing significance, it’s that the court will look to determine whether a licensing short of a full ordination is truly the equivalent of ordination or a sham for tax purposes — and the key test will be whether the non-ordained minister in fact performs baptisms and communion services.

Arguably, a woman who is “ordained” as a minister by the elders would be fully ordained and not subject to these tests. And it would be hard to argue that woman authorized to wear the title “minister” would not have been ordained as such. In the Churches of Christ, the word does carry a certain meaning. But there’s admittedly some uncertainty here. The cases could also be read as defining “minister” based on administration of ordinances and leading worship rather than whether the minister is ordained.

But the standard isn’t whether the minister routinely performs these functions; it’s whether the minister has this authority. After all, the minister would qualify for the housing allowance if he or she were serving as a teacher or administrator of a school. Running a church school is a ministerial function, but only qualifies someone who independently qualifies as a “minister.” Hence, someone ordained to do minister sorts of things who is assigned to teach qualifies, even though they don’t often lead worship or administer ordinances.

Conclusion

The regulations that define “minister” rely heavily on the administration of “ordinances” and worship. Therefore, I would think a female children’s minister would qualify for the housing allowance if —

* The elders formally ordained her as a “minister” — which would only be the case if they authorized her to wear that title, rather than something like “program coordinator.”

* The ordination authorizes her to administer ordinances and lead worship, even if only before an all-female assembly. In a Church of Christ, this is unquestionable the case for any male minister without any particular formality, as it’s true of all men. But for a female minister, it should be made explicit — not by a fresh ordination but by the elders’ responding in writing to an inquiry from the female minister asking whether she has their permission to do these things. (I’d avoid a fresh grant of authority as it looks so much like a grant solely for tax purposes. She’s already been ordained. It’s just a question of what that means in her case.)

* She sometimes actually conducts worship and administers ordinances. The fact that she only does so in all-female gatherings would seem entirely sufficient. The idea of “sacerdotal” is that she is acting in a role like a “priest” in those denominations that have priests, and that ultimately means that she leads worship and administers ordinances at least some of the time. And her role is just as priest-like whether the congregation is all female or mixed.

But she needs to have actually performed these functions, I think, to be confident of the outcome.

That’s not to say that she loses if she doesn’t actually sometimes administer ordinances, because she would still be “ordained” and have that authority. The implicit idea seems to be that an ordained minister is necessarily a minister — although this is not as clear in the regulations as we’d wish. Therefore, the cautious approach is as noted above.

And by analogy to the Jewish cantor decisions, I’d point out that in the Churches of Christ, administering ordinances does not distinguish clergy from laity. Neither does leading worship. For us, it’s more a matter of those roles that have traditionally been performed by someone with that title — preaching and leading age-group ministries (among others) would be squarely within our traditional use of the term. That’s what we hire “ministers” to do, and those are the ones we consider ministers.

But for the cautious church, the bulleted points should make the leadership comfortable, and the following arguments should be helpful fall-back arguments should the need arise.

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