IRS GETTING TOUGH

"IRS Getting Tough on Ministers' Special Tax Breaks"
by Carolyn Jenkins
Excerpt from World Religion

The Internal Revenue Service is cracking down on tax breaks some ministers have enjoyed by filing tax returns as self-employed contractors - rather than employees - of their churches and other religious institutions.

The IRS and tax courts are classifying some ministers as employees, subjecting them to the individual tax rules rather than self-employed business regulations.

But changes in the rules are confusing. Tax courts, for instance, have held that ministers in one denomination are employees but those in another are self-employed.

And now there's even controversy about who is a minister.

Even certified public accountants have problems keeping up with the rapidly changing IRS rules.

Meanwhile, the title of minister, as defined by the Internal Revenue Code, is also causing more consternation among clergy who may no longer be classified as a minister. Particularly at risk are those holding such titles as music ministers, youth ministers and education ministers.

The IRS indicates that only the senior, or top minister in a church can hope to qualify for self-employment status. Others could be eliminated automatically.