Housing Allowance and Commissioning of School Employees

In Technical Advice Memo (TAM 200318002), the Internal Revenue Service ruled that teachers and administrative staff of a school affiliated with a church do not qualify for the parsonage allowance exclusion under Section 107 of the Internal Revenue Code because they are not ministers of the gospel.

In this situation the school was affiliated with a church; all of the teachers of the school were certified by the State to teach; and the school was accredited by the State’s Department of Education. The teachers and administrative staff were not required to attend Bible College or seminary, nor were they required to attend the school’s church. However, they were required to attend a church.

The school’s board had resolved to provide its teachers and administrative staff with a parsonage allowance in the following year. The school stated that the teachers and administrative staff were commissioned as ministers of the Gospel, and that the commissioning took place the date each employee began his or her duties. The commissioning process consisted of a job interview and hiring process, which culminated in the signing of an employment contract and the first day of work.

However, the IRS determined that the duties and responsibilities of the teachers and administrative staff at that school reflected the typical duties and responsibilities found in secular schools. Furthermore, these duties did not include duties performed by ministers of the Gospel.

Section 1402(c)(4) of the Code provides that, at a minimum, a minister is to be "duly ordained, licensed, or commissioned." In Kirk v. Commissioner, 51 T.C. 66 (1968), affirmed, 425 F.2d 492 (D.C. Cir 1970), the Tax Court stated that the term "Commission means the act of committing to the charge of another or an entrusting." The court held that the petitioner was not commissioned, because no congregation or other body of believers was committed to his charge. The duty of spreading the Gospel, either by sermon or teaching, was not formally entrusted to his care. The petitioner was merely a non-ordained church employee. Furthermore, all the services performed by the petitioner were of a secular nature.

The precedent-setting Kirk Case clarifies that non-minister church employees are not eligible for the housing allowance exclusion. It is upon this basis that the IRS rejected the school’s petition to grant a housing allowance to its teachers and administrative employees.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.