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.
In contrast, the Tax Court held in Lawrence v. Commissioner, 50 T.C. 494, 499-500 (1968), that a “minister of education” in a Baptist church was not a “duly ordained, commissioned, or licensed” minister for purposes of IRC § 107. The petitioner held a Master’s Degree in Religious Education from a Baptist Theological Seminary, but was not ordained. Although his church “commissioned” him after he assumed the position, the court interpreted the commissioning to be for tax purposes, as it did not result in any change in duties. Most significant, however, was the court’s analysis of petitioner’s duties or rather, the duties he did not perform. He did not officiate at Baptisms or the Lord’s Supper, two Ordinances that closely resembled sacraments, nor did he preside over or preach at worship services. The court concluded that the evidence did not establish that the prescribed duties of a minister of education were equivalent to the duties of a Baptist minister.
The problem with the hapless Baptist gentleman in the Lawrence case was that his commisioning was an obvious ruse which served no purpose other than to take advantage of the tax code; his duties were no different than those of teachers who were not commissioned.