The IRS looks for “assignment letters” when non-churches engage in the MHA process.


Marathon Bible College (MBC) is a public charity and a school under I.R.C. sections 501(c)(3) and 170(b)(1)(A)(ii). MBC is not an integrated auxiliary nor an affiliate of a church (I.R.C. section 170(b)(1)(A)(i)). MBC has several employees who are ordained, licensed, or commissioned ministers of the Gospel and those employees receive a minister’s housing allowance from MBC.

MBC’s Controller asks us whether these housing allowances would “pass IRS muster.”

We answer that, because MBC is not a church or a “religious organization” in the eyes of the IRS, that their ministers should have “assignment letters” from a church or denomination/association of churches.

In addition, we tell the Controller that MBC should periodically perform a review of their procedures with regard to minister’s housing allowances to ensure consistency, fairness, and proper regulatory treatment.


From IRS Publication 517 (page 5):
Services for nonreligious organizations.
Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Assigned or designated services qualify even if they don’t involve performing sacerdotal functions or conducting religious worship.
If your services aren’t assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship.

From Treasury Regulation 1.1402(c)-5(c)(2):
Example: M, a duly ordained minister, is engaged by N University to teach history and mathematics. He performs no other service for N although from time to time he performs marriages and conducts funerals for relatives and friends. N University is neither a religious organization nor operated as an integral agency of a religious organization. M is not performing the service for N pursuant to an assignment or designation by his ecclesiastical superiors. The service performed by M for N University is not in the exercise of his ministry. However, service performed by M in performing marriages and conducting funerals is in the exercise of his ministry.

Bottom Line

• Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination.
• Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments.
• Generally, an organization that is not a church or an integrated auxiliary should obtain an assignment letter for their ministers on staff.

Specific questions? Email Dave Moja.

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.