[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3401(a)(9)-1]

[Page 205-207]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
              Subpart E_Collection of Income Tax at Source
 
Sec. 31.3401(a)(9)-1  Remuneration for services performed by a minister 
of a church or a member of a religious order.

    (a) In general. Remuneration paid for services performed by a duly 
ordained, commissioned, or licensed minister of a church in the exercise 
of his ministry, or by a member of a religious order in the exercise of 
duties required by such order, is excepted from wages and hence is not 
subject to withholding.
    (b) Service by a minister in the exercise of his ministry. Except as 
provided in paragraph (c)(3) of this section, service performed by a 
minister in the exercise of his ministry includes the ministration of 
sacerdotal functions and the conduct of religious worship, and the 
control, conduct, and maintenance of religious organizations (including 
the religious boards, societies, and other integral agencies of such 
organizations), under the authority of a religious body constituting a 
church or church denomination. The following rules are applicable in 
determining whether services performed by a minister are performed in 
the exercise of his ministry:
    (1) Whether service performed by a minister constitutes the conduct 
of religious worship or the ministration of sacerdotal functions depends 
on the tenents and practices of the particular religious body 
constituting his church or church denomination.
    (2) Service performed by a minister in the control, conduct, and 
maintenance of a religious organization relates to directing, managing, 
or promoting the activities of such organization. Any religious 
organization is deemed to be under the authority of a religious body 
constituting a church or church denomination if it is organized and 
dedicated to carrying out the tenents and principles of a faith in 
accordance with either the requirements or sanctions governing the 
creation of institutions of the faith. The term ``religious 
organization'' has the same

[[Page 206]]

meaning and application as is given to the term for income tax purposes.
    (3) (i) If a minister is performing service in the conduct of 
religious worship or the ministration of sacerdotal functions, such 
service is in the exercise of his ministry whether or not it is 
performed for a religious organization.
    (ii) The rule in paragraph (b)(3)(i) of this section may be 
illustrated by the following example:

    Example. M, a duly ordained minister, is engaged to perform service 
as chaplain at N University. M devotes his entire time to performing his 
duties as chaplain which include the conduct of religious worship, 
offering spiritual counsel to the university students, and teaching a 
class in religion. M is performing service in the exercise of his 
ministry.

    (4) (i) If a minister is performing service for an organization 
which is operated as an integral agency of a religious organization 
under the authority of a religious body constituting a church or church 
denomination, all service performed by the minister in the conduct of 
religious worship, in the ministration of sacerdotal functions, or in 
the control, conduct, and maintenance of such organization (see 
paragraph (b)(2) of this section) is in the exercise of his ministry.
    (ii) The rule in paragraph (b)(4)(i) of this section may be 
illustrated by the following example:

    Example. M, a duly ordained minister, is engaged by the N Religious 
Board to serve as director of one of its departments. He performs no 
other service. The N Religious Board is an integral agency of O, a 
religious organization operating under the authority of a religious body 
constituting a church denomination. M is performing service in the 
exercise of his ministry.

    (5) (i) If a minister, pursuant to an assignment or designation by a 
religious body constituting his church, performs service for an 
organization which is neither a religious organization nor operated as 
an integral agency of a religious organization, all service performed by 
him, even though such service may not involve the conduct of religious 
worship or the ministration of sacerdotal functions, is in the exercise 
of his ministry.
    (ii) The rule in subdivision (i) of this subparagraph may be 
illustrated by the following example:

    Example. M, a duly ordained minister, is assigned by X, the 
religious body constituting his church, to perform advisory service to Y 
Company in connection with the publication of a book dealing with the 
history of M's church denomination. Y is neither a religious 
organization nor operated as an integral agency of a religious 
organization. M performs no other service for X or Y. M is performing 
service in the exercise of his ministry.

    (c) Service by a minister not in the exercise of his ministry. (1) 
Section 3401(a)(9) does not except from wages remuneration for service 
performed by a duly ordained, commissioned, or licensed minister of a 
church which is not in the exercise of his ministry.
    (2) (i) If a minister is performing service for an organization 
which is neither a religious organization nor operated as an integral 
agency of a religious organization and the service is not performed 
pursuant to an assignment or designation by his ecclesiastical 
superiors, then only the service performed by him in the conduct of 
religious worship or the ministration of sacerdotal functions is in the 
exercise of his ministry. See, however, paragraph (b)(3) of this 
section.
    (ii) The rule in subdivision (i) of this subparagraph may be 
illustrated by the following example:

    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.

    (3) Service performed by a duly ordained, commissioned, or licensed 
minister of a church as an employee of the United States, or a State, 
Territory, or possession of the United States, or the District of 
Columbia, or a foreign government, or a political subdivision of

[[Page 207]]

any of the foregoing, is not considered to be in the exercise of his 
ministry for purposes of the collection of income tax at source on 
wages, even though such service may involve the ministration of 
sacerdotal functions or the conduct of religious worship. Thus, for 
example, service performed by an individual as a chaplain in the Armed 
Forces of the United States is considered to be performed by a 
commissioned officer in his capacity as such, and not by a minister in 
the exercise of his ministry. Similarly, service performed by an 
employee of a State as a chaplain in a State prison is considered to be 
performed by a civil servant of the State and not by a minister in the 
exercise of his ministry.
    (d) Service in the exercise of duties required by a religious order. 
Service performed by a member of a religious order in the exercise of 
duties required by such order includes all duties required of the member 
by the order. The nature or extent of such service is immaterial so long 
as it is a service which he is directed or required to perform by his 
ecclesiastical superiors.