The Internal Revenue Service has published its auditing guide for clergy. The guide provides tons of useful information as to how the IRS will treat various items that appear (or should appear) on a clergy member’s tax return. The Minister Audit Technique Guide begins:

Under the Internal Revenue Code of 1986, as amended, (hereinafter referred to as ‘IRC’), ministers are accorded some unique tax benefits for income, social security and Medicare taxes, which present several potential examination issues on ministers’ tax returns in addition to income and expenses issues found in most examinations.

The Table of Contents includes an Overview Of Issues; Who Qualifies For Special Tax Treatment As A Minister; Income To Be Reported; Gift or Compensation for Services; The Parsonage Allowance; Retired Ministers; Members of Religious Orders and Vow of Poverty; Determination of Deductible Expenses Where Some Income is Tax Exempt; Self-Employment Tax: Exemption; Employee versus Independent Contractor and more.

Clergy and their tax advisors should familiarize themselves with the audit technique guide and IRS Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.