PLR 1340015: IRS recognizes an interdenominational ministry as a religious order

Plain-English summary

The IRS concluded that an interdenominational Christian ministry qualified as a religious order for specified employment-tax rules. The ministry was recognized as tax-exempt under section 501(c)(3), screened and trained members, required indefinite commitments and strict conduct rules, and had members live and work together in support of its religious purposes. Although the ministry was not controlled or supervised by a church and was not significantly funded by a single church or church association, it met the other characteristics in Rev. Proc. 91-20. The conclusion applied to the exceptions in sections 1402(c)(4), 3121(b)(8)(A), and 3401(a)(9), concerning SECA tax, FICA tax, and federal income-tax withholding.

Ruling snapshot

• Question: Did the ministry qualify as a religious order for specified employment-tax exceptions?
• Outcome: Approved
• Key authorities: IRC §§ 1402(c)(4), 3121(b)(8)(A), 3401(a)(9), and 6110(k)(3); Rev. Proc. 91-20

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201340015 Third Party Communication: None
Release Date: 10/4/2013 Date of Communication: Not Applicable
Index Number: 1402.05-00, 3121.02-08,
3402.00-00 Person To Contact:
--------------------------, ID No. -------------
------------------- Telephone Number:
------------- ---------------------
------------------------ Refer Reply To:
-------------------- CC:TEGE:EOEG:ET1
--------------------------------------------- PLR-154615-12
Date:
June 24, 2013

Legend

X = ------------------------
State = ----------------
Year 1 = -------

Dear -------------------:

This is in response to ruling request dated December 20, 2012, submitted on behalf of X
by its authorized representative, concerning the status of X as a “religious order” for
purposes of sections 1402(c)(4), 3121(b)(8)(A), and 3401(a)(9) of the Internal Revenue
Code (Code).

Sections 1402(c)(4), 3121(b)(8)(A), and 3401(a)(9) of the Code, in certain situations,
except from the Self-Employment Contributions Act (SECA) tax, the Federal Insurance
Contributions Act (FICA) tax, and federal income tax withholding, respectively,
remuneration received for services performed by a member of a religious order in the
exercise of duties required by the order.

You state the following in your incoming letter. X is an interdenominational Christian
ministry. X was incorporated under the laws of State and recognized as exempt from
taxes as an organization described under section 501(c)(3) of the Code in Year 1. X’s
purposes are to evangelize, plant churches, and develop bases worldwide in order to
train and send out personnel to further the work of X. X receives a majority of its
financial contributions from organized churches and Christian individuals. However X is
not under the control and supervision of a church or convention or association of
churches.

All applicants to X are screened for Christian maturity and doctrinal orthodoxy. Each
candidate must successfully complete a three-month residential Candidate Orientation
that includes both classroom study and participation in the community life of
membership at X’s headquarters. A candidate who completes the orientation and who
is accepted for service by the members becomes a member of X.

PLR-154615-12 2

Members commit to X indefinitely. The average length of service of current members is
twenty years. Members affirm in writing that they will obey the regulations set by X, that
they are willing to endure sacrifice in the fulfillment of Christ’s command to preach the
gospel, and that they will seek in true humility to be loving, loyal, prayerful and unselfish
workers in X.

X owns and operates housing and offices on its headquarters’ campus where the
largest concentration of its members, who work in the United States, live together.
Members participate in regular worship and prayer meetings, as well as communal
meals several days per week. Members are subject to strict rules of conduct. Members
work full time to further X’s purposes of reaching people with the gospel, planting
churches, and mobilizing Christians to be engaged in missionary evangelism. Members
are typically engaged in evangelism and perform services ranging from conducting
public meetings and leading Bible studies to translating religious literature. All activities
in which members engage directly or indirectly advance X’s religious purposes.

Revenue Procedure 91-20, 1991-1 C.B. 524, states that the Internal Revenue Service
will use the following characteristics in determining whether an organization is a
religious order:

1. The organization is described in section 501(c)(3) of the Code.

2. The members of the organization vow to live under a strict set of rules requiring moral
   and spiritual self-sacrifice and dedication to the goals of the organization at the expense
   of their material well-being.

3. The members of the organization, after successful completion of the organization's
   training program and probationary period, make a long-term commitment to the
   organization (normally more than two years).

4. The organization is, directly or indirectly, under the control and supervision of a
   church or convention or association of churches, or is significantly funded by a church
   or convention or association of churches.

5. The members of the organization normally live together as part of a community and
   are held to a significantly stricter level of moral and spiritual discipline than that required
   of lay church members.

6. The members of the organization work or serve full-time on behalf of the religious,
   educational, or charitable goals of the organization.

7. The members of the organization participate regularly in activities such as public or
   private prayer, religious study, teaching, care of the aging, missionary work, or church
   reform or renewal.

PLR-154615-12 3

With respect to the characteristics set forth in Rev. Proc. 91-20, X does not meet
characteristic number 4. X is not, either directly or indirectly, under the control and
supervision of a church or convention or association of churches, and it is not
significantly funded by a single church or convention or association of churches.

However, X possesses all the other characteristics in Rev. Proc. 91-20. Accordingly,
based on our consideration of all of the facts and circumstances, we conclude that X is
a religious order for purposes of sections 1402(c)(4), 3121(b)(8)(A), and 3401(a)(9) of
the Code.

No opinion is expressed or implied on the tax consequences of any aspect of the
transaction or item discussed or referenced in this letter under any other section of the
Code.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                   Sincerely,


                                   Michael Swim
                                   Senior Technician Reviewer
                                   Employment Tax Branch 1
                                   Office of Division Counsel /
                                   Associate Chief Counsel
                                   (Tax Exempt & Government Entities)

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