MinistryCPA - Corey A. Pfaffe, CPA, LLC

Employees Foregoing Compensation to Make Contributions

2009-07-17T20:03:00.000-07:00

Question:

A church would like to replace its air conditioning system, but does not have the funds yet. Most of the employees have asked that it take the equivalent of one paycheck each month and deposit it to the “air conditioner fund." What are the pitfalls of handling it this way?

Answer:

The foregone compensation may be considered taxable (and an equal amount of donation deduction) under the taxation doctrine called "Constructive Receipt." IRS Publication 17: "Generally, you constructively receive income when it is set apart in any way that makes it available to you." This is at least one potential pitfall when the employees are given the option of receiving taxable income, but choose to have it contributed to some other purpose.

Independent Contractor or Employee?

2009-07-17T19:28:00.000-07:00

Question:

A church compensates several individuals who have been considered as Form 1099-MISC independent contractors. However, they are under the direct supervision of the church’s pastor, and he controls the work to be done and the way in which it is done. Should these employees should be reclassified as Form W-2 employees?

Answer:

The IRS provides excellent guidance to answer this question on its website at http://www.irs.gov/businesses/small/article/0,,id=99921,00.html.

The IRS site says, "In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

"Facts that provide evidence of the degree of control and independence fall into three categories:
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?"

Form 1099 to Missionaries

2009-07-17T19:20:00.000-07:00

Question:

A institution of higher education has a campus missionary partially supported by the school and partially by donations funneled through his mission board that are then advanced to the school for ultimate disbursement to the missionary. Should the school be considering this taxable and providing a Form 1099 to the missionary at year end?

Answer:

As the disbursing agent, the school is responsible to comply with IRS reporting requirements. If the missionary is not in the employ of the school, then Form 1099 should be issued to him as an independent contractor for the full amount disbursed to him. If the missionary is properly classified as an employee, then Form W-2 should be issued.

Designation of Housing Allowance by an LLC

2009-07-17T18:50:00.000-07:00

Question:

If a minister forms an LLC for his church consulting, preaching and pastoral counseling ministries can a portion of his income be designated as housing allowance?

Answer:

No, the Minister Audit Technique Guide, published in April 2009, clarifies this (http://www.irs.gov/businesses/small/article/0,,id=210018,00.html).

According to the Guide, "IRC § 107 provides an exclusion from gross income for a 'parsonage allowance,' housing specifically provided as part of the compensation for the services performed as a minister of the gospel.

"The exclusion under IRC § 107 only applies if the employing church designates the amount of the parsonage allowance in advance of the tax year. The designation may appear in the minister's employment contract, the church minutes, the church budget, or any other document indicating official action. Treas. Reg. § 1.107-1(b)."

The designation must be made by a church or qualifying IRC 501(c)(3) organization (e.g., certain religious educational institutions) for the services of a minister performing functions for its ministry. As stated in the question, a self-employed minister providing services to churches may request that they designate a portion of his compensation as housing allowance before it is disbursed by the church. But a sole proprietor LLC cannot designate receipts as housing that were not classified as such by the disbursing congregation.

Taxability of Benevolent Gifts to the Recipients

2009-06-29T09:25:00.000-07:00

Question:

A church member who had been a frequent volunteer serving in its ministry decided to attend seminary. Because of the financial burden this created for him and his family the church has designated them as deserving of benevolence gifts. Will these benevolence gifts (certain to exceed $600 in the year) be subject to Form 1099 reporting requirements?

Answer:

As long as the support provided him is neither in retroactive or anticipatory consideration of serves he has or will perform for the church, this benevolence represents non-taxable income. Unlike a missionary, for example, who is formally recognized as performing the work of the church to advance the worldwide cause of Christ on its behalf, the former volunteer in not an employee, nor independent contractor of the congregation.

I suggest a re-reading of my March 7, 2009, blog posting which brought a few cautions about some benevolent activities.

Also, I've recently been pursuing some resources from the Evangelical Council for Financial Accountability (www.ecfa.org) -- I read its Accounting and Financial Reporting Guide, plus e-mailed a question -- and find them to be very helpful. The ECFA seems to have been a leading voice in a few IRS deliberations regarding benevolent gifts.

2009-06-27T14:45:00.000-07:00

Question:

Do Bible camps and churches need to have their speakers and missionaries, as independent contractors, complete Department of Homeland Security: U.S. Citizenship and Immigration Service's Form I-9?

Answer:

The form is intended for employers to receive verification from employees of their employment eligibility. Self-employed persons are not required to submit the form.

2009-06-26T08:57:00.000-07:00

Question:

A foreign missionary is compensated by many churches and individuals whose contributions are managed and distributed to him by one church, which issues him a Form 1099-Misc at the close of each year. Can he set aside retirement funds in a Internal Revenue Code (IRC) section 403(b) retirement plan though he is being paid as in independent contractor (rather than as an employee)?

Answer:

IRC section 403(b) plans are funded from two sources--employer contributions and employee "elective deferrals" (amounts are withheld and then passed on to an investment firm that manages the plan). Since the missionary is not being treated as an employee, it seems that a self-employed plans offer the only alternatives (e.g. individual IRAs are the simplest form). IRS Publications 560 and 4547 provide additional information.

Housing Designation of 403(b) Plan Distributions

2009-05-29T12:25:00.000-07:00

Question from an investment advisor:

"I know that the IRS does allow for retirement distributions from a 403(b) plan to be at least partially designated as a housing allowance (true, see my Feb. 6, 2007, post and others). But up to this point I have not found if this is available for 403(b)(7) plans. A pastor has a 403(b) plan that he and the church both contribute to. Is there any way that part of the retirement distributions can be designated as a housing allowance? I have talked to [the mutual fund firm] and it will not “code” the Form 1099-R for any housing allowance." (The mutual fund firm will not report a lower taxable amount for a distribution than it reports as the full distribution amount simply because a recipient can provide documentation of a housing allowance designation by his congregation.)

Answer:

Two issues here...

1) Regardless whether the investments are held in a traditional TSA sold only by insurance companies (as initially described by Congress in 1958 when it established 403(b) plans) or in mutual funds (as modified by Congress in 1974 in IRC section 403(b)(7) to allow for non-annuity investments) a church can designate all or a portion of the distributions as housing allowance. Of course, a minister must comply with other requirements (e.g. must be 59 1/2 years old).

2) In my July 26, 2008, post I stated "the retired minister reports the full distribution on Line 16a (2007 Form 1040) and the taxable amount after allowable housing allowance on Line 16b." This reporting method, however, does have its challenges. The IRS document matching program may/will assume that an error has been made and propose a change in the return. The taxpayer must respond by providing an explanation for the discrepancy. I recommend that a schedule of the minister's housing expenses also be provided. The minister should maintain his documentation in case the Service requests it.

"Start-up" Missions Support by a Local Church

2009-05-27T08:06:00.000-07:00

Question:

After participating as a volunteer for three years, a member of a church congregation entered full-time mission work in a foreign country. She began going for about 3 or 4 months at a time and then returning to the U.S. for a few weeks to a month to visit and raise support. In 2007, she paid her own way. In 2008, she began raising support. Some people gave money directly to her, others gave money to the church for her support. In addition, the church sponsored her for support in 2008. She was not required to report back to the church’s internal mission board under any accountable plan arrangement. What advice can you offer to the members of the church’s mission board to better serve its missionary?

Answer:

The IRS will consider her to have entered the “business” of receiving self-employment income for the performance of religious services—representing donors and other organizations (the church) in providing services to people in a foreign country.

I encourage the mission board to establish a designated fund to manage the collection and disbursement of her support. This provides donors a vehicle for tax-deductible contributions. Generally, gifts given directly to her by individuals will be non-taxable to her and non-deductible by them – they are not considered to be rendered as an exchange of services for compensation.

The missionary will need to file Schedule C and deduct her travel and other business expenses as would any other self-employed person (e.g. she’ll need to keep a mileage log and use the standard auto allowance). Since she is not a minister (as defined by the IRS in Publication 517 and other sources that describe sacerdotal duties, etc.), she will not be eligible for a housing allowance and other ministerial tax provisions. She will need to determine whether she will qualify for the Foreign Earned Income Exclusion.

The local church mission board could opt to recommend employment status with the church. Then, FICA taxes could be withheld and matched (as a non-ministerial employee of a church or Christian organization) and an accountable plan for her employee business expenses could be
established.

Helping to Pay Half of the Pastor's SE Tax

2009-05-21T19:41:00.000-07:00

Questions:

A pastor has accepted a position at a new church. In his prior position, he was an "employee" who received a Form W-2 yet paid his entire 15.3% portion of self-employment (SE) tax. He took the various, allowable business deductions to reduce the amount of income that was taxable for SE purposes. In his new position, he will be an "employee" of the church and receive a W-2. However, the church is offering to pay 7.65 percent of his social security tax.

1. Will he still be considered "self-employed" for purposes of paying the remaining 7.65 percent?
2. Will he still be able to take the various deductions to reduce the income amount on which the self-employment tax is calculated?

Answers:

In both positions the pastor held/holds he is almost certainly correctly classified as an employee of the churches. An example of a rare exception to the employee designation is an iterant evangelist (truly an independent contractor).

Let me review some information posted in other blog entries that one might want to read as well. Churches that offer to help their pastors pay the costly SE tax should be commended. However, this amount too is considered taxable income. It is inconsistent with the Internal Revenue Code for a church to withhold and match FICA tax for a minister as it would for a non-minister. Further, denying him ministerial status will eliminate his eligibility for several favorable tax treatments (e.g., housing allowance). He would also then lose out on reducing his income by taking allowable deductions before the calculation. Operationally, I've seen two models for implementing the church's decision:

1. Add a 7.65 percent "bonus" to his taxable compensation each pay day, then immediately withhold it as federal income tax (not social security or Medicare tax). This way, when the pastor files his Form 1040 at the end of the year to calculate both his income and SE tax, a large amount has been withheld which will then reduce his balance due. Many pastors in this situation also elect to have additional federal income tax withheld to cover the remaining 7.65 percent of the 15.3 percent SE tax, plus their actual income tax.

2. Issue a "bonus" check on the following year's April 15th deadline when his balance due must be paid. Problem: he could suffer underpayment of estimated tax penalties. To eliminate these penalties he must make estimated tax payments without the benefit of the cash provided later. Of course, this bonus is reported as taxable income on his Form W-2 for the year in which it was paid.

Deductibility of Designated Gifts for Parsonage Improvements

2009-05-21T19:30:00.000-07:00

Question:

Some members in a church congregation want to buy new furnishings for its parsonage. Is there a way for the monies contributed to purchase the furniture to be deductible to the donors?

Answer:

Yes, just as a congregation may initiate, then "advertise" its establishment of a fund raising effort for any other activity related to its mission, a designated fund earmarked for parsonage improvements may receive tax deductible gifts. Of course, if these furnishings become the property of the minister occupying the parsonage, then their fair market value becomes taxable income to him in an identical manner as his standard cash compensation.

Licensure of a Gospel Minister

2009-05-21T19:10:00.000-07:00

Question:

Can a part-time minister get licensed by his congregation in order to receive the tax benefits of being licensed? Is his licensing contingent on factors such as title, hours, or ordination?

Answer:

It is my belief the a congregation should issue a license to a minister in recognition of his call to the gospel ministry. In many churches (as evidenced in their Constitutions) this gives him the same authority to serve as a minister as he would enjoy after ordination (i.e., leading public worship, preaching, administering church ordinances, conducting weddings, etc.). Of course, ordination is a highly valued designation as well.

Technically, the IRS will recognize the ministerial status of pastors who have not been licensed or ordained as long as they can demonstrate that they have performed the duties of a minister--what the IRS calls "sacerdotal functions" (see IRS Publication 517 at http://www.irs.gov/pub/irs-pdf/p517.pdf). However, this is generally much more challenging than simply providing evidence of one's licensure or ordination (a photocopy of the certificate and accompanying letter is often requested).

Again, I believe that motivation for licensure should be for recognition of one's call to the gospel ministry--a matter not to be taken lightly. Once a minister is licensed (and, of course, then performing sacerdotal functions) he must make sure that he is aware of the tax issues related to ministers, including at least one once-in-a-lifetime deadline for Form 4361.

Donor Input on Disbursement of Funds

2009-05-21T18:58:00.000-07:00

Question:

A donor contribution to a church established a fund to be advanced to missionaries in case of urgent needs. Subsequently, the donor asked that the church treasurer forward some funds to a missionary for his use. When the church treasurer distributes the funds, should they to be treated as a gift or taxable income? The treasurer understands that if he sends the funds through the missionary's agency that handles his account it will be treated as taxable income.

Answer:

It is certainly taxable income to them so I recommend sending it through the mission agency so that the treasurer won't need to issue Form 1099-MISC; the agency will report it consistently with the missionary's other earnings.

Also, just a note. Since the ability to direct funds after they are donated ends once the gift is received and a designation is made (i.e., “for the purpose of establishing a fund to be used by selected missionaries in case of urgent needs”), I recommend that the church decision to send the funds be documented--if, and only if, it concurs with the donor’s suggestion of the particular missionary. Otherwise, the donor jeopardizes the deductible nature of his or her donation and the church may be inadvertently setting a bad precedent.

Paying for Pastor's New Automobile Engine

2009-05-03T13:08:00.000-07:00

Question:

Our pastor needs to get a new engine for his car. Our church would like to pay to get this taken care of. If we do this, will our Pastor be exempt from paying taxes on this money?

Answer:

This is a great gesture! Unfortunately, it will be considered taxable income. But don't let this stop you. There are many steps your pastor can take to mitigate the tax bill.

Self-Employed Health Insurance Deduction

2009-04-25T18:17:00.000-07:00

Question:

If a minister receives a Form W-2 as an employee and is subject to self-employed income tax on the amount from the Form W-2 plus housing allowance, then can he deduct his health insurance (that he paid) on Form 1040, line 29 as self-employed health insurance or Schedule A. If not on line 29, what is the logic to make him pay SE tax, but not get to deduct SE insurance?

Answer:

A minister's health insurance premiums are deductible only on Schedule A. A minister employed by a church or other Christian organization is considered an employee in every respect except for purposes of SE tax. As an employee he enjoys access to numerous Internal Revenue Code (IRC) tax benefits available only because of his employment status (e.g., IRC 403(b) plans and matching contributions). While it might be annoying to not qualify for an "above-the-line" write-off of his health insurance premiums, overall he is better off tax-wise as an employee. Itinerant evangelistics, for example, do not qualify for employee benefit provisions of the IRC, but do qualify for line 29 write-offs.

Logic? Since when have logic and the IRC been in lock-step harmony? :^)

Church Records Retention

2009-04-21T17:54:00.000-07:00

Question:

How far back should our church hold on to financial records?

Answer:

While I'm not a lawyer, my understanding is that the legal statute of limitations that will generally apply to the church is 7 years. Many churches label boxes of financial records with the applicable year, plus a “Destroy” date 7 years later. They maintain copies of annual reports to the body in perpetuity.

Church Worker: Employee or Independent Contractor

2009-04-21T17:29:00.000-07:00

Question:

An individual providing services to a church for compensation receives a Form 1099-MISC reporting the earnings to the church worker. Unlike the typical Form W-2 provided to an employee which reports both earnings and withholdings, no taxes were withheld on the money. At tax time, these individuals are often surprised to learn that the Internal Revenue Service and their tax software provider treat them as small business owners subject to both self-employment (SE) and income taxes on the earnings. Is there another way to report these earnings and avoid SE tax?

Answer:

Form 1099-MISC reports payments to individual independent contractors (e.g., not corporations) for services rendered when the amount exceeds $600 per year. Unfortunately, many churches are unfamiliar with the rules for classifying a worker either as an employee or an independent contractor. IRS Form SS-8 may be submitted to the Service for a determination (http://www.irs.gov/pub/irs-pdf/fss8.pdf). However, this step is rarely necessary if the church officers carefully consider the guidance provided by the IRS either in the instructions for Form SS-8 or on its website. Typing "independent contractor" in the IRS search window is sure to bring a hit near the top of the list on this topic.

In most cases, non-ministerial church workers (individuals who are not performing the functions of a minister) should be classified as employees and subject to FICA withholding (and matching by the church) and income tax withholding. A common situation when independent contractor status is appropriate relates to a church employing a janitorial or other service firm to render services. On the other hand, the typical church janitor, office employee, etc. should not be treated as an independent contractor.

When an error in classification is discovered the church should take immediate action to correct the error. This may require the use of newly adopted IRS Form 941-X (http://www.irs.gov/pub/irs-pdf/f941x.pdf) and correction of previously issued paychecks. The employee may owe the church his or her share of the FICA tax not previously withheld.

When the error is not discovered until well after the previous year is complete, the employee who was erroneously classified as an independent contractor may have little recourse but to pay the full SE tax.

Missionary Business Use of Home

2009-04-21T17:09:00.000-07:00

Question:

A self-employed missionary receives a Form 1099-MISC reporting his support income and files Schedule C to claim his earnings and business expenses. The expenses that he can deduct on Schedule C include a long list of typical costs such as business mileage, office supplies, conference fees, and travel and entertainment. He spent $14,000 of his support to build a room attached to his house. The room is used exclusively as a church and ministry center. Is there any provision for him to reduce his income and self-employment tax by reporting a business expense deduction related to business use of his home?

Answer:

By spending his support to add to his personal residence (a home he owns and not one owned by the church), he will presumably be the ultimate beneficiary of the income since the sale of his home will likely bring greater value than without the addition. Hence, I see no provision to immediately write-off the expense in the year of expenditure. However, since it is an exclusive business use of his home it will likely qualify for a Form 8829 deduction. A percentage of his total home expenses will be deductible as a reduction of taxable income both for income and for self-employment tax purposes.

Gifts to Church School Teachers Paid as the Only Compensation

2009-03-31T16:19:00.000-07:00

Question:

A Christian School affiliated with a church is very small and provides no salary to its teachers except $500 gifts at Christmas and at the end of the school year. Now that it's so late after the new year started, what reports should be filed in connection with these 2008 payments?

Answer:

It seems like a shame to have to do so after they earned so little income, but you should issue them Forms 1099-MISC for $1,000 of non-employee compensation each. Technically you were required to withhold the 7.65% FICA tax (and match this amount out of school funds) and then issue them Form W-2s. But it’s kind of late for that. I recommend that you consider reimbursing them for at least one-half of the self-employment tax that they will owe when they file their 2008 Form 1040s along with their attached Schedules C and SE.

More bad news...these reimbursements themselves are considered taxable income in 2009.

Deferred Compensation Plans

2009-03-26T06:03:00.000-07:00

Question:

The sending church for a retiring missionary has for many years put money into an account that is set up as a missionary investment account (mutual funds in the church's name). It is now paying out a part of the money in the account directly to the retired missionary (i.e., not disbursed to the missionary's mission board and subsequently disbursed to the missionary). How should the church report these payments?

Answer:

Effectively, the church has established a deferred compensation plan. Whether a qualified or nonqualified plan, I make no judgment. The church should examine Internal Revenue Code section 457(b) plan requirements and Internal Revenue Bulletin (IRB) NO. 2007-19 regarding nonqualified plans.

Nevertheless, at this point in time, certainly the payments are taxable in the same character as the minister's previous compensation. It is, however, eligible for housing allowance designation. The church should issue Form 1099-MISC for the non-housing allowance portion (a designation cannot be made retroactively). Unless the minister has gained exempt status, the full amount (including housing allowance) is subject to Form 1040, Schedule SE self-employment tax.

Out-of-Pocket Contributions

2009-03-26T04:23:00.000-07:00

Question:

What constitutes charities given in kind (not money)? When individuals make meals for those ill in their churches or meals for the hospital are they deductible as charitable contributions?

Answer:

Tax law prohibits deductions for contributions (direct and out-of-pocket) to individuals; a qualified charitable organization must be the recipient. However, Internal Revenue Service Bulletin (IRB) No. 1997-5 allows deductions for "volunteers who incurred unreimbursed out-of-pocket expenses while performing services for a charity to substantiate their contributions" particularly those "incurred incident to the rendition of services to a donee organization" (page 9).

I interpret IRB 1997-5 as follows. Taking a meal to a fellow church member at home or to an individual in a hospital is not deductible--a wonderful philanthropic activity, but not deductible. Also, churches organizing dinners for common sharing often ask members to "bring a plate to pass" -- not deductible. However, if a church or other 501 (c)(3) charity sponsors a meal(s) for needy individuals and a donor responds by providing food, thus incurring unreimbursed out-of-pocket costs, then a deduction is permitted.

According to IRB 1997-5 "to carry out the purposes of the statute, volunteers claiming a charitable contribution deduction for an unreimbursed expense of $250 or more are still required to obtain substantiation confirming the type of services they performed for the charity" (page 9). In others, if you give more than $250, request a letter from the organization acknowledging your participation.

See also 2008 Publication 26 entitled Charitable Contributions (pages 5 and 13). The Publication offers one example: "You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youth to attend athletic events, movies, or dinners. The youths must be selected by a charitable organization whose goal is to reduce junenile delinquency. Your own similar expenses in accompanying the youths are not deductible" (page 5). Presumably, the same rules apply to church donations to send needy youths to Bible camp.

Honoraria Paid to Ministers, Other Staff Members, and Church Members

2009-03-23T05:45:00.000-07:00

Question:

Are payments by a church directly to members or staff for wedding services treated as compensation? It seems fairly certain that such payments are taxable. The payments are small ($50 to $150 per person). Should these payments be reported as compensation (Form W-2) for the employees and Form 1099-MISC for non-employees (issued only if they exceed $600 per year)?

Answer:

These payments are taxable and are properly reported as indicated within the second question. Similarly, honoraria that are paid to ministers directly by the benefiting party (weddings, funerals, etc.) are considered taxable compensation for services rendered.

SE Tax Trauma

2009-03-21T05:23:00.000-07:00

Question:

Missionaries, as do most ministers, are subject to both federal and state income taxes and self-employment tax.

Consider the following example. An independent missionary on deputation earns enough income (after deducting all allowable travel and ministry expenses) to owe $6,000 in self-employment (SE) tax on his support. Due to write-offs against his income taxable earnings (housing allowance, personal itemized deductions, personal exemptions for his family members, etc.) he not only owes no income tax, he receives $3,000 of credits that can gain him a refund check from the IRS even though he paid nothing in. Then comes his SE tax--ouch! Instead of receiving a refund, he must write the IRS a check for $3,000.

He asks, "Is there any legal way for me to file differently and avoid the Form 1040, Schedule SE tax?

Answer:

Missionaries in the above situation should consider at least two matters.

First, travel and other business expenses incurred while on deputation reduce reportable SE earnings. Many mission agencies require their missionaries to submit regular reports documenting their financial activity. Not only is this good stewardship on behalf of the supporting churches and individual donors, it makes good tax sense for the missionary. The mission agencies then issue to their missionaries Form W-2 which include only the portion of their support that is taxable after excluding reimbursements sent to the missionary for tax-deductible expenses.

Second, a missionary may consider applying for exemption from SE tax by filing a timely Form 4361. See my answer to Question 9 in the .pdf file listed below from my website:
http://www.ministrycpa.org/uploads/Top_10_Questions_that_Pastors_Ask_Tax_Preparers-May_2007.pdf

One final "reality check." Paying the 15.3 percent SE tax is a burden and reality that most missionaries and ministers face. While non-ministers have the 7.65 percent FICA (social security and Medicare) tax withheld from their gross earnings and matched by their employers, ministers must pay "both halves" but can pay this tax on their net (after business expenses) earnings. Accordingly, missionaries are well advised to either make quarterly federal estimated tax payments or to request federal income tax withholding by their mission agencies.

Pastor Appreciation (Love) Gifts

2009-03-19T17:41:00.000-07:00

Question:

A bi-vocational pastor works a full-time secular job, and also shepherds a small church. He receives no salary from the church. Once a year the church membership on its own initiative takes up a collection and provides it to the minister as a “pastor appreciation” gift. Does this gift represent taxable income?

Answer:

This situation mimics the case of itinerant ministers. To the extent that the minister has unreimbursed expenses it will be non-taxable (reportable as income less expenses on Form 1040, Schedule C). The individual here apparently holds himself out as a minister of the gospel and apparently is recognized as such by a grateful congregation that collected a pastor appreciation gift. This love offering is taxable to the extent it exceeds his business (ministry) expenses.