From the Mailbag: Mission Presidents and Taxes

Okay, not actually a mailbag. But a couple months ago, somebody asked a question on my tax blog:

LDS mission presidents’ compensation/tax advice? Sam, are you aware of the tax advice in the mission presidents handbook – that living expenses for self & family (housing, food, transport, medical, etc.) are paid by the Church, but are not to be reported as income?

Honestly, I wasn’t aware of it but some quick Googling indicates that, yes, the church disclaims any employer-employee relationship with mission presidents and advises them that they’re not taxable on reimbursements from the church.

Could that possibly be right? 

Before we dig into the specifics of mission president finances and taxes, though, a couple prefatory remarks.

First, just in case you weren’t aware of it, the church provides housing for mission presidents and reimburses them for a wide range of living expenses. If you’re shocked by that (and a quick Google search suggests that, in fact, a number of people claim to be shocked by that), you’ve never really thought about the economics of being a mission president.

Look, everybody here who could support themselves and their families for three years without earning income during that time, and with a roughly six-month lead time to save up, raise your hands. Me neither. Seriously, unless you want mission presidents called only from the ranks of the tremendously wealthy,[fn1] you have to assume some sort of financial support from the church.

Second, I’m not providing legal or tax advice here. Basically, I’m trying to reverse-engineer the advice that the church gives its mission presidents, and I’m doing it with a blog-amount of research. If I were actually advising somebody on whether or not reimbursements represent taxable income to them, my research and analysis would be far more thorough, and I wouldn’t start the research assuming the reimbursements weren’t taxable. Rather, I’d see where the law took me.

Third, and related to the prior point, the tax law is not black and white. A lot of students come into my Federal Income Tax class assuming that, after a year of constitutional law and contracts and torts, finally they’re in a class where the questions have one clear answer. They’re quickly disabused of that idea. As long as it is, the Internal Revenue Code can’t anticpiate every financial transaction that every U.S. person does. I’m entirely sure that Congress has never once thought about the appropriate way to tax volunteer mission presidents.[fn2]

That is to say, we’re not talking about the church trying to game the tax system (because, frankly, the tax consequences to mission presidents doesn’t really affect the church: most people, I suspect, accept the calling before they’ve taken the time to evaluate the tax consequences of accepting it). Instead, the advice represents the church’s efforts in determining the appropriate tax treatment.

Finally, note that everything I’m saying is U.S.-specific; the non-U.S. tax consequences of these reimbursements may be entirely different, and a mission president would, I think, do well to get independent tax advice if he serves in or is from another country.[fn3]

The Tax Landscape

We have to start with a couple broad tax rules. The first is, if you are a U.S. citizen or resident, you are subject to U.S. tax law. It doesn’t matter if you’re living in another country or if all of your money comes from another country; we have a worldwide tax system. So even if you were a mission president in Mozambique, as long as you’re a U.S. citizen, you’re subject to U.S. tax laws.

Second, “income” for tax purposes is defined pretty broadly. There are a couple consitutional(-ish) limitations on income, but other than those, if you get something of value, you have to include it in your income unless it is explicitly excluded.

Which is to say, there’s no underlying reason why reimbursements to a mission president couldn’t be included in income. So why does the church advise (and why do I agree) that they’re not?

Revenue Ruling 62-113

In 1962, the IRS released a revenue ruling (basically, a relatively formal administrative statement of where the law lies) that, though it doesn’t mention the LDS church, basically dealt with three tax consequences associated with LDS missionaries.[fn4]

The revenue ruling concerns church, called from congregations to spend their full time as missionaries for a defined period of time, whose “traveling and living expenses entirely or partially reimbursed or paid from a church fund maintained for that purpose.”[fn5]

Ultimately, the IRS determines that such reimbursements don’t constitute gross income for the missionaries.

But wait! you may be thinking. Missionaries and mission presidents are totally different.

Ah, but for these purposes, they’re not. The missionaries to whom the revenue ruling is directed are individuals called from congregations to spend their full time as missionaries. That applies, I would think, equally to mission presidents as it does to 19-year-olds.

Which, speaking of: 19-year-olds are subject to the tax law. Heck, 1-year-olds (think baby models and kids in movies, who are clearly compensated) must pay taxes on their income. The U.S. income tax doesn’t apply differently to the young than it does to the old.

But what about the fact that our missionaries pay their own way?

But they don’t. Sure, we say as missionaries that we’re paying our own way. But we’re not. We paying into a central fund, and that fund disperses monies to missionaries as needed. There’s a huge amount of attenuation between what we pay and what we get. I was in Brazil in the 90s; though I paid the same amount monthly as missionaries who went to West Africa and Hong Kong, I suspect that my monthly allowance was significantly different.

Do mission presidents pay a monthly amount? I doubt it. But paying that monthly amount is unrelated to the amount received by missionaries. Though it feels right to say missionaries pay their own way, in reality, the (potentially deductible) contribution they make to the church is transactionally separate from the amount of reimbursement/monthly allowance they receive.

Which is to say, ultimately, that, as best as I can figure out, mission presidents don’t pay U.S. taxes on their reimbursements for the same reason missionaries don’t: because the IRS determined that such reimbursements didn’t feel like what we think of when we think of income. And so it’s excluded.

[fn1] I think this would be a really bad idea; it would mean that the non-wealthy wouldn’t get the growth and blessings associated with being mission presidents, and would set up a wealth-based tiering system for who could fulfill what calling.

[fn2] And, in fact, I’d argue that creating a specific regime for them wouldn’t really be worth the time or complexity. Look, the church currently has 405 missions, each of which (I assume) has a mission president. Assume that all 405 mission presidents are U.S. taxpayers, that the value of what they receive is $100,000 annually, and that they pay taxes at a flat 25% rate. (They don’t: $100,000 does land you in the 25% tax bracket if you’re married filing jointly, but because of the progressive tiers, you’ll be paying tax at a rate of less than 25%. Still, treating it as a flat rate works for this example.)

Put this all together: jointly, the mission presidents would have $40.5 million of income. If they paid taxes at a flat 25% rate, that would supply the government with $10.125 million annually. In 2013, the government raised more than $1.3 trillion from the individual income tax, making te potential amount raised by explicitly addressing this would increase federal revenue by about 0.0008%.

[fn3] Frankly, I think a mission president from or in the U.S. would do well to get independent tax advice, too. I think the church’s advice is accurate, but I don’t think, for penalty purposes, a mission president can rely on it, though I’d need to think through that more than I will for this post.

[fn4] Though it applies with equal force to any missionaries who meet the factual predicate there.

[fn5] The relevant portion of the revenue ruling:

Advice has been requested as to the treatment, for Federal income tax purposes, of (1) payments made to a missionary from a church fund as reimbursement for travel and living expenses incurred away from home in the service of the church, (2) contributions to the fund by the parent of the missionary, and (3) direct payments by the parent for the support of the missionary.

In the instant case, the work of the local congregation in the field of missions is carried on by missionaries who are specially called from the congregation to devote their full time to missionary service for a period of specified duration and who are ordained for this purpose. The congregation has a number of missionaries presently serving missions in various parts of the world on a voluntary, noncompensated basis. Some of these missionaries are supported in whole or in part by their parents, some pay their expenses from their personal savings, and some have their traveling and living expenses entirely or partially reimbursed or paid from a church fund maintained for that purpose.

***

From this fund, missionaries are reimbursed for certain qualified living and traveling expenses incurred in the service of the church where such expenses are not covered by amounts received by the missionaries directly from their parents, from relatives or friends, or from their own savings. In order to justify reimbursement for his expenses, each missionary is required to submit a monthly report listing his receipts and expenses and in no case is the fund to supply amounts greater than the reports can validate.

***

Question 1. Are amounts paid by the fund to reimburse the missionary for expenses incurred away from home in the service of the church required to be included in the gross income of the missionary?

Answer. Section 61 of the Internal Revenue Code of 1954 and section 1.61-1 of the Income Tax Regulations provide, generally, that gross income includes all income from whatever source derived unless excluded by law.

In the instant case, the missionary is motivated by religious conviction and a desire to donate services to his church. He is engaged in rendering gratuitous services to his church. Under these circumstances, reimbursement by the church to the missionary, or the direct payment by the church, of any of the expenses involved does not constitute income to the missionary but represents the repayment by the church of advances made by the missionary on behalf of, and at the request of, the church. Accordingly, such amounts are not includible in the missionary’s gross income for Federal income tax purposes.

Comments

  1. I realize that I should probably point out that, when missionaries say they’re paying their own way, they are not lying. They certainly feel like they are: they’re making a financial sacrifice to be out there and preach the gospel. Feelings aside, though, they are not technically paying their own way: they’re paying into a common fund, and what they pay may be exactly what they take out, may be more than they take out, or may be less. But they rarely see exactly how much they take out of the fund. And expecting a 19-year-old to have a sophisticated view of the finances is probably more than we should ask.

  2. I might be missing something, but isn’t 10 million / 1.3 trillion = .0008%?

  3. it's a series of tubes says:

    Check your numbers on the US revenue implications. You’ve grossly overstated the revenue effect of taxing mission presidents.

  4. Ziff and tubes, thanks. You’re right and I’ve updated the post to give the truly, truly small proportion that it would represent.

  5. As an accountant (who doesn’t want to be an accountant) I love it when we talk tax law. This wonkette in me rejoices.

  6. Also, sorry to just be a complainer. :) This is an interesting post. Your point about mission presidents being not effectively different from missionaries makes a lot of sense.

  7. Thanks for this. I’m no tax expert, but I instinctively had the same conclusions you did and couldn’t understand why it was such a controversy on some blogs.

  8. fuddyduddy says:

    Ziff is right. That was my thought too.

  9. Even assuming 100K per mission president is probably quite high. I know the church caps some reimbursements to 5200 per year so that it doesn’t exceed the IRS reporting threshold. Are you also including the value of the lodging and transportation provided? I know that they usually only receive reimbursements for expenditures they make for mission related activities out of their own pockets. I’m an accountant as well, Kristine, it really is a charmed life.

  10. Correct me if I’m wrong, but while MP’s/Missionaries don’t pay taxes on “reimbursements,” if they actually earn income independently (investments, other taxable distributions), they do pay taxes on those. I had a companion 35 years ago who had an uncle who played around in the stock market, and every once in a while, uncle would sell some stock at a gain and companion would direct his family to pay tithing on the gain. Same thing, I presume, would apply if someone owned rental property some other income producing venture. Income from those activities would be taxable.

  11. “…couldn’t understand why it was such a controversy on some blogs.”

    I don’t find it hard to understand why it’s controversial at all. Have you ever spent time reading any blogs?

  12. Ziff, no problem. I appreciate the catch.

    And Brian, I suspect that my $100,000 estimate significantly exceeds the median reimbursement, even including housing. But I wanted to exaggerate the amount of income to reach the highest reasonable amount in foregone taxes, and to simplify my math with nice round numbers. (And I still managed to mess up in my calculations!)

  13. IDIAT, that is correct.

  14. John Mansfield says:

    Another enjoyable Sam Brunson tax post. That they’re paying their own way isn’t an idea that missionaries come up with on their own through a limited understanding of accounting procedure. They were taught to prepare to do so in many quorum lessons.

  15. John Harrison says:

    I think that the controversy is usually generated around the tithing aspects and not the taxation aspects. The notion that mission presidents do not pay tithing arguably has implications for how one should calculate one’s own tithing.

    The tax aspect is interesting on its own and somewhat separate from the tithing question.

  16. Ministers of many faiths receive a tax-deductible housing allowance. Refer to IRS Publication 517 and consult your tax advisor.

    Question: A minister receives a salary plus a housing allowance. Is the housing allowance considered income? Where does the minister report it?

    Answer:

    A minister’s housing allowance, sometimes called a parsonage allowance or a rental allowance is excludable from gross income for income tax purposes, but not for self-employment tax purposes.

    If you are a minister and receive as part of your salary (for services as a minister) an amount officially designated as a rental allowance, you can exclude from gross income the lesser of the following amounts:
    •the amount actually used to provide or rent a home;
    •the fair market rental value of the home (including furnishings, utilities, garage, etc.);
    •the amount officially designated (in advance of payment) as a rental or housing allowance; or
    •an amount which represents reasonable pay for your services.

  17. I wouldn’t know where to begin calculating rental values here in New York, much less in Kobe, Japan, or Moscow or Johannesburg. But I wouldn’t be surprised if the fair market rental value of the mission home in the local mission were upwards of $4,000/month. That’s almost half of your annual reimbursement estimate of $100,000. Throw in a couple of mission vehicles, travel to mission president conferences once or twice a year, etc., etc., I wouldn’t be surprised if the total reimbursement comes close to six figures.

    And, in foreign missions, what about private schooling for the children. In many cases, parents would have little choice but to enroll their children in the nearest “International” school. No matter how much you wanted your child to be immersed in the local culture, it would be awfully hard on a 15-year-old from Orem to be dropped into a Japanese high school and told to sink or swim. I’m guessing that he would sink.

  18. Mark, that’s almost certainly true, but to the extent it raises the median amount mission presidents receive, I suspect that’s counteracted by the many mission presidents in places with substantially less-expensive costs of living.

    And Kristine A, I’m glad you like the wonkiness.

  19. Daniel Smith says:

    Up until I read this blog post, I had been fairly sure that I had both thought about the economics of being a mission president, and been shocked they were reimbursed for a wide range of living expenses. Thanks for setting me straight that those two states are mutually exclusive. It does kind of leave me wondering whether it is my thoughts or my shock that I misrecall. Did I not observe that the mission presidents that I had interacted with were all wealthy and from a different class than the general membership? When I have visited them after their service, did I not always find myself in exclusive communities and lavishly decorated homes? Was I mistaken that the church already had a mechanism for providing for the material needs of members who actually can’t provide for life’s necessities? Or maybe I wasn’t really shocked when I found that the breadth of the necessities that could be reimbursed were far greater than any bishops’ storehouse would allow. Perhaps for some people modest birthday gifts, vacations to visit family, and college tuition for multiple children are necessities while other people just need a can of Deseret Industries stewed beef.

    Yes, there may be a reasonable legal explanation for how the church can justify the tax advice it gives to mission presidents. I seem to recall Elder oaks talking about how our standards are not the world’s in last conference. Does that only apply to romantic and not financial interests? Could a mission president echo Alma, “I have never received so much as even one senine”?

  20. JD_Dancer says:

    As a lawyer/CPA who very recently left tax practice after many wonderful, fascinating years in the profession, this post fills me with happy nostalgia. You should talk tax, revenue rulings, and the IRC far more often, Sam. And I see that you do, on your tax blog. That discovery might even be my favorite part of this post. Thanks for this.

  21. Yes, there may be a reasonable legal explanation for how the church can justify the tax advice it gives to mission presidents

    And, in fact, there is, as I laid out pretty extensively in the OP. There is no higher law of US federal income taxation of which I’m aware, which suggests to me that mission presidents should get tax advice as to how the tax law is, not how we think it maybe ought to be.

    Are most mission presidents rich? I don’t frankly know; I’ve known like four or five in my life (including my two presidents). I suspect that they often are—most of us, even if our finances are taken care of, can’t reasonably expect to take three years off and then get our jobs back. But I’ve known mission presidents who were not wealthy, too. And our anecdotal knowledge doesn’t really mean a lot: four mission presidents out of however many there’ve been over the last 20 years is a pretty small percentage.

  22. Still wondering says:

    It seems that besides not paying tithing, the main concern is what are reasonable living expenses. Rent, utilities, food? Sure. Clothes (not uniforms), entertainment (“family activities”), and Christmas/birthday/anniversary gifts? Not so clear. But since we’re comparing them to missionaries, we could ask why missionaries aren’t getting those things? Are they not reasonably necessary living expenses?

  23. wreddyornot says:

    Thanks, Sam. This post is kind of nostalgic for me. Especially at Halloween. Ben Franklin introduced the Grim Reaper into taxation with his *…nothing can be said to be certain, except death and taxes.” I worked for the *dreaded* IRS as an Appeals Officer for around 35 years (around 30 years in the appealing position). An Appeals Officer, however, is viewed in-house, unofficially, by those terrible tax auditors and revolting revenue agents as a kind of a Santa Claus (over against their own grim reaping), compromising away their hard-won additional tax proposals because of errors they have made and/or due to doubts as to the conclusion of facts or of law if their cases were litigated. I have to admit to having seen in my years a few cases, both of mine and of colleagues, involving a few mission presidents.

  24. Wondering, stop for a minute, breathe, and think about it. Everything the missionaries buy on their missions (unless they bring their own money) is reimbursed to them (albeit sometimes in advance). That is, if the missionary, e.g., buys a new shirt out of his monthly allowance, in essense, the church has reimbursed him for that amount. Ditto entertainment, to the extent it’s permitted to missionaries (e.g., we’d pay $5 occassionally to go up into the tallest building in Sao Paulo; that money, iirc, came from my monthly allowance).

    Or maybe you’re asking why missionaries are generally treated differently than mission presidents. I assume you’re not asking that, but just in case: because missionaries are functioning in a different role, and have different duties and opportunities, than mission presidents. Just because they’re both missionaries for the revenue ruling’s purposes, doesn’t mean they’re identically situated.

  25. Daniel Smith says:

    If I were actually advising somebody on whether or not reimbursements represent taxable income to them, my research and analysis would be far more thorough, and I wouldn’t start the research assuming the reimbursements weren’t taxable. Rather, I’d see where the law took me

    I’m not sure how you can now claim the OP is an extensive review of the governing laws when you yourself acknowledge it is essentially a tax apologia and it ignores the possibility that there may be other laws that effectively disallow your explanation. I don’t take issue with your explanation it is reasonable for the amount of research appropriate to short blog post.

    I do take issue that you questioned the intelligence of anyone who was shocked to discover the wide range of reimbursements mission presidents receive. I am well aware there is no “higher law” of US federal income taxation. I did not insinuate that there was. There is also no higher law of marriage in the US, and yet the church feels quite comfortable insisting that scriptural standards are more stringent, and is even willing to spend a great deal of money to try impose those standards on civil society. I did allude to a scriptural standard that reimbursement of mission presidents may violate. If mission presidents in need of assistance received it in the same manner as any other member, they wouldn’t be in a position of using tax law in a manner that offends so many members that mission presidents are advised to not discuss it with anyone.

  26. Thanks wreddyornot; I’m sure you can’t share your stories, but I’ll at least dream of what they might be . . .

  27. Coffinberry says:

    Sam, just wanted to clarify…. my son is currently on a mission here in the States, and he was instructed to have at least $250 of his own money accessible at all times for bike repair, clothing purchases, transfer errors, and other emergencies, etc. I don’t think there’s any reimbursing of this.

  28. Daniel Smith says:

    The instructions to have personal funds available for personal expenses and emergencies have been around for decades. Your examples of clothing and entertainment are thing that are specifically not reimbursable for a missionary.

  29. Daniel,
    My computer died just before I hit post, probably saving me from an impolitic response. Instead, let me respond like this:

    My analysis of the tax law is accurate. If you think I’m wrong, please feel free to do the research yourself, but my disclaimer basically was meant to signal that this was blog-level research and analysis, not tax opinion-level. (I’m good at what I do, meaning my blog-level analysis is going to be right, just not the kind of thing I’d write for a client.)

    I disagree with you that Alma has any relevance to the discussion of mission presidents, but it’s outside the scope of the post. (Though it’s worth noting that the church has had paid positions essentially since its beginnings, though a mission president, being reimbursed, not paid, probably ends up not a dollar richer.)

    And this is not a normative piece; this is purely descriptive of the tax law as it exists and as it applies to missionaries and mission presidents.

  30. And Coffinberry, I can’t speak to that. IIRC, we were told on my mission not to have any (substantial, at least) personal funds. But it’s been two decades, so I can’t say for sure.

  31. Coffinberry, he could reimburse himself for those expenses out of what the mission gives him each month. It just may be hard for them to build up much of a reserve early on. That said, I think a lot of clothing, bike, etc expenses do tend to come out of personal funds. They did for me anyway. In Finland we had enough for food and incidental purchases, and travel expenses like bus tickets were reimbursed, but that was about it.

    I’m not at all shocked about mission presidents being supported differently. Especially when they have dependent children with them on the mission. Single elders and sisters rarely have any serious responsibilities outside themselves and their calling. MPs have relationships with and obligations to spouses and children to maintain, perhaps financial obligations at home, and need to be prepared to go back to supporting themselves afterwards. You can ask an individual to take a vow of poverty, but forcing teenage kids into the life of single elders and sisters for three years would be a recipe for disaster. Unless you want to push the median age of MPs even higher.

  32. This is quite interesting, Sam. Thanks.

    “I am well aware there is no “higher law” of US federal income taxation.”

    Yeah, scripture says render unto Caesar that which is Caesar’s, not render unto Caesar that which makes Daniel Smith (or any other random church member) comfortable.

    About missionary reimbursements, my monthly allowance back in the mid-90s was enough to cover food and incidental expenses, including bike repair, replacement clothing and shoes, entertainment (such as it was), some modest souvenirs, etc., and I returned a significant sum of money to the mission at the end of my mission. However, other missionaries burned through their allowance and tapped personal funds on a regular basis. We were told to bring travel checks for emergencies; I think $200 or $250 worth.

    I don’t think either of my mission presidents was wealthy and I believe they both sacrificed greatly to serve. My daughter’s mission president is a religion professor at a church school, so I assume he will have no problem returning to his employment after the three years.

  33. Many mission presidents have a home and expenses and obligations at home that the church doesn’t ask them to sacrifice. For instance, they are not required to sell their homes before leaving, which means mortgage and utilities and taxes need to be paid. You can get renters, but that doesn’t always work out perfectly.
    By having a mission home for them to live in, it means each mission president doesn’t have to find accomodations that fit their own budget and everyone knows where it is and the church has chosen a reasonably safe, convenient place for the family to live.
    My friend who has a husband who travels for work gets a “stipend” for the extra living expenses. They often go live in another state for a few months while he works on a project. They still have their home state expenses, but in addition they have a nontaxable stipend to spend on the rent and utilities of the new place while they are there.
    Seems reasonable to not tax it as income.

  34. Daniel Smith says:

    When Alma is confronted by Korihor, an acknowledged antichrist, with the accusation that he teaches the doctrine of Christ to get gain, Alma can responds that he had never received the smallest denomination of compensation and that he had supported himself. If random members of the church are no longer deserving of the respect extended an antichrist, fellowship has come to mean very little.

  35. Daniel–which way do you want it? Do you want only very rich mission presidents who can afford to support themselves for three years? Or do you want the church to give them a living allowance? Choose only one.

  36. Also consider the possibility that supporting oneself in a pre-industrial Book of Mormon economy might have been a little different proposition than supporting oneself most places in the developed/developing world ca. 2014.

  37. I can barely begin to say how much I love these tax posts, Sam. Keep ’em coming!

  38. Another anecdotal point. I had two mission presidents. One was independently wealthy, the other was a veteran of CES. Which means: not wealthy. He had actually sold his home right before he left.

  39. My brother in law is a MP and he has no job waiting for him. My wife’s uncle served as MP 35 years ago and was from a town of about 2,500 way out in the mission field. He was part of a family business that stayed afloat while he was gone, but he definitely wasn’t — and still isn’t — wealthy. In fact, still working at 80.

  40. Kevin Barney says:

    I too love your tax posts. Thanks for this, I found it very interesting.

  41. Left Field says:

    How is it exactly, that missionaries get funds these days? Back in my day, the cost was I think $200/month (though it increased during my mission). The mission office rented all the apartments, equalized the costs, and missionaries paid some set amount (maybe $125) to the mission to cover our rent. The remainder went towards groceries, etc. At first, my parents just sent me a $200 check, but after a few months, I arranged for them to send a rent check directly to the mission office, and the rest to me. If I needed more money, I had to negotiate with my parents, and if the rent went up, they just had to send a bigger check to the office.

  42. @Left missionaries, or more accurately their parents, pay the monthly missionary support amount in their regular donation envelopes to the bishop. Each month the church withdraws that amount for each missionary from that ward and it goes into a general fund for missionaries. Part of that amount, and it depends on the mission, is deposited onto a Bank of America debit card that the missionary uses to pay for groceries, transportation, and other things. The money in that fund is also allotted to the missions themselves to pay the rent and utilities and other expenses. They do this for the rent and utilities because usually those require a lease agreements, and the leases are signed by the mission financial or housing secretary.

  43. Some perhaps relevant historical perspective:

    Mission presidents have been allowed family maintenance since at least 1902 — probably earlier, but that is as early as I have evidence in my research. In the early part of the 20th century, mission presidents retained the tithing paid within their missions, using it according to guidelines furnished by the Church, to pay for things like hall rent, purchase and maintenance of Church properties (including mission homes), medical care and return fares of missionaries, and mission president support. Unused money was forwarded to Salt Lake; in missions where tithing was not high enough to meet expenses, the difference was made up from Salt Lake. Accounting procedures were elaborate, and reviewed and approved (or disapproved) from Salt Lake — people shouldn’t get the idea that tithing funds were disbursed according to mission president whims. Every penny was accounted for, and heaven help the mission clerk who ended something in the wrong fund (mission charity entered as mission expense, for instance) — he most definitely heard about his error from Salt Lake.

    In 1932 procedures were changed: all tithing was forwarded to Salt Lake, and Salt Lake returned funds as needed by the missions, including a set amount for mission president allowance. Allowances were not uniform — a man with a large family in an expensive area where the only schooling available was in private schools received more than a man with only a wife in a less expensive area. Mission presidents were frequently reminded that the maintenance was sent to meet actual expenses and was not to be thought of in any way as a salary.

    In the early 1940s, and again in 1946, procedures changed when tax law changed — for a short time (two or three months), taxes were withheld from mission president allowances, until the Church received confirmation from the IRS that such allowances were not regarded as income. Amounts withheld for that short period were immediately reimbursed to the mission presidents. (The question in 1946 regarded Social Security tax withholding; as with income tax, the government ruled that mission president allowances were not subject to those taxes.)

    There have been some other tax questions — such as a time in the ’30s when Switzerland tried to tax the funds sent by American parents to their missionary sons there (that one was settled by negotiations between the federal governments of Switzerland and the US, and the elders’ funds were not taxed) — which would indicate that throughout that time (my research ends at about 1950), maintenance of mission presidents and their families, as well as of missionaries, was not taxed as income.

    I have no idea of anything past about 1950.

  44. Daniel Smith says:

    Kristine,
    So the only options are:

    Some mission presidents need help covering all their expenses so all mission presidents should be reimbursed for all of those expense.

    or

    Some mission president don’t need help covering their expenses so no mission president should be reimbursed for any of those expenses.

    Why can’t we just reimburse the mission presidents who need help and allow those who don’t to pay their own way? That’s how other church welfare programs are administered. Why should this be different?

  45. Left Field says:

    Brian, does Salt Lake deduct a set amount from the ward’s account each month regardless of whether or how much the parents pay in?

  46. Left, when I was a ward clerk, we had a missionary who was mistakenly sent out from our ward, and we were charged her missionary support funds even though we didn’t have any money in there. So, the funds are deducted automatically, and it took some doing to get it all straightened out. Basically the other ward reimbursed our ward for those funds. Also, when I was on my mission somebody in the ward donated money for my mission, and my parents didn’t have to put any in for a few months.

  47. Ardis,

    Those historical details are really interesting. I had no idea that tithing flowed through mission presidents in the past. Knowing the trouble that mission finances caused on my mission I can only imagine what might have happened had we had access to a far larger sum…

  48. Curt Carmack says:

    Lots of interesting stuff here. One point not fleshed out is that housing allowances and vehicles are often provided to employees of firms that assign them to work in locations far from home. These things are provided for the convenience of the employer and thee allowances are not generally taxed in the US, though they are in some countries. Mission presidents are no different in that sense for tax purposes, even though they don’t meet the definition of employees in most countries (they do in some countries). Also, the Church does in fact recommend that mission presidents get their own tax advice if they think they might need it, and even will provide advice on local tax implications in the jurisdiction where called to serve. (In some countries, for example, the living allowances received by foreign mission presidents are taxable in that country.) There is a lot more to the advice given than meets the eye here. It’s just not talked about.
    Daniel makes some interesting points, but in fairness they should properly be seen as applying equally to young missionaries and also to general authorities. To be clear, many young missionaries and their families donate at least as much as they “consume,” and some much more. There are also plenty of mission presidents and general authorities who don’t ask for reimbursements, and plenty who donate far more, even while serving, than they receive. Finally, there is a fairly significant difference between Alma and most mission presidents that was alluded to earlier but could be explained just a bit more. Alma started out employed as the chief judge. Mission presidents are not allowed any outside employment, and there certainly isn’t any time for it anyway. In many respects, our days are a little different. Paul was able to stop and work along the way, and also received help from those whom he taught. Even Christ said in Luke 22 that going without purse or scrip was no longer what was expected. When we are called, we do what we are asked, and if help is offered, we can either take it or leave it, depending on our needs. The Church does not force anyone to take its money, and in fact seeks diligently to provide only for basic needs of a mission president and his family.
    As someone who quit his job to serve, I can vouch for those who point out that being a mission president is an endeavor undertaken out of love for the Lord. The living allowances referred to are very modest indeed, though I think that most of us would find a way to finance the expenses even if no help were offered at all. We all agreed to live the law of consecration, after all.

  49. Then it might be worth noting, John, before anybody asks, that in all that time, in all the missions I’ve looked at, I haven’t seen a single instance of pilfering or other dishonesty — and I’m sure, given the scoldings I’ve seen about entering something in column A when it belonged in column B, there would have been some record of questioning, investigating, and dealing with any dishonesty that the accounts in Salt Lake detected. There are plenty of instances of minor errors, and some instances of overspending in the case, say, a mission president spending more on building a chapel than he was authorized to do, and at least once when a mission’s books got so tangled through incompetence that a professional had to be brought in to straighten things out. But not a single case of which I’m aware when a president or his secretary or financial clerk pocketed money or used it improperly to benefit himself.

  50. We had some minor scandals that were for the most part confined to the office. I’ll leave it at that.

  51. Very interesting, Sam. Thanks for this.

    Daniel, we don’t use tithing funds the same way as they did in Old Testament times for a reason: It would be stupid. This is no different. You’re not comparing apples and oranges; you’re comparing apples and pocket wrenches.

  52. Still wondering says:

    Curt Carmack, thank you. Your comment was very helpful.

  53. As a former expat, I have to throw in my two cents’ worth that these types of reimbursements and coverage for cost of living differences (I assume that’s why certain things are covered) are simply a necessity to move people around internationally without materially damaging their financial interest.

    When I went to Singapore 3 1/2 years ago, tuition to send my kids to school was about S$26K per year per kid. Tuition was covered. Uniforms (mandatory) and school bus costs (mandatory) were not. There was no option for a free public school education, and this was the only school with an American curriculum so my high schoolers would not lose credits. The apartment we lived in was paid for by my company as was one vehicle (here in the US we have 4 cars), at a cost of roughly $2K per month, every month we lived there. The apartment was much smaller than our house in the US (which we rented out for slightly less than our mortgage cost), but cost about 6 times as much monthly. Because groceries, gas, and other living expenses cost so much more we also got a quarterly lump sum. A package of bacon cost S$16.

    Living abroad entails inconveniences and expenses for a family that have nothing to do with your reasons for being there. These kinds of stipends simply make it possible to live abroad without it being punitive. I’m positive I made mine a lucrative deal because they also assumed we eat a lot of meat and drink alcohol, both of which are very expensive there, neither of which were a big expense for us personally.

  54. Interesting post, Sam!

    I recall my mission president (early 40’s with kids in tow) was happy one morning while reading the paper. The U.S. dollar had strengthened, and he commented that this meant extra money in his monthly allowance.

  55. “Why can’t we just reimburse the mission presidents who need help and allow those who don’t to pay their own way? That’s how other church welfare programs are administered. Why should this be different?”

    Because it’s not church welfare. You imply that only reimbursing mission presidents who need the help would be more consistent with other church practices. This is not exactly correct. For all callings (not just mission presidents), all church members are reimbursed for certain expenses incurred while carrying out the duties of their callings, not just the ones who are less fortunate, financially. The church doesn’t tell the wealthy YM president to eat the expense of driving the boys hundreds of miles to scout camp, while reimbursing the poorer YM president who does the same thing.

  56. Daniel Smith says:

    I haven’t encountered many people that are upset mission presidents don’t pay to conduct mission business out of their own pocket. The shock comes with list of other things that can be reimbursed. I would never dream of trying to get the cost of a birthday present for my wife reimbursed because I happen to drive the boys to scout camp that month. I’m never going to submit receipts for airfare to a family reunion because I also catered a ward social. The list of things that can be reimbursed includes a great many things that have nothing to do with the execution of mission business. They do make life more comfortable for mission presidents and their families. Of the categories that occur on a donations slip, welfare is the only one that could conceivably be used to cover these expenses and even that is a stretch.

    Just so there isn’t any more confusion about where I stand, I have no problem with mission business being financed with tithing and church missionary funds. I have no problem with anyone in need receiving welfare assistance to feed, clothe, or house themselves and their family. I do have a problem with the way that “need” has expanded for a small group of members while it contracts for everyone else.

  57. Daniel, complaints about specific reimbursement policies are a) fruitless, since most of us don’t have access to those policies, b) rude, and c) a complete threadjack. Please stop.

  58. Curt Carmack says:

    Daniel, to suggest that airfare for a trip to a family reunion is reimbursable only shows that you do not know what the policy is. Expenses of those kinds are most definitely not reimbursable. Neither are gifts for spouses reimbursable.

  59. Curt Carmack says:

    And to be clear, I would not expect Daniel to know what the policy is. It is absolutely true that the church does not publish details of these policies. I can’t say I understand all of the reasons for that, but I respect the decision and abide by it.

  60. Deleted because we prefer to avoid the legal difficulties attendant to linking to illegal downloads of copyrighted material. –Admin.

  61. President Carmack, thank you for your insightful views. We’re so grateful to have known you and count you among the small handful (four?) of mission presidents we have known personally. We’re also grateful for your service.

    Great post! If I had taken a tax class my freshman year at BYU I might have ended up as an accountant instead of a statistician.

    My own mission president was a CES director and certainly not wealthy. He is a Brazilian who had a profound positive impact in the lives of all he served.

  62. Curt Carmack says:

    Erin, we certainly miss you and your family here. I actually enjoyed my tax class in law school as much or more than any other specific subject-matter class. I had a great professor.

    I’ve known quite a few mission presidents who were far from wealthy. In fact, the significant majority of those I’ve known were solidly in the middle class or maybe just slightly above it. I’m very glad we have a great variety of people serving — from almost all socio-economic classes, and from any races and cultural backgrounds. I think that trend will only increase over time.

    I had two mission presidents myself, both of whom were middle-class, independent, hard-working people. Both ended up serving as temple presidents later. I owe a great deal to each of them and their wives — they all had a profound impact on me.

  63. So for example if a missionary is paying $400 a month to the mission fund, and receiving $100 a month in “allowance” in a less expensive country, can he deduct the $300/month difference? Most of the time he wouldn’t have any need for deductions while on a mission, but could it be carried forward to later years when he had income?