Kentucky Ministers Lose Occupational Tax Exemption

Under pressure from a lawsuit and new state legislation, officials in a Kentucky county have agreed to stop extending an occupational tax break to ministers.

Boone County Judge Executive Gary Moore said in December that clergy would lose their exemption from payroll taxes. Moore told The Cincinnati Inquirer that he did not want to rescind the tax break, but would do so on the advice of a county attorney.

“I would not normally vote for this,” Moore told the newspaper. He said the county had to comply with state law, “as much as I disagree with it.”

Since 2000, Boone County ministers have not paid payroll taxes. But a lawsuit was lodged by Edwin Kagin, a Union resident, who argued that the tax break violated the Kentucky Constitution.

In 2006, a Kentucky law took effect that states, “Ministers of religion shall be subject to the same license fees imposed on others in the county on salaries, wages, commissions, and other compensation earned for work done and services performed or rendered.”

Because Boone County has agreed to impose the tax on ministers, the Inquirer reported that Kagin’s lawsuit was likely to be dismissed.

The newspaper also noted that Campbell County is still granting the tax break to its ministers. The county’s occupational tax manager, Linda Eads, told the newspaper that she was aware of the state law but that county officials “decided nobody is going to sue us to make us tax them.”