The IRS decides if a taxpayer is a minister for tax purposes in two ways: 

Wingo test: 

(1) Is the person licensed, commissioned, or ordained? (2) Does the person perform sacerdotal functions? (3) Does the person conduct religious worship?, and (4) Does the person maintain and control a religious organization?

The Knight test is the other way, but not as commonly used as the Wingo test by the IRS.  In this test, the questions are weighted:

(1) Is the person licensed, commissioned, or ordained? (2) Does the person perform religious worship?  (3) Does the person administer the sacraments? (4) Does the person have management responsibilities in the church or denomination? (5) Is the person considered to be a religious leader?

A church cannot pay FICA for a minister (as defined above). By law, ministers are always treated as self-employed for Social Security purposes and therefore subject to SECA for their ministerial earnings. Churches that pay FICA for their ministers are not doing them a favor; they are violating the law. Additionally, when churches report FICA for their ministers, they can mess up the Social Security Administration's records, which could lead to incorrect retirement income calculations when the minister begins drawing income.

For more information, visit the Ministers' Tax Guide