Litigation related to a tax exemption given to some clergy.

[Gregory Matthews]

 

http://www.adventistreview.org/world-news/%E2%80%8Bpastor%E2%80%99s-housing-allowance-weighed-by-appeals-court

[Gregory Matthews]

For the story, see the article at the web site listed in the above post.

 

Briefly:  A Federal District court juddge has ruled that an IRS Tax Exemption for the housing expenses of some clergy is a violaiton of the 1st Ammendment to the Federal Constituiton.

 

The appeal of that ruling was heard on September 9 at the 7th Federal Appealate Court.  The SDA Chruch, along with several other religious organizations asks that the Appealate court overturn the decision of the District Court.

 

It should be noted that under the IRS rulings, the housing exemption was limited to some closely defined clergy and it was not available to all clergy.  For the past 40 years, i have not been allowed to take that housing exemption, although I am ordained clergy and I have clearly been working in a clergy/religious role.

 

The appellants are asking that the Federal court overturn the District Court ruling that the exemption violated the 1st Ammendment.    I, personally have mixed feeling about this.  On the one hand, I do believe that the appellants may be correct that the exemption does not violate the Constution.  But, on the other hand, I question the retional behind the exemption, in the present day.  IOW, I think that there may have been a rational reason   in an earlier time that does not exist today.

 

Actually, there are clearly defined situaitons in which an employer today may provide a worker with housing and that benefit is not taxed, it is exempt.  I will suggest that it  might be fairer for clergy to be placed on the same standards.  To me, that would be fair to all and clergy would not have an advantage over other employees.

 

While one might say that this is a religious liberty issue simply because it is an issue that affects churches and clergy, I have reservations as to it being a central religious liberty issue.

[pierrepaul]

Historically it was argued that the power to tax entailed the power to destroy. For example, if Congress were to enact a 100% tax on clergymen's income and a 100% property tax on church's real estate holdings, the church would be effectively destroyed. The solution was to exempt the church and churchmen from tax.

 

Of course, when judging legislative measures, courts don't blindly accept the government's characterization of the measure. In this hypothetical example, a court would have no problem ruling that such a measure was not a tax authorized under the 16th amendment but rather was in substance an attack on free exercise of religion.

 

On the other hand, subjecting churches, religious bodies and clergymen to tax on the same basis as every other citizen would not IMO be considered to be a violation of free exercise, since we have the experience of a century of businesses and organizations throughout the land thriving despite the federal income tax.

[rudywoofs (Pam)]

I'm of the opinion that if clergy own their own homes, i.e., homes not under the umbrella of a church, there should not be a tax exemption..

 

(I'd be interested in knowing if the current tax exemption for housing continues for those who are retired ...  )

[Gregory Matthews]

Pam:  The issue is a bit more complex than how it is commonly stated.

 

The housing exemption only applies to some clergy persons, not all.  E.G.  I have not been allowed to take the clergy housing exemption in my last 40 years of clergy service.  However, during 18 years of that time I met the housing exemption under other provisions of the law.  The rest of the time, I did not meet any provision of the law for a housing exemption.

 

You see the so-called clergy exemption comes only under one provision of a law which limits it applicability to some, but not all, clergy.  There are other provisions of the law that provide a housing exemption for people who meet their standards.  Clergy are not the only people who may have a housing exemption.

 

As to your question:  I believe that some retired clergy would be able to take a housing exemption, but I believe that many retired clergy would not be able to take such.  However, I am not a clear on this aspect as I am on what I said previously.  So, I could be wrong on this.

[Gregory Matthews]

The Appealate Court has spoken:

 

http://www.adventistreview.org/church-news/adventist-church-applauds-u.s.-ruling-on-%E2%80%98parsonage-allowance%E2%80%99

 

The decision of this Court was a technical one and did not decide the question on its merits.  It simply ruled that the plaintiffs did not have standing to litigate the quesition and therefore dismissed the case.

 

I will remind you that this issue is limited and does not automaticly apply to all clergy.  E.G.  It does not apply to me, and it has not applied to me for many years.  For further comments on this see Post l# 2 in this thread.

[phkrause]

Not sure if this is related, but thought it was similiar

 

7^th Circuit Rules Challengers to Ministerial Housing Exemption Lacked Standing

http://religiousliberty.tv/7th-circuit-rules-challengers-to-ministerial-housing-exemption-lacked-standing.html

[Tom Wetmore]

Yes, that's the same case.