On Nov. 22, a judge of the US District Court for the Western District
of Wisconsin ruled that the housing allowance that is made available to
clergy by the Internal Revenue Service (IRS) is unconstitutional. The
decision has no immediate impact because it is not yet effective, and
the ruling is on hold until all appeals are exhausted.
The Ministry Office provides a link to information on the ruling at www.brethren.org/ministryoffice. This update from Church Law and Tax and “Christianity Today,” notes
this section of the federal tax code “exempts from federal income
taxation that portion of a minister's compensation that is designated in
advance by an employing church as a housing allowance to the extent
that it is used for housing expenses and does not exceed the home's fair
rental value.... The parsonage exclusion remains intact, at least for
now.”
Brethren Benefit Trust (BBT) president Nevin Dulabaum attended the
Church Alliance meeting this week in Baltimore, Md., where a
subcommittee drafted a plan to file an amicus brief appealing the
ruling. The Church Alliance is an advocacy group of 38 church benefit
programs representing more than 1 million clergy, lay workers, and their
family members. Through BBT’s membership, the Church of the Brethren
will be a part of the amicus brief, Dulabaum said.
BBT staff are feeling urgency to be proactive in this matter, in
order to aid Church of the Brethren ministers who have heard the news
and are wondering what is next and whether it impacts them, Dulabaum
said. This is important to BBT as it designates several payments as
housing allowance, giving recipients a tax advantage. Those payments
include annuity payments for retirees, Church Workers' Assistance Plan
grants for retirees, and long-term disability payments for active
pension plan members.
The court ruling is expected to be appealed to the 7th US Circuit
Court in Chicago. If it is upheld by that court, the case is then
expected to be appealed to the Supreme Court. It could be several years
before a final decision is rendered. Until that time, the housing
allowance tax benefit will continue to be available to clergy.
For questions about the amicus brief contact BBT president Nevin Dulabaum at ndulabaum@cobbt.org
or 800-746-1505 ext. 388. For general questions about the clergy
housing allowance contact Mary Jo Flory-Steury, executive director of
the Ministry Office and associate general secretary, officeofministry@brethren.org or 800-323-8039.
-- BBT communications staff Brian Solem contributed to this report.
Source: 12/7/2013 Newsline
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