BREAKING NEWS: Friday, November 22, 2013, U.S. District Judge Barbara Crabb in Wisconsin ruled that the “clergy housing allowance” portion of the Internal Revenue Code(IRC-107(2)) is unconstitutional. This ruling could have a enormous impact on clergy around the country. According to a 2002 statement by former U.S. Rep. Jim Ramstad (MN-R), the clergy housing allowance exclusion saves clergy around the country 2.3 billion in taxes between 2002-2007. For clergy living in a church owned parsonage, the exclusion of the FRV of the parsonage(IRC 107(1)) was ruled constitutional. With so many clergy around the country being affected by this decision, it is likely that the case will proceed to the 7th U.S. Circuit Court of Appeals in Chicago. UPDATE (9:35am 11/25/13): Even though the ruling has been issued by U.S. District Judge Barbara Crabb, it has been stayed until the case has exhausted the appeals process. For the time being, the ruling does not have an impact on clergy housing allowance. However, if the case ruling stands during the subsequent appeals, the benefit of clergy housing allowance may be altered or discontinued. UPDATE (2:41pm 11/25/13): Unless the case is taken to the Supreme Court, this case will not affect clergy across the country. If the Seventh Circuit Court of Appeals takes the case and affirms the ruling, clergy in the states of Wisconsin, Indiana and Illinois would be at risk of losing the housing allowance exclusion. Stay tuned to the Clergy Tax Law Blog for more information on this developing story. Clergy Financial Resources https://www.clergyfinancial.com Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.< Back
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101