Friday, August 30, 2013

Coming soon? Atheist ministers of the gospel and their very own housing allowance

I do not know of an ordained Southern Baptist minister, pastor, teacher, evangelist, or denominational worker who does not take full advantage of our Sacred Clergy Tax Break, the Minister's Housing Allowance, provided by our wonderful government for the regular benefit of "ministers of the gospel".

The housing allowance allows SBC and other clergy to exclude money spent on their housing. If the minister owns a home he can exclude mortgage, taxes, insurance, and stuff spent on the home (the hot tub he installed on his deck to dissipate all that bad old stress he gets from pastoring a church). It is really a pretty nice tax loophole, since he can turn it into a double tax break by using mortgage interest already part of income exclusion as an itemized deduction.

Most of us consider the housing allowance as our birthright, although I have wondered if any of my colleagues have honest conversations with church members about it: How do you explain your government tax break, the clergy housing allowance?

But what the government giveth, the government can taketh away.

The Freedom From Religion Foundation has a lawsuit going in which they argue that it is a violation of the constitution for only "ministers of the gospel" to receive the housing allowance. In an interesting development the government's defense is in part to assert that the FFRF staff who brought the lawsuit and who seek a housing allowance despite not being ministers of the gospel, might actually qualify to receive it...even though they are atheists. 

Ah, got it, atheist ministers of the gospel. 

Oh, the lengths to which we must go to defend our sacred tax loophole.

Peter J. Reilly, my CPA blogging buddy and Civil War afficionado (albeit on the wrong side, forgivable since he didn't choose to have Yankee ancestors), has actually read the documents and gives a much fuller explanation of the whole absurdity in his blog, Government lawyers advocate for atheism as a religion.
The litigation between the Freedom From Religion Foundation and the United States over the parsonage exclusion has taken an odd turn.  The Government is trying to convince a couple of atheists who get housing allowances from  FFRF that maybe they might qualify as “ministers of the gospel”.
What started out almost a century ago as a law that allowed ministers of the gospel who lived in pastoriums to have the same tax status as others who lived in employer housing has morphed into a monstrosity with some million dollar ministers living in mansions and excluding hundreds of thousands of dollars from being subject to income taxes. Ordinary Americans get a W-2 that lists their wages. Ministers don't have to report their housing allowance at all - no W-2 income for that.

But no one says tax laws have to make sense.

For the vast majority of us this is a very modest tax break, couple of thousand dollars in taxes saved, and I rather like it and would like to keep it. I would have no objection to the housing allowance having a cap, say, no more that $100,000 or so in income may be excluded, or even means testing it. That would sanitize it against the small fraction of extremely wealthy clergy getting tax loopholes.

But does anyone blame the FFRF for suing to get the same privilege as ministers of the gospel? Little did they know that government lawyers would be arguing that our atheist FFRF friends could be considered ministers of the gospel, just like us.

No one can make this stuff up.

So, to what lengths will we go to preserve our Sacred Clergy Tax break? Perhaps GuideStone, our SBC Ethics and Religious Liberty Commission, and convention attorney will file a friend-of-the-court brief in support of that.


RLBaty said...

It's interesting that in the first such suit, which was later dismissed by mutual agreement in order to allow the FFRF to redesign its litigation strategy, the Pacific Justice Institute (PJI) filed to interview within a week of the Complaint being filed and that on behalf of 100 ministers.

Now, the current suit has been around for quite some time and no individual or group has come forward to intervene and help the Government defend IRC 107.

Very interesting, especially in light of the PJI pledge to do so.

Where are they?

In any case, the motions for summary judgment are in and the briefs have been filed.

Judge Barbara Crabb could make a ruling any day now striking down IRC 107. If neither motion is granted, the case is still scheduled for trial in January 2013.

William Thornton said...

January 2013...I missed it. 2014 you mean.

It should be interesting.

RLBaty said...

Thanks for the save.

January 2014 it is, if a trial becomes necessary and it is not delayed.

Peter Reilly CPA said...

Some minor quibbles. FFRF is not asking for exclusion for their housing allowances. It is the government that is making the argument.

I have not now nor have ever been the descendent of Yankees, although thanks to their DAR descended mother my kids are.

Private Patrick Lyons, Fifer, Company K 22nd New Jersey my sole Late Unpleasantness ancestor was a famine refugee from the Emerald Isle.

Also as I kept telling my covivant during our Gettysburg stay which was pretty close to real time, my knowledge and obsession with the period is very moderate.

William Thornton said...

Actually, we do often chose our ancestors when looking for Civil War vets. The migration pattern for my crowd was MA to SC to GA for one line and relatively recently, ME to MS to GA. If I looked hard enough I'm sure I could find Union Army vets who were my relatives.

But why make it messy? I'll just not research those lines.

Have a nice holiday.