Tuesday, November 26, 2013

Alas, our Sacred Clergy Tax Break declared unconstitutional

Is it unfair to say that few things get the attention of clergy quicker than pocketbook issues?

Thus, the decision handed down Friday by U. S. District Judge Barbara Crabb has riveted the attention of my Southern Baptist colleagues along with most every group who has been a beneficiary of the tax break we call the clergy housing allowance.

My interest in the housing allowance goes back several decades, since I have always used it to exclude a portion of my income from the churches I have pastored but my focus on the intricacies, history, and abuses of it are only a few years old. I heard the clear notes of a trumpet calling me to look closely at it. I credit my CPA blogging friend, Peter Reilly, for alerting me to most of the stuff happening with the housing allowance.

So, here we are with the housing allowance being ruled unconstitutional when paid in cash to a minister. Those clergy living in pastoriums weren't affected by the decision.

The reactions have been interesting.

Southern Baptists have two main entities that concern themselves with the allowance, our annuity board, GuideStone Financial Services and our lobbying arm, the Ethics and Religious Liberty Commission. The former provides clergy and churches with counsel on how to manage the allowance so as to keep the IRS happy and the latter is supposed to be a watchdog over our interests.

I get the feeling that both GuideStone and the ERLC were caught flatfooted by this decision. The two CEOs of the entities issued a joint statement and GS head, O. S. Hawkins even stated that the decision was "not unanticipated." I suppose that such anticipation was expressed around the water cooler in GuideStone's executive suite because nothing was said about it before the decision was handed down. I expect both entities to sharpen their focus now. It is incidental but both entity leaders are among the higher paid SBC clergy and likely exclude nice sums from their income tax through the housing allowance.

Naturally, the Freedom From Religion Foundation, Inc., plaintiff in the lawsuit is elated with the decision.
“May we say hallelujah!" sayeth the FFRF.
"Hallelujah" translates to "praise the Lord" so I am gratified that our fellow citizens at the FFRF aren't completely free from religion. Although, we hate to have our sacred tax break ox gored by the FFRF, those associated whom I have exchanged comments with have always been perspicacious, cordial and not unkind. Some Baptists commenters might take a lesson.

Judging from comments among the brethren, a good many Southern Baptist ministers believe that a Masters of Divinity degree conveys on them the ability to be an expert in constitutional law; hence, numerous pronouncements about rogue judges and what an establishment of religion really is. Let's be honest, this is a prickly issue with many components, precedents, and facets. While I disagree with the judge here, I cannot say flatly that any appeal is a slam dunk in our favor. We will see.

No reasonable, thinking Southern Baptist minister can avoid one conclusion in all this: the manner in which our housing allowance has been used borders on clergy malpractice. A growing subset of ministers who are very highly paid and who live in multi-million dollar mansions are able to exclude hundreds of thousands of dollars from income taxation. While this is perfectly legal, I would expect that most of us would think it to be bad policy for both government tax law and for maintaining clergy goodwill in the community. Do we really think it fair to shift taxes from wealthy clergy living in mansions to the less highly compensated? Surely not. Add to that the practice of churches ordaining ministry associates in administrative or peripheral church jobs solely so that they can be qualified for the housing allowance.

Not helpful, brethren. An overseer is required to be above reproach and have a good reputation in the community. Let's not forget that.

I wrote over two years ago,
Augie Boto, Frank Page, the SBC Executive Committee and our favorite SBC lobbyist, Richard Land, ought to be proactive on this matter and find a way to support legislation that will preserve the Housing Allowance in a reasonable fashion while excluding the ridiculous abuses, legal though they may be, by people like Phil Driscoll and Kenneth Copeland.
While this would not affect the constitutional issue, right is right and fair is fair. It's time to get our act together on this.

We will see what happens down the road. For now nothing is changed although Thom Ranier, head of our publishing and bookstore entity, LifeWay Christian Resources, said this:
Rainer advised ministers to be conservative as they deal with the issue. "If at all possible, do not be dependent on the tax benefits garnered from having a housing allowance," he wrote. "Look carefully at the tax benefits you gain with the housing allowance. Be prepared to know what to do if the benefit goes away."
No so simple for ministers who aren't as highly paid as Ranier, but this is good advice.


Anonymous said...

“Do we really think it fair to shift taxes from wealthy clergy living in mansions to the less highly compensated? Surely not.”

Largely that is what is being advocated. The wealthy clergy and their use of extant tax laws are now making it difficult for many clergy to make a living that provides a reasonable amount of security. Policy, thus, needs to be re-written so as to not to allow the fortunes of a few to compromise the security of the less fortunate.

Clergy taking a stand to lessen the impacts of ridiculous inequalities. Now that such may impact them. It’s a start and it may prove to be useful.

RLBaty said...

Amidst all the whining from the religious side of this I like to point out that they and their political machine have had 60 years to cure what ails IRC 107.

The Rick Warren case helped illustrate that the religious folks had no intention of doing anything but protecting their "sacred" turf.

As the old preacher has said:

Pigs get fat.
Hogs get slaughtered.

Congress and the President would do well to moot the case by quickly repealing IRC 107 and starting over if they thought there was some appropriate benefit to allow folks, NOT JUST "Ministers"", another benefit.

Anonymous said...

Does IRC 107 not create a significant government entanglement with religion? The government must decide whether an applicant for tax exemption is a minister based on whether a service he performs is sacerdotal, etc. This sounds like something the government is prohibited from doing by the First Amendment.

RLBaty said...


You missed it.

The Government typically lets the religious group involved determine who is "ordained" as a "minister".

Some groups have a restricted "clergy" and others follow the "priesthood of believers" and can recognize just about anybody as a "minister" amongst them.

What the "minister" gets paid for is not relevant if the "minister" gets his money from the church.

Apart from that, there is, in my opinion, considerable UNconstitutional entanglement as the Government, in part, is asked to figure out if some other organization is sufficiently "religious" to be treated as if it were a church for purposes of allowing the "minister" his tax free benefit.

And so, contrary to the facts and the law, the Government has recognized the likes of Pepperdine University as if it were a church so that its employees can register as "ministers" and claim the benefit (i.e., coaches, math teachers, administrators, ad nauseum).

We might have heard more about that had the FFRF case gone to trial, as it was referenced in the Complaint as an example of what is constitutionally wrong with IRC 107 and its administration.

RLBaty said...

It might also be worth noting that Stuart Watson, an investigative reporter in Charlotte, NC, broadcast/published late last night his latest on the Baptist-like Furtick/Elevation Church issue and related matters, including a recent on-camera interview with Dan & Annie of the FFRF (watch video at link for that).

Here's the link:


RLBaty said...

FFRF v IRS - IRC 107 Radio Broadcast


Click on download podcast to access the December 7, 2013 show.

The segment of the show featuring attorney Rich Bolton and Robert Baty begins about the 20:25 mark.

Christiane said...

it all seems like a very petty game that is being played out . . .

but why would people want to attack ministers who serve the public?

or is it 'payback' for all the political game-playing and sermons preached from the pulpit about 'anyone who votes Democratic supports abortion'?

or is an attempt at placing ministers in a position where they would be as disadvantaged as would have the poor been if the Ryan Budget had been enacted should Romney's forces have won ???

I must think about this, but I suspect that once the Church takes up a political stance and identifies itself strongly with a political party,
then something unhealthy has been let lose that may come home to roost . . . and for the sake of all the innocent who may suffer (and that is likely the majority of mainline clergy in our country), and for the sake of the families of ministers who became political hacks for a certain Party,
I hope this petty vendetta comes to no good,

if people want to 'punish' our nation's clergy and their families, we need to really examine what happened that fed into this mess and how best it can be resolved. We need our clergy. We honor them with respect nationally even granting them parking privileges at hospitals.

Could it have been the political identification thing that caused this, rather than 'an attack on Christians' ? I think it might have had something to do with it.