Clergy housing allowance bill passes House, Senate

Clergy housing allowance bill passes House, Senate

 

A bill that protects an 81-year-old tax break for clergy housing has passed both houses of Congress and is awaiting President Bush’s signature.

The Clergy Housing Allowance Clarification Act was designed to pre-empt a case now before the U.S. 9th Circuit Court of Appeals based in San Francisco. In the case, California megachurch pastor Rick Warren challenged an IRS ruling that he could not claim $79,999 of his salary as a tax-exempt housing allowance. The IRS wanted to allow no more than $59,479. Warren’s Saddleback Valley Community Church, located in suburban Los Angeles, is one of the nation’s largest congregations.

A California tax court ruled in Warren’s favor, but the IRS appealed. When it went before the 9th Circuit, a majority on a three judge panel of the court took the unusual step of using the case to determine the constitutionality of the ministerial housing allowance tax exemption- something neither side was contesting.

If all goes as planned, after Bush signs the bill the U.S. Justice Department will ask the 9th Circuit to dismiss the Warren case.

Even if the case is dismissed, however, the bill would not prevent future challenges to the constitutionality of the ministerial tax exemption.

(Compiled from wire services)A bill that protects an 81-year-old tax break for clergy housing has passed both houses of Congress and is awaiting President Bush’s signature.

The Clergy Housing Allowance Clarification Act was designed to pre-empt a case now before the U.S. 9th Circuit Court of Appeals based in San Francisco. In the case, California megachurch pastor Rick Warren challenged an IRS ruling that he could not claim $79,999 of his salary as a tax-exempt housing allowance. The IRS wanted to allow no more than $59,479. Warren’s Saddleback Valley Community Church, located in suburban Los Angeles, is one of the nation’s largest congregations.

A California tax court ruled in Warren’s favor, but the IRS appealed. When it went before the 9th Circuit, a majority on a three judge panel of the court took the unusual step of using the case to determine the constitutionality of the ministerial housing allowance tax exemption- something neither side was contesting.

If all goes as planned, after Bush signs the bill the U.S. Justice Department will ask the 9th Circuit to dismiss the Warren case.

Even if the case is dismissed, however, the bill would not prevent future challenges to the constitutionality of the ministerial tax exemption.

(Compiled from wire services)