President George W. Bush has signed into law a bill designed to protect a longstanding housing tax exemption for ordained ministers the other clergy.
Bush signed the Clergy Housing Allowance Clarification Act May 20 after the legislation sped through Congress in the face of a judicial challenge to the exemption’s constitutionality. The unusually rapid legislative action came after a panel of the U.S. Ninth Circuit Court of Appeals announced in March it was reviewing the constitutionality of the allowance.
Enactment of the measure came less than six weeks after the bill was introduced. The measure passed both the Senate and House of Representatives without opposition. The House adopted it with a 408-0 vote April 16, while the Senate agreed by unanimous consent to the same bill May 2.
Since 1921, pastors and other religious leaders have been able to deduct from federal taxes a proportion of their income for housing. The new law is intended to preserve the exemption by amending the Internal Revenue Code to make clear the allowance should not exceed the “fair rental value” of a house, including furnishings, accessories and utilities.
‘Clergy protected’
Rep. Jim Ramstad, R-Minn., who introduced the bill April 10, said in a written statement, “With an overwhelming vote in Congress and the president’s signature, America’s clergy and their congregations will be protected from this destructive tax increase.”
The bill would add the following language to the tax code: “And to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.” The amendment would not apply to taxable years before 2001. Amended tax returns could be filed without penalty or interest under the bill.
Abolition of the allowance would have a highly negative impact on pastors and other clergy, as well as churches and other religious bodies.
It has been estimated loss of the allowance would result in clergy paying an additional $2.3 billion in taxes during the next five years.
It also would be particularly damaging to small congregations, which often have been able to employ a full-time pastor because of the housing benefit.
(BP)
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