2014); see "Tax Matters: Seventh Circuit Denies Plaintiffs' Standing to Challenge Parsonage Allowance
," JofA, Feb.
District Court for the Western District of Wisconsin ruled that the parsonage allowance
under Internal Revenue Code (IRC) section 107(2)--an exclusion from income for employer-paid housing to ministers--was unconstitutional.
(Although it was not an issue before the Tax Court, the IRS likely would have alternatively disallowed such expenses as commuter mileage.) (34) The church agreed to pay him a salary of $25 per week and designated the entire amount as a parsonage allowance
. The Tax Court held that because his entire salary was tax-free income, he could not claim a deduction for any business expense.
She said that a panel of the Ninth Circuit had just heard oral argument in a case involving the parsonage allowance
and wanted to know if I was available to accept an appointment to be a friend of the court and to write a brief assessing its constitutionality.
original Tax Court case that the parsonage allowance
was limited to fair
1), which states, "Under section 107 of the tax code, `the parsonage allowance
,' as it is known, means the cost of buying, renting or repairing the rector is fully deductible."
107(2) a $78,000 annual parsonage allowance
from the church.
Retired ministers need not include a parsonage allowance
or the rental value of a provided parsonage in the computation of net self-employment earnings, even if they have not opted out of the Social Security system; moreover, they do not need to include any retirement benefits received from a church plan subsequent to retirement (IRC section 1402[a]).
Another change under new laws treats retirement benefits received from a church plan and any parsonage allowance
provided to a minister after retirement as exempt from self-employment tax.
Under Section 107 of the tax code, "the parsonage allowance
," as it is known, means the cost of buying, renting or repairing the rector is fully deductible.
1.107-1(a), the parsonage allowance
is tax free if provided as remuneration for services that are ordinarily the duties of a minister of the gospel.
11/21/13); see also "Tax Matters: District Court Rules 'Parsonage Allowance
' Unconstitutional," JofA, March 2014, page 64).