Parsonage Allowance Scrutinized by Federal Court

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The U.S. Tax Court recently upheld the parsonage allowance and extended it to an unlimited number of homes.

The U.S. Tax Court recently upheld the tax break referred to as the “parsonage allowance” and extended it to an unlimited number of homes and an unlimited value on a home. The Wall Street Journal told the story of a case involving an ordained minister who was jailed for tax evasion; it was ruled that he didn’t owe federal taxes over $400,000 given to him by his church for the purchase of a second home. Experts say the parsonage allowance was designed to supplement the often meager income of clergy members, although some are concerned that the ruling in this new case allows larger, wealthier ministries to apply the tax break to multiple homes, including Iowa Senator Charles Grassley, member of the Senate Finance Committee. Grassley is interested in protecting the spirit of the provision. He said to the WSJ, “It’s fair to question why a clergy member needs a tax-free allowance for more than one home and whether tax-exempt churches should subsidize millionaire ministers.”

What do you think? Should Congress and the IRS be concerned about the parsonage allowance as they continue to scrutinize every part of the federal budget? Add your comments and thoughts here.

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