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New ruling changes law on tax-free housing for clergy

A federal judge has handed down a ruling that reverses the previous Congressional law passed in 1954 exempting people of the cloth from paying taxes on that part of their compensation earmarked for housing.

This action has the potential to have enormous fiscal impact for ministers throughout the country. According to the sitting United States district judge, the previous legislation was exclusively reserved for clergy and no one else. She added that it benefits pastors and other ministers although doing it “is not necessary to alleviate a special burden on religious exercise.”

The ruling has astonished many religious officials. Pastors have been able to use that portion of their untaxed income to purchase or rent property, pay expenses associated with living fees such as homeowner’s association dues, mortgages or property tax.

The change in legislation would allow a huge portion of a clergy’s salary to go untouched by the IRS in order for him or her to reside in places exempt from taxation. According to the judge, a previous ruling claimed the amount of savings in taxes racked up to be billions of dollars.

The judge questioned the validity of allowing a certain group of the population to go unburdened by taxation when the rest of the population was obliged to pay taxes on living expenses for housing. It is expected the decision will be appealed by clergy members and take the case to the US Circuit Court of Appeals.

Contrary to the opinion that the line between church and state might be questionable, proponents of the ruling disagree. They contend the legal system has initiated a process to comprehend that major benefits should not be conferred on the basis of one’s religion. In view of the extended wealth of some religious organizations this is an allegation well-founded.

For the rest of us, we must resign ourselves to pay the piper. The IRS wants our money so it is our responsibility to stay informed of tax liability, as well as what taxes mean, and how we pay them. We work hard for the money we earn and we deserve the right to be assured it’s going or staying where it is supposed to be.

Source: seattletimes.com, “Judge rules against tax-free housing for clergy” No author given, Nov. 23, 2013

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