Judge Rules Against Pastors Tax-break (5 views) Subscribe   
  From:  David (DavidABrown)    3/21/2002 1:57 pm  
To:  ALL   (1 of 2)  
 
  340.1  
 
Subject: From Pastor Rick - Court Case

> Finally, on May 16, 2000, we got that ruling. The United States Tax Court
> gave us, in Warren vs. Commissioner, a stunning victory. We didn't just
> win by a small margin; the 17 judges ruled 14 to 3 in our favor. They
agreed
> with every single point we made in the case. It was a four- year battle,
> but the court decided that the IRS had clearly misinterpreted the law as
> enacted by Congress. This case was reported in numerous legal publications
> as a major victory for every minister in America.
>
> But last week, the case was resurrected with a totally different twist.
> On Tuesday, March 5, Judge Stephen Reinhardt, a judge on the Ninth Circuit
> Court of Appeals, questioned the "constitutionality" of the parsonage
allowance,
> which has been a law for nearly 75 years.

> COURT CASE AFFECTING RELIGIOUS WORKERS
> March 11, 2002
>
> Dear Church Family,
>
> In the days ahead, you may hear my name in the media connected to an
important
> court case so I wanted to give you some background. I won't bore you with
> all the technical details, but I want you to know my motivation if anyone
> asks about it.
>
> I've always had a heart for pastors of small churches. I publish a free
> weekly training newsletter that serves tens of thousands of pastors around
> the world. I dedicated my book, The Purpose Driven Church, to
bi-vocational
> pastors, who serve with little or no salary. My father and Kay's father
> were pastors of small churches, and we both spent time living in a
"parsonage"
> growing up. A parsonage is a home, often next door to the church, provided
> tax free by the church for its pastor or priest. In 1929 Congress amended
> the tax code to allow clergy who were renting or purchasing a home this
> same benefit, known as a "parsonage allowance."
>
> In 1996, I was talking with my tax preparer, who has filed returns for
> over 11,000 ministers in America. During a routine audit of our personal
> tax return, he explained to me that from his perspective, the IRS was
unfairly
> hurting thousands of pastors, particularly those in small churches. When
> he said "The IRS has been bullying pastors on this issue for years," I
> decided that I should be the one to champion this cause for all ministers.
> Fully aware that it would cost me a lot of time and money, I intentionally
> challenged the IRS in a court case to get this vague, unfair ruling
changed.
>
> Over the years, as the legal costs mounted, the IRS offered to settle with

> me if I'd drop the court case. They did not want their vague standard
challenged,
> but Kay and I refused. My explanation was, "I'm fighting this battle for
> every minister and church worker in America. These ministers deserve a
> fair court ruling."
>
> Finally, on May 16, 2000, we got that ruling. The United States Tax Court
> gave us, in Warren vs. Commissioner, a stunning victory. We didn't just
> win by a small margin; the 17 judges ruled 14 to 3 in our favor. They
agreed
> with every single point we made in the case. It was a four- year battle,
> but the court decided that the IRS had clearly misinterpreted the law as
> enacted by Congress. This case was reported in numerous legal publications
> as a major victory for every minister in America.
>
> But last week, the case was resurrected with a totally different twist.
> On Tuesday, March 5, Judge Stephen Reinhardt, a judge on the Ninth Circuit
> Court of Appeals, questioned the "constitutionality" of the parsonage
allowance,
> which has been a law for nearly 75 years.
>
> What is amazing is that no one, not even the IRS, had raised this
question.
> In fact, both the IRS and the Justice Department filed briefs backing my
> position that the parsonage law is constitutional. But Judge Reinhardt,
> and another judge, ignored their opinions, as well as the opinion of a
> 3rd judge on the panel, and appointed Erwin Chermerinsky, a USC law
professor,
> to write an opposing opinion.
>
> If Judge Reinhardt throws out this 73 year old law, it will have a
devastating
> effect on all churches and pastors, missionaries, ministers, priests,
rabbis,
> and religious workers in America. The parsonage allowance is the only way
> many small churches can afford a pastor, and it's the only way many
ministers
> are able to survive on a meager salary. The loss of it would close an
untold
> number of small churches in small towns across America.
>
> Judge Reinhardt will likely declare the parsonage law unconstitutional
> in the next few months. If that happens, a coalition of Christian
ministries
> and churches will undoubtedly take this issue to the Supreme Court. While
> my name is attached to the first case (which we won), the issue has been
> morphed by Judge Reinhardt into a constitutionality issue and is not
really
> about the rule I challenged anymore. However, it is still a battle that
> will affect all churches.
>
> We will not be surprised when anti-religious groups and the secular media
> try to "spin" this issue with false headlines and personal accusations.
> I knew when I chose to champion this cause for ministers that it would
> attract criticism, but the truth is, fourteen Tax Court judges ruled that
> we were right in challenging the IRS, agreeing with us on every single
> point in the case.
>
> While I won the first case for ministers, others will now take up this
> new cause while I'm finishing The Purpose Driven Life book. In closing,
> I ask you to pray for 2 things: 1) Pray that what others have intended
> to harm God's people, God will use for good. (Gen. 50:20) 2) Pray for
those
> who will represent this case on the behalf of all the churches in America.
>
> Thanks. I love you all.
>
> Pastor Rick 



David A. Brown
Basic Christian: Forum
 
 
From:  David (DavidABrown)    5/12/2002 8:44 pm  
To:  ALL    
 
    
 
Source WWW.PASTORS.COM  
 
Senate OKs bill to protect clergy housing allowance

 We want to thank so many of you who have followed this story with interest, and for contacting your representatives in Washington. We're glad to announce that the U.S. Senate has now approved a bill to protect clergy housing, and now it's up to President George W. Bush to sign the bill into law.
- Rick & Kay Warren 

NEWSWIRE: Senate OKs bill to protect clergy housing allowance
by Tom Strode 

WASHINGTON (BP)--The U.S. Senate has approved without opposition a bill designed to protect a longstanding housing tax exemption for ordained ministers and other clergy.

The Senate vote completed swift congressional action on the measure, which President Bush is expected to sign into law. Senators agreed to the Clergy Housing Allowance Clarification Act, H.R. 4156, by unanimous consent May 2. The House of Representatives approved the same bill in a 408-0 vote April 16.

Congressional approval came barely three weeks after the bill was introduced by Rep. Jim Ramstad, R.-Minn. The highly unusual speed with which Congress moved came in reaction to a threat by a federal appeals court to strike down the allowance as unconstitutional. A panel of the U.S. Ninth Circuit Court of Appeals announced in March it was reviewing the constitutionality of the allowance.

"I'm grateful the Senate leadership responded so quickly to my request for expedited consideration of this critical legislation," Ramstad said in a written statement. "One misguided court is literally trying to tax our clergy out of house and home."

Since 1921, pastors and other religious leaders have been able to deduct from federal taxes a portion of their income for housing. This allowance has been especially helpful in enabling small churches to have a full-time pastor.

Ramstad's legislation 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.

 
While the bill would not settle the issue of constitutionality, its supporters believe it will end the Ninth Circuit's threat to the allowance by codifying the "fair rental value" language formerly used by the Internal Revenue Service. The legislation could provide a way for both sides in the Ninth Circuit case to resolve the dispute. It would not prevent a future challenge to the allowance's constitutionality, however.

Lawyers from the Southern Baptist Convention's Executive Committee, Annuity Board and Ethics & Religious Liberty Commission, as well as other religious organizations, have worked for the exemption's preservation.

"I am delighted that both the House and the Senate have moved with such alacrity to seek to provide as much protection as possible for the clergy housing allowance in our tax code," ERLC President Richard Land said. "The passage and signing of Rep. Ramstad's Clergy Housing Allowance Clarification Act will provide far greater protection against judicial challenges than previously existed for the clergy exemption."

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.

 
Congress reacted after the Ninth Circuit signaled a likelihood it would strike down the housing allowance. After the court received the case as an appeal by the IRS, a divided three-judge panel announced it would consider whether it should weigh the exemption's constitutionality and, if so, whether the allowance would pass the test under the First Amendment's ban on government establishment of religion. 

The panel appointed Erwin Chemerinsky, a professor at the University of Southern California Law School, to write a brief on those issues for the court. The panel requested both parties in the case to submit briefs as well. The panel set May deadlines for the briefs. Neither party, however, challenged the exemption's constitutionality.

In interviews, Chemerinsky said he believes the allowance is invalid.

"Government can't subsidize religion," he told the Los Angeles Times. "Religion is treated differently by the Constitution. If the government wants to subsidize journalists because it feels they aren't paid enough, I don't have any problem with that. But if they want to do the same thing with regards to religion, they can't."

The potential crisis for pastors and churches began not as a challenge of the allowance's constitutionality but of the IRS' application of it in a case titled Warren vs. Commissioner of Internal Revenue.

Rick Warren, pastor of Saddleback Valley Community Church, a large and highly influential Southern Baptist church in Lake Forest, Calif., sued the IRS after an agent assessed his home's value at far less than its worth and thereby reduced the housing allowance, he said. The IRS penalized Warren for the years 1993-95 for the difference between the IRS valuation and the exemption from taxable income he claimed.

In a letter to readers of his Web site, www.pastors.com, Warren said his wife, Kay, and he "decided to challenge the vagueness of the revenue ruling that allowed agents to arbitrarily assess the value of a parsonage without any objective standard." He is not opposed to the "fair market rental value" clause IRS uses if the "IRS will define a 'fair' written, objective standard to be used by all IRS agents," said Warren, who wrote the book Purpose Driven Church.

In May 2000, a U.S. Tax Court in California decided in Warren's favor by a 14-3 vote. The court ruled the exemption in the code is limited "to the amount used to provide a home, not the fair market rental value of the home." The IRS appealed the ruling to the Ninth Circuit.

www.pastors.com Please help us get the word out
by forwarding this issue to other Christians. Thanks!




David A. Brown
Basic Christian: Forum
 
