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Back Story on Rick Warren's Housing Dispute!

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  • rlbaty50
    I don t recall if this has been posted here before, so I am posting it now for reference and consideration as it relates to the pending FFRF IRC 107 suit
    Message 1 of 1 , Apr 3, 2010
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      I don't recall if this has been posted here before, so I am posting it now for reference and consideration as it relates to the pending FFRF IRC 107 suit challenging the constitutionality of the income tax free ministerial housing allowance.

      It is reported that this discussion is in the Congressional Record from 2002 concerning the legislative change prompted by Rick Warren's case:


      Mr. RAMSTAD. Mr. Speaker, I yield myself such time as I may consume.

      Mr. Speaker, in one of the most obvious cases of judicial overreach in recent memory, the Ninth Circuit Court of Appeals in San Francisco is poised to inflict a devastating tax increase on America's clergy. Unless Congress acts quickly, the 81-year-old housing tax exclusion for members of the clergy will be struck down by judicial overreach on the part of America's most reversed and most activist circuit court.

      The focus of this court's attack is a long-standing clergy housing allowance. Dating back to 1921 and recodified in 1954 in section 107 of the Tax Code, this allowance prevents clergy from being taxed on the portion of their church income that is used to provide their housing. This allowance is similar to other housing provisions in the Tax Code offered to workers who locate in a particular area for the convenience of their employers, and military personnel who receive a tax exclusion for their housing.

      Clergy members of every faith and denomination rely on the housing allowance. Without it, America's clergy face a devastating tax increase of $2.3 billion over the next 5 years. At a time when our places of worship are financially strapped and struggling to serve people in need, we cannot allow this important tax provision to fall.

      The case, now in the Ninth Circuit, Mr. Speaker, arose because of a dispute over a 1971 IRS ruling [Rev Rul 71-280] that limited the clergy allowance to the fair rental value of the parsonage.

      A taxpayer [Rick Warren] in turn challenged this limit and won in tax court and the IRS appealed.

      But rather than simply considering the issue presented in the case, which was whether the Internal Revenue Service had authority to limit the allowance, the Ninth Circuit hijacked the case and turned it into a challenge of the very constitutionality of the housing allowance.

      Neither party in the case even raised the constitutionality issue or requested the court to consider that issue, so the Ninth Circuit, in turn, asked for a ``friend of the court'' brief from a law professor who happened to believe that it was unconstitutional.

      Mr. Speaker, this is judicial activism at its worst. The legislation on the floor today will stop the attack on the housing allowance by resolving the underlying issue in the tax court case. H.R. 4156, the bill before us today, clarifies that the housing allowance is limited to the fair rental value of the home, which has been common practice for decades, for 81 years.

      * * * * *

      We believe Congress clearly has the constitutional authority to enact section 107 of the Tax Code and the amendments contained in H.R. 4156 that are before us today. In addition, we believe the Internal Revenue Service should provide guidance on the issue of fair rental valuation to avoid unnecessary disputes with taxpayers. I intend to work with my colleagues to make sure the guidance is issued.

      Finally, the amendment clarifies that the new fair rental value limitation to section 107 applies prospectively to the year 2002 and beyond. Both H.R. 4156 and this amendment explicitly provide that for tax years before the effective date, the fair rental value limitation does not apply. This language is intended to end the current litigation and fully resolve the matter.

      [How many other taxpayers besides Warren get legislation enacted for their benefit while their cases are pending in court?]

      Mr. Speaker, again, I appreciate the strong bipartisan support this legislation has received from our colleagues, with 37 cosponsors. My fellow Committee on Ways and Means member and friend, the distinguished gentleman from North Dakota (Mr.Pomeroy), the chief sponsor on the other side of the aisle, has been tremendous on working on this legislation.

      Mr. Speaker, I urge my colleagues to vote for this bipartisan legislation to protect America's clergy from an unwarranted judicial attack and to preserve the important housing allowance.


      My further comments:

      And as far as I can tell, neither the Congress or the President have indicated any political will to tackle the abuses of IRC 107 (e.g., those million dollar housing benefits and "basketball minister") or remove the constitutional issues now being pursued by the FFRF in its IRC 107 suit.

      What are they waiting for; Rick Warren's permission?

      Robert Baty
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