Loading ...
Sorry, an error occurred while loading the content.
 

Re: ECFA Report to Senator Grassley!

Expand Messages
  • rlbaty50
    ... Here s how the housing allowance chapter looks (not all references and footnotes were copied): A Report to Senator Charles Grassley with Recommendations
    Message 1 of 382 , Jun 13, 2013
      --- In Maury_and_Baty@yahoogroups.com,
      "rlbaty50" <rlbaty@...> wrote:

      > You can access this file at the URL:
      >
      > http://groups.yahoo.com/group/Maury_and_Baty/files/Commission-Report-December-2012.pdf

      Here's how the housing allowance chapter looks (not all references and footnotes were copied):

      A Report to Senator Charles Grassley
      with Recommendations for
      Religious and Charitable Organizations,
      The Giving Public,
      The Internal Revenue Service and
      Treasury Department, and
      Congress

      December 2012

      Clery Housing Exclusion

      Introduction and Background

      The income tax exclusion for clergy housing was established
      by Congress in 1921.

      Originally, it excluded from a minister's taxable income
      the rental value of a home provided by a religious organization.

      In 1954, Congress amended the law to exclude from a minister's taxable income a housing allowance paid to the minister to the
      extent that he or she uses the allowance to provide his or her
      own home.

      With the passage of the Clergy Housing Allowance Clarification
      Act of 2002, Congress clarified its intent by amending the law
      to provide that the exclusion is also limited to the fair rental value of the minister's housing.

      The 2002 legislation was approved by a vote of 408 to 0 in the
      U.S. House of Representatives and was approved in the U.S.
      Senate by unanimous consent.

      In other words, no member of Congress voted against the
      legislation.

      President George W. Bush signed the legislation shortly
      after passage by Congress.

      In support of this legislation, Senator Max Baucus of Montana observed that:

      > This section of the Code is similar to one
      > for employer-provided housing for other
      > taxpayers. The one for clergy is much simpler,
      > in order to minimize the involvement of the
      > Government in the affairs of churches, that
      > is, to keep the separation between Church and
      > State.

      The Grassley Staff Report expresses concern that a small
      number of ministers live in employer-provided homes with
      high values or receive allowances to live in high-value
      homes.

      On another front, the validity of the clergy housing exclusion
      is being challenged in federal court by parties who claim it
      violates constitutional provisions.

      Additionally, observations have been made that some religious organizations consider significant portions of their workforce
      to be ministers. Accordingly, they treat them as ministers for
      income tax purposes, which may include providing housing or a
      housing allowance.

      Observers have expressed concerns that practices in this area
      by some organizations may be abusive.

      Relevant Portion of Grassley Staff Report: Pages 10–16
      28 148 Cong. Rec. S2957 (daily ed. Apr. 18, 2002) (statement
      of Sen. Max Baucus).

      Questions

      *

      Should the clergy housing exclusion be
      limited to a specific dollar amount?29

      *

      To withstand further constitutional scrutiny,
      should the law related to the clergy housing
      exclusion be amended to broaden its applicability?

      *

      Should the clergy housing exclusion be limited
      to a more select group of individuals?

      Recommendations

      Religious and Charitable Organizations

      1.

      For the good of our country's moral fabric,
      religious organizations and their leaders
      must represent the best examples of faith
      and good moral conduct in all areas of
      financial activity. The vast majority of
      them do. Religious organizations and their
      leaders most certainly should not attempt
      to skirt the law for financial gain. Operating
      on the high road of integrity includes making
      reasonable and appropriate determinations as
      to who is a minister consistent with the polity
      of each religious organization and making
      appropriate decisions regarding clergy housing
      or related allowances. For a religious
      organization or its leaders to intentionally
      abuse the law is shameful and damaging to
      its mission and to the religious community as
      a whole. On the other hand, when individual
      organizations and leaders set their bar
      high—and even raise the bar—it inspires others
      to do the same. We encourage all religious
      organizations and their leaders to help raise
      the bar of reasonable and ethical conduct in
      this area.

      IRS/Treasury

      1.

      Given the dual tax status of many members
      of the clergy (e.g., the common circumstance
      in which a minister is an employee for income
      tax purposes but subject to the self-employment
      tax for Social Security purposes), and the fact
      that the clergy housing exclusion applies to
      income tax but not to Social Security tax,
      much confusion exists among members of the
      clergy regarding the applicability of the
      exclusion under current tax law. Accordingly,
      the IRS should improve the tax forms, worksheets,
      and educational guidance for members of the
      clergy in connection with the clergy housing
      exclusion.

      The Grassley Staff Report also raised a question, in light of
      a Tax Court decision for which appeals had not been exhausted
      at the time, as to whether the exclusion for a clergy housing allowance should be limited to a single home.

      Subsequent to the issuance of the Grassley Staff Report, an
      appeals court decision and denial of certiorari by the U.S.
      Supreme Court rendered the issue moot, having effectively
      clarified that the exclusion is limited to a single home.
      Comm'r v. Driscoll, 669 F.3d 1309 (11th Cir. 2012), cert.
      denied, 81 U.S.L.W. 3167 (U.S. Oct. 1, 2012) (No. 12-153).

      Accordingly, the Commission has not addressed that question
      in this Report.

      We recommend the following specific improvements:

      a.

      Clergy housing allowances paid pursuant to
      Section 107(2) should be required to be
      reported by paying organizations on Form W-2
      or Form 1099, whichever is applicable. The
      amount should be reported for information
      purposes in a manner so as not to imply that
      it is subject to income tax.

      b.

      A good-faith estimate of the value of an
      organization-provided parsonage pursuant
      to Section 107(1) should be required to be
      reported by larger religious organizations
      on Form W-2 or Form 1099 (whichever is
      applicable) by the organization providing
      the housing. The amount should be reported
      for information purposes in a manner so as
      not to imply that it is subject to income tax.

      c.

      The IRS should develop helpful, understandable
      forms or worksheets for use by clergy to
      address issues uniquely related to the housing
      exclusion in preparing Form 1040, including
      the following:

      1)

      determining the portion, if any, of a housing
      allowance that is not exempt under Section
      107(2) (for example, if the amount designated
      as a housing allowance by a religious
      organization exceeds the amount spent by the
      minister in providing a home, the minister is
      required to report the excess as taxable
      income, even though it is not reported by the
      payer as such on Form W-2 or Form 1099);

      2)

      determining the portion, if any, of a minister's
      unreimbursed business expenses that are not
      deductible pursuant to Section 265, as applied
      in Deason, Dalan, and McFarland;31 and

      3)

      determining the gross amount (before applicable
      expenses) of the housing allowance or the rental
      value of an organization-provided parsonage, if
      any, that is subject to self-employment tax and
      reportable on Schedule SE.

      2.

      In recognition of the recent unanimous Supreme Court
      ruling in Hosanna-Tabor,32 great deference should be
      given by the IRS to determinations made by religious
      organizations, pursuant to their sincerely-held religious
      beliefs, as to who is a minister for their organizations.

      The Commission recommends that religious organizations that
      are required to file fewer than 25 Forms W-2 and fewer than
      25 Forms 1099 in a particular tax year be excepted from the requirement to report the estimated rental value of
      parsonages on Forms W-2 and 1099.

      We encourage smaller organizations, as a best practice, to
      report that information if they have the practical means to
      determine the estimated fair rental value. See Deason v.
      Comm'r, 41 T.C. 465 (1964); Dalan v. Comm'r, 55 T.C.M. (CCH)
      370 (1988); McFarland v. Comm'r, 64 T.C.M. (CCH) 374 (1992).

      These cases address the fact that business expenses are not
      deductible to the extent that they are allocable to income that
      is tax-exempt due to the clergy housing exclusion. Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 132 S. Ct. 694
      (2012).

      Congress

      1.

      Congress should not apply a dollar limit to the clergy
      housing exclusion under Section 107 of the Internal Revenue
      Code because, as described further below, attempting to do
      so would create more challenges than it would solve.

      2.

      In recognition of the recent unanimous Supreme Court
      ruling in Hosanna-Tabor, great deference should be
      given by Congress to determinations made by religious
      organizations, pursuant to their sincerely-held religious
      beliefs, as to who is a minister for their organizations.
      Congress should not attempt to limit the clergy
      housing exclusion to a more select group of individuals.

      3.

      Congress should not expand the clergy housing
      exclusion in an attempt to protect its
      constitutionality.

      Basis for Recommendations

      Two substantive limitations on the amount of the clergy
      housing exclusion already exist in federal law that limit
      the exclusion's value.

      First, federal tax law prohibits excessive compensation for
      leaders of tax-exempt organizations described in Section
      501(c)(3), including religious organizations.

      For this purpose, "compensation" includes benefits such as
      housing, whether taxable or not.

      Accordingly, the clergy housing exclusion is already limited
      by law in that total compensation is limited to that which is reasonable.

      Reasonable compensation is "the amount that would ordinarily
      be paid for like services by like enterprises (whether taxable
      or tax exempt) under like circumstances."

      The second limitation on the clergy housing exclusion that
      exists under current federal tax law is narrower because the
      law provides that the exclusion may not exceed the lower
      of the fair rental value of the housing provided (including furnishings and utilities) or the actual amount spent providing
      a home.

      In his 2002 Senate testimony supporting the addition of the
      fair rental value limitation to the clergy housing exclusion,
      Senator Max Baucus observed that these limitations impose reasonableness:

      > It is good tax policy to keep a reasonable
      > limit on the amount of [the clergy housing
      > exclusion], as the IRS has done for decades.
      > And it is good policy to make our intent
      > crystal clear so that government involvement
      > with religious affairs is kept to a minimum.
      > This bill will do both.

      After careful analysis, the Commission determined that
      imposing yet another limitation on the clergy housing
      exclusion in the form of a dollar-based cap would create
      more challenges than it would solve.

      In other words, the cure would likely be worse than the
      presumed disease. We identified the following significant
      challenges associated with imposing a dollar-based cap:

      1.

      The amount of a cap or limit would be arbitrary.

      2.

      There is no "one-size-fits-all" limit.
      A single cap or limit would be inequitable to
      ministers who live in higher-cost areas of the
      country.

      3.

      A geographically-variable cap would be complex
      and difficult for taxpayers to apply and for
      the IRS to administer.

      4.

      Some clergy members are required, due to the
      location of their houses of worship (and, in
      some cases, due to the requirements of their
      religion), to live in high-cost locales.

      For example, in certain faith groups, clergy
      are required to live within a specific distance
      of the house of worship and are required to walk
      to the house of worship for services.

      In circumstances where such houses of worship
      happen to be based in high-cost locales, the
      members of the clergy, by virtue of their
      religious doctrine, are required to live within
      the same locale. Furthermore, regardless of
      whether a member of the clergy is required by
      doctrine to live within a specific distance of
      the house of worship, the mere fact that a house
      of worship exists in a high-cost locale limits
      the practical ability of a member of the clergy
      to choose lower cost housing in proximity to the
      house of worship.

      5.

      Some houses of worship own clergy residences that
      were purchased long ago or were donated and have
      high values today even though they did not have
      a high cost to the organization.

      We do not believe that a religious organization's
      good stewardship (buying a parsonage at what was
      a reasonable price in prior years) or its wise use
      of a donated parsonage should result in extra
      taxes on its clergy.

      6.

      Imposing a cap at a level high enough to accommodate
      the various real-life scenarios described above
      (wherein the housing value or cost may be high for
      appropriate reasons) would likely result in the
      unintended and incorrect perception that any clergy
      housing value or allowance within the cap is permissible
      and/or excludible.

      In other words, it would likely cause houses of worship
      and clergy to gravitate upward toward the cap.

      Additionally, the Commission noted that another similar
      housing exclusion in the Internal Revenue Code, the
      employer-provided housing exclusion under Section 119,
      does not have a dollar-based cap.

      We see no valid federal policy reason that a tax benefit
      for clergy housing should have a dollar-based cap when
      the exclusion in Section 119 for employee housing
      typically associated with taxable corporations and
      business operates without such a limit.

      In its recent ruling in Hosanna-Tabor, the U.S. Supreme
      Court unanimously reaffirmed its clear support for the
      authority and freedom of a religious organization to
      determine who qualifies as a minister, free from
      interference from the federal government.

      Appropriate respect must be given to such a decision,
      and we note especially that the Court's ruling was
      unanimous.

      Based on the principles espoused by the Court and enumerated
      in the First Amendment, we believe great deference should be
      given by Congress and the IRS to the sincerely-held religious
      beliefs of religious organizations as to who is a minister
      for their organizations.

      Congress should not attempt to limit the clergy housing
      exclusion to "a more select group of individuals" - the term
      used in the Grassley Staff Report.

      We believe that any effort to amend the law to restrict
      the clergy housing exclusion to a more select group of
      individuals is likely to be insufficiently sensitive to
      the variety of religious practices in America and will
      result in a rule that infringes upon the constitutional
      rights of religious organizations to select their ministers
      and to govern themselves free from government interference.

      An effort by Congress to expand the clergy housing exclusion
      in an attempt to protect its constitutionality could be counterproductive. Legal experts advised the Commission
      that there is good reason to believe the clergy housing
      exclusion can withstand a legal challenge to its
      constitutionality.

      Further, we are concerned that expanding the exclusion to
      include one or more additional categories of taxpayers,
      in addition to being costly, could actually enhance the
      risk to the law's constitutionality.

      The stated motivation for such an expansion would presumably
      be concern that the law in its present form is unconstitutional-
      rather than a genuine desire to add a new category of taxpayers
      to receive the exclusion.

      As stated above, the dual tax status of many members of the
      clergy results in much confusion regarding the applicability
      of the exclusion under current tax law.

      For example, even though a minister may be an employee of a
      religious organization for income tax purposes, members of
      the clergy are subject to self-employment tax for Social
      Security purposes.

      Further, even though the value of using a parsonage provided
      to a minister by a house of worship is exempt from the
      minister's income tax, it is subject to self-employment tax.

      The same is true for a clergy housing allowance.

      Additionally, a minister may not be entitled to exclude from
      taxable income the entire amount of a housing allowance paid
      to him or her due to the limitations on the exclusion described
      above.

      Further complicating the tax compliance requirements for
      ministers is the fact that unreimbursed business expenses
      are not fully deductible for income tax purposes if the
      minister is entitled to the clergy housing exclusion.

      However, the limitation on business expense deductibility
      that applies for income tax purposes does not apply in
      determining net income from self-employment. Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 132 S. Ct. 694,
      704–06 (2012).

      This is true unless they have elected out of self-employment
      coverage with respect to earnings as a minister by filing
      Form 4361.

      For the reasons cited above and more, tax compliance for
      members of the clergy is no simple task.

      While the IRS has published some helpful guidance addressing
      these issues (particularly Publication 517, Social Security
      and Other Information for Members of the Clergy and Religious Workers), we believe members of the clergy would benefit
      substantially from new, very well-written, well-designed,
      separate, practical guidance related to the tax issues
      uniquely involving the clergy housing exclusion.

      Such additional guidance should be directly integrated into
      the forms, worksheets, and instructions of Form 1040.

      Additionally, we believe that consistency in the practice
      of reporting clergy housing amounts on Form W-2 or Form
      1099 will significantly enhance compliance with the law by
      clergy.

      It is generally essential for ministers to know the amount
      of a housing allowance and/or the fair rental value of
      organization-provided housing to properly report both their
      income and Social Security tax obligations:

      1.

      Income tax. In the case of a housing allowance,
      a minister must compare the amount of the allowance
      to both the fair rental value of his or her home
      (with furnishings and utilities) and the amount
      spent providing the home in order to determine if
      the full amount of the allowance may be excluded
      for income tax purposes.

      2.

      Self-employment tax. The minister must know the
      amount of a housing allowance in order to properly
      report it as income for self-employment tax purposes,
      unless he or she has elected out of Social Security
      coverage with respect to his or her ministerial
      income by filing Form 4361.

      Additionally, for organization-provided housing,
      clergy must know the estimated fair rental value
      of the home in order to properly report it as income
      for self-employment tax purposes, unless he or she
      has elected out of Social Security coverage as stated
      above.

      Further, reporting the amount of allowances or housing
      provided to a minister helps the minister and the
      employing organization alike by providing information
      about the minister's total compensation, which is
      subject to the reasonableness standard under federal
      tax law. See I.R.C. § 4958(c)(1)(A) and related Regulations.

      ---------------------
      ---------------------
    • Robert Baty
      I didn t have any problem when I cut and pasted the link into my browser and then clicked on the file icon. However, maybe this will be an easier fix. I have a
      Message 382 of 382 , Apr 1

        I didn't have any problem when I cut and pasted the link into my browser and then clicked on the file icon.


        However, maybe this will be an easier fix.


        I have a clickable link at the top of this article.


        Try it and see if it works for you.


        The link:

        http://kehvrlb.com/brady-byrums-no-longer-secret-baby-holm-billion-letter


        Sincerely,

        Robert Baty




        From: Maury_and_Baty@yahoogroups.com <Maury_and_Baty@yahoogroups.com> on behalf of PIASAN@... [Maury_and_Baty] <Maury_and_Baty@yahoogroups.com>
        Sent: Sunday, April 2, 2017 12:47 AM
        To: Maury_and_Baty@yahoogroups.com
        Subject: Re: [M & B] Brady Byrum's No-Longer-Secret 25-Page Baby Holm Letter
         
         

        FYI...
         
        I couldn't load either link.
         
         
        -----Original Message-----
        From: Robert Baty rlbaty@... [Maury_and_Baty] <Maury_and_Baty@yahoogroups.com>
        To: Maury_and_Baty <Maury_and_Baty@yahoogroups.com>
        Sent: Sat, Apr 1, 2017 10:24 pm
        Subject: [M & B] Brady Byrum's No-Longer-Secret 25-Page Baby Holm Letter



        This email message is a notification to let you know that
        a file has been uploaded to the Files area of the Maury_and_Baty
        group.

        File : /Brady Byrum Baby Holm Letter.pdf
        Uploaded by : rlbaty50 <rlbaty@...>

        Description : The no-longer-secret 25-page letter Brady Byrum, Kent Hovind's legal dream team leader, created for use by C. Clarke Holm in his custody dispute with the State of Alabama

        You can access this file at the URL:

        Sincerely,
        Robert Baty


      Your message has been successfully submitted and would be delivered to recipients shortly.