Jump directly to the content

Update on the Housing Allowance Case

Constitutionality of the housing allowance is being called into question.

Warren v. Commissioner, 2002 WL 338145 (9th Cir. 2002)

In one of the most significant clergy tax cases in recent years, the United States Tax Court ruled in 2000 that a housing allowance is nontaxable for income tax reporting purposes so long as it is used to pay for housing-related expenses. Warren v. Commissioner, 114 T.C. 23 (2000). The court threw out the annual "rental value" test that the IRS adopted in 1971, which limited nontaxable housing allowances for ministers who own their homes to the annual rental value of their home. The IRS appealed the Tax Court's ruling to a federal appeals court, and the court recently issued a preliminary order requiring the parties, and a law professor, to submit legal briefs to the court addressing the question of whether the housing allowance violates the first amendment's prohibition of the establishment of religion.

In referring to the housing allowance ...

Log In For Full Access

Interested in becoming a member? Learn more.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Related Topics:
Posted:
  • May 1, 2002

Related ResourcesVisit Store

50-State Religious Freedom Laws Report
50-State Religious Freedom Laws Report
A review of state laws and court decisions affecting church leaders
2020 Church & Clergy Tax Guide
2020 Church & Clergy Tax Guide
Find comprehensive help understanding United States tax laws as they relate to pastors and churches.
Pastor, Church & Law, Fifth Edition
Pastor, Church & Law, Fifth Edition
Learn which local, state, and federal laws apply to religious organizations.
12 Law & Tax Guidelines for New Ministers
12 Law & Tax Guidelines for New Ministers
Essential knowledge to ensure legal and financial clarity and integrity in ministry.