Several important tax developments occurred in 2016 that affect tax reporting by ministers, church staff, and churches this upcoming tax season and beyond. The top ten developments are explained in this article.
1. Status of the housing allowance.
The constitutionality of the ministerial housing allowance benefit is again in question, thanks to one organization's ongoing efforts to challenge it.
On November 22, 2013, federal district court judge Barbara Crabb of the District Court for the Western District of Wisconsin struck down the ministerial housing allowance as an unconstitutional preference for religion. Freedom From Religion Foundation, Inc., v. Lew, 983 F. Supp. 2d 1051 (W.D. Wis. 2013). The ruling was in response to a lawsuit brought by the Freedom From Religion Foundation (FFRF). The federal government, which defended the housing allowance since it is a federal statute, asked the court to dismiss the lawsuit on the ground that the plaintiffs lacked standing to pursue their claim in federal court.