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US Tax Court Fines Pastor $2,500 for “Frivolous” Tax Argument

This case highlights some of the most important provisions of federal tax law pertaining to ministers.

The United States Tax Court rejected a minister’s frivolous tax arguments and subjected him to back taxes, interest, and a penalty for filing a frivolous tax return.

Background

A minister was employed by a church in Connecticut. He resided in the parsonage of the church as part of his employment and did not make rental payments to the church.

On April 15, 2018, the minister timely filed a Form 1040, US Individual Income Tax Return for the 2017 tax year. On his return, the minister self-reported $16,632 in pension income and $1,480 in taxable Social Security benefits. He did not report any wage income, despite the church issuing him a Form W-2 reporting $63,652 in compensation for his ministerial services.

The IRS selected the minister’s tax return for examination. The IRS proposed an adjustment in the amount of $24,884, resulting from the addition of the omitted wages to gross income ...

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Posted:
  • June 24, 2022

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