Pastor Housing Allowance on Thin Ice

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When pastoral scandals hit the mainstream news, often the first item
cited as evidence that a minister is misusing his or her position is the
housing allowance tax break that allows pastors to deduct housing
expenses from their income. Sometimes the pastor in question will claim
his entire salary as housing allowance. For others, its the sheer size
of the allowance that raises suspicion.

At the
request of Senator Charles Grassley, the Evangelical Council for
Financial Accountability
(ECFA) will lead the independent commission to investigate and offer
recommendations to lawmakers on a list of eight issues related to
ministry ethics and finances. Housing allowances are
near the top of the list.

A 2009 lawsuit filed in
California by the Freedom from Religion Foundation argued
the housing allowance tax benefit violates the Constitution’s Establishment Clause. A
government request to dismiss the case was rejected in 2010, allowing it
to proceed to trial. Experts like Richard R. Hammar, an attorney and senior editor of the Church Law & Tax Report, are concerned that its outcome may spell the demise of the benefit.

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