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October 2, 2012

Supreme Court Won't Hear Housing Allowance Case

Petition by Driscoll denied by High Court.

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The U.S. Supreme Court denied a petition on Monday to take up an appeal by a minister who claimed an income tax exclusion for two homes.

In late 2010, the U.S. Tax Court ruled that federal tax law does not limit the number of homes for which a minister can receive special, tax-free benefits. The federal government appealed the Tax Court decision, and the 11th Circuit Court of Appeals reversed the Tax Court earlier this year. The appeals court said the clergy housing exclusion is limited to a single home.

The minister, Philip Driscoll, then filed a petition to have the case considered by the U.S. Supreme Court. The denial issued on Monday by the Supreme Court leaves the issue where the IRS and the vast majority of clergy have understood it to be for decades–that the clergy housing exclusion is limited to a single home.

This guest post first appeared in The Nonprofit Watchman, a free e-newsletter published by Batts Morrison Wales & Lee, P.A., that covers significant state and federal developments for nonprofits and their executives. Reprinted with permission.

For a comprehensive explanation of the housing allowance and how it works, check out Chapter 6 of Richard Hammar's 2012 Church & Clergy Tax Guide.

Michael E. Batts, is a CPA and the managing partner of Batts Morrison Wales & Lee, an accounting firm dedicated exclusively to serving nonprofit organizations across the United States. He is a member and former chairman of the board of ECFA, a national organization that accredits Christian organizations in the areas of financial integrity, accountability, and governance. He also serves as an Editorial Advisor for Church Law & Tax Report and ManagingYourChurch.com.

Related Tags: church law, compensation, court, government, housing allowance, IRS, law, pastors, tax

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