- The Washington Times - Wednesday, April 17, 2002

The House made a pre-emptive strike against a federal appeals court yesterday, approving 408-0 a bill designed to protect a long-standing tax break for clergy.
Since 1921, ministers and other clergy have been exempt from paying taxes on housing allowances they receive from their churches.
The U.S. Court of Appeals for the 9th Circuit, however, is questioning the constitutionality of this tax break, prompting Congress to respond with legislation that clarifies and preserves the exemption.
Rep. Jim Ramstad, Minnesota Republican and bill sponsor, said his measure will "protect America's clergy from an unwarranted judicial attack."
The long-standing parsonage exemption prevents clergy from being taxed on the portion of their church income that is used to provide housing. The Internal Revenue Service limits the exemption to the fair market rental value of the clergy member's home or parsonage.
"Clergy members of every faith and denomination rely on the housing allowance," Mr. Ramstad said. "Without it, America's clergy face a devastating tax increase of $2.3 billion over the next five years."
The issue began to emerge when the Rev. Richard D. Warren, a Baptist minister in California, challenged the IRS rule that limits the housing-allowance exemption to the fair market rental value of the clergy's home. The U.S. Tax Court sided with the minister, and the IRS appealed the case to the 9th Circuit Court.
But instead of simply addressing the question of whether the IRS has the authority to limit the housing-allowance exemption, the 9th Circuit which spans nine Western states questioned the overall constitutionality of the tax benefit for clergy.
"They chose to address the wider issue of the exemption in general," said Dean Peterson, spokesman for Mr. Ramstad. "They turned a routine tax-court question into a constitutional question."
"This is judicial activism at its worst," Mr. Ramstad said.
Mr. Ramstad's bill would, in essence, settle the court case by codifying the IRS rule that limits the clergy housing-allowance exemption to the fair market rental value of the clergy's home.
"Congress will take this out of the IRS and out of the court's hands," said a House Republican aide familiar with the bill. "This makes the case that's pending moot."
Rep. Danny K. Davis, Illinois Democrat and a supporter of the bill, said he has talked to many churches and religious groups, and "there's no legislation that they're more concerned about than this issue."
Rep. Sam Johnson, Texas Republican, agreed. "For thousands of years, churches, temples, mosques and synagogues have provided housing to members of their clergy. And it makes complete sense that these benefits are not taxed," he said.
Frederick W. Schmidt, director of the office of spiritual life and formation at the Perkins School of Theology at Southern Methodist University in Dallas, wrote to Mr. Johnson urging Congress to preserve the tax exemption for clergy.
Mr. Schmidt said in a phone interview yesterday that taking the housing tax exemption away from clergy would place a "sudden and fairly large burden" on faith communities and would make it harder for them to do their jobs.
"Any changes in tax laws that burden church communities are likely to take their attention off their involvement in their communities," he said.
He said rural and inner-city churches which already are financially strapped will be the hardest hit if the exemption is taken away.
The issue moves to the Senate. House aides familiar with the bill said they know of no one who opposes it, but it remains unclear whether the Senate will introduce a bill of its own or take up the House-passed bill.

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