Recent ruling on clergy housing brings no immediate change

A message from Todd Burris, director of administrative services for the Arkansas Conference

On Nov. 22 a federal district judge in Wisconsin ruled that the tax-free status of a clergy housing allowance violates the establishment clause of the First Amendment, giving preferential tax benefit not available to similar non-religious organizations.

What does a potential change in the taxability of a housing allowance mean for clergy in Arkansas? When Justice Barbara Crabb issued the ruling, she prevented the IRS and Treasury department from enforcing the law until the appeals process is completed—so, for the moment, nothing will change.

If the government does not appeal this decision in 60 days, it will become law, but only in Wisconsin.  The U.S. Supreme Court will have to affirm this decision before it has any effect on clergy in Arkansas. So in 2014, both active and retired clergy may continue to receive tax-sheltered housing allowances. (This ruling, if it takes effect, would not affect pastors living in church-owned parsonages.)

Attorneys with the United Methodist Church’s General Board of Pensions and Health Benefits, as well as the General Council on Finance and Administration, are closely monitoring this case on behalf of the church.  We will keep you informed on this and any other developments relating to clergy and church tax laws.  In the meantime, if you have any questions, please feel free to contact me at tburris@arumc.org.