Court Probing Parsonage Tax

Court Probing Parsonage Tax

CIRCUIT COURT PROBING \PARSONAGE\ TAX BREAK FOR CLERGY

Could an obscrure tax court case mark the beginning-of-the-end for an unconstitutional perk which benefits clergy?

Following oral arguments in an obscure tax case involving a California minister, a federal appellate panel of the 9th U.S. Circuit Court is examining the constitutionality of an IRS provision which permits a tax exemption for ministers and other clergy.

   The move comes in connection with WARREN v. COMMISSIONER OF INTERNAL REVENUE. The case originated in tax court, and pertains to filings made by Rev. Richard D. Warren of the Saddleback Valley Community Church in Orange County, California. According to the San Francisco Daily Journal, a publication for the legal community, Warren received approximately $100,000 in salary in 1995 from the Baptist church trustees, all of which he defined as a \housing allowance.\ Using Section 107(2) of the IRS Code, Warren thus deducted the entire amount and paid no taxes. The return was challenged by the IRS, which argued that only the fair market rental value of the parsonage was deductible; but the tax court sided with the minister, and the IRS appealed.

   Last week, in an atmosphere which the Journal described as \unusual and quarrelsome,\ a judicial panel voted to look into the constitutionality of the IRS statute and consult University of Southern California law professor Erwin Chemerinsky about the matter. Jurists argued over the move, however, with Judge Richard C. Tallman saying, \I believe it injudicious to appoint an amicus curiae (\friend of the court\) to attack the constitutionality of the parsonage income tax exclusion when no one but the other panel judges improvidently wish to reach that issue.\

   Panel Judge Stephen Reinhardt countered, \Our colleague obviously has a passionate desire that we permit the religious tax deduction, whether constitutional or not.\ Reinhardt had earlier opined that before the WARREN case could be taken up the Circuit Court, that body may have to examine the constitutional implication of the \parsonage exclusion.\ The issue, Reinhardt wrote is \to what tax deduction is Reverend Warren entitled? If ... under the constitution, Rev. Warren is not entitled to any tax deduction at all because such a deduction would violate the First Amendment, then it is not possible to decide the case on non-constitutional grounds and reach the correct result.\

    There has not been a constitutional challenge to the exemption since it became part of the IRS code. \The government would never raise the constitutionality of its own regulation,\ said Dr. Chemerinsky, \and the ministers wouldn't want to disturb their tax deduction.

   \This is for churches, synagogues and mosques a really big deal.\

   Indeed, the case has become pivotal for the little-known National Association of Church Business Administration which describes itself as \an interdenominational, professional, Christian organization which exists to train, certify and provide resources for those serving in the field of church administration.\ The group hired attorneys in 2000 to file amicus briefs when the WARREN case began winding its way through the courts. Also joining in the amicus are a Presbyterian church in Houston and an interdenominational church from Newark Texas.

   The case is potentially explosive for several reasons.

   One issue is to what extent courts must confine themselves when faced with the question of constitutional inquiry. Judge Tallman, the lone jurist opposed to testing the legality of the parsonage exemption cited the \wise counsel\ of former U.S. Supreme Court Justice Felix Frankfurter, who in 1958 wrote:

\But it is not the business of the Court to pronounce policy. It must observe a fastidious regard for limitations on its own power, and this precludes the Court's giving effect to its own notions of what is wise or politic.\

   Judge Reinhardt disagreed, saying it was the obligation of the court to review constitutionality.

   \No case our colleague can locate, not even the ghost of Justice Frankfurter, can help him avoid this inescapable fact...\

   Another issue is whether in the current political climate, the legal system wants to take on the burden of possibly overturning what the religious community definitely considers to be a sacrosanct practice, that of not imposing a tax on clerical property, and whether the exemption violates the First Amendment. Neither of the parties in WARREN -- the minister and the Internal Revenue Service -- wish to question the constitutionality of the exemption. Lurking in the background is the 1989 case of TEXAS MONTHLY v. BULLOCK, where the U.S. Supreme Court held that a sales tax exemption on Bibles and other religious materials was unconstitutional. The Ninth Circuit is locked in a similar position, since the \parsonage exclusion\ applies solely to clerics.

   In BULLOCK, three high court justices opined that to be constitutional, any tax exemption must include nonreligious groups or publications. Three others wrote that the practice constituted an exemption specifically aimed at religious instruction and content, and thus violated the First Amendment.

   \I am surprised that it's come to this,\ said Frank Sommerville, an attorney hired by the NACBA. \It puts all 850,000 ministers, priests and rabbis in the U.S. at risk of losing the housing allowance...\

3 2012-02-28 20:16:18
151 21 0 The Cons of Charitable Choice

The Cons of Charitable Choice

“No man shall be compelled to frequent or support any religious worship, place of ministry whatsoever, nor shall be enforced, restrained, molested or burdened in his body or goods, nor shall otherwise suffer on account of his religious opinions of belief: but that all men shall be free to profess ... their opinion in matters of religion.”

Should Americans be compelled to support organized religion? Legislative proposals, including the 1996 “Charitable Choice” provision of the Welfare Reform Act (“Personal Responsibility and Work Opportunity Reconciliation Act of 1996”), and proposals to form “faith-based partnerships” between religious groups and government are moving our nation in this dangerous direction. Some political and sectarian groups insist that churches, synagogues, and other religious movements should be given a greater role in operating and administering social welfare programs. With government “privatizing” the welfare system, billions of dollars in grants and other disbursements are now being handed out to various non-profit organizations. Changes in the law, and in the way welfare operates today in the United States, means that religious groups will be able to compete for these contracts.

All of this seriously threatens the separation of church and state in America today. Already, sectarian groups take public tax money and use it to operate social service programs that are religion-based. New proposals in Congress would expand the latitude these religious organizations have in using public funds to advance their sectarian message. Under the guise of “welfare reform” or “streamlining” the delivery of social services, we are in danger of using public funds to support religion and instituting what amounts to a religion tax which all Americans -- including tens of millions of Atheists, agnostics, freethinkers and other like-minded citizens -- must pay.

Unfortunately, government programs have long had the effect of aiding religious groups. Tax money has been used to finance everything from hospitals run by religious denominations to programs which provide direct and indirect financial and material aid to religious schools. Courts have been sharply divided in cases examining the constitutionality of such programs. Many critics say that even the majority in some Supreme Court cases seem to go to great lengths in trying to uphold policies which allow religious schools or groups to be the beneficiaries of public funding.

DISESTABLISHMENT OF RELIGION;
AN AMERICAN TRADITION

Prior to the American Revolution, a number of colonies had an official or “established” church which was often supported by a tax. One frequently had to belong to such an official religion in order to enjoy certain rights such as owning property, operating a business or holding an office of public trust. Most of the Founding Fathers were opposed to such a practice, though, and called for the “disestablishment” of religion. Churches were disestablished (written out of the law as the “official” sect, their public funding terminated) in Pennsylvania, Delaware and New Jersey in 1776, and in New York, North Carolina and Georgia in 1777. In 1790, South Carolina disestablished its state-supported church, while Connecticut did so in 1818. Massachusetts was the last state which took its official religion off the public dole in 1833.

Religious groups frequently protested disestablishment. Some states in New England continued the unfair policy of giving religious groups free land. Other formerly-established churches attempted to “incorporate” through Congress so that they might administer a tax in their communities. James Madison vetoed one bill that would have allowed the Episcopal Church in Alexandria, Virginia to have this authority. It took until the 1860s to fully end these schemes which allowed churches to use public money for their survival.

Churches & Charity

Religious organizations often boast of their “charitable” works, as if government social programs and even non-sectarian charities have not helped millions of Americans. Today, religious charities often depend on local, state and federal funding for most of their budgets -- even thought the churches like to take full credit.

When public monies have been provided to religious groups to operate social outreaches -- everything from housing programs to health clinics or neighborhood food distribution -- certain conditions had to be followed, at least in theory. The tax money had to be used for secular purposes (food, health services) rather than religious worship or proselytizing. No person accepting the services could be compelled to change their religious beliefs, attend religious services or engage in any other type of sectarian activity as the “price” for benefiting from the program. Everyone, whether they agreed with the doctrines of the religious group operating the program, had to be eligible. If they felt uncomfortable with the program, a secular alternative -- one that was not religion-based -- had to be available. The program had to follow other guidelines, too, such as not requiring staff members to hold a particular religious belief. Religious symbols, tracts and other materials could not be in evidence, or used as a component of the program.

Religious groups often established separate, non-profit corporations -- “fronts” -- so they could accept government money and operate these social service programs. In theory, this allowed the government to monitor the programs for compliance, and protect the independence of the religious organization sponsoring the program.

American Atheists has maintained that even these programs should not have been permitted. It is difficult to truly separate the secular and religious component in any of these social outreaches. Even with guidelines, the mere existence of the programs creates the public impression that faith-based groups are engaged in beneficial services to the community at their own expense. Government funding has resulted in “free publicity” for religious groups, and it has provided a source of jobs -- at public expense -- for persons connected with these churches, who otherwise would have to go out and find other employment.

Finally, even with the guidelines, the opportunity for abuse pervades these programs. There is often little or no government oversight to guarantee that they are not being used to promote religious belief, or that religion is not smuggled into a particular social program. When federal money trickles down to state and local agencies, it is often disbursed by committees staffed by representatives of the very faith-based groups which are seeking grants. When religious groups apply for public money, there is generally only a perfunctory review, and little supervision and follow-up to guarantee that this money is not being used to support religious activities, messages and proselytizing.

Ideally, we should prohibit religious groups from accepting any public money to operate social services. Some faith-based organizations rightly insist that they should use their own money, not the taxpayers’, to fund their charitable works. Others fear that with government money will eventually come control and more intrusion into the affairs of religious denominations. In any case, American Atheists takes the position that absolutely no funds should flow from the public treasury into the coffers of sectarian religious groups -- for any excuse! Any public funding of religion, for whatever reason, amounts to a religious tax on the American people. The decision to contribute to a church or other house of worship -- or not contribute -- should be a private one.

THE CHARITABLE CHOICE THREAT

The 1996 Welfare Reform Act contained provisions which allow a greater role for religious groups in operating social services. It seriously lowers the legal standards for such groups, and further erodes the separation of church and state. It may well constitute a further peril to the independence of religious congregations by “hooking” them on the public payroll. (We often speak of “getting people off the welfare treadmill,” but in this case public policy is encouraging a similar syndrome for churches, mosques, temples and other faith groups.) Finally, it expands a dangerous and unfair religious tax on the American people, forcing them to support faith-based organizations and programs.

* The “charitable choice” provision was promoted by Sen. John Ashcroft (R-Mo.) In unabashed language, he admitted that the goal of the legislation was to encourage religious groups to become further involved with social service programs. This is one of the things he said about the legislation:

“In the past, many successful faith-based organizations have not participated in government programs for fear of having to compromise their religious integrity or being hobbled by excessive government regulation and intrusion. The confusing array of legal precedents has often led government officials to conclude mistakenly that the constitutional law requires that faith-based organizations be excluded from the mix of private service providers, or that entities accepting government funds forego their religious character.”

Ashcroft admitted:

“One of my goals in proposing the charitable choice provision was to encourage faith-based organizations to expand their involvement in the welfare reform effort by providing assurances their religious integrity would be protected.”

* “Charitable Choice” states that faith-based providers must be given equal consideration with secular, non-profit organizations when bidding for social service contracts. This encourages religious groups to accept public money and “hunt” for public funding sources. Unfortunately, the legislation further muddles the already-complex and confusing array of laws and court guidelines pertaining to religious groups accepting public money. The law claims that it does not violate the separation of church and state (a decision usually left for the judicial system, not Congress) and that the money is not to be used for religious proselytizing or indoctrination, but then guarantees that religious groups need not abandon their “faith-based” mission or character. Religious providers may not be forced to remove icons, religious art, scriptures or other symbols from their premises. Religion-based activities (such as prayer at a meal) may be carried out, although in theory, any social service beneficiary may not be compelled to participate.

Even though the program is supposedly based on “choice,” problems abound. Clients accepting social services are presumably free to decline any participation in the religious parts of a program, but what guarantee is there that this will be enforced? As “charitable choice” schemes expand, would groups such as juveniles really be informed of their rights in such programs? Those who decline to pray, read Bible or Koran verses, or engage in other religious rituals would be marginalized and possibly harassed for failing to conform. Is this right?

The legislation pays lip service to separation of church and state, and provides that a secular alternative must be available for those not wishing to participate in a religion-based service program. What kind of oversight exists, though, to guarantee this?

And remember that all religious groups may apply for public funding. Christians may be excited about receiving a public subsidy to “serve” the public, but what happens when Muslims, Hindus or even fringe religious groups begin to apply for their share of tax money? What happens if an Atheist family must seek public assistance through a “faith-based” program operated by Roman Catholics? The Nation of Islam? A Hindu Temple? How would a Christian family react?

The fairest approach is to fund no religious groups. If the goal is to feed hungry people, provide medical care, train people for the job market and render other services, those objectives -- not “faith-based” doctrines -- should be the focus of social service legislation. Involving religious groups and “faith-based” outreaches at public expense still amounts to a religious tax.

* Religious groups which accept “charitable choice” funding play by a special set of rules. In order to “encourage” religious involvement, this legislation provides wide latitude for faith-based groups above and beyond that enjoyed by secular, nonprofit service providers. Sectarian providers may discriminate and use a religious litmus test when hiring staff to administer such programs.

In addition, this legislation opens the door to widespread fiscal abuse. Religious groups have been involved in financial and other scandals, and have attempted to use freedom of religion as a legal shield. “Charitable Choice” allows these groups to establish separate nonprofit corporations to operate social programs, thus insulating their parent denominations/sects from any scrutiny. The religious character of these faith-based outreaches can be a powerful disincentive for monitoring and oversight to insure that the service provider is obeying the law.

* Many social service and religious groups have spoken out against “charitable choice” schemes. They include The B’nai B’rith, Church of the Brethren, United Methodists, Jewish Council for Public Affairs, Presbyterian Church, Rabbinical Assembly, and United Church of Christ. It is important to note that while certain religious groups may speak out against “charitable choice,” that does not mean that they oppose other forms of public funding and special privileges for organized religion! They may oppose this legislation for fear of potential government oversight. They may also support the notion of religious groups accepting public money to operate programs that appear to be mostly secular. Again, this is why American Atheists seeks an end to any and all programs which divert public money to religious groups under any excuse!

FAITH-BASED PARTNERSHIPS:
MELDING PRIVATE AND TAX MONEY TO BENEFIT RELIGION

Another category under the heading of public funding of religion is so-called “faith-based partnerships.” These are relatively new, but they are all the rage in many religious, political and public policy circles. While “charitable choice” is certainly one form of this “partnership,” it is not the only possible arrangement. “Partnerships” are increasingly popular with state and local governments. They meld public and private money in order to operate a variety of social services and outreaches.

Some groups which oppose “charitable choice” still support a “partnership” arrangement which might, for instance, give religious groups considerable latitude in how they operate social service programs. As with the federal legislation, though, these “partnerships” rarely attract much media or political scrutiny. The money is often disbursed by committees appointed by government leaders or bodies; and religious groups are inevitably represented, guaranteeing that faith-based organizations receive “their share” of our tax dollars.

* In Texas, Gov. George W. Bush has promoted “faith-based” partnerships involving everything from drug and alcohol rehab to prison-based ministries. An estimated $10 million has been spent so far (September, 2000).

* In New Jersey, the state operates a special “Office of Faith-Based Partnership” to encourage participation by religious groups in the public policy sphere. This has helped churches purchase housing units, storefronts and even vacated business real estate.

* As with federal “Charitable Choice,” these “partnerships” appear to have minimal or no oversight. State and local governments are often more concerned with efforts to involve the religious community than they are in supervising the recipients of these public funds so that they do not use the money in promotion of their religious mission.

* Some “partnership” proposals would use tax credits and other incentives, rather than outright grants, to encourage the growth of religion-based social programs. American Atheists considers this to be a disingenuous “end run” around the First Amendment by tinkering with the tax system in order to encourage contributions to religious groups. Again, the real goal is not to feed and cloth the needy, or provide job training or other social services, but rather create public policies which involve religious groups in the administration and operation of such programs. “Partnership” boosters such as Bush advisor Marvin Olasky frequently refer to the need for a religious component in social welfare services.

Ending Religious Taxation in America

In the 1947 case EVERSON v. BOARD OF EDUCATION OF EWING TOWNSHIP, Supreme Court justices noted:

“The ‘establishment of religion’ clause of the First Amendment means at least this: neither a state nor the Federal Government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another. Neither can force nor influence a person to go to or to remain away from church against his will or force him to profess a belief or disbelief in any religion. No person can be punished for entertaining or professing religious beliefs or disbeliefs, for church attendance or non-attendance. No tax in any amount, large or small, can be levied to support any religious activities or institution, whatever they may called, or whatever they may adopt to teach or practice religion. Neither a state nor the Federal government can, openly or secretly, participate in the affairs of any religious organizations or groups or vice versa. In the words of Jefferson, the clause against establishment of religion by law was intended to erect ‘a wall of separation between Church and State’ ...”

Despite that guidance, the court nevertheless upheld a public policy which reimbursed parents who sent their youngsters to religious school for the cost of transportation. Courts have continued to chip away at the wall of separation between church and state, gradually opening the door of the public treasury with the possibility of more taxpayer funding of religion. Some defend these policies as long as “all religious groups” may qualify for funding, or if clients receiving social services have the “alternative” of obtaining services from a secular provider.

The fact that all religious groups may qualify for public assistance, though, does not render this practice fair and constitutional. We take seriously the principle that no public monies should be given to any religious groups for any purpose whatsoever. “Charitable Choice,” Faith-Based “partnerships,” vouchers and other schemes simply amount to a religious tax. They compel tens of millions of Atheists to directly and indirectly fund religious groups, programs and outreaches.

STOPPING CHARITABLE CHOICE, PARTNERSHIPS AND OTHER SUBSIDIES FOR SECTARIAN RELIGION

What can Atheists -- and other Americans who oppose a religious tax and other public funding of religious groups -- do to stop this trend?

* Learn more about Charitable Choice. The American Atheist Magazine and American Atheist Newsletter often carry news items about this dangerous trend.

* Support educational and legal efforts to thwart “charitable choice” and partnership schemes.

* Speak out! Let your elected officials know where you stand.

3 2012-02-28 20:16:18
152 20 0 Congress Rushes to preserve Clergy Tax Breaks

Congress Rushes to preserve Clergy Tax Breaks

CONGRESS RUSHING CLERGY TAX BREAK IN HOPES OF NEUTRALIZING U.S. COURT RULING

The House of Representatives yesterday passed legislation that would preserve a decades-old policy of giving tax breaks to members of the clergy toward the costs of their housing.

   With little fanfare or advance publicity, the Clergy Housing Allowance Clarification Act of 2002 passed during a roll call vote, 408-0. The measure was introduced on April 10, and the bill fast-tracked through the legislative hopper without public hearings or other input. Debate and discussion of the measure lasted yesterday from 2:58 PM to 3:19 PM.

   Sponsored by Rep. Jim Ramstad (R-Minn.), the legislation is designed to shore-up a government policy which has been in place since 1921 giving ministers, priests and other clerics an exemption for the cost of housing and home ownership. Ramstad told reporters that loss of the special privilege could cost the clergy an estimated $2.3 billion over the next five years.

    \We cannot allow this important tax provision to fall,\ Ramstad declared.

   But why the rush?

   One reason is that the U.S. 9th Circuit Court of Appeals is considering an examination of the exemption thanks to an obscure tax court case, WARREN v. COMMISSIONER OF INTERNAL REVENUE. That dispute originated when Rev. Richard D. Warren of the Saddleback Valley Community Church in Orange County, California attempted to write off his $100,000 salary from church trustees as a \housing allowance.\ The IRS challenged the deduction, arguing that only the fair market rental value of the parsonage was deductible. A tax court sided with the minister, and the IRS appealed.

   When the case reached a panel of the 9th Circuit, though, Judge Stephen Reinhardt voiced questions over the constitutionality of the exemption. That precipitated an exchange described as \unusual and quarrelsome,\ as jurists debated whether the court should further examine the tax break.

   The issue, Reinhardt wrote is \to what tax deduction is Reverend Warren entitled? If .... under the constitution, Rev. Warren is not entitled to any tax deduction at all because such a deduction would violate the First Amendment, then it is not possible to decide the case on non-constitutional grounds and reach the correct result.\

   The case is even more awkward since, as University of Southern California law professor Erwin Chemerinsky says, \The government would never raise the constitutionality of its own regulation.\

   \The ministers wouldn't want to disturb their tax deduction, either,\ he adds. \This is for churches, synagogues and mosques a really big deal.\ He added that the IRS policy amounts to \government subsidizing religion.\

   Chemerinsky has been called by the court to advise the judges on how to handle the issue. Neither the IRS, nor attorneys for Rev. Warren, want to see the regulation eliminated. Neither does an obscure group known as the National Association of Church Business Administration which has entered the fray with an amicus ('friend of the court\) brief.

   On Capitol Hill, there is little effort to conceal the fact that the \Clergy Housing Allowance Clarification Act of 2002\ benefits organized religion. Rep. Earl Pomeroy (D-ND) said that the exemption was crucial especially in rural areas and communities which find it difficult to attract clergy. \A clergy's home is not just his shelter, but a central meeting place for all members of the congregation,\ Pomeroy added.

   As for the Ninth Circuit daring to examine the constitutionality of the clergy perk, Rep. Ramstad accused the court of \judicial activism at its worst.\

   The House bill deals with section 107 of the Internal Revenue Code, modified in 1968. Section 2 of the legislation lists several purposes, among them to \accommodate clergy in denominations that require as part of their ministry that they locate to specific communities...\ and to \recognize that clergy frequently are required to use their homes for purposes that would otherwise qualify for favorable tax treatment, but which may require more intrusive inquiries by the government into the relationship between clergy and their respective churches.\ Another objective is to \minimize controversies between the clergy and the Internal Revenue Service...\

   \If this isn't a blatant example of government protecting 'special rights' for organized religion,\ said American Atheists President Ellen Johnson, \I don't what is.\

   H.R. 4156 now moves to the U.S. Senate for possible further action.