I’m often asked about whether I accept guest posts. I do. Once per year. And it’s that time of year!
Earlier this year, I announced my annual call for guest posts where I offered readers the chance to answer one of six tax-related questions. I chose, out of all of the submissions, thoughtful posts that represented a mix of viewpoints on each of the issues. That mix means that there might be opinions that differ from yours – and that’s okay. Feel free to chime in with your own thoughts as a comment. Remember, however, that the normal terms and conditions for Forbes apply to comments: additionally, I have my own rules (they can be summed up in two words: play nice).
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IRC 107 – Ripe for Repeal
By Robert Baty
Congressmen, Senators and the President may not openly discuss the subject, but it is being discussed by them and lobbyists are actively using their influence regarding the matter. That such is the case is evident by one congressman, Bill Cassidy (R-LA) having introduced H.R. 4493 in a rather lame effort to pacify the lobbyists, appeal to his base, and claim he at least made an effort to thwart the litigation that is on-going regarding the future of IRC 107.
IRC 107 states, in relevant part:
In the case of a minister of the gospel, gross income does not include the rental value of a home furnished to him as part of his compensation; or the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home…
The 1st Amendment states, in relevant part:
Congress shall make no law respecting an establishment of religion…
To many tax and legal scholars, IRC 107 is unconstitutional on its face; a law written solely for the benefit of and, as a result, the establishment of religion (through what is an effective government subsidy of those being paid by churches and other religious organizations).
There is no, was no good constitutional reason for writing such a law for the sole benefit of individuals who are “ministers”.
The in-kind housing benefit has been around for almost 100 years; the cash benefit for about 60 years.
How has it managed to avoid challenge?
I propose 2 fundamental reasons:
First, congress and the president, democrats and republicans, dare not challenge their religious constituencies and propose IRC 107 cannot withstand constitutional muster. Some may recall that Senator Grassley, after conducting a years’ long investigation of certain million dollar ministries and outsourcing to his religious friends what might be done regarding his findings, including IRC 107 issues, was told in no uncertain terms by his religious friends to keep his hands off of IRC 107 and how it has been/is administered by the IRS. And so Congress and the President got the message and have kept their hands off of IRC 107.
Second, until recently, no one else was able muster the will, the financing, and the legal strategy to prosecute a judicial test of the statute.
The Freedom From Religion Foundation (FFRF) gets credit for taking on the challenge and has already been successful in getting Wisconsin Federal District Court Judge Barbara Crabb to declare the cash benefit unconstitutional. The Justice Department has appealed and been joined by hundreds of religious organizations and churches as amici to try and defeat Judge Crabb’s ruling.
Oral arguments in the case are scheduled to be heard in Chicago before a panel of judges of the 7th Circuit Court of Appeals on September 9, 2014.*
If Congress and the President don’t step up to do their duty and simply repeal IRC 107, the case will no doubt proceed to the U.S. Supreme Court regardless of who prevails in the 7th Circuit.
There is also an election coming up in November 2014. Who among the candidates are willing to publicly come out with a vision for the future of IRC 107 as part of their platform and public commitment to the Constitution, however they may see it?
I venture to say not any!
I’m still looking for one.
IRC 107 is ripe for repeal, but what is it going to take to get Congress and the President to rise above their desire to pacify their religious constituencies and simply do what is right?
I don’t know!
I tried!
Didn’t work!
Now I support the FFRF litigation in hopes that the 7th Circuit Court of Appeals will uphold Judge Crabb’s ruling the the U.S. Supreme Court will ultimately, if Congress and the President don’t act to repeal IRC 107, declare IRC 107 unconstitutional.
Robert Baty is a retired Internal Revenue Service Appeals Officer and Christian.
*This post was submitted on August 30, 2014, prior to the hearings. For more on the hearings, see this prior post from my colleague, Peter J. Reilly.
