Update on 11th Circuit Housing Allowance Case

November 2014 Update:

Federal Court Rules to Dismiss Housing Allowance Complaint

In November 2013, a federal district judge in Wisconsin held that Internal Revenue Code Section 107(2) (the clergy housing allowance) was unconstitutional  The government appealed the case to the Seventh Circuit Court of Appeals, who today (Nov. 13, 2014) vacated the lower court’s decision, and remanded the case “with instructions to dismiss the complaint for want of jurisdiction.”  See file linked below.

In short, the Seventh Circuit held that the plaintiffs did not have standing to bring the case.

November 2014 Court Ruling


2013 Update:

The following update was provided by GCFA in 2013:

As you recall, in December 2010, the U.S. Tax Court issued a controversial decision in a case involving the clergy housing allowance.  The decision held that a ministerial taxpayer could apply the housing allowance exclusion to more than one home. The IRS appealed the decision to the 11th Circuit Court of Appeals.

Yesterday, the 11th Circuit reversed (opinion attached, if you’re interested) the Tax Court’s decision and held the housing allowance can only be applied to one home. We won’t bore you with the details behind the fairly short opinion, as the result was not at all surprising.  Almost everyone (except for the taxpayer and a majority of the Tax Court!) had thought the housing allowance could only be applied to one home.  So we are back to where we were.

This return to the status quo may be important information for any clergy who were planning on claiming an allowance for two homes on their 2011 returns or who requested designations to reflect the cost of two homes for 2012.

Court Ruling: Driscoll - (11th Circuit)