Lawsuit claims religious pastors get unfair tax break

Lawsuit claims religious pastors get unfair tax break

Print
Email
|

by STUART WATSON / NBC Charlotte

Bio | Email | Follow: @stuartwcnc

WCNC.com

Posted on November 28, 2013 at 12:30 AM

Updated Thursday, Nov 28 at 4:34 PM

CHARLOTTE, N.C. -- Mega church preachers building mega mansions with their tax-free “parsonage allowances” have served to bolster the federal case of a group of atheists trying to strip the clergy of their tax exemption for housing.

Last month the NBC Charlotte I-Team broke the story of Elevation Church founding Pastor Steven Furtick building a 16,000-square-foot mansion in Union County near the town of Weddington.

Last week a federal judge in Madison, Wisconsin ruled the tax exclusion for the “parsonage allowance” for clergy housing is unconstitutional -– a violation of the “establishment clause” in the first amendment to the U.S. Constitution.

The ruling will likely be appealed.

Pastor Steven Furtick will not reveal how much Elevation Church pays him as a “parsonage allowance.”  He told his congregation from the pulpit in September that proceeds from the sales of his books paid for his $1.7 million home.

But WFAA-TV has reported that Furtick’s mentor and former board member, Pastor Ed Young Jr. of Dallas, Texas, received $240,000 as an annual parsonage allowance.
 
Elevation Church Chief Financial Officer James “Chunks” Corbett told the I-Team that 24 pastors at Elevation are eligible for housing allowances but refused to say how much the church pays for the tax-free benefit.

“Why wouldn't churches want to be open?” asked Freedom From Religion Foundation Co-President Annie Laurie Gaylor.  “Why wouldn't churches want to tell a reporter how much they are paying a pastor and how much in housing allowances when they are being given this immense privilege?”

Ordained clergy don’t even have to work directly for a church or other house of worship in order to qualify for the lucrative tax break.

Dennis McLain is an ordained Methodist minister who was “assigned” by the church to serve as CEO of Goodwill Industries of Eastern North Carolina in Durham.  IRS tax forms made public by law from Goodwill show that McLain receives more than $147,000 a year in tax-free payments, thanks in large part to the parsonage allowance.

Through a public relations firm, McLain declined to comment.

I first questioned McLain about the benefit in November of 1996 while I was working at WRAL-TV.

When asked about a $54,500 “expense allowance” on Goodwill’s tax forms, McLain responded, “As a Methodist minister assigned to Goodwill Industries I get a parsonage allowance.”

“Of $54,000?” I asked.

“Whatever it is.  That’s a parsonage allowance,” he responded.

“Is that fair?” Watson asked.

“Fair has nothing to do with it,” he said.

The (Raleigh) News and Observer reported first this year that Dennis McLain and his wife Linda, who also works as an executive at Goodwill of Eastern North Carolina, together now earn close to $800,000 a year.  More than a third of Dennis McLain’s income is tax-free.

“We feel that is unfair,” said Dan Barker, Co-President of the Freedom From Religion Foundation.

The Foundation has sued in federal court in Madison, Wisconsin, where it is headquartered.  Barker himself was once an ordained pastor who took advantage of the parsonage allowance before he changed his mind and became an atheist.

“You don’t even have to report it (to the IRS),” he said.  “It was nice.  I mean who wouldn’t want that advantage?  When you’re paying your taxes you want every break you can get."
 
But Barker and his wife and Co-President Annie Laurie Gaylor sued to strip clergy of the exemption, arguing it is unfair and unconstitutional.

“The rest of us pay more because clergy pay less,” said Gaylor.  “They need to pay their fair share.”

Barker and Gaylor won standing to sue because they too run a non-profit and are paid housing allowances, but are not able to claim the income as tax-free because they do not function as clergy.
 
“Sometimes we’re seeing stupendous housing allowances,” Gaylor said.  “Overpaid ministers.”

And the bigger the house, the bigger the tax break, because the parsonage allowance is limited only by the fair market rental value of the clergy’s home.

“So if you choose to live in the Sistine Chapel or a mansion you can’t claim more than the fair rental value but that could be astronomical,” Gaylor said.

As a practical matter, Gaylor and Barker could not care less what Elevation Church pays Steven Furtick as a salary.  But they do care about the housing allowance because of the tax implications.

“If they want to pay the pastor $50 million a year we're not complaining about that.  That's freedom,” said Barker.  “But if they're excluding housing from taxation, from tax liability, then that's hurting all of us.”

And thanks to the secrecy Congress affords churches -- who are not required to file the IRS Form 990 required of other non-profits -- taxpayers have no idea how much the parsonage allowance is worth.

The best estimates range from $700 million to $1 billion a year.
 
“It’s shielded from public scrutiny,” said Gaylor.  “And yet the public is subsidizing churches.”

Barker said the Freedom From Religion Foundation, like other non-profit groups, must be transparent and accountable.
 
“You could go online right now and see my salary,” he said.  “You can see our organization's income and expenses down to the penny.”

So when it comes to being forthcoming about the details of their finances, the atheists are more open than some Christian mega churches.

Print
Email
|