Why was it tax-free? Isn’t this income just like everyone else in the world deals with? Sorry, while I haven’t read the ruling, seems fair to me to treat these benefits as income since the do that with everyone else.
The founding fathers didn’t believe you tax God. Because he is the higher authority.
That’s why church properties and income are tax exempt.
As for housing allowances. Many churches used to maintain a pastoral residence that was church property.
So the question then becomes is a pastoral residence different than a housing allowance?
I’m not an a tax accountant, but I have done some bookkeeping for a few churches. The housing allowance is subject to FICA (self-employment tax for many ministers) but not federal tax. I believe because it is not considered a “wage” but an “allowance” —much the same a car allowance can be allotted (it’s not subject to federal tax either). Records must be kept to prove that the housing allowance is actually being used for housing purposes. Any amount given that is not being used for housing purposes must be declared as taxable income.
In some cases, a parsonage is provided in lieu of a housing allowance. A parsonage is usually located on the church property (which usually means the minister is available to “minister” virtually 24-hours per day). I guess it was extended to provide for those ministers to which a parsonage is not available.
Doesn’t matter, churches and clergy are exempt.