Religion-Based Tax Breaks: Housing

A legal battle between the IRS and the author of, ''The Purpose Driven Life,'' by Pastor Warren recently ended with positive results for leaders of houses of worship.

The housing deduction is one of several tax breaks that leave extra money in the pockets of clergy members and their religious employers. Ministers of every faith are also exempt from income tax withholding and can opt out of Social Security. And every state but one exempts religious employers from paying state unemployment taxes -- reducing the employers' payroll expenses but also leaving their workers without unemployment benefits if they are laid off.

For Tens of thousands of ministers -- and their financial advisers -- Pastor Warren will also be remembered as their champion in a fight over the most valuable tax break available to ordained clergy members of all faiths: an exemption from federal taxes for most of the money they spend on housing, which typically represents roughly a third of their compensation. Pastor Warren argued that the tax break is essential to poorly paid clergy members who serve society.


The Housing Exemption
The one small passage in the vast federal tax code that originally conferred the housing-expense exemption on clergy members did not cap the deduction. But in 1971, the Internal Revenue Service limited it to the ''fair market rental value'' of the furnished home, utilities included.
During a routine audit in 1996, according to court documents, the I.R.S. decided that Pastor Warren's housing deduction exceeded the rental value of his new home on Via Del Sol in the rugged Trabuco Canyon, southeast of Los Angeles.


Pastor Warren, who gives 90 percent of his considerable income to charities, later explained in an open letter to other ministers that he decided to sue because the housing allowance was the only way small churches could pay their pastors enough to live -- and he knew that those ministers could not fight the I.R.S. as he could.

It took four years -- and far more of Pastor Warren's money than the $55,300 disputed in the audit -- but on May 16, 2000, the United States Tax Court struck down the I.R.S.'s cap and ruled that clergy members could deduct ''the amount used to provide a home,'' however much that might be.

Pennewell Invitational Tournament Recap

Wow, a battle erupted at our golf tourney! Late Sunday with the sun going down, Tom Dorsch and Scott Carter won an epic battle for the 3rd annual Pennewell Invitational. They inched out Charlie Jaromin and Bob who were both questioning how they did come away with a repeat of a past years victory. 3rd place went to John Groubert and his son Johnny Groubert who this author told you would place well. Rounding out the winners circle was your very own Nick Pennewell and Steve Bishop.
The long drive contest was donated by Kelly & Coyle, PA. The long drive contest went to Scott Carter who used a technical ruling to attain the prize. His drive had landed just off the fairway, but with the 1 club rule traditional in scrambles he "found" the fairway and the win. The other long drive was aptly won by the 3rd place finisher John Groubert.
Closest to the Pin was won by Wayne Pennewell who somehow managed to get inside of his son Nick for the win. There is some question wheter a technical ruling assisted the eldest Pennewell. Johnny Groubert stoned the closest to the pin on the back nine for the win going away.
We appreciate our donors: Penn Pro, Kelly & Coyle, PA, and Nicholas J. Pennewell, CPA for their assistance in putting the tournament together.

Great news for CPAs

The following is about to become law.
Oct. 2, 2006
— Congress passed a bill that exempts certified public accountants from the Gramm-Leach-Bliley Act's requirement that CPAs send their clients an annual privacy notice, the American Institute of Certified Public Accountants announced. The exemption will be effective as soon as President Bush signs the bill.

Pennewell Invitational, 3rd Annual
The 3rd annual Pennewell Golf Invitational will get underway on Oct 7, 2006 at 1pm. We are expecting a good turnout as defending champion Charlie Jaromin and his fierce accomplice will try to repeat as champions once again. Jay Allen and his son, past champions, will try to regain their lost glory but face an uphill climb as the competition is tough. A dark horse in the competition is the team of Wayne Pennewell and his partner from Atlanta. The team is considered dark horses because Wayne injured himself (emotionally) at an earlier golf outing and has yet to recover. Nick Pennewell will team with Orlando resident Steve Bishop in an attempt to bring home the tournament title he has created. Making his first appearance will be John Groubert playing with son. John is expected to show well. Mark Pennewell and Justin Powers combine forces to attempt to overshadow the "older" competitors in the competition. A new team in the tourney is Danny Reynolds and Zip. This twosome is probably the early favorites as the tournament approaches!