In June, 2011, I wrote a blog post about a minister who claimed two residences with his parsonage allowance – a primary residence and a lake house. The IRS wanted to deny the exclusion for two residences, even though both residences met the criteria. The Tax Court had cross-referenced the Dictionary Act, arguing that the definition of a ‘home’ could also mean ‘homes’ if the condition for residence is met. The Tax Court supported the minister’s exclusions and so the ruling stood that both residences qualified for excluding the allowance from income.
On February 8, 2012, the Court of Appeals for the Eleventh Circuit reversed the Tax Court decision, siding with the IRS. The Eleventh Circuit Panel cited that cross-references to the Dictionary Act are made for convenience and do not constitute law. They also stated that the legislative history of the Internal Revenue Code referring to the housing allowance at the applicable time period (Code Sec. 107 applying to 1996-1999) repeatedly referred to a dwelling as a singular entity.
Obviously, these challenges can continue for years before resolution since it appears that the minister will appeal the Panel’s ruling. Obviously, the more conservative approach is to claim only one home in the housing allowance calculation.