I
107TH CONGRESS
2D SESSION
H. R. 4156
To amend the Internal Revenue Code of 1986 to clarify that the parsonage
allowance exclusion is limited to the fair rental value of the property.
IN THE HOUSE OF REPRESENTATIVES
APRIL 10, 2002
Mr. RAMSTAD (for himself, Mr. POMEROY, Mr. CRANE, Mr. HERGER, Mr.
MCCRERY, Mr. NUSSLE, Mr. SAM JOHNSON of Texas, Mr. HAYWORTH,
Mr. FOLEY, Mr. BLUNT, Mr. COX, Mr. MICA, Mr. WAMP, Mr. KENNEDY
of Minnesota, and Mr. CHAMBLISS) introduced the following bill; which
was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to clarify
that the parsonage allowance exclusion is limited to the
fair rental value of the property.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Clergy Housing Allow-
ance Clarification Act of 2002’’.
SEC. 2. FINDINGS, PURPOSES, AND CONSTRUCTION.
(a) PURPOSES.—Section 107 of the Internal Revenue
Code of 1986, and the amendments made by this Act, are
intended, among other purposes, to—
(1) further the tax policy of encouraging home
ownership and providing tax preferences for housing;
(2) accommodate clergy in denominations that
require as part of their ministry that they locate to
specific communities for such periods of time as des-
ignated by their denomination, and whose denomina-
tions may provide housing or housing allowances;
(3) minimize government intrusion into internal
church operations and the relationship between a
church and its clergy;
(4) accommodate the differing governance
structures, practices, traditions, and other character-
istics of churches through tax policies that strive to
be neutral with respect to such differences;
(5) recognize that clergy frequently are required
to use their homes for purposes that would otherwise
qualify for favorable tax treatment, but which may
require more intrusive inquiries by the government
into the relationship between clergy and their respec-
tive churches with respect to activities that are in-
herently religious; and
(6) minimize controversies between clergy and
the Internal Revenue Service by clarifying the extent
to which a parsonage or a housing allowance is not
considered gross income for Federal income tax pur-
poses.
(b) CONSTRUCTION.—Nothing in this Act shall be
construed to reverse or modify any regulation, revenue rul-
ing, or other guidance that was issued by the Internal Rev-
enue Service prior to the date of enactment of this Act,
except with respect to the effective date of the fair market
value limitation added to section 107 of the Internal Rev-
enue Code of 1986 by this Act.
(c) FINDING.—Congress finds that it would be appro-
priate and consistent with the purposes of this Act and
the general administration of the Federal tax laws for the
Internal Revenue Service to provide additional guidance
with respect to fair market valuation determinations in
order to minimize disputes regarding valuation under sec-
tion 107 of the Internal Revenue Code of 1986.
SEC. 3. CLARIFICATION OF PARSONAGE ALLOWANCE EX-
CLUSION.
(a) IN GENERAL.—Section 107 of the Internal Rev-
enue Code of 1986 is amended by inserting before the pe-
riod at the end of paragraph (2) ‘‘and to the extent such
allowance does not exceed the fair rental value of the
home, including furnishings and appurtenances such as a
garage, plus the cost of utilities’’.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendment made by
this section shall apply to—
(A) taxable years beginning after Decem-
ber 31, 2000, and
(B) taxable years beginning before Janu-
ary 1, 2001, with respect to taxpayers who filed
a return before April 10, 2002, for such taxable
year limiting the exclusion under section 107 of
the Internal Revenue Code of 1986 as provided
in such amendment.
(2) WAIVER OF INTEREST AND PENALTIES.—In
the case of a taxable year beginning after December
31, 2000, no penalty, addition to tax, or interest
shall be imposed by reason of the amendment made
by subsection (a) with respect to any return filed be-
fore the date of the enactment of this Act if an
amended return is filed within 90 days after such
date of enactment that limits the exclusion under
section 107 of such Code in accordance with the
amendment made by this section.
(3) YEARS BEFORE 2001.—Except as provided
in paragraph (1)(B), notwithstanding any prior reg-
ulation, revenue ruling, or other guidance issued by
the Internal Revenue Service, no person shall be
subject to the limitations added to section 107 of
such Code by this Act for any taxable year begin-
ning before January 1, 2001.
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