You are currently viewing How Warnock Avoids Income Taxes

How Warnock Avoids Income Taxes

Sen. Raphael Warnock (D., Ga.) has an unusual financial arrangement with an outside employer that allowed him to avoid income tax on $89,000 of outside pay last year, tax experts say.

Warnock, who works as a senior pastor at the Ebenezer Baptist Church in Atlanta, said the church paid him $89,000 last year as a “presbytery allowance” – as opposed to regular outside income, which is subject to strict limits for senators under federal law. Legislators are not permitted to receive more than $29,895 in outside revenue.

The news raises questions about whether Warnock is taking tax relief that is not available to the vast majority of Americans. Republicans say Warnock wants to raise taxes, pointing to his vote for a spending package in August that some analysts say would raise taxes for low- and middle-income people. The senator has also come under fire for his outside financial arrangements from his opponent, Republican Herschel Walker. The Walker campaign criticized Warnock for doubling his annual salary since taking office, raising $120,000 from the Ebenezer Baptist Church and more than $240,000 for a book deal.

Tax experts said the Internal Revenue Service created the modern “manson allowance” provision in the 1950s as tax relief for religious leaders, who historically lived in tax-exempt manses owned by church, but who now often rent or own their own homes. The provision allows pastors and other clergy to deduct their estimated annual housing expenses — including mortgage payments, lawn care, furniture and pool maintenance — from their income taxes.

Warnock’s campaign declined to say whether he paid tax on his housing benefit.

Some legal experts have also questioned the Senate Ethics Committee’s decision to approve the arrangement, saying it appears to violate federal law that prohibits members of Congress from receiving more than $29,895 in outside income. Warnock’s campaign has suggested that ‘presbytery allowance’ is not subject to the same cap as regular income, according to the Atlanta Journal-Constitutionwho first reported on the arrangement last month.

“Senator Warnock’s arrangement appears to be an abuse of both the presbytery allowance provisions of the tax code and Senate ethics rules,” said Charlie Spies, Republican campaign finance attorney at Dickinson. Wright. Free Washington Beacon. “The parsonage exception in section 107(2) is targeted at those who are pastors, not politicians.”

Tax experts told the Free tag qualified clergy are allowed to designate up to 100 percent of their salaries as tax-exempt under the presbytery exemption. Although clergy members need written acknowledgment from their church to participate, religious institutions have no say in the percentage requested by clergy and do not monitor how the employee spends that money. , according to experts. Instead, participating clergy are supposed to be regulated by the IRS.

While many pastors claim less than 40 percent of their salary as parsonage allowance, one forensic accountant said he’s seen some who take more than 70 or 80 percent, an amount he says is “on the edge of abuse”.

Warnock’s parsonage stipend accounts for nearly 75% of his income from Ebenezer Baptist Church, which comes down to about $7,400 a month in housing costs.

The senator owns a home in Atlanta that was recently appraised at around $1 million, according to property records. In addition to mortgage payments, Rectory Allowance can be used to cover all housing-related costs, including security, landscaping and furnishings.

Gil Rothenberg, the former head of the Justice Department’s tax division appeals division, told the Free tag the parsonage allowance was intended to “even the balance” between wealthy and poorer churches, which cannot always afford to provide a well-maintained home for their ministers.

But he added that there have also been instances where religious leaders have abused the system. In 2002, Rothenberg represented the government in a legal dispute with Rick Warren, a pastor of a mega-church who had claimed $80,000 of his salary as a “parsonage allowance” – an amount which, according to the IRS, exceeded the value of his home. The case prompted Congress to update the law, capping the parsonage allowance at the fair rental value of the home, plus furnishings and maintenance.

“The types of cases that got to me when I was at the DOJ were basically the most abusive ones,” Rothenberg said. “I don’t know how many other ministers inflate their parsonage allowance. No one does. You hope the CPA, or whoever does their taxes, does it right.”

While churches note that the provision is crucial for many clergy, who often do not earn large salaries, the rule has also been controversial. Critics accused some clergy of taking advantage of the exemption, using it to pay for lavish vacation homes and other luxuries.

Peter Reilly, a chartered accountant who has written about parsonage allowances, said Warnock’s allowance “seems like a lot, but it’s not crazy” in comparison to others he’s seen.

“Part of the presbytery [allowances] can tend to be huge,” he told the Free tag. “Some of the televangelists, it’s millions.”

Leave a Reply