In a 36-page opinion peppered with New Testament quotations and citations, the U.S. Tax Court in
Felton v. Commissioner, (US TC, Oct. 10, 2018) held that the over $200,000 per year that congregants donated to Rev. Wayne Felton should be taxed as income rather than treated as gifts. The amounts were received in "Pastoral Gift" envelopes that were available to congregants each week. The court explained:
The dispute between the Commissioner and the Feltons has roots deep in Christian history, and both parties can see their positions staked out as far back as St. Paul. “Who planteth a vineyard, and eateth not of the fruit thereof? Or who feedeth a flock, and eateth not of the milk of the flock?” 1 Cor. 9:7. And “[e]ven so hath the Lord ordained that they which preach the gospel should live of the gospel.” 1 Cor. 9:14. In our era, the Commissioner might have argued, all this milk and fruit constitute income upon receipt. See sec. 61 (gross income defined as income from whatever source deriveth).
But the relationship between a pastor and his flock is far from entirely commercial, and the Feltons argue that, at least in part, they are supported by gifts, not wages justly bargained for and justly earned in the marketplace: “[W]hen I preach the gospel, I may make the gospel of Christ without charge, that I abuse not my power in the gospel.” 1 Cor. 9:18. And “[y]e sent once and again unto my necessity. Not because I desire a gift: but I desire fruit that may abound to your account. But I have all, and abound: I am full.” Phil. 4:16-18.
We have already found that the transfers--whether gifts or compensation-- have left the Feltons very full indeed. But our tax system is somewhat more complicated than the ancients’, and meeting its exactions can only rarely be extinguished with the draught of a single fish. See Matt. 17:27. To decide this case, we must therefore descend from the sacred to the profane.
The court also approved of the tax penalties assessed by the IRS.
[Thanks to Steven H. Sholk for the lead.]
