When the Reverend Goodbody retired after a quarter century during which he tripled the congregation and built a new church, members of his grateful flock voted him $200 a month as a retirement gift. He settled down happily in a small, flower-covered cottage.
Then disaster struck. The federal government demanded income taxes on his $200 allowance. Instead of paying, the clergyman went to court.
"That money isn't salary, but a gift which the congregation voted out of gratitude for my years of service," the Reverend Good-body contended. "It is well established that income taxes cannot be collected on gifts, so make the revenuers stop pestering me."
"The reverend's own argument shows that the money was voted because of his services in the church," the tax collector countered. "As money paid for services is salary and not a gift, the government is entitled to its tax."
If you were the judge, would you make the clergyman pay up?
He did not have to pay. The court ruled that the $200 a month was "a free gift of a friendly, well-to-do group who wished their old minister to live without fear of want." It was not paid for services rendered, the court continued, but was a voluntary "honorarium" which could be terminated at any time.
Based upon a 1954 decision.
-- William Donaldson
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