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Canon Law of the church, the priest had no right to receive,
direct the use of, or dispose of the salary for his own benefit.
His salary went directly to the church, and the church provided
him with a place to live and minimal living expenses. The court
held that the priest was not exempt from filing a Federal income
tax return and paying taxes on the income, even though he taught
at the express direction of the church, and his earnings were
paid directly to the church.
Unlike the taxpayer's income in Fogarty, petitioner’s income
was wholly unconnected with his work for the church.
Additionally, petitioner first paid his rent and living expenses
before dispersing the remainder as he saw fit. Unlike the
taxpayer in Fogarty, petitioner did not transfer his entire
paycheck to his church but merely dispersed funds to various
people and causes. Although petitioner contends he gave much of
his Pension Plan payments and Social Security benefits to “do the
work of the Lord” on behalf of the church, this does not relieve
him from the obligation of paying Federal income taxes on his
income. These actions do not bestow a tax-exempt status on him.
Respondent, therefore, is sustained. As a result, petitioner is
also liable for the sections 6651(a)(1) and 6654(a) additions to
tax.
At trial, respondent orally moved for the imposition of the
section 6673 penalty. Section 6673 allows the Court to impose a
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