Judge Dismisses Atheist Lawsuit Challenging Church, Clergy Tax Exemptions

churchCOVINGTON, Ky. — A federal judge in Kentucky has dismissed a lawsuit filed by three atheist organizations that challenged tax provisions for churches and members of the clergy.

United States District Judge William O. Bertlesman, appointed by then-President Jimmy Carter, threw out the suit lodged by American Atheists, Atheists of Northern Indiana and Atheist Archives of Kentucky, declaring that they had no standing in the matter.

The groups had asserted that current tax law, which exempts churches from requesting tax exempt status, filing an annual Form 990 or paying income tax withholding and FICA taxes, among other benefits, is unconstitutional.

“Religious organizations and churches are treated differently from secular organizations,” American Atheists wrote in a outline of the lawsuit last year. “The exemptions are applied in a way that discriminates solely on the basis of whether an entity’s members express beliefs and practices accepted as religious. The IRS treats your organization better if you profess belief in a supernatural deity.”

“American Atheists and its co-plaintiffs are asking the Court to find that such disparity of treatment between religious and secular non-profit organizations is unconstitutional and require the IRS to make the tax-exempt filing process uniform for all nonprofit organizations,” it said.

But Bertlesman dismissed the suit on Monday, stating that the atheist groups lacked standing because they personally suffered no injury from the regulations and were never denied the benefits that they challenged. He pointed to circumstances where similar groups were granted the same benefits allotted to churches.

“Initially, the atheists’ complaint concedes that some atheist organizations have obtained classification as a religious organization or church under §501(c)(3).  The Atheists also admit Plaintiff ‘Atheist Archives of Kentucky’s sincerely held beliefs would
allow it to be classified as a ‘religious organization’ because atheist philosophy concerns solely religious beliefs,'” Bertlesman wrote. “Moreover, the IRS cites to a number of cases where state and federal law have recognized non-theist organizations as tax-exempt religious organizations.”

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He said that the groups could be considered religious in light of a 2005 federal court ruling ruling, which said that “when a person sincerely holds beliefs dealing with issues of ‘ultimate concern’ that for her occupy a ‘place parallel to that filled by … God in traditionally religious persons,’ [then] those beliefs represent her religion.”

“Here, the statutes and regulations pertaining to tax-exempt organizations do not expressly favor certain churches or certain religious organizations, nor do they expressly favor theist organizations over atheist or non-theist organizations,” Bertlesman reasoned. “As the atheists have never sought classification as a church or a religious organization under I.R.C. §501(c)(3), their assertion that the IRS targets the atheists’ beliefs for disfavored treatment is unfounded.”

As previously reported, the Freedom From Religion Foundation (FFRF) had filed a similar lawsuit last year, challenging a nearly 60-year-old law that allows pastors an exemption from paying taxes on their housing allowance. U.S. District Barbara Crabb, also appointed by Jimmy Carter, agreed with FFRF, declaring Section 2 of the federal tax code unconstitutional.

Crabb’s ruling is now on appeal before the 7th Circuit, and was rejected by Bertlesman in his decision.


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