Appeals Court Overturns Ruling Striking Down Tax-Free Clergy Housing Allowances

taxes pdMADISON, Wisc. — An appeals court has overturned a lower court ruling that struck down a law granting U.S. pastors tax-free housing allowances.

As previously reported, the Wisconsin-based Freedom From Religion Foundation (FFRF) had filed suit in August 2012, challenging the 1954 “parish exemption” granted by Congress.

“In the case of a minister of the gospel, gross income does not include (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities,” the pertinent statute states.

U.S. Representative Peter Mack, who introduced the legislation, was said to have introduced the law in order to reward ministers for working to fight against wickedness in the land.

“Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this foe,” he stated. “Certainly this is not too much to do for these people who are caring for our spiritual welfare.”

FFRF had sued U.S. Treasury Secretary Jacob Lew and acting IRS Commissioner Daniel Werfel, asserting that the tax exemption violated the Establishment Clause of the First Amendment and the equal protection provision of the Fourteenth Amendment. The organization claimed that it was unfair for clergy to receive the tax break while others, such as the founders of FFRF, must pay taxes on their housing allowance.

“[I]t is pure discrimination to deny atheist leaders the housing allowance privileges given to clergy as a reward for fighting ‘godless foe,’” co-founder Annie Laurie Gaylor stated.

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Last November, U.S. District Court Judge Barbara Crabb, appointed by Jimmy Carter, agreed with FFRF, declaring section 2 of the tax code unconstitutional.

“Because a primary function of a ‘minister of the gospel’ is to disseminate a religious message, a tax exemption provided only to ministers results in preferential treatment for religious messages over secular ones,” she wrote.

But on Thursday, the 7th Circuit Court of Appeals in Chicago reversed Crabb’s ruling, opining that FFRF has no standing in the matter and thus throwing out the legal challenge. FFRF suffered no personal injury, the court said, because it has never sought to obtain the exemption and therefore cannot show that it had been denied under the law.

“The plaintiffs were never denied the parsonage exemption because they never asked for it, ” the three-judge panel stated. “Without a request, there can be no denial. And absent any personal denial of a benefit, the plaintiff s’ claim amounts to nothing more than a generalized grievance about §107(2)’s unconstitutionality, which does not support standing.”

Alliance Defending Freedom (ADF), the Christian legal organization that filed a friend of the court brief on behalf of approximately 600 churches nationwide, applauded the decision.

“The atheists who filed this suit may have an axe to grind against religion, but as the 7th Circuit found, that doesn’t give them sufficient standing to challenge a tax benefit for which it has never applied and that has been provided to pastors for decades,” said ADF Senior Legal Counsel Erik Stanley. “The allowance many churches provide to pastors is church money, not government money. It is constitutional and should continue to be respected and protected.”

As of press time, FFRF had yet to issue a statement about the matter.


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  • Thomas Collins Jr June

    One law at a time.

  • Homonaseau

    God’s righteous judgment is upon this nation.

  • Drihtnes

    All housing should be tax-free.

  • Demopublicrat

    “A heavy progressive or graduated income tax.” – Communist Manifesto plank 2.

  • James Grimes

    The FFRF is a group of haters and Christians are their targets.