Federal Judge Again Rules Tax-Free Clergy Housing Allowances Violate Establishment Clause

MADISON, Wisc. — A federal judge has again struck down a 60-year-old law that allows pastors in the nation an exemption from paying taxes on their housing allowance.

“[A]ny reasonable observer would conclude that the purpose and effect of § 107(2) is to provide financial assistance to one group of religious employees without any consideration to the secular employees who are similarly situated to ministers. Under current law, that type of provision violates the Establishment Clause,” wrote U.S. District Court Judge Barbara Crabb, appointed by Jimmy Carter.

As previously reported, the Wisconsin-based Freedom From Religion Foundation (FFRF) had first filed suit in August 2012 to challenge 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 asserted 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.

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“[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.

In November 2013, Crabb 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.

However, the following year, the 7th Circuit Court of Appeals in Chicago reversed Crabb’s ruling, opining that FFRF had no standing in the matter. 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.”

Therefore, FFRF applied for the exemption, and refiled the suit in April 2017 after being denied. Named in the lawsuit were U.S. Treasury Secretary Steve Mnuchin and IRS Commissioner John Koskinen.

“Although defendants try to characterize § 107(2) as an effort by Congress to treat ministers fairly and avoid religious entanglement, the plain language of the statute, its legislative history and its operation in practice all demonstrate a preference for ministers over secular employees,” Crabb ruled again on Friday.

“Ministers receive a unique benefit under § 107(2); it is not, as defendants suggest, part of a larger effort by Congress to provide assistance to employees with special housing needs. A desire to alleviate financial hardship on taxpayers is a legitimate purpose, but it is not a secular purpose when Congress eliminates the burden for a group made up of solely religious employees but maintains it for nearly everyone else,” she said.

In addition to concluding that it is unfair to only benefit pastors, Crabb also stated that that the law can be problematic because it is not limited to ministers with lower incomes, but wealthy prosperity preachers can still live in multi-million dollar homes tax-free.

“Thus, an evangelist with a multi-million dollar home is entitled under § 107(2) to deduct the entire rental value of that home, even if it is not used for church purposes,” Crabb outlined, pointing to a quote from an article by Adam Chodorow, who noted that “Joel Osteen lives in a $10.5 million home and is entitled to exclude the fair rental value of that home so long as he spends that money on the home and his church allocates that amount to housing.”

“If Congress were concerned about lessening the tax burden on poor Americans, it could have tied the exemption to income and made it generally available to any employee who qualified rather than to all ministers who receive a housing allowance,” she contended.

It is not yet known whether the government plans to appeal.


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  • bowie1

    FFRF is more political in its attempts to shut down religious free speech while ministers of the gospel preach a moral, biblical message.

  • BuckeyePhysicist

    If the house is on church property they can’t touch it for tax purposes!

    • dansLaRue

      Actually it’s about time religious organizations start paying taxes, or stay out of the affairs of government.

      • Amos Moses – He>i

        Actually it’s about time government organizations start paying taxes, or stay out of the affairs of religion …. per the first amendment …………..

        • dansLaRue

          Governments collect taxes, citizens and corporations pay taxes. Churches qualify as corporations. Take an elementary level civics class.

          • Amos Moses – He>i

            nope …. some do …. yes … some have bent that knee ….. and have become creatures of the state ….. but the church that has not is tax immune ……………

          • Off Shore

            Corps don’t pay taxes that tax is simply passed on to the consumers “citizens” if you like. Churches by nature should be doing a lot of charity work and therefore can’t pass that tax on. I know, I know… some don’t do much charity work, but as a whole they do.

          • dansLaRue

            If corporations don’t pay taxes, how would you explain the corporate tax rate, 45 wants to lower? The American Revolution was, in part, fought over taxation without representation, and religious institutions now believe they are somehow entitled to representation without taxation.

      • belfastconfetti

        I sort of agree – except that I think it’s time for churches to throw the governments money back in their faces and take back the political voice that they sold for that money. Off the leash.

      • MarkSebree

        I agree with you. I would also add that they need to follow the same rules as other Non-Profit organizations. They need to submit Bylaws to the IRS before they receive tax exempt status. (I am willing to allow this one to be grandfather for existing churches.) They need to start filling out Form 990s every year. They need to be held accountable to all the same laws and regulations that secular organizations need to follow.

  • Recognizing_Truth

    As long as the benefit is available to ministers of any religion (not just the denominations of christendom), then it does not violate the establishment clause.
    If FFRF is willing to admit that atheism and secular humanism are religions then they could qualify for this tax exemption as ministers of their religion (even though all their religion does is violate and deny the rights of other religions).

    The equal protection clause is overused and misapplied regularly, and actually does not apply in this case. Tax exemptions and credits are regularly applied to specific individuals or classes of individuals that are not applied to other and no one believes this is violating the equal protection clause – head of household, child and dependent care credits, combat zone tax exclusions, etc.

    • Freezefred45

      The criteria for the benefit should not be based on religion at all. If religious organizations can get it, but non religious organizations cannot, that too is a violation of the establishment clause.

      Also, religions are ideas, and ideas have no rights for the FFRF to violate.

      • Recognizing_Truth

        It is not a violation of the establishment clause if it were applied to all religions. Again, it would not establish a religion, nor deny religious practice. End of tests for Amendment 1. The only other amendment it can run awry of is the equal protection clause of the 14th, and there the precedent is already set that tax laws can provide or deny benefits to (arbitrary) groups of people (head of household but not just a father/mother, combat soldier but not just any member of military, etc.). Religious leaders but not business leaders is nothing different.

        Now, because the words of the one who proposed the law which was subsequently enacted by Congress are on record, and it is clear that he intended (so one assumes Congress agreed) it for “ministers of the gospel”, there is reason to say he/they were enacting laws that helped establish a particular religion. And that would (currently, apparently does) make the law at least Constitutionally (dark) grey and needs to be revised by Congress.

        And, I don’t deny it is ILL ADVISED on the part of government to make such a broad class of exemption that not only allows the poor head of a soup kitchen to keep things running, but grants Joel Osteen and Creflo Dollar and other “ministers” the free-and-clear means to inhabit and run multimillion dollar “homes”. But it certainly has served to point out the blatant hypocrisy of such men/organizations we should shun and brings to light the self sacrificing ones that deserve our personal support.

        IMHO a man of God, who is paid for and provided for by the people/congregation in monetary or equivalent means (housing) should be happy to follow the example of Jesus and keep things out in the light without any opportunity for the name of Jesus to be besmirched by their activity, by simply doing as He did: “render to Caesar, what is Caesar’s”. Pay the tax. It’s a small price to pay to get the gospel out unhindered by legal morass.

        • Freezefred45

          So, what, do the FFRF have to make up some policy to make them qualify as a religious group for the tax break? Like, add “Also we worship the FSM to their charter? What’s the minimum requirement to qualify as a religious group to as easily as possible exploit this tax break?

          • Recognizing_Truth

            No need to make up a policy. Atheism is a religion already. They just have to be willing to go public with the admission of that.

          • Freezefred45

            Atheism isn’t a religion anymore than A-stantaclausism is a religion. However, under HR15, atheism has all the same protections under the law that religions do, without actually being a religion.

          • Recognizing_Truth

            FFRF is a religious organization which follows doctrines of atheism. It meets several of the criteria outlined by Ninian Smart’s Seven Dimensions of Religion – a system used by anthropologists and archaeologists in their study of civilizations and people groups.

            It also passes the “P” test on all points:
            – organization with a religion Purpose: the active denial of a god/gods. (this differs from simply suspending belief (not believing) that there is a god)
            – they Preach their position in public and private forums (I have attended quite a few of them)
            – they engage in Polemic with organizations which do believe in god(s) (i.e. other religions)
            – they Proselytize, seeking converts from other religions to the beliefs of atheism

            As such, all they have to do to qualify for a “religious exemption” is admit the truth, and take advantage of the law.

      • Recognizing_Truth

        So, if religions are “ideas” and ideas have no rights…then what is the purpose of the clause in the 1st Amendment that reads “prohibiting the free expression thereof”? Obviously there is no religion (practice) without those to practice it (person), so it is the followers/practicers of religion – people – which are affected.

        Denying free expression is denying a protected right. And FFRF continually seeks to deny the right of various religions (practitioners) to work and worship unhindered by government and legal wrangling.

        • Freezefred45

          That is the right of PEOPLE to have whatever religious ideas they want, not the ideas themselves having rights.

          • Recognizing_Truth

            You do know why there is always more than one definition in the dictionary for any given word, right? Because the word may have different meanings or connotations depending upon the context in which it is used. You would like to base your whole argument on the concept that “religion = only ideas”, when the vernacular and legal use of the term is recognized as “the people and practices of their faith”. Your argument is inconsistent with the meaning of the word in the Constitution and in daily practice, and so your position (ideas having rights) is not relevant to the discussion of how the FFRF continues to want to deny rights to people in practicing their faith (the meaning of religion and worship).

          • Freezefred45

            They don’t want to deny them rights, just special treatment, like what they did here. This law gave them special, not equal, treatment, so they worked to get rid of it.

          • Recognizing_Truth

            Again, precedent says that preferential treatment in the tax code can be for arbitrary reasons: active battlefront engagement, head of household (but not just father/mother), religious occupation, etc. The law which gives them preferential treatment has precedent (even if the law is silly, foolish, ill advised). The fact you DON’T like a law doesn’t mean the law runs afoul of being “pursuant to the Constitution”.

            I also stand by my earlier statement that, as far as Christian ministers are concerned, we shouldn’t be taking advantage of this type of law anyway – our Lord didn’t (Matthew 22:15-21), the apostle Paul didn’t (Acts 18:1-4), it sets a bad example for all Christians, and (now) creates a social/legal morass which may impugn the name of Christ if we do it. (Osteen and Dollar and other multi-million-dollar-mansion prosperity preachers are demonstrably NOT Christian so I don’t expect they will agree with this position)

      • Recognizing_Truth

        Precedent says that you can base a benefit on virtually any parameter: head of household, but not just a father/mother; combat soldier but not just a person in the military; student but not just a person under 25, etc.

        Specifying that someone must be working as minister, guru, imam, etc. of a recognized religion to get a housing allowance benefit is completely consistent with the precedents.

        The fact you don’t like religion, or people who practice it, has no bearing on whether they can be given or denied any benefit in the tax code.

        Again, the establishment clause does not automatically deny someone for consideration of a benefit – it could only be claimed if a specific religion was singled out for the benefit. And (again) there is no requirement that a benefit be globally supplied to all breathing people, as already shown in the above examples. So, no problem with the equal protection clause of the 14th either.

        I would suggest that you take a course on constitutional law. They’re available at virtually every college and university. You’d be surprised at just HOW FAR OFF you and most people are in what you THINK the Constitution says and what it actually does.

  • Michael D Coxie

    FFRF should be treated as a domestic terrorist organization in a time of war plain and simple.

    • MarkSebree

      On what grounds? They do not espouse violence. They are not an armed organization or militia. They do not call for sedition. They are a bunch or lawyers that support people fighting for their religious rights against government organizations and actors that think that they can use the power of the government to impose their religious beliefs onto the people under their control. The FFRF fights the mostly christian bullies that do not respect the rights of minorities.

      There are a lot of organizations that are more deserving of the label “domestic terrorist organization” than the FFRF.

      • Michael D Coxie

        do they go against ANY other group besides Christians like everyone else seems to target Christians these days? in other words i DON’T see them going after Bhuddists hindu muslims, etc just Christians. i wonder why that is UNLESS there is something to what Christianity teaches and they are afraid of it. IF that is the case and there is nothing to Christianity and the belief system don’t add up why bother attacking it. would it not be better to take a little wisdom from the Charleton Heston movie of the ten commandments. when the pharoh confronted him in that movie he said let him rave on so that men will know him mad. well…. if there is nothing to Christianity leave Christians be we’ll find out in the end if their is anything to Christianity. until then i FULLY STAND by my comment.

        • MarkSebree

          “do they go against ANY other group besides Christians like everyone else seems to target Christians these days?”

          Yes, they do. The reason that Christians seem to be the most targeted is that they are the most numerous in the USA, they have the most governmental power, and thus they feel that they deserve special privileges that other religions cannot have. This causes them to illegally try to impose their beliefs onto others, and their favorite target are public school children who are required to be there, and usually are not yet educated enough to know the law or to raise an intelligent objective to the teacher’s/coach’s/principal’s illegal prostelyzation.

          ” in other words i DON’T see them going after Bhuddists hindu muslims, etc just Christians. i wonder why that is UNLESS there is something to what Christianity teaches and they are afraid of it.”

          For starters, most religious news outlets will not report on the FFRF addressing issues caused by any besides Christians. Have you looked at the FFRF website to see what their current cases even are? And it is not about what Christianity teaches, it is about what Christians do when they have governmental power behind them. They think it is ok to impose their beliefs onto others, like school children who are required by law to be there. Muslims, Buddhists, Hindus, and other religions do not have the power to get away with violating the First Amendment, sometimes for decades at a time.

          If you know of verifiable instances where Buddhists, Hindus, Muslims, etc. have actually tried to proselytize to the students and the administration and community did not stop them, then feel free to report it with your evidence to the FFRF. Keep in mind that teaching about these religions is not illegal. There are a lot of valid reasons to do so, like history classes, comparative religion classes, social studies classes, and others. The key point is that the teacher is trying to convert the children.

          “IF that is the case and there is nothing to Christianity and the belief system don’t add up why bother attacking it.”

          Because Christians are violating the law, someone sees this and asks the FFRF for help. The FFRF investigates, finds that the complaint has substance, and lets the school (usually) know about the violation, why it is a violation, and a list of Supreme Court cases which support their argument.

          “would it not be better to take a little wisdom from the Charleton Heston movie of the ten commandments. when the pharoh confronted him in that movie he said let him rave on so that men will know him mad. ”

          A movie about a myth is not a valid argument when dealing with American law and jurisprudence. And it is people like you that are the ones raving, not the FFRF. They have long since shown that they are very sane.

          “well…. if there is nothing to Christianity leave Christians be we’ll find out in the end if their is anything to Christianity. until then i FULLY STAND by my comment.”

          What you fail to understand is that the actions of the FFRF have nothing whatsoever to do with Christianity. It has everything to do with the actions of Christians who are government actors/agents who abuse the power that the government gives them in order to impose their beliefs onto people who either need their services, such as at a county courthouse, or who are in their power, like school children or prisoners.

          • Michael D Coxie

            sorry still no valid grounds here move along

          • MarkSebree

            You certainly have not supported your claims. You cannot come up with any valid instances of other religions using using the government authority to promote their religions, disparage other religions, or proselytize to others on government time. You unfairly and dishonestly complain about the FFRF not going after other religions when you cannot provide any instances where they can do so.

            The only one with no valid grounds to complain is you. I can support my statements. You cannot.

    • MarkSebree

      On what grounds? They do not espouse violence. They are not an armed organization or militia. They do not call for sedition. They are a bunch or lawyers that support people fighting for their religious rights against government organizations and actors that think that they can use the power of the government to impose their religious beliefs onto the people under their control. The FFRF fights the mostly christian bullies that do not respect the rights of minorities.

      There are a lot of organizations that are more deserving of the label “domestic terrorist organization” than the FFRF.

  • PabloDali

    Tax the Goddamn Churches!

    Same as ANY other business.

  • NCOriolesFan

    The FFRF should NOT get the same benefits as members of the clergy because it is more a political organization, not a church unless they want to be named The Church of Religious Bigotry.

    • MarkSebree

      Except that, unlike you, they do not espouse any religious bigotry. Telling Christians, especially far right Christians, that they have to play by the same rules as everyone else is not bigotry. It is denying them a privileged status.

      The FFRF is a Non-Profit organization that is in the same IRS category as churches, and thus should be subject to the same laws and rights as churches. However, churches are given special privileges just because they are churches, and the FFRF is challenging the laws that give them those privileges. They have the standing to do so now, so the case cannot be so easily thrown out of court when the IRS appeals. The favoritism is actually quite clear in the law, which is why it runs afoul to the Constitution.

  • Roy

    The wicked are winning the battle, but Christ has won the battle. The anti-Christ forces will be destroyed in the end at His second coming at Armageddon. That day may not be far off.

    • MarkSebree

      Actually, the good and the just, i.e. the FFRF won this battle. Your entire post is nonsense. Your beliefs do not matter. Only American law and the American Constitution. Your mythology does not apply in American courts, and does not apply to anyone else except you.

  • Off Shore

    “without any consideration to the secular employee”
    Not really true I know that G.I.’s don’t pay taxes on their housing allowance either and that is completely secular.