A district court gave the green light to the right of the Freedom From Religion Foundation’s nonbelieving directors to continue their challenge of the parish exemption giving preferential tax benefits to “ministers of the gospel.”
U.S. District Judge Barbara Crabb, Western District of Wisconsin, issued a strong 20-page opinion and order today permitting FFRF Co-Presidents Dan Barker and Annie Laurie Gaylor and President Emerita Anne Gaylor to pursue their challenge of the 1954 law.
Known as FFRF v. USA, the lawsuit was filed in September 2011. The plaintiffs receive part of their salaries designated for a housing allowance. Yet they do not qualify for the parish exemption as they are not “ministers of the gospel.”
“We are very pleased that the court has acknowledged our injury and right to sue over this,” said Barker, a former minister who previously qualified for housing allowance benefits, but does not have that privilege as director of an atheist/agnostic organization. FFRF calls the statute a subsidy, rather than an accommodation of religion.
FFRF seeks a declaration that the federal statute creating the parish exemption violates the Establishment Clause of the First Amendment. FFRF asks the court to enjoin the allowance or grant of tax benefits exclusively for ministers of the gospel under 28 U.S.C. § 2201 that 26 U.S.C. §107.
The federal government argued that the FFRF directors would not have standing to challenge the law until they claim an exemption on their tax returns and the IRS denies them. “Because it is clear from the face of the statute that plaintiffs are not entitled to the exemption, I see no reason to make their standing contingent on the futile exercise of making a formal claim with the IRS,” Crabb ruled. She wrote that “there is no plausible argument that plaintiffs could make that they qualify as ‘ministers of the gospel,’ so it would be pointless to require plaintiffs to jump through the hoop of filing a claim to prove that they are not entitled to the exemption.”
She dismissed as “another strawman” the government’s characterization of the FFRF directors’ injury as mere “disagreement with the government’s claim.” Crabb wrote: “It is undoubtedly true that plaintiffs object to §107 because they believe it violates the establishment clause and that this may be the primary reason they filed the lawsuit, but that is not the injury plaintiffs are alleging for the purpose of showing standing.”
The exemptions permit clergy to deduct from their taxable income housing allowances furnished as part of compensation. The unique benefits to clergy date to 1954, when Congress amended the tax code to permit all clergy to exempt their housing costs from their taxable income. U.S. Rep. Peter Mack, author of the amendment, declared:
“Certainly, in these times when we are being threatened by a godless and antireligious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this foe. Certainly this is not too much to do for these people who are caring for our spiritual welfare.”
The statute says the gross income of a minister of the gospel does not include “the rental value of a home furnished to him as part of his compensation,” or “the rental allowance paid to him as part of is 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 §107 tax exclusion can be used by ministers for virtually all of the costs of home ownership, including: Down payment on a home; home mortgage payments, including both interest and principal; real estate taxes; personal property tax; fire and homeowners liability insurance; rental payments; and cost of acquiring a home (i.e., legal fees, bank fees, title fees, etc.).
Crabb’s ruling means FFRF’s lawsuit will go forward to be argued on its merits.
