The Freedom From Religion Foundation renewed its challenge against the IRS U.S.C. § 107 in a federal lawsuit filed on April 6, 2016, in the Western District of Wisconsin. The lawsuit challenged the clergy housing allowance, which permitted clergy to be paid partly through a housing allowance which is subtracted from taxable income. FFRF Co-Presidents Annie Laurie Gaylor and Dan Barker brought suit against Jacob Lew, U.S. secretary of the treasury, and John Koshkinen, IRS commissioner. Treasury Secretary Steven Mnuchin was substituted as a defendant upon taking office. Rep Peter Mack, the sponsor of the 1954 law, argued that ministers should be rewarded for “carrying on such a courageous fight against this [a godless and anti-religious world movement].”
The FFRF couple, who are married, are being paid in part by FFRF through a housing allowance. Their request for a housing allowance refund for the year 2012 was denied by the IRS. Anne Nicol Gaylor, president emerita, requested a refund which was not received prior to her death last year. Her son Ian Gaylor is also a named plaintiff representing the Anne Nicol Gaylor estate.
FFRF asked the court to rule the provision unconstitutional because it provided preferential and discriminatory tax benefits to ministers of the gospel. The section “directly benefits ministers and churches, most significantly by lowering a minister’s tax burden, while discriminating against the individual plaintiffs, who as the leaders of a nonreligious organization opposed to governmental endorsements of religion are denied the same benefit.” Clergy were permitted to use the housing allowance not just for rent or mortgage, but for home improvements, including maintenance, home improvements and repairs, dishwashers, cable TV and phone fees, paint, towels, bedding, home décor, even personal computers and bank fees. They were able to be exempt from taxable income up to the fair market rental value of their home, particularly helping well-heeled pastors.
On Oct. 6, 2017, FFRF once more made history by winning its challenge of the housing allowance in federal district court. Mnuchin and several intervening churches appealed the case to the Seventh Circuit Court of Appeals.
Gaylor v. Lew had appellate case numbers 18-1277 and 18-1280.
- Read about prior challenges, including a 2013 district court victory
- Complaint
- FFRF News Release: “FFRF renews David vs. Goliath IRS challenge”
- IRS Brief in Support of Summary Judgment
- Intervenor Brief in Support of Summary Judgment
- FFRF Summary Judgment Brief
- Mnuchin Brief on Remedies
- FFRF Response on Remedies
- Intervenor Response Brief on Remedies
- Opinion and Order by Judge Barbara B. Crabb in favor of FFRF, Oct. 6, 2017
- Judge Crabb Opinion on Housing Allowance
Appeal Documents
- Federal Brief
- Intervenors Brief
- Amicus Brief by Foundation for Moral Law
- Amicus Brief by Church Alliance
- Amicus Brief by Pacific Justice Institute
- Amicus Brief by State of Wisconsin et al.
- Amicus Brief by Tax Law Professors
- Amicus Brief by ECFA et al.
- Amicus Brief by ADF
- Amicus Brief by First Liberty Institute
- Amicus Brief by COLPA
- FFRF Initial Brief
- Amicus Brief of Tax Law Professors
- Amicus Brief of Center for Inquiry
- Seventh Circuit Court of Appeals Opinion
