The Freedom From Religion Foundation withdrew its parish exemption challenge, FFRF v. Geithner, on June 24 from the California Eastern District. It plans to refile and reconfigure the lawsuit.
“Unfortunately, the decision by the Supreme Court this spring in Arizona Christian School Tuition Organization v. Winn has had a very chilling effect and forced our hand,” said FFRF Co-President Dan Barker. In Winn, the high court ruled that a group of Arizona taxpayers lacked standing to challenge tax credits, ultimately funding tuition at religious schools.
“Either we were going to get dismissed or we needed to withdraw,” explained Barker.
FFRF, along with 21 of its California members, filed the federal lawsuit in Sacramento in October 2009, challenging tax benefits for “ministers of the gospel.” Under both federal and California law, payment in the form of housing allowances is not taxable income.
The unique benefits, permitting clergy to deduct from taxable income their housing allowances furnished as part of compensation, date to 1954. At that time, Congress amended the tax code to permit all clergy to exempt their housing costs from income taxes. U.S. Rep. Peter Mack Jr., D-Ill., 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.”
FFRF is planning to pursue the parish exemption provided by the California Franchise Tax Board in California state court, and will soon announce other challenges.
The case was handled by litigation attorney Richard Bolton, with Michael Newdow generously serving as local counsel in Sacramento.
“We thank Mike for his invaluable assistance, and our 21 Sacramento-area FFRF members who served as taxpayer plaintiffs, some of whom are volunteering to continue on as plaintiffs in a challenge in state court,” said Annie Laurie Gaylor, who directs FFRF with Barker. To read more about FFRF’s federal challenge, go to ffrf.org/legal/.