The Freedom From Religion Foundation filed a federal lawsuit Sept. 13 that says if “ministers of the gospel” are accorded preferential tax benefits, then their nonbelieving directors should receive the same benefit.
The lawsuit goes after a relatively recent change in the tax code granting clergy significant tax benefits known as the “parish exemption.” The lawsuit, FFRF v. Geithner, was filed in the Madison courtroom of U.S. Magistrate Stephen Crocker, Western District of Wisconsin. Defendants are Timothy Geithner, U.S. Treasury secretary, and Douglas Shulman, Internal Revenue Service commissioner.
Individual plaintiffs are FFRF Co-Presidents Dan Barker and Annie Laurie Gaylor and President Emerita Anne Nicol Gaylor. All three receive part of their salaries designated for a housing allowance but don’t qualify for the parish exemption as they are not “ministers of the gospel.”
Barker, an ordained minister who left the ministry in his mid-30s, previously used the housing allowance to deduct such payments from his taxable income. Now, as head of a national atheist/agnostic group, he’s denied those tax benefits.
FFRF seeks a declaration that the law creating the parish exemption, as administered by the IRS and the Treasury Department, violates the Establishment Clause of the First Amendment by providing preferential tax benefits to ministers of the gospel. 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 unique benefits to clergy date from 1954, when Congress amended the tax code to permit all clergy to exempt their housing costs from their incomes taxes. U.S. Rep. Peter Mack, 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.”
Ministers, who are paid in tax-free dollars, may deduct their mortgage interest and property tax payments. Under federal law, allowances paid to “ministers of the gospel” are not treated as taxable income. Because “ministers of the gospel” are singled out as a class to uniquely claim these benefits, the statutes convey a governmental message of endorsement and unconstitutionally favor religious employees and institutions over others.
“The income taxation of ministers of the gospel under the general rules that apply to other individuals would not interfere with the religious mission of churches or other organizations or the ministers themselves,” FFRF’s legal complaint maintains. The statutes are not an accommodation of religion, therefore, but a subsidy.
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.).
The allowance can also be used for maintaining a home. Eligible costs or expenses include: Home improvements; minor repairs; utilities; furnishings and appliances (dishwasher, TV, refrigerator, pool table, vacuum cleaner, personal computer, etc.); home decor (rugs, curtains, plants, knickknacks, wallpaper, paint, towels, bedding, etc.); lawn care (lawnmower, garden hose, sod, landscape tools, etc.); basic telephone services; cable TV; internet service; pest control; and miscellaneous (light bulbs, cleaning supplies, carpet cleaning, etc.).
“Preferential tax benefits provided exclusively to religious clergy violate the Establishment Clause; neutrality is required by the Establishment Clause, which means that tax benefits cannot be preferentially provided to ministers of the gospel,” FFRF asserts.
FFRF points out that the IRS and Treasury must make “sensitive, fact intensive, intrusive, and subjective determinations dependent on religious criteria and inquiries, such as whether certain activities constitute ‘religious worship’ or ‘sacerdotal functions;’ whether a member of the clergy is ‘duly ordained, commissioned, or licensed;’ or whether a Christian college or other organization is ‘under the authority of’ a church or denomination; or whether a full-time cantor in the Jewish faith qualifies as a minister of the gospel. These and other determinations result in ‘excessive entanglement’ between church and state contrary to the Establishment Clause.”
“We don’t think the general public realizes the scope of this preferential treatment, how many everyday expenses may be deducted from taxable income for ministers and even retired ministers. They should know that we laypersons pay much more because individual clergy pay so much less,” said Annie Laurie Gaylor.
“And it is pure discrimination to deny atheist leaders the housing allowance privileges given to clergy as a reward for fighting ‘godless foe.’ ”
FFRF withdrew its previous federal challenge of the parish exemption, filed in October 2009 in federal court in Sacramento, Calif. Individual plaintiffs were 21 FFRF members from California. FFRF was forced to withdraw the suit following the Supreme Court’s 2011 decision voiding taxpayer standing in the Winn v. Arizona case.
FFRF refiled the case using plaintiffs who have been directly injured by the preferential law.