On September 7, as was discussed in “Appeals Court Upholds Clergy Housing Exemption,” the Seventh Circuit of appeals reversed a Federal District Court decision that ruled the minister’s housing allowance was unconstitutional. The suit had been brought by the Freedom From Religion Foundation. So the housing allowance survives, for now.
The Appeals Court ruling was actually based on the fact that the plaintiffs, Dan Barker and Laurie Anne Gaylor (co-presidents of FFRF) did not have standing to sue as they had not been denied the benefit of a housing allowance. In ruling that the plaintiffs did not have standing, the court did not actually address the issue of the constitutionality of the housing allowance.
The court suggested that the officers would have standing if they filed returns claiming the housing allowance and the claim was subsequently denied by the IRS. To do so would be somewhat of a stretch for the officers, as it would require them to file a return as ministers who have been ordained, licensed, or commissioned by an appropriate church body. As a side note, Barker is a former minister, but is not entitled to a housing allowance if employed in a non-ministerial position. On the surface, this would seemingly create an inconsistency as their website states “The Foundation works as an umbrella for those who are free from religion and are committed to the cherished principle of separation of state and church.” In claiming the housing allowance, they would be certifying on their return that they are ministers ordained by a church body, working in a ministerial capacity.
In press release, the plaintiffs stated that “Gaylor and Barker took issue with the appeals court’s cavalier assessment that they have suffered no concrete injury, since they must pay taxes on their housing allowance, while ministers are rewarded, simply for being religious leaders, with a unique and substantial tax benefit. The parish allowance is not a tax deduction but an exemption — housing allowances are subtracted from taxable income. ‘We will continue to challenge this indefensible favoritism for religion in other forums until the issue cannot be circumvented,’ Barker said.”
The housing allowance remains intact for now, but future challenges appear to be a certainty. Ultimately, the allowance could be lost. It remains to be seen how this issue will play out.