Federal judge: Clergy tax-free housing allowance is unconstitutional

By on November 24, 2013
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A federal judge has ruled that an Internal Revenue Service exemption that gives clergy tax-free housing allowances is unconstitutional.
The exemption applies to an estimated 44,000 ministers, priests, rabbis, imams and others. If the ruling stands, some clergy members could experience an estimated 5 to 10 percent cut in take-home pay.

U.S. District Court Judge Barbara Crabb ruled on Friday (Nov. 22) in favor of the Freedom From Religion Foundation, saying the exemption violates the establishment clause because it “provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise.”

The case, decided in the District Court for the Western District Of Wisconsin, will likely be appealed to the the 7th Circuit, which could reverse the decision. If the 7th Circuit lets the ruling stand, then it could become precedent for courts in Wisconsin, Illinois and Indiana. Earlier this month, the 7th Circuit barredthe enforcement of the contraceptive mandate, a church-state issue being considered by the Supreme Court.
If the court decision stands, it could have a significant impact on clergy income. Clergy thatearn an average of $50,000 per year, may receive another a third of income, or $16,000, from a tax-free housing allowance, essentially earning $66,000. The cut in taxes ($4,000 in this case), would mean an 8 percent cut in salary.

The Hosana-Tabor v EEOC case decided last year that a teacher could be considered a “minister,” so the exemption could extend beyond traditional members of the clergy.
The exemption is worth about $700 million per year, according to the Joint Committee on Taxation Estimate of Federal Tax Expenditure.
Judge Crabb ruled that the law provides that the gross income of a “minister of the gospel” does not include:

“the rental allowance paid to him as part of his 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.”

  • Michael Stanley

    Let’s see is that a plank in my eye? Because the tactics of a Progressive, Socialistic Government on a money spending spree would probably be pro-gay, pro-abortion, pro-atheist to get that to hip I’m in control enthusiasm behind them; While their true motive, that had to be hid behind the drooling, is creating a way to attack the Churches for money. The Progressives don’t really support anyone but themselves.

    IRS- Investigate Religious Saints……………

  • Michael Stanley

    This is what a Progressive Government does. Pro-gay, pro-abortion, pro-atheist just to get that I’m too Hip and in control enthusiasm. The real motive power hungry, spending spree junkies, Socialistic Government is to get the public know that the Church shouldn’t be considered an exception, drooling over the revenues that could be taken, the pro-gay, pro-abortion, pro-anti God support is only a social manipulation to sustain their cause.This Progressive Government doesn’t really care about anyone or anything but themselves. May the Lord rebuke them like Aaron’s sons.

    IRS= Investigate Religious Saints

  • frankfan42

    Yet another attack upon the foundation. Obama can throw endless free phones, paid by taxpayer subsidy so that every homeless person can look “Cool” and “Well connected.” Progressives should really be labeled regressives, since they seek to take our society back to everything controlled by a centralized, all powerful monolithic government.

    This is a beginning, but it is not the end game for regressives. Most people are awake enough now that they know their game is not one of co peaceful co-existence , but silencing any meaningful opposition. Control of the finances of a Church is a good first step, there will be more to come.

    God Bless ya!.

  • G Lindgren

    I would be interested to see how many of these “church leaders” live better than the people attending their churches (or non-church others, etc.). This is what happens when you want the almighty 501C3 tax exemption. What, do you think, the crows wouldn’t come back to rest? Can’t help but to think of Ezekiel 34 that talks about the irresponsible shepherds getting fat off the sheep. Many of these guys have been getting fat off the sheep for far too long. Only recently has it been so lucrative to be a “pastor.” Where else can you travel the world, have myriad benefits and allowances.

    Jesus even said, “render unto Caesar, that which is Caesars. When Peter was asked whether Jesus paid tax, Jesus didn’t say, Uh, no, I’m exempt. To not offend, he paid His and His disciple’s tax (sent Peter fishing). Rome was just like the U.S.;however, Jesus did not give his people a free pass.

    Therefore, I agree with my esteemed posters below, it is a sign of things to come, can be dangerous…Is dangerous. As those who are true Christians, can we expect any better treatment than our Lord and His disciple throughout history have received? What somehow makes us better or exempt? WAKE UP!

  • PeaceToAll

    It’s really about time that they start taking away the tax exempt status of clergy and most churches. Look at some of the grandiose structures built with all that tax free money yet I’m sure many public services are used daily by these same structures. You know, roads, police protection, fire protection.
    And you ever see some of the nice cars these clergy climb into? They need to pay their way like everybody else is expected to.