Clergy Housing Allowance Exemption Unconstitutional

December 30, 2013

Court rulingsSection 107 of the Internal Revenue Code provides a tax exemption for a housing allowance provided to a “minister of the gospel.” In a decision virtually certain to be overturned, a federal judge has found the exemption unconstitutional.

While the wording of the provision may seem to suggest it applies only to Christian ministers, the provision applies equally to persons of any faith performing services which are ordinarily the duties of a minister of the gospel. The case does not involve discrimination against non-Christian religions.

Instead, this is a case brought by the Freedom From Religion Foundation, which argued that the provision violates the establishment clause of the Constitution because it favors religion in general. Relying on a case in which the Supreme Court struck down a sales tax exemption for religious books, the court ruled for the plaintiffs.

The case seems unlikely to have any impact, however. In an earlier case brought by the same plaintiff, the same judge ruled that it was unconstitutional to have a National Day of Prayer. The ruling was overturned on appeal, and it seems all but certain that this one will be as well.

The judge issued an injunction against enforcement of the clergy housing allowance provision, but the injunction does not go into effect until appeals expire or the judgment is affirmed, neither of which seems likely.

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