FFRF Wins Lawsuit Over Parsonage Exemptions

FFRF Wins Lawsuit Over Parsonage Exemptions October 16, 2017

The Freedom From Religion Foundation has won another round in its lawsuit to force the government to treat religious and non-religious non-profits equally. The case involves the parsonage exemption, which allows pastors sizable tax breaks when the church pays for their housing, but not leaders of other non-profits.


Plaintiffs are FFRF Co-Presidents Dan Barker and Annie Laurie Gaylor, and Ian Gaylor, representing the estate of President Emerita Anne Nicol Gaylor, whose retirement was paid in part as a housing allowance.

“Although defendants try to characterize § 107(2) as an effort by Congress to treat ministers fairly and avoid religious entanglement, the plain language of the statute, its legislative history and its operation in practice all demonstrate a preference for ministers over secular employees,” writes Crabb, for the Western District of Wisconsin.

“As I noted in the earlier lawsuit,” Crabb writes, “there is no reasonable interpretation of the statute under which the phrase minister of the gospel could be construed to include employees of an organization whose purpose is to keep religion out of the public square.”

Any reasonable observer would conclude that the purpose and effect of the statute is to provide financial assistance to one group of religious employees without any consideration to the secular employees who are similarly situated to ministers, Crabb noted. “Under current law, that type of provision violates the establishment clause,” she adds.

“In reaching this conclusion, I do not mean to imply that any particular minister is undeserving of the exemption or does not have a financial need for one. The important point is that many equally deserving secular employees (as well as other kinds of religious employees) could benefit from the exemption as well, but they must satisfy much more demanding requirements despite the lack of justification for the difference in treatment.”

FFRF already won the suit in 2013, but the 7th Circuit sent it back down to the district court after concluding that they hadn’t gone through the full process of applying for the exemption from the IRS and been denied. In other words, they had to exhaust all administrative remedies before they had standing to bring the suit. Once it was denied, the case went back to the same judge, who reached the same conclusion she had previously.

I’m on record as strongly criticizing the simpleminded position that many atheists take on the question of tax exemptions for churches. The cries of “tax the churches” almost always fail to recognize that doing so would — and should — also apply to secular non-profit organizations, which are exempt under the same section of the Internal Revenue Code as churches. The real problem is not that churches are tax exempt, it’s that they are treated unequally from other non-profits. They don’t have to apply for their 501(c)(3) status, it’s automatically given to them, nor do they have to file a form 990 every year, as any other non-profit is required to do. And things like the parsonage allowance are given to churches but not to other non-profits. This case rightly seeks to correct that and ensure that religious and non-religious non-profit organizations are all treated equally under the law.

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