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-7th Circuit: Pastors Can Keep Their Housing Allowance

by Dr. D ~ November 18th, 2014


The 7th Circuit Court of Appeals has overturned a lower court decision that would  have denied pastors their traditional tax exempt housing allowance which is normally a major part of their compensation package. Here’s the story from Christianity Today:

Today, the Seventh Circuit Court of Appeals overturned a lower court’s high-profile 2013 decision that the longstanding clergy housing allowance was unconstitutional. The 60-year-old tax break excludes the rental value of a pastor’s home from their taxable income.

The Freedom From Religion Foundation (FFRF) challenged the law last year in Wisconsin, and federal district judge Barbara Crabb agreed that the allowance violates the First Amendment 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.”

Her November 2013 ruling… ended up "sending shockwaves through the religious community," … The housing allowance is "the most important tax benefit available to ministers," according to GuideStone Financial Resources.

In response, a broad spectrum of religious groups and the Obama administration urged the appeals court to reconsider.

<Read the whole article>

Response: This is good news for thousands of pastors and ministers. Also for church boards trying to find ways to fairly compensate them for the huge number of hours they usually put in helping others. It is also nice to see the atheist group-FFRF lose one for a change. Note that even the Obama administration came out against the original decision and pushed for it to be overturned.

The following is part of my response to the original ruling:

Many churches own the houses that the pastors and ministers live in. This is particularly true among the Catholics. How this would be accounted for under a new ruling is unknown.

Fact is one of the reasons that pastors and ministers receive the allowances in the first place is that the minister’s homes are not just strictly private residences but usually function as smaller church meeting venues for counseling, Bible and prayer meetings, and for leadership gatherings. Also many pastors have their offices in their homes and how all of these different uses would be accounted for when it comes to taxes could be rather problematic and in final analysis would end up putting pastors and ministers at a distinct disadvantage rather than the claimed ‘benefit’ that they now receive. 

Finally I really do question whether the writers of the Constitution envisioned that the First Amendment would ultimately be used to combat and diminish religion in America and put ministers at a disadvantage.

This issue may not be completely over if the FFRF tries to appeal it to SCOTUS. However, it is doubtful that the Supremes will take it on in which case this decision should stand.             *Top

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1 Response to -7th Circuit: Pastors Can Keep Their Housing Allowance

  1. Brian

    Once again, what the secular left was doing (under the guise of demanding that a “special” benefit to churches be ended), was to attempt to discriminate against churches.

    The IRS allows employees to receive free housing from their employer under certain circumstances, and this would not be a taxable benefit. See Internal Rev. Code Section 119. The criteria are:

    — the lodging must be on the employer’s premises.
    — the lodging must be for the employer’s convenience. and
    — the lodging must be a condition of employment.

    Thus, lots of secular folks who are required to live on premises for their employer get a tax break. Think about live-in managers at apartment complexes, live-on-site managers at at “you-store-it” facility, live on site requirements for a warden at at a prison etc.

    The provision for clergy applies to either clergy living for free at a parsonage (which is identical in substance to the aforesaid criteria), or receiving a cash stipend for procuring substitute housing (which is analogous to the aforesaid three criteria).

    Either way, Freedom from Religion Foundation was trying to cause church-affiliated housing to be treated in a different manner than analogous employer-provided housing in a secular context.


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