Judge Strikes Down Housing Tax Break for Pastors

Longstanding IRS exemption—last revised after Rick Warren dispute in 2002—currently saves pastors $700 million per year.

One of the most important tax breaks available to American pastors is unconstitutional.

At least, according to a federal judge's assessment of an atheist group's complaint that the IRS's clergy housing allowance—which will save pastors $700 million this year in income taxes—violates the establishment clause of the First Amendment.

On Friday, U.S. District Judge Barbara Crabb of Wisconsin ruled that the second part of IRS Code Sec. 107, which exempts clergy from paying income taxes on compensation considered a housing allowance, "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 significance of the benefit simply underscores the problem with the law, which is that it violates the well-established principle under the First Amendment that '[a]bsent the most unusual circumstances, one's religion ought not affect one's legal rights or duties or benefits,'" wrote Crabb in a ruling first reported by the Wisconsin State Journal.

The decision leaves alone the first part of Sec. 107, which excludes the rental value of actual parsonages from being taxed. Keep reading

Also see
Judge strikes down law that gives clergy members tax-free housing allowances
Court Strikes Clergy Tax-Free Housing Allowances; FRC Calls it 'Supreme Arrogance'