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From his column God, Government and Me—Money in the Church

god-government-me-01-14-1The church is the current piñata of choice for atheists. One almost needs a scorecard to keep track of all the lawsuits brought by our atheist friends in recent years.

An atheist group, the Freedom From Religion Foundation (FFRF), has been seeking to have the clergy housing exclusion ruled unconstitutional for years. Finally, they were successful in getting the U.S. Court for the Western District of Wisconsin to rule that the clergy housing exclusion is unconstitutional for clergy providing their own homes.[1]

In the court’s opinion, the law violates the Establishment Clause because it lacks a secular purpose and effect. The ruling does not address the issue of clergy living in congregational-provided housing.

FFRF’s co-presidents Annie Laurie Gaylor and Dan Barker said: “May we say hallelujah! This decision agrees with us that Congress may not reward ministers for fighting a ‘godless and anti-religious’ movement by letting them pay less income tax. The rest of us should not pay more because clergy pay less.”

Clergy in the United States have enjoyed a special housing exclusion from federal income tax for congregation-owned housing since 1921. This provision was extended to clergy-owned housing in 1954. In 2002, Congress clarified its intent by amending the law to provide that the exclusion is also limited to the fair rental value of the minister’s housing.

The district court’s decision on the clergy-owned housing exclusion may be appealed by the Department of Justice to the Seventh Circuit (the same court that dismissed the FFRF challenge to the National Day of Prayer in 2011). Since the case was filed over two years ago, attorneys for the federal government have defended the constitutionality of the clergy housing exclusion and have argued that FFRF lacked legal standing to bring the challenge in the first place.

No Change for the Present

Until there is more clarity concerning the housing exclusion issue churches should continue to designate housing allowances for clergy-providing housing and clergy should continue claiming the housing exclusion for clergy-provided housing, subject to their tax counsel.

Two additional lawsuits filed by FFRF in the same court are awaiting a final ruling. One would lift the current church exemption from annually filing Form 990, alleging that the exemption constitutes preferential treatment of churches and other religious organizations, while discriminating against other nonprofit organizations. In the other case, FFRF has sued the IRS over enforcement of the tax code’s political campaign prohibition against churches.

FFRF is just one atheist organization doing battle with the church. On the same day the Wisconsin federal judge declared a portion of the clergy housing exclusion statute unconstitutional, another federal district court in Kentucky heard oral arguments in a similar case brought by atheist groups suing the IRS and Treasury over longstanding provisions in the tax code related to churches and clergy.

In American Atheists v. Shulman,[2] three atheist nonprofit groups[3] are raising a joint challenge to what they call unconstitutional preferential treatment of religious organizations and churches. The case centers around who must file IRS Form 990, an annual reporting statement that provides information on a group’s mission, programs, and finances.

Current tax law requires all tax-exempt organizations (except churches and church-related organizations) to file a Form 990 financial report. The suit charges that this means the IRS treats religious groups differently than it does all other organizations.

The Commission on Accountability and Policy for Religious Organizations, which was sponsored by ECFA, has taken a strong position against requiring churches to file Form 990. The commission said: “To require such a filing would not only place a substantial and unnecessary burden on churches and the government, it would also raise significant constitutional concerns. The U.S. Supreme Court has ruled that the First Amendment’s Establishment Clause prohibits ‘excessive entanglement between the church and the government.’ The Court has ruled that ‘detailed monitoring and close administrative contact’ are elements of excessive entanglement.”

The oral arguments for this case concerned the federal government’s motion to dismiss the case. The court has agreed to take the government’s motion to dismiss under advisement and issue a ruling in due course.

Atheists are gambling there will be no Judgment Day. I am thinking that will place them in a hot spot.

Dan Busby is president oftheEvangelical Council for Financial Accountability(ECFA)an accreditation organization that sets standards for governance, financial management, and fundraising/stewardship for churches and other nonprofits across the country.



[1] Freedom From Religion Foundation v. Lew, No. 11-CV-626 (W.D. Wis.)

[2] American Atheists v. Shulman, 2:12-CV-00264 (E.D. Ky.)

[3] American Atheists, Atheists of Northern Indiana, and Atheist Archives of Kentucky.

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