Judge again strikes down clergy tax benefit

A federal judge in Wisconsin sided with an atheist group Friday and overruled a tax exemption for clergy. U.S. District Judge Barbara Crabb ruled in favor of the Freedom from Religion Foundation that challenged a longstanding clergy housing allowance. Since 1954, a “minister of the gospel” doesn’t have to pay income taxes on compensation designated as housing costs. It’s the biggest tax benefit available to ministers, and U.S. clergy see $800 million a year in tax breaks from the law, according to the latest estimate by the congressional Joint Committee on Taxation. Crabb ruled the tax law provides an unfair benefit to religious persons, violating the establishment clause of the U.S. Constitution. The ruling could affect pastors in Wisconsin, Illinois, and Indiana if upheld. Crabb deferred granting relief to the Freedom from Religion Foundation, which previously sued to overturn the law. Crabb sided with them in 2013, but the 7th U.S. Circuit Court of Appeals reversed the ruling, saying the co-presidents of the organization didn’t have standing to bring the lawsuit because they had never been denied the housing exemption. So in 2015, they requested the tax benefit and were rejected by the IRS, leading them to file a new lawsuit last year. Crabb gave both sides until Oct. 30 to make arguments for what consequences would be suitable. The Becket Fund for Religious Liberty, which represents churches affected by the ruling, said it breaks nearly 65 years of precedent and threatens the viability of churches in the area. The firm intends to challenge the decision.