Batts Morrison Wales & Lee - News & Resources - Nonprofit Special Alert

Clergy Housing Allowance Exclusion Ruled Unconstitutional by Federal Judge

A Wisconsin federal judge has ruled that the housing allowance exclusion for clergy under Section 107(2) of the Internal Revenue Code is unconstitutional.  The judge cites as her premise that the exclusion violates the Establishment Clause of the First Amendment.  The decision emanates from a lawsuit filed by the atheist group Freedom from Religion Foundation.

The ruling does not address the exclusion for clergy living in church-provided parsonages under Section 107(1).

The judge in the case deferred enforcement of her decision pending an appeal.  Accordingly, the ruling has no immediate impact on churches or clergy.

It is expected that the U.S. government will appeal the decision.  The Obama administration is responsible for defending the exclusion in the event of appeal.

A copy of the full decision is available at this link:

The BMWL team will be conferring with our friends in the legal community across the country in the coming days and we will report further on the implications of this decision in the days ahead.

If there were ever a time for churches and clergy to share with their members of Congress and the White House their concerns over threats to religious accommodation, this is it.

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