The fate of a 60-year-old provision that allows churches to provide ministers with a tax-exempt “parsonage allowance” now lies in the hands of the 7th U.S. Circuit Court of Appeals.
The Chicago-based appellate court heard oral arguments Sept. 9 in a lawsuit filed by the Freedom From Religion Foundation claiming the Internal Revenue Service (IRS) “confers a significant tax benefit upon religious clergy that is not available to nonclergy taxpayers.”
Church, state separation
The Madison, Wis., based group that advocates for “freethinkers” including atheists, agnostics and skeptics claims the exemption is “patently unfair” and a violation of the constitutionally mandated separation of church and state.
A legal brief filed in June noted that even the Bible commands citizens to “render unto Caesar the things that are Caesar’s.”
In November 2013 a federal judge agreed, ruling that a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over nonreligion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.
Southern Baptists are among those interested in the case. Three entities of the Southern Baptist Convention (SBC) joined other religious organizations in urging the 7th Circuit Court to reverse the ruling of Barbara Crabb, the federal judge who said the allowance violates the First Amendment’s prohibition of government establishment of religion.
The Ethics & Religious Liberty Commission and the International Mission Board signed onto a friend-of-the-court brief with a diverse array of religious organizations in support of the housing allowance. GuideStone Financial Resources, the SBC’s financial and health benefits entity, joined in a brief with other denominational benefit boards as part of the Church Alliance. Both briefs were filed in April.
The briefs are based on a legal doctrine known as “convenience of the employer.”
Convenience of the employer is based on the premise that for something to qualify as income there must be an economic gain that primarily benefits the taxpayer personally.
Employees might enjoy things like meals, travel and office furnishings, for example, but if they are provided primarily to benefit their employer, they are not counted as taxable income.
Other lodging jobs
The same principle applies to lodging. For jobs like hotel managers required to live on-site, government workers serving abroad or seamen who live aboard ships, lodging is a key component of their work.
The Becket Fund claimed removing the parsonage allowance would increase church-state entanglement by putting the IRS in the position of determining which deductions claimed as business expenses qualify as ministry.
(ABP, BP)
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