Church Alliance files amicus brief in clergy housing exclusion case

The EPC, in partnership with more than 30 other denominations through The Church Alliance, has filed an amicus curiae brief with the Seventh Circuit U.S. Court of Appeals in Chicago in Freedom From Religion Foundation, Inc., et al. v. Jacob Lew, et al. (FFRF v. Lew). The case challenges the constitutionality of the clergy housing exclusion under Section 107(2) of the Internal Revenue Code of 1986.

“This is obviously a very important case,” said Jeff Jeremiah, EPC Stated Clerk, “and we are grateful for the Church Alliance and their work in addressing the merits of what we believe is the appropriate ruling for the Court of Appeals to make.”

The Church Alliance brief adds a perspective not duplicated in the government’s brief, focusing on the jurisprudential history of permitted legislative accommodations of religion. The brief argues that Code §107(2) is a constitutionally permitted accommodation of religion when viewed in the context of Code §107(1), the parsonage exclusion, and Code §119, which excludes employer-provided housing from employees’ incomes in numerous secular circumstances. Click here to read the brief in its entirety.

FFRF v. Lew was filed by the Wisconsin-based Freedom from Religion Foundation on grounds that the housing allowance violates the separation of church and state and the constitutional guarantee of equal protection. The group’s founders have said that if tax-exempt religious groups are allowed a housing subsidy, other tax-exempt groups, such as FFRF, should get one, too.

That portion of the Code, called “clergy housing exclusion” or “clergy housing allowance,” excludes from income taxation the cash compensation provided to “ministers of the gospel” toward the cost of their housing. This section of the Code essentially excludes the value of clergy-owned housing from income taxation. It is related to Code §107(1), which excludes from a minister’s taxable income the value of church-provided housing (commonly called a parsonage, vicarage or manse). The FFRF v. Lew appeal does not involve a challenge to Code §107(1).

In November 2013, U.S. District Court Judge Barbara Crabb ruled in favor of the FFRF, saying the exemption was unconstitutional because it “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.”

While Crabb’s ruling that Code §107(2) is unconstitutional because it violates the Establishment Clause of the First Amendment to the U.S. Constitution, she stayed the effect of her ruling until all appeals are exhausted. In January of this year, the U.S. federal government filed notice of appeal, and the government’s opening brief was filed on April 2.

Barbara Boigegrain, chair of the Church Alliance and chief executive of the General Board of Pension and Health Benefits of The United Methodist Church, said, “The Church Alliance has a substantial interest in the validity of Code §107(2) because of the immediate impact on compensation and housing of active clergy in the benefit plans of its member denominations, and also because of the indirect impact on retirement benefits.”

The members of the Church Alliance stand with other religious organizations in their vested interest in the outcome of this litigation. The clergy housing exclusion is important to millions of active and retired clergy from the 38 Church Alliance-represented denominations, including, among others, American Baptist Churches in the U.S.A., Church of God (Cleveland, TN), Church of the Nazarene, Christian Church (Disciples of Christ), Christian Brothers Services, Episcopal Church, Evangelical Lutheran Church in America, Joint Retirement Board for Conservative Judaism, Lutheran Church-Missouri Synod, Presbyterian Church (U.S.A.), Reform Pension Board, Southern Baptist Convention, United Church of Christ, and The United Methodist Church.

Numerous other churches, associations or conventions of churches, and other religious organizations with religious leaders eligible for the clergy housing exclusion under Code §107(2) are additional signers of the brief, supporting the filing of the Church Alliance’s brief and the positions advocated in it. They include the United States Conference of Catholic Bishops, Central Conference of American Rabbis, General Council on Finance and Administration of The United Methodist Church, Moravian Church, Rabbinical Assembly, Salvation Army, Union for Reform Judaism, United Synagogue of Conservative Judaism, and Wisconsin Council of Churches, among others.

The clergy housing exemption applies to an estimated 44,000 ministers, priests, rabbis, imams and others. If the ruling stands, some clergy members could experience an estimated 5 to 10 percent cut in take-home pay.

An amicus curiae, or “friend of the court” brief, is filed with the court by someone who is not a party to the case but who believes that the court's decision may affect its interest. 

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