Originally published on Forbes.com.
Freedom From Religion Foundation’s fight against a special tax benefit for the clergy has been grinding along as these things do. The latest development is the intervention of some actual clergy in the case.
Thanks to the work of the Becket Fund, a non-profit, public-interest law firm, Bishop Ed Peecher of Chicago Embassy Church and Father Patrick Malone of Holy Cross Anglican Church have been allowed to intervene in Gaylor v Lew, FFRF’s latest attack on the dubious constitutionality of Code Section 107(2), the parsonage exclusion. Their churches are also recognized as intervenors along with the Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia.
The Parsonage Exclusion
Code Section 107 is one of the shortest sections of the Internal Revenue Code.
§ 107 Rental value of parsonages.
In the case of a minister of the gospel, gross income does not include—
107(1)
the rental value of a home furnished to him as part of his compensation; or
107(2)
the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.
The Christian terminology and lack of gender-neutral language indicate that the section has been around a long time. The in-kind exclusion, not in dispute, goes back to the nineteen twenties, and the cash exclusion, which is what is in dispute, goes back to 1954, although it was tweaked in the nineties.
Unlike arguably similar exclusions for the military and people living abroad,there is no dollar limitation on the parsonage exclusion. Televangelists and mega-church ministers can and do have cash housing allowances in the hundreds of thousands of dollars.
For most ministers, though, the exclusion is a fairly modest benefit and with Bishop Ed, as he is known and Father Malone, the Becket Fund has found exemplars that illustrate why the loss of the exclusion could be a heavy blow.
Intervention
FFRF is suing the Secretary of the Treasury and the Commissioner of the Internal Revenue Service. There is a presumption that a law passed by Congress and signed by the President is constitutional, so it is expected that the executive branch will defend the law’s constitutionality in court. In order to intervene, the Becket Fund needed to show that the ministers had a stake in the outcome. That was easy.
…. it is undisputed that the proposed intervenors are part of the group that would lose their tax exemption if 26 U.S.C. § 107(2) is invalidated, it is clear that they have a concrete interest in the outcome of the case. In fact, no group of people face more to lose if plaintiffs succeed than ministers such as the proposed intervenors.
Then there is the notion that the government’s interest and perspective is different than theirs. That was not that hard either.
As to the adequacy of the government’s representation, the proposed intervenors do not for the most part challenge the government’s competence, but rather contend that the government’s interests are different from theirs. In particular, the proposed intervenors say that they want to defend § 107(2) from their own perspective, arguing that striking down § 107(2) would violate their constitutional rights under the Free Exercise Clause, the Establishment Clause, and the Due Process Clause. Also, the proposed intervenors want to provide facts to the court related to how the tax exemption they receive works in practice, which they believe will help to demonstrate that § 107(2) has a secular purpose and effect and does not violate the Establishment Clause
Poster Boys For The Modest Benefit
The Becket press release on the ruling allowing intervention focused on Bishop Peecher – African Amerian pastor joins fight against atheist lawsuit.
The founder of a predominantly African American congregation, Bishop Peecher devotes his life to serving his community in order to decrease gang violence, mentor at-risk youth, and feed and clothe the homeless in Chicago’s poorest neighborhoods. This work is possible because the church supports Bishop Peecher through a small housing allowance, called a parsonage allowance, permitting him to focus on and live just minutes from his congregation and the surrounding communities in need.
I have to say that I am a little concerned that the argument that Becket is making with respect to Bishop Peecher and Father Malone. They are, in effect, saying that the congregations might not be tenable without the tax break to the ministers. In my mind, that argument could be turned around by the other side since it reinforces the idea that the exclusion is supporting the establishment of those churches.
Another County Heard From
A few Unitarian Universalist ministers that I have spoken to have not really thought the exclusion is such great public policy. Following Reilly’s First Law of Tax Planning – (It is what it is. Deal with it.), they take it anyway. My own minister Reverend Aaron Payson of the Unitarian Universalist Church of Worcester has a different view and believes that support of the ministry, by the housing allowance, is good public policy.
The history of ministry in New England includes both the role of Parish Minister and “teacher of public piety” which continues in as municipalities, hospitals, non-profit organizations, schools, and a variety of other community organizations call upon religious professionals to provide example, counsel, instruction and ritual presence in service to community welfare, peace and justice.
This story about him doing ride alongs with the Worcester Police is an example of what he is talking about.
A Pragmatic View
I’m very sympathetic with the view that suddenly eliminating the housing allowance could be a shock to some small congregations. On the other hand, the abuse by the big dollar scoundrels, the creeping extension of who qualifies (think basketball ministers) and the notion that the IRS must sort out who is or is not a “minister of the gospel” makes me think it should be gradually phased out. The first order of business should be a dollar limitation. None of that is going to happen, though. This litigation will go on and it is possible that FFRF has it right this time.
Decision This Summer
I spoke with Hannah Smith, a senior attorney with the Becket Fund. Besides clarifying for me the concept of intervention, she did a bit of prognosticating. She expects that there will be a District Court decision in the summer. The last time we went through this the appellate decision came down a year later.
So if FFRF wins, this matter becomes a concern for church budgets in 2019. I’m hoping there will be a “Make Our Pastor Whole” movement. My experience with small congregation governance is that generally, the problem is people thinking things should be able to run with them dropping the same amount in the plate that their grandparents did forgetting that grandma baked nine million cookies to sell and grandpa painted the church himself. Maybe this will serve as a wake-up call.