The decision by a federal district court in Wisconsin to allow the Freedom From Religion Foundation and its officers to have standing to challenge the constitutionality of the exclusion for housing allowances for “ministers of the gospel” is an exciting development. So far the media response has been underwhelming. If you do a “news” google on Freedom From Religion Foundation the big story is about a high school football team praying. A decade ago, the Ninth Circuit heard a case between Rick Warren and the IRS about the scope of the housing allowance. He had claimed $80,000. The Court raised the question of whether allowing any of the minister’s tax free housing allowance would be constitutional. Congress and the President acted very quickly to pass legislation that made the Warren case moot. This was a tacit admission that the argument for the constitutionality of the allowance is on the weak side. I’ve invited several people to guest post on the issue. Not surprisingly, Robert Baty, a retired IRS appeals officer, who has followed the issue intensely for many years was the first to respond.
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On August 29, 2012 Judge Barbara Crabb, senior judge of the federal district court in Wisconsin, ruled that the Freedom From Religion Foundation and its various officers had “standing” to challenge the constitutionality of Internal Revenue Code section 107 (IRC 107) which allows income tax free income to be paid to “ministers” in cash or kind for services rendered.
The 1st Amendment to the U.S. Constitution provides, in relevant part:
Congress shall make no law respecting an establishment of religion…
Internal Revenue Code section 107 states, in relevant part:
In the case of a minister of the gospel, gross income does not include—
(1) the rental value of a home furnished to him as part of his compensation; or
(2) the rental allowance paid to him as part of his compensation…
Part (1) of the law has been around for almost 100 years, part (2) has been around for about 60 years and both have been, despite concerns expressed from tax and legal scholars, impervious to attack. In the evolution of the administration of the law, “ministers” have been allowed million dollar tax free benefits, the determination as to who qualifies as a “minister” has been expanded for some religious groups while other religious groups were not so “blessed”. In addition, the administration of the law has allowed the benefit to be allowed to employees registering as “ministers” at organizations other than churches (e.g., private schools and other such businesses run by nice church-going folks).
The legislative history of IRC 107 is rather explicit that those legislating the allowance intended to advance religion.
It’s not a constitutionally approved accommodation to religion, it is a law designed to “respect the establishment of religion”.
Alas, where there is no political will to affect a change to UNconstitutional statutes, our “rule of law” allows such UNconstitutional laws to remain on the books and, in this case, thwart the limits of the Constitution and “respect the establishment of religion”.
The only alternative to concerned citizens is to attempt to use the “third rail”, the judiciary, to challenge the law. Not every grievance, however, is subject to judicial authority (part of the inherent checks and balances of our system). In order to invoke judicial authority to challenge the actions of the other two branches of Government, one must establish “standing” to do so.
The 9th Circuit of Appeals had thought it might take up the issue when Rick Warrens housing allowance case was presented to it. Neither Rick Warren or his Government opponent raised any constitutional issue; they were just quibbling over the amount. The 9th Circuit, on its own initiative, questioned whether or not anything should be allowed because it recognized a constitutional problem with IRC 107.
Congress and the President acted with great and remarkable haste in legislating relief for a taxpayer (Rick Warren) whose case was still being litigated. A most unusual effort, but reflective of the power of the religious lobby. The effort allowed Rick and the Government to settle the case without a decision from the Court and so thwarted the Court’s effort to decide whether or not IRC 107 should be ruled UNconstitutional. And so all the abuses of IRC 107 were preserved.
That was 10 years ago.
Senator Grassley with his Commission which investigated some million dollar ministries had a chance more recently to do something about what was recognized as a constitutional problem with IRC 107. Grassley had earlier led the cause to get Rick Warren off the hook. Given a second chance, however, Grassley simply deferred the matter to his friends in the private, religious sector to think about it for a few more years and then get back with him with some suggestions.
Thanks for nothing Senator Grassley!
Until last Wednesday, August 29, 2012, no citizen to my knowledge, had been able to obtain “standing” to judicially challenge the constitutionality of IRC 107.
One reason, I believe, that so much effort has gone in to keeping any citizen from attaining “standing” to challenge IRC 107 is because the statute itself is so obviously UNconstitutional that the outcome would be ungetoverable if “standing” were to be granted in order to consider the merits of the statute. As Professor Chemerinsky noted when asked by the 9th Circuit to consider the issue as an advisor to the Court in the Rick Warren case, the statute (IRC 107) is UNconstitutional on its face.
Of course, books can be written to explain all the intricate details of the law, its administration, its history, and the various arguments for and against its constitutionality. Such can already be found in cyberspace for those wishing to search it out.
Ultimately, though, is it really a difficult question?
Don’t we all really know that Chemerinsky is right; IRC 107 is UNconstitutional on its face!
The only question is what are we, Congress, and the President going to do about it.
FFRF has sued to have the law declared UNconstitutional!
Obama’s Justice Department is currently trying to defend the law!
What does Romney propose on the issue?
As it was in the Rick Warren situation, I propose that Congress and the President could work on a bi-partisan solution to be enacted before the election and so resolve the matter for all involved.
It could be done, but I don’t think it will be done.
If it isn’t, and it probably isn’t, the issue remains for both candidate Obama and candidate Romney to address as to what the future is going to be for IRC 107 during the next administration?
I’ve been doing what little I can do on the matter for 30 years, and I may have helped to get it this far.
Others are going to have to take up the cause in order to insure it gets the attention it deserves.
Obama and Romney need to be compelled by an informed media and public to deal with this important public issue.
Will Obama and Romney stand up to their religious constituencies or bow to their demands that IRC 107 defended all the way to the Supreme Court?
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You can follow me on twitter @peterreillycpa.
Originally published on Forbes.com on September 1st, 2012