Gavel Book

Judge Strikes Down Tax-Exempt Status for Ministerial Housing Allowance

A federal court recently held that laws providing tax-exempt status for “clergy” housing allowances are unconstitutional (Freedom From Religion Foundation, Inc. v. Lew, 2013). This decision was handed down by Judge Barbara Crabb of the Western District of Wisconsin. While there is much to be concerned about with this legal opinion, there is also good reason to take this all with a grain of salt and with hope for the future.

In Judge Crabb’s opinion and order, she held that 26 U.S.C. section 107(2) violates the Establishment Clause of the First Amendment of the U.S. Constitution. This provision states:

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, 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 (26 U.S.C. § 107).

Interestingly, the plaintiff did not challenge section 107(1), but only section 107(2). While the court held that only subsection 2 was unconstitutional, this appears on its face to be blatantly inconsistent with the fact that the court’s holding is based in part on the language “minister of the gospel.” This is language that applies to both subsections.

One could easily argue that the reason why the court did not hold section 107(1) to be unconstitutional was because it was not challenged by the plaintiff, and therefore, that issue was not before the court. However, the plaintiff did not even move for judgment in this case. This matter came before the court when the defendant moved for summary judgment. So how did the court grant judgment in favor of the plaintiff when the plaintiff did not move for judgment before Judge Crabb. The district court sua sponte (on its own initiative) decided to abandon the role of a neutral party and moved for judgment on behalf of the plaintiff (an incredibly rare procedure). Therefore, if the court wanted to resolve the constitutionality of section 107(1), it could have done so sua sponte. This is just one example of many where this opinion goes awry.

Nevertheless, the court held that section 107(2) (tax exemption for a minister’s housing allowance) violated the Establishment Clause because it violated the Lemon Test. Under the Lemon Test, a court must (1) determine whether the law or government action in question has a bona fide secular purpose; (2) determine whether the state action has the primary effect of advancing or inhibiting religion; and (3) consider whether the action excessively entangles religion and government (Lemon v. Kurtzman, 1971).

Without going into the substance and details of the analysis (guaranteed to cure all forms of insomnia), this is not the first time Judge Crabb has demonstrated hostility toward religion in her judicial opinions. This Carter-appointed district judge authored an opinion in 2010 holding that the National Day of Prayer was unconstitutional because it violated the Establishment Clause (Freedom From Religion Foundation, Inc. v. Obama, 2010). She employed the same analysis using the Lemon Test to reach the result that the National Day of Prayer was unconstitutional. Notice that the same special interest group (Freedom From Religion Foundation) was the plaintiff in this case as well. Apparently, their primary goal is to free our government from religion and ensure that we have a godless form of government. Nevertheless, the good news in all this is that the Seventh Circuit Court of Appeals reversed Judge Crabb’s hostile opinion striking down the National Day of Prayer (Freedom From Religion Foundation, Inc. v. Obama, 2011). The Seventh Circuit held that the plaintiff did not have standing because it had not been injured. In other words, the Freedom From Religion Foundation is just a group that likes to stick their nose into litigation where it does not belong (a very down-to-earth explanation of what it means to not have standing before a court).

The same defect plagues the plaintiff in Judge Crabb’s opinion regarding the minister’s housing allowance. The defendant in that case argued and preserved for appeal the issue of standing. As such, if and when the defendant in that case appeals Judge Crabb’s opinion, they will appeal to the Seventh Circuit, the same appellate court that has previously held that this same plaintiff does not have standing to challenge these types of statutes. However, even if the Seventh Circuit finds that the plaintiff does have standing, the court will then address the merits of the constitutionality challenge to determine if the statute regarding the tax-exempt status of ministers’ housing allowance violates the First Amendment. And, there is a legitimate chance that the court will correct Judge Crabb’s anti-religion opinion. Regardless of who wins or loses before the Seventh Circuit Court of Appeals, this is the type of case that is likely to find its way before the U.S. Supreme Court. Therefore, it will be some time before this issue will be resolved.

Have you ever noticed that when some renegade judge with an axe to grind comes out with some ridiculous ruling or appellate opinion, you hear about it all over the internet, Facebook, Twitter, blog posts, and even national news and radio? However, when that same ruling or opinion gets reversed or struck down on appeal, there is little in the way of hype or publicity to equal the coverage that accompanied the original bad news. I guess that is how the media (and our minds) work. A little bad news goes a long way toward gaining attention and scaring some people into taking notice. However, good news rarely makes it above the fold these days. That notwithstanding, I look forward to the day when I can report to you that the Seventh Circuit has yet again reversed another hostile opinion from Judge Crabb, or even better, the U.S. Supreme Court has weighed in on the subject and established sound precedent holding that the ministerial housing allowance exception does not violate the Establishment Clause—precedent that binds every federal court.

But if at the end of the day, Judge Crabb’s opinion survives appellate scrutiny, and higher courts hold that the ministerial housing allowance exception is unconstitutional, I am confident that I know exactly what hundreds and thousands of evangelists and preachers for the body of Christ all over the United States will do. They will continue to preach the whole counsel of God, they will continue to preach in season and out of season, they will continue to pray for the government, obey the government, pay taxes, and honor the government. Why will they respond this way? Because as blessed as we are to be citizens of this wonderful country, we serve a God who calls us to be citizens of a heavenly kingdom. Why will evangelists do what is right regardless of the law? Because these fine servants and preachers of God’s good news are not preaching for the tax exemptions (although that is certainly a help), but they preach in order to seek and save the lost. Why will preachers react in this godly manner? Because the position, policy, and practice of this nation cannot hinder the proclamation of God’s saving message.


26 U.S.C. § 107.

Freedom From Religion Foundation, Inc. v. Lew, No 11-cv-626-bbc (W.D. Wis., Nov. 21, 2013).

Freedom From Religion Foundation, Inc. v. Obama, 705 F.Supp.2d 1039 (W.D. Wis. 2010).

Freedom From Religion Foundation, Inc. v. Obama, 641 F.3d 803 (7th Cir. 2011).

Lemon v. Kurtzman, 403 U.S. 602 (1971).


A copied sheet of paper

REPRODUCTION & DISCLAIMERS: We are happy to grant permission for this article to be reproduced in part or in its entirety, as long as our stipulations are observed.

Reproduction Stipulations→