Wednesday, September 26, 2012
Christianity Today reports that the U.S. District Court for the Western District of Wisconsin has concluded that the Freedom from Religion Foundation (FFRF) has standing to challenge the income tax exemption for parsonages and pastor housing allowances provided by Internal Revenue Code section 107 because FFRF has altered its salary structure to provide housing allowances, but those allowances do not qualify for exemption since the recipients are not ministers. According to a FFRF press release about the decision, its lawsuit seeks a declaration that section 107 violates the First Amendment's Establishment Clause. The case, which is only the latest attack by FFRF on section 107, raises the interesting question of whether the Supreme Court's recent narrowing of the Establishment Clause exception to the general rule that taxpayers lack standing to challenge tax provisions benefiting others can be avoided by creating a fact pattern that is identical to the one required under the challenged provision except for the lack of a religious element. For example, could a non-religious nonprofit that functions in a manner very similar to a church challenge the exemption for churches from having to file annual information returns (the Form 990)? The outcome of this lawsuit could therefore have even larger ramfications than the possible end of the pastor housing allowance exemption.
(Hat tip: ECFA)
Correction: The original version of this post gave the Washington Ethical Society as an example of a non-religious nonprofit that appears to function in a manner very similar to a church. An astute reader brought to my attention that the Washington Ethical Society is in fact actually classified as a church by the IRS, so I have corrected the post by removing that reference. My thanks for the fact checking.