The U.S. Department of Justice filed a notice of appeal in late January with the Seventh Circuit Court of Appeals in Chicago to challenge a federal district judge's ruling that the clergy housing allowance in her district is an unconstitutional preference for religion.
Federal district court judge Barbara Crabb made her ruling in late November for the Western District of Wisconsin, but stayed the decision pending the outcome of an expected appeals process. The Freedom From Religion Foundation, a nonprofit organization, brought the lawsuit.
The housing allowance is the most important tax benefit for clergy, so the pending outcome is significant. If the Seventh Circuit affirms Judge Crabb's decision, it would affect churches and clergy in Wisconsin, Illinois, and Indiana, the three states covered by the circuit—and the Internal Revenue Service also could choose to apply the decision nationwide for clergy tax purposes. If it's reversed, the benefit remains intact.