Kentucky Court's Ruling Favors Churches, Clergy
A federal district court in Kentucky on Monday dismissed a lawsuit brought against the Internal Revenue Service by three different atheist groups that challenged various church and clergy tax provisions.
The dismissal may be a sign of things to come on a clergy housing allowance challenge in Wisconsin that gained steam late last year.
The American Atheists Inc., Atheists of Northern Indiana Inc., and Atheist Archives of Kentucky Inc. claimed churches and religious organizations receive unconstitutional preferential treatment. The defense and the court identified five specific tax provisions that would fit under the groups' claim, including church exemption from filing a Form 1023 to receive tax-exempt status, church exemption from filing annual Form 990s, and the clergy parsonage allowance.
The groups said they suffered "unconstitutional discrimination and coercion arising from their inability to satisfy the IRS test to gain classification to secure the same treatment as religious organizations or churches…" However, the groups said they never actually tried to become 501(c)(3) religious organizations, explaining that such attempts to do so would violate their beliefs.
The court dismissed the case, saying the atheist groups lacked standing—because they never attempted to file as religious organizations, they never suffered direct injuries, and any possibility of injuries was "mere speculation." "(I)njury for standing purposes must be an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical," the court's opinion said, citing a 1992 case, among others, related to standing.
A sign of things to come?
Although this ruling only pertains to Kentucky, it may shed light on another high-profile lawsuit brought by the Freedom From Religion Foundation (FFRF) in Wisconsin. Last November, a federal judge there ruled the clergy housing allowance exclusion in her district was an unconstitutional preference for religion. In January, the U.S. Department of Justice appealed. The benefit remains unaffected until the Seventh Circuit Court of Appeals issues a ruling.
Its decision isn't expected until later this year, but the Kentucky federal court's ruling may be a preview of how the Seventh Circuit will rule. According to Richard Hammar, senior editor of ChurchLawAndTax.com, the Kentucky case "has direct relevance to the housing allowance appeal, due to the Kentucky court's handling of the technical issue of standing."