The ministerial housing allowance is “the most important tax benefit available to ministers”—but since October 2017, that benefit has faced an uncertain future.
A refresher: On October 6, Judge Barbara Crabb of the District Court for the Western District of Wisconsin ruled that the housing allowance showed an unconstitutional preference for religion. In her opinion, she wrote, “The housing allowance violates the establishment clause because it does not have a secular purpose or effect and because a reasonable observer would view the statute as an endorsement of religion.” (To read more of Judge Crabb’s opinion—and key takeaways from it—here is attorney Richard Hammar’s take.)
But where do things stand with the housing allowance—and when will there be more clarity about its future?
The case will go to the US Court of Appeals for the Seventh Circuit before 2018’s end; according toChristianity Today reporter Kate Shellnutt, “Oral arguments in the case will take place later this year, and could be scheduled as early as this summer.” In the meantime, various Christian groups, including the Alliance Defending Freedom (ADF), have filed amicus briefs—legal documents presenting pertinent information and arguments from non-litigants. The ADF campaign included the backing of more than 5,000 pastors nationwide.
Another amicus brief—filed by representatives of the Evangelical Council for Financial Accountability, the National Association of Evangelicals, and others—incorporates material from various Church Law & Tax resources, including the 2018 Compensation Handbook for Church Staff, the 2018 Church & Clergy Tax Guide, and “Facing a Future Without the Clergy Housing Allowance,” in its defense of the allowance.
One distinctive theme from the brief: Statistically speaking, the loss of the housing allowance would disproportionately affect small congregations (a point emphasized in this March post on ManagingYourChurch.com and further confirmed by independent research the brief’s authors found). Whether such a possibility will be persuasive to the Seventh Circuit, however, remains to be seen.
For now, this key benefit still stands, and even if it were to be struck down by the Seventh Circuit, clergy in just three states (Illinois, Indiana, and Wisconsin) would be affected immediately. Churches should be prepared, however, for the possibility of a nationwide application of this ruling. Keep monitoring ChurchLawAndTax.com and ManagingYourChurch.com, and subscribe to our free weekly Church Law & Tax Update email newsletter for any developments you and your church should know.
Emily Lund is assistant editor for Church Law & Tax.
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