Jump directly to the content

Key Housing Allowance Ruling

On November 22, 2013, a federal district court judge in Wisconsin struck down the ministerial housing allowance as an unconstitutional preference for religion. The ruling was in response to a lawsuit brought by the Freedom From Religion Foundation (FFRF) challenging the constitutionality of the housing allowance and the parsonage exclusion.

Here are five things to note about this ruling:

  1. FFRF narrowed its challenge to the ministerial housing allowance, meaning that the parsonage exclusion remains intact, at least for now.
  2. A ruling by a federal district court judge in Wisconsin is not binding on other courts, and does not apply to ministers in other states. If the ruling is appealed and affirmed by the Seventh Circuit Court of Appeals in Chicago, it will apply to ministers in that circuit (Illinois, Indiana, and Wisconsin). It would become a national precedent binding on ministers in all states only if affirmed by the United States Supreme Court (an unlikely outcome). However, the Internal Revenue Service also has discretion to follow, or not follow, the ruling nationwide.

Log In For Full Access

Interested in becoming a member? Learn more.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Related Topics:
Posted:
  • December 16, 2013

Related ResourcesVisit Store

2020 Church & Clergy Tax Guide
2020 Church & Clergy Tax Guide
Find comprehensive help understanding United States tax laws as they relate to pastors and churches.
Smart Money for Church Salaries
Smart Money for Church Salaries
This resource takes you on a journey through real-life case studies to uncover compensation issues and navigate their solutions.
ChurchSalary
ChurchSalary
Let ChurchSalary do the work. Get personalized compensation reports for staff and pastors.
12 Law & Tax Guidelines for New Ministers
12 Law & Tax Guidelines for New Ministers
Essential knowledge to ensure legal and financial clarity and integrity in ministry.