On November 22, 2013, federal district court judge Barbara Crabb of the District Court for the Western District of Wisconsin (a President Carter appointee) 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.
Judge Crabb stayed the decision, pending an appeal to the Seventh Circuit Court of Appeals in Chicago. As this issue went to press, it is unclear whether an appeal will occur, but one seems likely. If one is filed, but the Seventh Circuit affirms Judge Crabb's decision, churches and clergy in Illinois, Indiana, and Wisconsin will be affected.
The implications on a nationwide scale remain unclear. From a judicial perspective, the ruling would only become a national precedent if it is affirmed by the United States Supreme Court, but this is an unlikely outcome. However, the Internal Revenue Service has discretion to follow, or not follow, the ruling nationwide, and may be inclined to follow it to promote consistency in the application and enforcement of federal tax law.
Here are 10 things church leaders should note about this ruling.
Section 107(1) of the federal tax code exempts, from federal income tax, the fair rental value of a church-owned parsonage provided to a minister as compensation for ministerial services. Section 107(2) exempts the amount of a minister's compensation that is designated in advance as a housing allowance to the extent that the allowance represents compensation for ministerial services, is used to pay housing expenses, and does not exceed the fair rental value of the home (furnished, plus utilities).
In 2009, the Freedom From Religion Foundation and several other plaintiffs filed a lawsuit in a federal district court in California challenging the constitutionality of the parsonage exclusion and housing allowance. The lawsuit alleged:
Section 107 … of the Revenue Code … violates the Establishment Clause of the First Amendment, in part, because it provides tax benefits only to "ministers of the gospel," rather than to a broad class of taxpayers.
Section 107 … subsidizes, promotes, endorses, favors, and advances churches, religious organizations, and "ministers of the gospel," and discriminates against secular organizations, including nonprofit organizations such as FFRF that promote atheism, humanism, secularism, and other non-religious worldviews, as well as their employees and members … .
The [housing allowance] has the effect each year of excluding hundreds of millions of dollars from taxation, and this exclusion is available only to ministers of the gospel. The tax preferences granted to ministers of the gospel under the Internal Revenue Code … also enables churches and other religious organizations to reduce their salaries and compensation costs. The employees of secular organizations such as FFRF are not allowed these tax preferences, and FFRF and other secular organizations incur comparatively greater compensation costs than they would if their employees could be considered "ministers of the gospel."
The tax preferences afforded ministers of the gospel constitute a subsidy that results in tangible and direct economic injury to FFRF, and to its members and employees, who cannot claim these benefits.
The FFRF's lawsuit asked the court to rule that section 107 of the federal tax code violated the Establishment Clause of the First Amendment to the United States Constitution, which prohibits any governmental establishment of religion.
The federal government, which defended the constitutionality of the housing allowance (since it is a federal statute) asked the court to dismiss the lawsuit on the ground that the FFRF lacked "standing" to pursue its claim. Standing is a requirement of any plaintiff in a federal case. It has been described by the United States Supreme Court as follows:
The party who invokes the power [of the federal courts] must be able to show not only that the statute is invalid, but that he has sustained or is immediately in danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers in some indefinite way in common with people generally. Doremus v. Board of Ed. of Hawthorne, 342 U.S. 429 (1952).
The California district court ruled that the FFRF had standing, so it denied the government's request to dismiss the case. But FFRF's challenge to the constitutionality of the housing allowance was dealt a setback by a 2011 decision of the Supreme Court. Arizona Christian School Tuition Organization v. Winn, 131 S.Ct. 1436 (2011). The Supreme Court ruled that a group of Arizona taxpayers lacked standing to challenge the constitutionality of a state law involving tax credits for contributions to "school tuition organizations" that provided scholarships to students attending private schools, including religious schools. It noted that the courts have consistently ruled that standing cannot be based on a plaintiff's status as a federal taxpayer because the "injury" is too remote or speculative.
The Court acknowledged a limited exception to taxpayer standing in cases challenging legislation on the basis of the First Amendment's nonestablishment of religion clause. Taxpayers have standing in such cases to challenge direct transfers of tax revenue to religious organizations since "the taxpayer's allegation in such cases would be that his tax money is being extracted and spent in violation of specific constitutional protections against such abuses of legislative power."
FFRF argued that it had standing because the Arizona tax credit was in essence a governmental expenditure for religion. The Court disagreed, noting that there is a fundamental difference between granting a tax credit to taxpayers and using tax dollars to directly benefit religion. Like the tax credit in the Arizona case, a housing allowance exclusion under the federal tax code falls short of using tax dollars to directly benefit religion, and so the taxpayer standing requirement is not met.
Based largely on this ruling, FFRF voluntarily dismissed its constitutional challenge to the housing allowance in California. However, it soon filed a second challenge, on different grounds, in a federal district court in Wisconsin. In this challenge, FFRF did not attempt to demonstrate taxpayer standing. Instead, it asserted that it satisfied the standing requirement on the basis of direct injury, namely, that some of its executive officers were unable to receive the benefit of a housing allowance solely on the ground that they were not ministers. This disparate treatment, FFRF claimed, amounted to unlawful discrimination in favor of clergy in violation of the First Amendment's ban on the establishment of religion. FFRF insisted that the injury its officers experience was not speculative, but immediate and direct—the denial of a tax benefit that is available to clergy—and was sufficient to satisfy the standing requirement apart from the issue of taxpayer standing.
The Wisconsin court concluded that FFRF had standing to pursue its constitutional challenge to the housing allowance on the basis of direct injury rather than taxpayer standing.
2. Housing allowance is an unconstitutional preference for religion
The Wisconsin court concluded that the housing allowance exclusion under section 107(2) is an unconstitutional preference for religion since the same benefit is not provided to other taxpayers. The court relied on a 1989 decision by the Supreme Court in which the Court ruled that a Texas statute exempting from the state sales tax periodicals and books "published or distributed by a religious faith" was an unconstitutional preference for religion. Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989). The Supreme Court concluded that tax exemptions that include religious organizations "must have an overarching secular purpose that equally benefits similarly situated nonreligious organizations." To illustrate, the exemption of church property from taxation is constitutionally permissible because state laws exempt a wide range of non-religious properties from taxation. In contrast, the housing allowance applies only to ministers.
The Wisconsin court conceded that there were other provisions in the tax code that recognize housing allowances, and it referred specifically to State Department employees and the military. It noted that in the Texas Monthly decision, the Supreme Court acknowledged that a tax exemption benefiting religious groups could survive a challenge under the establishment clause if the exemption was "conferred upon a wide array of nonsectarian groups as well." However, the Supreme Court "rejected the argument that it was enough to point to a small number of secular groups that could receive a similar exemption for a different reason."
Judge Crabb concluded:
In concluding that section 107(2) violates the Constitution, I acknowledge the benefit that the exemption provides to many ministers (and the churches that employ them) and the loss that may be felt if the exemption is withdrawn [in 2002, estimated to be $2.3 billion over five years]. However, the significance of the benefit simply underscores the problem with the law, which is that it violates the well-established principle under the First Amendment that "absent the most unusual circumstances, one's religion ought not affect one's legal rights or duties or benefits … ." Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility. It is important to remember that the establishment clause protects the religious and nonreligious alike … . If a statute imposed a tax solely against ministers (or granted an exemption to everyone except ministers) without a secular reason for doing so, that law would violate the Constitution just as section 107(2) does. Stated another way, if the government were free to grant discriminatory tax exemptions in favor of religion, then it would be free to impose discriminatory taxes against religion as well. Under the First Amendment, everyone is free to worship or not worship, believe or not believe, without government interference or discrimination, regardless what the prevailing view on religion is at any particular time, thus preserving religious liberty to the fullest extent possible in a pluralistic society.
Key point. An invalidation of the housing allowance affects not only active ministers, but also retired ministers. Many church pension boards designate all of the distributions paid to retired ministers as a housing allowance, and in many cases this makes the distributions tax-free.
While FFRF challenged the constitutionality of both sections 107(1) and 107(2), it ultimately narrowed its challenge to section 107(2), meaning that the parsonage exclusion remains intact, at least for now.
Example 1. Pastor C lives in a church-owned parsonage. The rental value of the parsonage is exempt from income taxation. This result is not affected by the Wisconsin court's ruling.
Key point. Compensation data compiled by CHURCH LAW & TAX REPORT show that the number of ministers living in church-owned parsonages or manses has declined over the past several years. Approximately 11 percent of full-time senior pastors currently live in a church-provided home, according to data from the 2014-2015 Compensation Handbook for Church Staff (ChurchLawAndTaxStore.com).
Example 2. Same facts as Example 1, except that the church designates a portion of Pastor C's annual compensation as a parsonage allowance to pay expenses, such as furnishings and utilities, that are incurred in living in the parsonage. A parsonage allowance, like a housing allowance, will not be tax-exempt in jurisdictions in which the housing allowance is adjudged unconstitutional. This is so, even though the rental value of the parsonage continues to be tax-exempt in reporting income taxes.
Key point. The fact that FFRF narrowed its challenge to the section 107(2) housing allowance does not mean that the section 107(1) parsonage exemption will remain unchallenged. However, an even stronger argument can be made for the constitutionality of the parsonage exclusion than for the housing allowance since section 119 of the tax code exempts from income taxation lodging provided "for the convenience of the employer" regardless of an employee's vocation.
4. Effective date and an appeal
The court enjoined the IRS and Department of the Treasury from enforcing section 107(2). But it added that its ruling "shall take effect at the conclusion of any appeals … or the expiration of the deadline for filing an appeal, whichever is later." An appeal by the IRS and Department of the Treasury would be to the Seventh Circuit Court of Appeals in Chicago, and could take up to a year or more to resolve.
Any appeal will be at the discretion of the the Department of Justice, and at least indirectly, the White House. At the time of publication, no decision has been made regarding an appeal. It is likely, however, that an appeal will be filed, if for no other reason than the actual or perceived pressure that religious groups can exert on political leaders. One need only recall the Clergy Housing Allowance Clarification Act of 2002, which was enacted by unanimous votes of both houses of Congress within a matter of days in order to fend off a constitutional challenge to the housing allowance.
Also, note that the outcome of an appeal is far from certain. It is possible that a federal appeals court will reverse the Wisconsin court's ruling and uphold the constitutionality of the housing allowance. If so, it won't be the first time a ruling by Judge Crabb was reversed on appeal. In 2011, a three-judge panel of the Seventh Circuit Court of Appeals unanimously reversed her opinion that the National Day of Prayer violated the First Amendment ban on the establishment of religion.
Further, there are substantial arguments supporting the constitutionality of the housing allowance. Of course, those arguments are not dispositive, as the Wisconsin case demonstrates. But they were given little attention by Judge Crabb, and her perspective may not be shared by the appeals court. It is also possible that the appeals court will revisit the issue of standing and conclude that FFRF lacks standing to prosecute the case.
5. Application in other states
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, it will apply to ministers in that circuit (Illinois, Indiana, and Wisconsin). It would become a national precedent binding on ministers in all states if affirmed by the Supreme Court (an unlikely outcome). Note, however, that the IRS has the discretion to follow, or not follow, the ruling in other circuits, and may be inclined to do so to promote consistency in tax administration.
6. Housing allowances for 2014
Churches should continue to designate housing allowances for ministerial employees for 2014, and church pension plans should continue to designate housing allowances for retired ministers. Such allowances will continue to be valid in all states outside of the Seventh Circuit (Illinois, Indiana, and Wisconsin), and to ministers in the Seventh Circuit so long as the district court's ruling is reversed on appeal, or the appeals court does not render an opinion in 2014.
However, if the appeals court affirms the district court's decision in 2014, then a housing allowance for ministers in Illinois, Indiana, and Wisconsin may be partially or wholly lost. The same would be true for ministers in other states, should the IRS choose to follow the ruling nationwide.
Key point. Ministers should address the continuing availability of the housing allowance with a tax professional.
7. What can Congress do?
The decision by the federal district court in Wisconsin is based on an interpretation of the Constitution, so there is little Congress can do to overturn it. Congress does have a "nuclear option" of depriving the federal courts of jurisdiction to adjudicate cases challenging the constitutionality of the housing allowance and parsonage exclusion, but the likelihood of Congress doing so in this case is extremely remote.
The financial impact of this ruling will be significant, especially for ministers who purchased homes in reliance on the continuing availability of the housing allowance. This impact could be mitigated if Congress eliminates the treatment of ministers as self-employed for Social Security. Under current law, a duly ordained, commissioned, or licensed minister is treated as self-employed with respect to services performed in the exercise of ministry (with the exception of some chaplains). This is so, even though most ministers are employees for income tax reporting. This is sometimes referred to as the "dual tax status" of ministers. As a result, a minister reports and pays Social Security taxes as a self-employed person (and not as an employee) with respect to services performed in the exercise of ministry. IRC 3121(b)(8)(A).
The financial impact of eliminating the mandatory treatment of ministers as self-employed for Social Security could be significant, since self-employed persons pay the "self-employment tax," which is 15.3 percent of net earnings, while employees and employers split the Social Security and Medicare (FICA) tax rate of 15.3 percent, with each paying 7.65 percent. There is little Congress can do to overturn a federal district court's interpretation of the Constitution, but it can materially reduce the financial impact of the district court's ruling on ministers, which in many cases will be substantial, by revoking their mandatory self-employed status for Social Security. In fact, in many cases, such a change in the tax code would result in a substantial bonus for ministers over and above a complete elimination of the tax burden of losing the housing allowance exclusion. Note the following additional considerations:
Such a legislative change would be appealing to lawmakers for two reasons. First, it will provide them with a meaningful way of responding to the loss of a housing allowance for many of their constituent ministers; and second, there is absolutely no basis for the mandatory treatment of ministers as self-employed for Social Security, so an elimination of this rule should arouse little, if any, opposition. In explaining the reason for treating ministers as self-employed for Social Security, the Tax Court observed: "Congress chose not to place the onus of participation in the old-age and survivors insurance program upon the churches, but to permit ministers to be covered on an individual election basis, as self-employed, whether, in fact, they were employees or actually self-employed." Silvey v. Commissioner, 35 T.C.M. 1812 (1976). In other words, if ministers were treated as employees for Social Security, their employing churches would be required to pay the employer's share of the Social Security and Medicare tax, and this apparently was viewed as inappropriate. This justification ceased to exist in 1984 when Social Security coverage was extended to church employees.
Approximately 30 percent of ministers have exempted themselves from self-employment taxes by filing a timely Form 4361 with the IRS. Eliminating the mandatory treatment of ministers as self-employed for Social Security may not benefit these ministers if such a change in the law preserves their exemption under both self-employment taxes and Social Security and Medicare (FICA) taxes. But, the loss of a housing allowance exclusion for these ministers would be more than offset by the fact that they would pay no self-employment or Social Security and Medicare taxes on their ministerial income.
Eliminating the mandatory treatment of ministers as self-employed for Social Security would not benefit those few ministers who, in fact, are self-employed.
Many churches pay half or all of their ministers' self-employment taxes. This is a common fringe benefit that often is utilized to "equalize" the treatment of clergy and lay employees. Eliminating the mandatory treatment of ministers as self-employed for Social Security would be of limited benefit to these ministers.
Revoking the mandatory status of ministers as self-employed for Social Security would mean that many ministers would start paying the employee's share of Social Security and Medicare taxes (7.65 percent) rather than the full self-employment tax (15.3 percent). However, this substantial reduction in a pastor's taxes comes at a price. The church would have to pick up the employer's 7.65-percent share of Social Security and Medicare taxes. But, note the following: (1) The church is already picking up the employer's share of FICA taxes on all of its nonminister employees, so this would not be unique. (2) Under current law, when a church pays half or some other portion of a minister's self-employment tax, the amount it pays constitutes taxable income that must be reported on the minister's W-2 form. However, if the minister is treated as an employee for Social Security, the employer's share of Social Security and Medicare taxes (7.65 percent of an employee's wages) is not taxable income to the employee. (3) The 7.65 percent tax consists of two separate taxes—a Social Security tax (6.2 percent) and a Medicare tax (1.45 percent). The Social Security tax is only assessed against earnings up to $117,000 (2014), whereas the 1.45-percent Medicare tax is assessed against all income paid to an employee.
In summary, ministers looking for a way to respond to legal threats to the housing allowance should consider contacting their United States senators and member of Congress to discuss repealing section 3121(b)(8)(A) of the tax code. Note that such a proposal needs to be coordinated with other provisions of the tax code. For example, section 1402(e) allows ministers to exempt themselves from self-employment taxes. This exemption would need to be expanded to cover Social Security and Medicare (FICA) taxes.
Example 3. Pastor T is paid a salary of $40,000 from his church, and in addition receives a housing allowance of $20,000. Assuming that Pastor T has housing expenses of at least $20,000, and the rental value of his home is at least $20,000, his taxable income is reduced by the full amount of the housing allowance ($20,000). Ignoring all other exemptions, credits, and deductions for the sake of simplicity, and assuming that Pastor T's spouse does not work outside the home, the housing allowance will result in a tax reduction of $3,000 (15 percent of taxable income in excess of $17,850 according to the tax tables). If the housing allowance is declared unconstitutional by a federal court, and the ruling is binding in Pastor T's state of residence (or the IRS elects to apply the ruling nationwide), then the financial impact for Pastor T will be an additional $3,000 in federal income taxes.
Example 4. Same facts as the previous example, except that Congress repeals section 3121(b)(8)(A) of the federal tax code which treats ministers as self-employed for Social Security with respect to compensation received in the exercise of ministry. The $3,000 increase in income taxes will be offset by the decrease in Social Security taxes if Pastor T is an employee of the church rather than an independent contractor. The self-employment tax rate on Pastor T's compensation (salary plus housing allowance) would be $9,180 ($60,000 x the self-employment tax rate of 15.3 percent). But if treated as an employee for Social Security, his Social Security and Medicare (FICA) taxes would be $4,590—salary plus housing allowance of $60,000 times the employee's share of Social Security and Medicare taxes of 7.65 percent. This tax savings of $4,590 not only fully offsets the loss of the housing allowance exclusion, but provides a premium of $1,590. If Congress makes this simple change, it not only will fully offset the loss of the housing allowance, but provide many ministers with a substantial bonus. However, as noted above, this benefit comes at a price. Churches would have to pay the employer's share of Social Security and Medicare taxes (7.65 percent of ministers' compensation).
Example 5. Same facts as the previous example, except that Pastor T exempted himself from self-employment taxes many years ago by filing a timely Form 4361 with the IRS. A repeal of the mandatory treatment of ministers as self-employed for Social Security will be of no benefit to Pastor T since he pays no Social Security taxes. However, the loss of a housing allowance exclusion for these ministers would be more than offset by the fact that they pay no self-employment taxes at all on their ministerial income.
Example 6. Same facts as example 4, except that Pastor T's church pays all of his self-employment taxes. A repeal of the mandatory treatment of ministers as self-employed for Social Security will not offset the loss of the housing allowance exclusion, since Pastor T pays no self-employment taxes.
Example 7. Same facts as example 4, except that Pastor T's church pays half of his self-employment taxes. A repeal of the mandatory treatment of ministers as self-employed for Social Security may not fully offset the loss of the housing allowance exclusion, since Pastor T pays only half of his self-employment taxes.
8. Other special tax rules that apply to ministers
A number of provisions in the tax code apply specifically to ministers. However, the following four provisions are unique in that they use the same language in defining which persons are eligible for the special treatment:
the exclusion (in computing income taxes) of housing allowances and the fair rental value of church-owned parsonages provided to ministers rent-free;
the exemption of some ministers from self-employment taxes (e.g., Social Security taxes for the self-employed) if several conditions are met;
treatment of ministers (who are not exempt) as self-employed for Social Security with respect to ministerial services; and, exemption of ministers' wages from income tax withholding.
If the housing allowance is an unconstitutional preference for religion, will this affect the other three special rules? Possibly not. The Wisconsin court noted that the exemption of ministers from self-employment taxes is not constitutionally suspect because it is limited to "those who have a religious objection to receiving public insurance" and "limits the exemption to those whose religious exercise would be substantially burdened."
No pending lawsuit is challenging the constitutionality of any of these rules other than the housing allowance, and for good reason. None of the other three special rules singles out ministers for favorable tax treatment. These rules either apply to a broad class of taxpayers, including ministers, or they do not provide a tax benefit (as in the case of the exemption from income tax withholding).
9. The Deason rule
In 1964, the Tax Court ruled that section 265 of the tax code (which denies a deduction for any expense allocable to tax-exempt income) prevented a minister from deducting his unreimbursed transportation expenses to the extent that they were allocable to his tax-exempt housing allowance. Deason v. Commissioner, 41 T.C. 465 (1964).
To illustrate, assume that a minister receives compensation of $30,000, of which $10,000 is a nontaxable housing allowance, and incurs unreimbursed business expenses of $1,500. Since one-third of the minister's compensation is tax-exempt, he should not be permitted to deduct one-third of his business expenses, since they are allocable to tax-exempt income and their deduction would amount to a double deduction. This was the conclusion reached by the Tax Court in the Deason case.
The IRS has issued audit guidelines for its agents to follow when auditing ministers. The guidelines instruct agents to apply the Deason allocation rule. The guidelines explain this rule as follows: "A minister may deduct ordinary and necessary business expenses. However, if a minister's compensation includes a housing allowance which is exempt from income tax, then that portion of the expenses allocable to this tax-exempt income is not deductible. Before this allocation is made, the total amount of business expenses must be determined."
It has been generally assumed that the Deason rule does not apply to the computation of a minister's self-employment taxes, since the housing allowance is not tax-exempt in computing self-employment taxes. If the housing allowance is deemed to be unconstitutional, then no reduction in business expense deductions is necessary in computing income taxes.
10. Tax withholding and estimated taxes
All individual taxpayers are required to prepay their taxes. For most taxpayers, this is done by having taxes withheld from their compensation at the time of payment. But some kinds of compensation are exempt from withholding, including "services performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry." IRC 3401(a)(9). This means that a church is not required to withhold income taxes from wages paid to ministers who report and pay their income taxes as employees. As a result, ministers are required to prepay their taxes using the estimated tax procedure unless they request voluntary withholding.
Ministers who are affected by an invalidation of the housing allowance will experience an increase in income taxes. As a result, they should increase their quarterly estimated tax payments to reflect the increase in income taxes in order to avoid an underpayment penalty. Note that there will be no effect on self-employment taxes for which the housing allowance is not tax-exempt. Churches should adjust the amount of income taxes that are withheld from the wages of ministers who have elected voluntary tax withholding.
What can churches and ministers do to minimize the impact of the Wisconsin court's ruling? Consider the following:
Monitor developments in this case. If it is appealed to the Seventh Circuit Court of Appeals in Chicago, follow the court's disposition of the case. Any developments will be reported in this publication, as well as prominently noted on ChurchLawAndTax.com.
Remember that the Wisconsin court postponed its ruling while an appeal is pending. So, churches affected by the Wisconsin court's ruling should continue to designate housing allowances.
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, it will apply to ministers in that circuit (Illinois, Indiana, and Wisconsin). It would become a national precedent binding on ministers in all states if affirmed by the Supreme Court (an unlikely outcome since the Court receives 10,000 appeals each year and accepts 75 to 80 of them). Note, however, that the IRS has the discretion to follow, or not follow, the ruling in other circuits, and may be inclined to do so to promote consistency in tax administration.
Many churches own parsonages. Some are still used by pastors, but others are not since many staff pastors prefer to own their homes. Pastors can mitigate the effect of an invalidation of the housing allowance by using a church parsonage as their residence since the rental value of the parsonage is exempt from income taxation, at least for now. However, a parsonage allowance would be unavailable.
Increase its ministers' compensation to offset the financial impact. Such an increase could be phased out over a period of years to minimize the impact on the church.
Note that churches cannot pay a minister's housing expenses directly as a tax-free benefit.
Consider contacting your United States senators and member of Congress to discuss amending section 3121 of the tax code to eliminate the mandatory treatment of ministers as self-employed for Social Security. But remember, while such a change would provide relief to ministers and, in many cases, more than offset the financial impact of losing the housing allowance, it would create an additional tax burden for churches (they would be responsible for the employer's share of Social Security and Medicare taxes on clergy compensation).