Appeal Filed in Wisconsin Clergy Housing Allowance Case

The Department of Justice filed a notice of appeal in late January with the Seventh

The 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. The Freedom From Religion Foundation, a nonprofit organization, brought the lawsuit.

With the November ruling, Judge Crabb stayed her decision, pending the outcome of an appeals process or the expiration of a 60-day period for an appeal to be filed. The Justice Department’s filing was made ahead of the expiration date; the appeal could take up to a year.

The housing allowance is the most important tax benefit for clergy, so the stakes are significant. Judge Crabb’s decision, had it not been appealed, would have only affected churches and clergy in her district, but a precedent of that nature likely would have spurred additional lawsuits nationwide challenging the benefit. The Seventh Circuit either will affirm Judge Crabb’s ruling—which would then become binding in Wisconsin, Illinois, and Indiana, the three states covered by the circuit—or it will reverse it.

Were the Seventh Circuit to affirm Judge Crabb’s decision, the Internal Revenue Service also would likely consider applying the ruling nationally to ensure the consistent treatment of clergy for tax purposes, regardless of their geographic location. An affirmative ruling also could be appealed by the Justice Department to the Supreme Court of the United States.

If the Seventh Circuit reverses the decision, then the Freedom From Religion Foundation could appeal to the Supreme Court.

Richard Hammar, senior editor of CHURCH LAW & TAX REPORT, considers the likelihood of the Supreme Court hearing an appeal from either side to be small.

—Matthew Branaugh

Matthew Branaugh is editor of content and business development for Church Law & Tax at Christianity Today. He earned his juris doctor (JD) with honors from the University of Denver Sturm College of Law.

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